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VII.1. Award the Sale of $7,800,000 General Obligations Bonds, Series 2022A; BishopApril 5, 2022 City Council Report 2022-037 AWARD THE SALE OF $7,800,000 GENERAL OBLIGATION BONDS, SERIES 2022A Proposed Action Staff recommends approval of the following motion: Adopt Resolution No. 2022-032 awarding the sale of General Obligation Bonds, Series 2022A, in the original aggregate principal amount of 7,800,000; fixing their form and specifications; directing their execution and delivery; and providing for their payment. With this motion the sale of the bonds will be awarded based on the recommendation of Ehlers, Inc., financial advisor for this project. Overview The City of Hopkins has the authority to issue General Obligation bonds to pay for streets improvements, utility improvements, mill & overlay projects and equipment purchases. The 2022A bond issue is being sold to finance four purposes: • 2022 street improvement project for 6th Avenue South and 7th Avenue South. The bonds for this purpose will be issued with a 16 year term to come from a general tax levy and special assessments. • 2022 & 2023 Mill and overlay projects on 10th Avenue North and 1st Street North. The bonds for this purpose will be issued with a 10 year term to come from a general tax levy. Issuance for the 2023 portion is being recommended based on currently low interest rates. • Trunk Water Main Rehabilitation. The bonds for this purpose will be issued with a 15 year term to come from utility revenues. • Equipment Purchases (Fire Truck and Dump Truck). The bonds for this purpose will be issued with 10 year term to come from a general tax levy. The bond payments will come from a tax levy, utility revenues and special assessments. The interest rate for special assessments will be set at 2% over the True Interest Cost or TIC. On March 30, 2022, Standard & Poor’s reaffirmed our AA+ bond rating with a stable outlook. At the March 1, 2022 Council Meeting, the Council authorized the sale of $9,840,000 General Obligation Bonds which has been reduced to $7,800,000. The sale amount was reduced for actual construction contracts awarded and the removal of the refunding portion. The bids will be accepted until 10:00 AM on April 5, 2022 at which time they will be reviewed and the recommendation incorporated into Resolution 2022-032 Primary Issues to Consider At this time, there do not appear to be any primary issues relating to the award of the bond sales. Tax-exempt bond rates have increased slightly since the initial authorization on March 1st, however they continue to be low. Any significant issues affecting the sale will not be known until after the closing of the bids on April 5, 2021. Supporting Information • Resolution No. 2022-032 • S&P Rating Report ___________________________ Nicholas Bishop, CPA Finance Director Financial Impact: $ 8,890,000 bond issue Budgeted: Y/N Yes Source: Bond Funds Related Documents: None EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL OF THE CITY OF HOPKINS, MINNESOTA HELD: April 5, 2022 Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Hopkins, Minnesota was called and held in City Hall on Tuesday, the 5th day of April, 2022, at 7:00 p.m., for the purpose, in part, of awarding the sale of the City’s General Obligation Bonds, Series 2022A, and directing their execution and delivery. The following members were present: and the following were absent: * * * * * * * * * The Mayor announced that the next order of business was consideration of the proposals which had been received for the purchase of the City’s General Obligation Bonds, Series 2022A, to be issued in the original aggregate principal amount of $7,800,000. The City Manager presented a tabulation of the proposals that had been received in the manner specified in the Terms of Proposal for the Bonds. The proposals are attached hereto as EXHIBIT A. After due consideration of the proposals, Member _________________ then introduced the following written resolution, the reading of which was dispensed with by unanimous consent, and moved its adoption: 2 RESOLUTION NO. 2022-032 A RESOLUTION AWARDING THE SALE OF GENERAL OBLIGATION BONDS, SERIES 2022A, IN THE ORIGINAL AGGREGATE PRINCIPAL AMOUNT OF $7,800,000; FIXING THEIR FORM AND SPECIFICATIONS; DIRECTING THEIR EXECUTION AND DELIVERY; AND PROVIDING FOR THEIR PAYMENT BE IT RESOLVED By the City Council (the “City Council”) of the City of Hopkins, Hennepin County, Minnesota (the “City”) as follows: Section 1. Sale of Bonds. 1.01. Equipment Certificates. (a)Pursuant to Minnesota Statutes, Chapter 475, as amended, and Minnesota Statutes, Sections 410.32 and 412.301, as amended (the “Capital Equipment Act”), the City is authorized to issue its general obligation equipment certificates of indebtedness on such terms and in such manner as the City determines to finance the purchase of items of capital equipment (the “Equipment”), subject to certain limitations contained in the Capital Equipment Act. (b) The City has purchased and acquired or will purchase and acquire the Equipment described in EXHIBIT B attached hereto, or other items of capital equipment authorized under the Capital Equipment Act, pursuant to the Capital Equipment Act. (c)It is necessary and expedient to the sound financial management of the affairs of the City to issue general obligations in the aggregate principal amount of $975,000 (the “Equipment Certificates”), pursuant to the Capital Equipment Act, to provide financing for the acquisition of the Equipment. (d) As required by the Capital Equipment Act: (i)the expected useful life of the Equipment is or will be at least as long as the term of the Equipment Certificates; and (ii)the principal amount of the Equipment Certificates to be issued in the year 2022 will not exceed one-quarter of one percent (0.25%) of the estimated market value of taxable property in the City for the year 2022. 1.02. Improvement Bonds. (a) Certain assessable public improvements within the City, including but not limited to concrete curb and gutter addition and replacement, bituminous street removal and reconstruction or rehabilitation, and turf restoration (the “Assessable Improvements”), which are part of the City’s 2022 Street and Utility Improvements (the “Improvement Project”), have been made, duly ordered or contracts let for the construction thereof pursuant to the provisions of Minnesota Statutes, Chapters 429 and 475, as amended (the “Improvement Act”). 3 (b) It is necessary and expedient to the sound financial management of the affairs of the City to issue general obligations in the aggregate principal amount of $1,210,000 (the “Improvement Bonds”), pursuant to the Improvement Act, to provide financing for the Assessable Improvements. 1.03. Utility Revenue Bonds. (a) The City engineer has recommended the construction of various improvements to the City’s sewer, water, and storm sewer systems (the “Utility Improvements”) as part of the Improvement Project. (b) It is necessary and expedient to the sound financial management of the affairs of the City to issue general obligations in the aggregate principal amount of $4,585,000 (the “Utility Revenue Bonds”), pursuant to Minnesota Statutes, Chapters 444 and 475, as amended (the “Utility Revenue Act”), to provide financing for the Utility Improvements. 1.04. Street Reconstruction Bonds. (a) Pursuant to Minnesota Statutes, Chapter 475, as amended, specifically Section 475.58, subdivision 3b (the “Street Reconstruction Act”), the City is authorized to finance all or a portion of the cost of street reconstruction projects by the issuance of general bonds of the City payable from ad valorem taxes. (b) On March 1, 2022, following a duly noticed public hearing, the City Council adopted a five-year street reconstruction and bituminous overlay plan for the years 2022-2026 (the “Street Reconstruction Plan”) describing the streets to be reconstructed, estimated costs, and any planned reconstruction of other streets in the City and approved the issuance of obligations by vote of at least two-thirds of the members thereof, all pursuant to the Street Reconstruction Act. (c) Expenditures described in the Street Reconstruction Plan include 10th Avenue North and 1st Street North; 1st Street South and the South Central Business District; 1st Street North and Lot 700; Robinwood Lane, Highway 7 Service Drive, and 5th Street North; and Washington Avenue North, Jackson Avenue North, and St. Louis Street (the “Street Reconstruction”). The City estimates that the total cost of the Street Reconstruction is $1,030,000. (d) The City Council has determined that, within thirty (30) days after the hearing, no petition for a referendum on the issuance of bonds to pay costs of the Street Reconstruction was received by the City in accordance with the Street Reconstruction Act. (e) It is necessary and expedient to the sound financial management of the affairs of the City to issue general obligations in the aggregate principal amount of $1,030,000 (the “Street Reconstruction Bonds”), pursuant to the Street Reconstruction Act, to provide financing for the Street Reconstruction. 1.05. Issuance of General Obligation Bonds. (a) The City Council finds it necessary and expedient to the sound financial management of the affairs of the City and for the reduction of debt service costs to issue its General Obligation Bonds, Series 2022A (the “Bonds”), in the original aggregate principal 4 amount of $7,800,000, pursuant to the Capital Equipment Act, the Improvement Act, the Utility Revenue Act, the Street Reconstruction Act (collectively, the “Act”), to provide financing for the Equipment, the Assessable Improvements, the Utility Improvements, and the Street Reconstruction. (b) The City is authorized by Section 475.60, subdivision 2(9) of the Act to negotiate the sale of the Bonds, it being determined that the City has retained an independent municipal advisor in connection with such sale. The actions of the City staff and municipal advisor in negotiating the sale of the Bonds are ratified and confirmed in all aspects. 1.06. Award to the Purchaser and Interest Rates. The proposal of ______________________ (the “Purchaser”) to purchase the Bonds is hereby found and determined to be a reasonable offer and is hereby accepted, the proposal being to purchase the Bonds at a price of $_______________ (par amount of $7,800,000, [plus original issue premium of $______________,] [less original issue discount of $____________,] less an underwriter’s discount of $_______________), plus accrued interest, if any, to date of delivery for Bonds bearing interest as follows: Year Interest Rate Year Interest Rate 2024 % 2032 % 2025 2033 2026 2034 2027 2035 2028 2036 2029 2037 2030 2038 2031 True interest cost: _____________% 1.07. Purchase Contract. The sum of $_________, being the amount proposed by the Purchaser in excess of $7,706,400, shall be credited to the accounts in the Debt Service Fund hereinafter created, deposited in the accounts of the Project Fund hereinafter created, or deposited in the Redemption Fund, as determined by the Finance Director of the City in consultation with the City’s municipal advisor. The good faith deposit of the Purchaser shall be retained and deposited until the Bonds have been delivered and shall be deducted from the purchase price paid at settlement. The Mayor and City Manager are directed to execute a contract with the Purchaser on behalf of the City. 1.08. Terms and Principal Amounts of the Bonds. The City will forthwith issue and sell the Bonds pursuant to the Act, in the original aggregate principal amount of $7,800,000, originally dated April 26, 2022, in the denomination of $5,000 each or any integral multiple thereof, numbered No. R-1, upward, bearing interest as above set forth, and maturing serially on February 1 in the years and amounts as follows: 5 Year Amount Year Amount 2024 $ 2032 $ 2025 2033 2026 2034 2027 2035 2028 2036 2029 2037 2030 2038 2031 (a) $975,000 of the Bonds, constituting the Equipment Certificates, maturing on February 1 of the years and in the amounts set forth below, will be used to finance the acquisition of the Equipment: Year Amount Year Amount 2024 $ 2029 $ 2025 2030 2026 2031 2027 2032 2028 (b) $1,210,000 of the Bonds, constituting the Improvement Bonds, maturing on February 1 of the years and in the amounts set forth below, will be used to finance the construction of the Assessable Improvements: Year Amount Year Amount 2024 $ 2032 $ 2025 2033 2026 2034 2027 2035 2028 2036 2029 2037 2030 2038 2031 (c) $4,585,000 of the Bonds, constituting the Utility Revenue Bonds, maturing on February 1 of the years and in the amounts set forth below, will be used to finance the construction of the Utility Improvements: 6 Year Amount Year Amount 2024 $ 2032 $ 2025 2033 2026 2034 2027 2035 2028 2036 2029 2037 2030 2038 2031 (d) The remainder of the Bonds in the principal amount of $1,030,000, constituting the Street Reconstruction Bonds, maturing on February 1 of the years and in the amounts set forth below, will be used to finance the Street Reconstruction: Year Amount Year Amount 2024 $ 2029 $ 2025 2030 2026 2031 2027 2032 2028 2033 1.09. Optional Redemption. The City may elect on February 1, 2031, and on any day thereafter to prepay Bonds due on or after February 1, 2032. 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. [TO BE COMPLETED IF TERM BONDS ARE REQUESTED 1.10. Mandatory Redemption; Term Bonds. The Bonds maturing on February 1, 20____ and February 1, 20____ shall hereinafter be referred to collectively as the “Term Bonds.” The principal amount of the Term Bonds subject to mandatory sinking fund redemption on any date may be reduced through earlier optional redemptions, with any partial redemptions of the Term Bonds credited against future mandatory sinking fund redemptions of such Term Bond in such order as the City shall determine. The Term Bonds are subject to mandatory sinking fund redemption and shall be redeemed in part at par plus accrued interest on February 1 of the following years and in the principal amounts as follows:] 7 Sinking Fund Installment Date February 1, 20___ Term Bond Principal Amount ____________________ * Maturity February 1, 20___ Term Bond Principal Amount ____________________ * Maturity Section 2. Registration and Payment. 2.01. Registered Form. The Bonds will be issued only in fully registered form. The interest thereon and, upon surrender of each Bond, the principal amount thereof, is payable by check or draft issued by the Registrar described herein. 2.02. Dates; Interest Payment Dates. Each Bond will be dated as of the last interest payment date preceding the date of authentication to which interest on the Bond has been paid or made available for payment, unless (i) the date of authentication is an interest payment date to which interest has been paid or made available for payment, in which case the Bond will be dated as of the date of authentication, or (ii) the date of authentication is prior to the first interest payment date, in which case the Bond will be dated as of the date of original issue. The interest on the Bonds is payable on February 1 and August 1 of each year, commencing February 1, 2023, to the registered owners of record thereof as of the close of business on the fifteenth day of the immediately preceding month, whether or not such day is a business day. 2.03. Registration. The City will appoint a bond registrar, transfer agent, authenticating agent and paying agent (the “Registrar” and the “Paying Agent”). The effect of registration and the rights and duties of the City and the Registrar with respect thereto are as follows: (a) Register. The Registrar must keep at its principal corporate trust office a bond register in which the Registrar provides for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. (b) Transfer of Bonds. Upon surrender for transfer of a Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar will authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until that interest payment date. (c) Exchange of Bonds. When Bonds are surrendered by the registered owner for exchange the Registrar will authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity as requested by the registered owner or the owner’s attorney in writing. 8 (d) Cancellation. Bonds surrendered upon transfer or exchange will be promptly cancelled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When a Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is satisfied that the endorsement on the Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar will incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name a Bond is registered in the bond register as the absolute owner of the Bond, whether the Bond is overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on the Bond and for all other purposes, and payments so made to a registered owner or upon the owner’s order will be valid and effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or sums so paid. (g) Taxes, Fees and Charges. The Registrar may impose a charge upon the owner thereof for a transfer or exchange of Bonds sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to the transfer or exchange. (h) Mutilated, Lost, Stolen or Destroyed Bonds. If a Bond becomes mutilated or is destroyed, stolen or lost, the Registrar will deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for any Bond destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar an appropriate bond or indemnity in form, substance and amount satisfactory to it and as provided by law, in which both the City and the Registrar must be named as obligees. Bonds so surrendered to the Registrar will be cancelled by the Registrar and evidence of such cancellation must be given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured or been called for redemption in accordance with its terms it is not necessary to issue a new Bond prior to payment. (i) Redemption. In the event any of the Bonds are called for redemption, notice thereof identifying the Bonds to be redeemed will be given by the Registrar by mailing a copy of the redemption notice by first class mail (postage prepaid) to the registered owner of each Bond to be redeemed at the address shown on the registration books kept by the Registrar and by publishing the notice if required by law. Failure to give notice by publication or by mail to any registered owner, or any defect therein, will not affect the validity of the proceedings for the redemption of Bonds. Bonds so called for redemption will cease to bear interest after the specified redemption date, provided that the funds for the redemption are on deposit with the place of payment at that time. 2.04. Appointment of Initial Registrar. The City appoints Bond Trust Services Corporation, Roseville, Minnesota, 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 thirty (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 9 due date, without further order of the City Council, the Finance Director must transmit to the Registrar moneys sufficient for the payment of all principal and interest then due. 2.05. Execution, Authentication and Delivery. The Bonds will be prepared under the direction of the City Manager and executed on behalf of the City by the signatures of the Mayor and the City Manager, provided that those signatures may be printed, engraved or lithographed facsimiles of the originals. If an officer whose signature or a facsimile of whose signature appears on the Bonds ceases to be such officer before the delivery of a Bond, that signature or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. Notwithstanding such execution, a Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this resolution unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on a Bond is conclusive evidence that it has been authenticated and delivered under this resolution. When the Bonds have been so prepared, executed and authenticated, the City Manager will deliver the same to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Purchaser is not obligated to see to the application of the purchase price. Section 3. Form of Bond. 3.01. Execution of the Bonds. The Bonds will be printed or typewritten in substantially the form set forth in EXHIBIT C. 3.02. Approving Legal Opinion. The City Manager is authorized and directed to obtain a copy of the proposed approving legal opinion of Kennedy & Graven, Chartered, Minneapolis, Minnesota, and cause the opinion to be printed on or accompany each Bond. Section 4. Payment; Security; Pledges and Covenants. 4.01. Debt Service Fund. The Bonds will be payable from the General Obligation Bonds, Series 2022A Debt Service Fund (the “Debt Service Fund”) hereby created. The Debt Service Fund shall be administered and maintained by the Finance Director as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. The City will maintain the following accounts in the Debt Service Fund: the “Equipment Account,” the “Assessable Improvements Account,” the “Utility Improvements Account,” and the “Street Reconstruction Account.” Amounts in the Equipment Account are irrevocably pledged to the Equipment Certificates, amounts in the Assessable Improvements Account are irrevocably pledged to the Improvement Bonds, amounts in the Utility Improvements Account are irrevocably pledged to the Utility Revenue Bonds, and amounts in the Street Reconstruction Account are irrevocably pledged to the Street Reconstruction Bonds. (a) Equipment Account. Ad valorem taxes hereinafter levied for payment of the Equipment Certificates are hereby pledged to the Equipment Account of the Debt Service Fund. There is also appropriated to the Equipment Account a pro rata portion of (i) capitalized interest financed from the proceeds of the Bonds, if any; and (ii) amounts over the minimum purchase price paid by the Purchaser, to the extent designated for deposit in the Debt Service Fund in accordance with Section 1.07 hereof. (b) Assessable Improvements Account. The following shall be pledged to the Assessable Improvements Account of the Debt Service Fund: (i) ad valorem taxes hereinafter levied for payment of the Improvement Bonds; and (ii) special assessments (the “Assessments”) levied against property specially benefited by the Assessable Improvements. There is also appropriated to 10 the Assessable Improvements Account a pro rata portion of (1) capitalized interest financed from the proceeds of the Bonds, if any; and (2) amounts over the minimum purchase price of the Bonds paid by the Purchaser, to the extent designated for deposit in the Debt Service Fund in accordance with Section 1.07 hereof. (c) Utility Improvements Account. The City will continue to maintain and operate its Sewer Fund, Water Fund, and Storm Sewer Fund (collectively, the “Revenue Funds”), to which will be credited all gross revenues of the sewer system, the water system, and the storm sewer system (collectively, the “Revenue Systems”), respectively, and out of which will be paid all normal and reasonable expenses of current operations of such systems. Any balances therein are deemed net revenues (the “Net Revenues”) and will be transferred, from time to time, to the Utility Improvements Account of the Debt Service Fund, which Utility Improvements Account will be used only to pay principal of and interest on the Utility Revenue Bonds and any other bonds similarly authorized. There will always be retained in the Utility Improvements Account a sufficient amount to pay principal of and interest on all the Utility Revenue Bonds, and the Finance Director must report any current or anticipated deficiency in the Utility Improvements Account to the City Council. There is also appropriated to the Utility Improvements Account a pro rata portion of (i) capitalized interest financed from the proceeds of the Bonds, if any; and (ii) amounts over the minimum purchase price of the Bonds paid by the Purchaser, to the extent designated for deposit in the Debt Service Fund in accordance with Section 1.07 hereof. (d) Street Reconstruction Account. Ad valorem taxes hereinafter levied for payment of the Street Reconstruction Bonds are hereby pledged to the Street Reconstruction Account of the Debt Service Fund. There is also appropriated to the Street Reconstruction Account a pro rata portion of (i) capitalized interest financed from the proceeds of the Bonds, if any; and (ii) amounts over the minimum purchase price of the Bonds paid by the Purchaser, to the extent designated for deposit in the Debt Service Fund in accordance with Section 1.07 hereof. 4.02. Project Fund. The City hereby creates the General Obligation Bonds, Series 2022A Project Fund (the “Project Fund”). The City will maintain the following accounts in the Project Fund: the “Equipment Account,” the “Assessable Improvements Account,” the “Utility Improvements Account,” and the “Street Reconstruction Account.” Amounts in the Equipment Account are irrevocably pledged to the Equipment Certificates, amounts in the Assessable Improvements Account are irrevocably pledged to the Improvement Bonds, amounts in the Utility Improvements Account are irrevocably pledged to the Utility Revenue Bonds, and amounts in the Street Reconstruction Account are irrevocably pledged to the Street Reconstruction Bonds. (a) Equipment Account. Proceeds of the Equipment Certificates, less the appropriations made in Section 4.01(a) hereof, together with any other funds appropriated for the purchase of the Equipment, will be deposited in the Equipment Account of the Project Fund to be used solely to defray the costs of acquiring the Equipment. When the Equipment has been acquired and the cost thereof paid, the Equipment Account of the Project Fund is to be closed and any funds remaining may be deposited in the Equipment Account of the Debt Service Fund. (b) Assessable Improvements Account. Proceeds of the Improvement Bonds, less the appropriations made in Section 4.01(b) hereof, together with ad valorem taxes and the Assessments and any other funds appropriated for the Assessable Improvements collected during the construction of the Assessable Improvements, will be deposited in the Assessable Improvements Account of the Project Fund to be used solely to defray expenses of the Assessable Improvements and the payment of principal of and interest on the Improvement Bonds prior to the completion and payment of all costs of the Assessable Improvements. Any balance remaining in the Assessable Improvements 11 Account after completion of the Assessable Improvements may be used to pay the cost in whole or in part of any other improvement instituted under the Improvement Act, under the direction of the City Council. When the Assessable Improvements are completed and the cost thereof paid, the Assessable Improvements Account of the Project Fund is to be closed and any subsequent collections of Assessments and ad valorem taxes for the Assessable Improvements are to be deposited in the Assessable Improvements Account of the Debt Service Fund. (c) Utility Improvements Account. Proceeds of the Utility Revenue Bonds, less the appropriations made in Section 4.01(c) hereof, will be deposited in the Utility Improvements Account of the Project Fund to be used solely to defray expenses of the Utility Improvements. When the Utility Improvements are completed and the cost thereof paid, the Utility Improvements Account of the Project Fund is to be closed and any funds remaining may be deposited in the Utility Improvements Account of the Debt Service Fund. (d) Street Reconstruction Account. Proceeds of the Street Reconstruction Bonds, less the appropriations made in Section 4.01(d) hereof, together with ad valorem taxes and any other funds appropriated for the Street Reconstruction collected during the Street Reconstruction, will be deposited in the Street Reconstruction Account of the Project Fund to be used solely to defray expenses of the Street Reconstruction and the payment of principal and interest on the Street Reconstruction Bonds prior to the completion and payment of all costs of the Street Reconstruction. When the Street Reconstruction is completed and the cost thereof paid, the Street Reconstruction Account of the Project Fund is to be closed and any funds remaining may be deposited in the Street Reconstruction Account of the Debt Service Fund. 4.03. City Covenants with Respect to the Improvement Bonds. It is hereby determined that the Assessable Improvements will directly and indirectly benefit abutting property, and the City hereby covenants with the holders from time to time of the Bonds as follows: (a) The City will cause the Assessments for the Assessable Improvements to be promptly levied so that the first installment of the Assessable Improvements will be collectible not later than 2023 and will take all steps necessary to assure prompt collection, and the levy of the Assessments is hereby authorized. The City Council will cause to be taken with due diligence all further actions that are required for the construction of each Assessable Improvement financed wholly or partly from the proceeds of the Improvement Bonds, and will take all further actions necessary for the final and valid levy of the Assessments and the appropriation of any other funds needed to pay the Improvement Bonds and interest thereon when due. (b) In the event of any current or anticipated deficiency in Assessments and ad valorem taxes, the City Council will levy additional ad valorem taxes in the amount of the current or anticipated deficiency. (c) The City will keep complete and accurate books and records showing receipts and disbursements in connection with the Assessable Improvements, Assessments, and ad valorem taxes levied therefor and other funds appropriated for their payment, collections thereof and disbursements therefrom, monies on hand, and the balance of unpaid Assessments. (d) The City will cause its books and records to be audited at least annually and will furnish copies of such audit reports to any interested person upon request. (e) At least twenty percent (20%) of the cost to the City of the Assessable Improvements described herein will be specially assessed against benefited properties. 12 4.04. City Covenants with Respect to the Utility Revenue Bonds. 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 Revenue Systems as public utilities and conveniences free from competition of other like municipal utilities and will cause all revenues therefrom to be deposited in bank accounts and credited to the respective Revenue Funds, 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 Utility Improvements Account of the Debt Service Fund as a separate account and will cause money to be credited thereto from time to time, out of Net Revenues from the Revenue Systems in sums sufficient to pay principal of and interest on the Utility Revenue 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 Revenue Systems and which will be open to inspection and copying by any Bondholder, or the Bondholder’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 Revenue Systems 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 such systems to be deposited in a bank whose deposits are guaranteed under the Federal Deposit Insurance Law. (e) The City Council will keep the Revenue Systems 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 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 Revenue Systems as required by law. (g) The City will impose and collect charges of the nature authorized by Section 444.075 of the Utility Revenue Act, at the times and in the amounts required to produce Net Revenues adequate to pay all principal and interest when due on the Utility Revenue Bonds and to create and maintain such reserves securing said payments as may be provided herein. (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. 4.05. General Obligation Pledge. For the prompt and full payment of the principal of and interest on the Bonds, as the same respectively become due, the full faith, credit and taxing powers of the City will be and are hereby irrevocably pledged. If the balance in the Debt Service Fund is ever insufficient to pay all principal and interest then due on the Bonds and any other bonds payable therefrom, the deficiency will be promptly paid out of monies in the general fund of the City which are available for such purpose, and such 13 general fund may be reimbursed with or without interest from the Debt Service Fund when a sufficient balance is available therein. 4.06. Pledge of Tax Levy. For the purpose of paying all or a portion of the principal of and interest on the Equipment Certificates, the Improvement Bonds, and the Street Reconstruction Bonds, there is levied a direct annual irrepealable ad valorem tax (the “Taxes”) upon all of the taxable property in the City, which will be spread upon the tax rolls and collected with and as part of other general taxes of the City. The Taxes will be credited to the Equipment Account, the Assessable Improvements Account, and the Street Reconstruction Account of the Debt Service Fund above provided and will be in the years and amounts as set forth in EXHIBIT D attached hereto. 4.07. Certification to Taxpayer Services Division Manager as to Debt Service Fund Amount. It is hereby determined that the estimated collections of Taxes, Assessments, and Net Revenues will produce at least five percent (5%) in excess of the amount needed to meet when due the principal and interest payments on the Bonds. The tax levy herein provided is irrepealable until all of the Bonds are paid, provided that at the time the City makes its annual tax levies the Finance Director may certify to the Taxpayer Services Division Manager the amount available in the Debt Service Fund to pay principal and interest due during the ensuing year, and the Taxpayer Services Division Manager will thereupon reduce the levy collectible during such year by the amount so certified. 4.08. Registration of Resolution. The City Manager is authorized and directed to file a certified copy of this resolution with the Taxpayer Services Division Manager and to obtain the certificate required by Section 475.63 of the Act. Section 5. Authentication of Transcript. 5.01. City Proceedings and Records. The officers of the City are authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Bonds certified copies of proceedings and records of the City relating to the Bonds and to the financial condition and affairs of the City, and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books and records in their custody and under their control, relating to the validity and marketability of the Bonds, and such instruments, including any heretofore furnished, will be deemed representations of the City as to the facts stated therein. 5.02. Certification as to Official Statement. The Mayor, the City Manager, and the Finance Director are authorized and directed to certify that they have examined the Official Statement prepared and circulated in connection with the issuance and sale of the Bonds and that to the best of their knowledge and belief the Official Statement is a complete and accurate representation of the facts and representations made therein as of the date of the Official Statement. 5.03. Other Certificates. The Mayor, the City Manager, and the Finance Director are hereby authorized and directed to furnish to the Purchaser at the closing such certificates as are required as a condition of sale. Unless litigation shall have been commenced and be pending questioning the Bonds or the organization of the City or incumbency of its officers, at the closing the Mayor, the City Manager, and the Finance Director shall also execute and deliver to the Purchaser a suitable certificate as to absence of material litigation, and the Finance Director shall also execute and deliver a certificate as to payment for and delivery of the Bonds. 5.04. Electronic Signatures. The electronic signature of the Mayor, the City Manager, the City Clerk, and/or the Finance Director to this resolution and to any certificate authorized to be executed hereunder shall be as valid as an original signature of such party and shall be effective to bind the City 14 thereto. For purposes hereof, (i) “electronic signature” means a manually signed original signature that is then transmitted by electronic means; and (ii) “transmitted by electronic means” means sent in the form of a facsimile or sent via the internet as a portable document format (“pdf”) or other replicating image attached to an electronic mail or internet message. 5.05. Payment of Costs of Issuance. The City authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses in accordance with the closing memorandum to be prepared and distributed by Ehlers and Associates, Inc., the municipal advisor to the City, on the date of closing. Section 6. Tax Covenant. 6.01. Tax-Exempt Bonds. The City covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become 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. Rebate. The City will comply with requirements necessary under the Code to establish and maintain the exclusion from gross income of the interest on the Bonds under Section 103 of the Code, including without limitation requirements relating to temporary periods for investments, limitations on amounts invested at a yield greater than the yield on the Bonds, and the rebate of excess investment earnings to the United States. 6.03. Not Private Activity Bonds. The City further covenants not to use the proceeds of the Bonds or to cause or permit them or any of them to be used, in such a manner as to cause the Bonds to be “private activity bonds” within the meaning of Sections 103 and 141 through 150 of the Code. 6.04. Qualified Tax-Exempt Obligations. In order to qualify the Bonds as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code, the City makes the following factual statements and representations: (a) the Bonds are not “private activity bonds” as defined in Section 141 of the Code; (b) the City designates the Bonds as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds that are not qualified 501(c)(3) bonds) which will be issued by the City (and all subordinate entities of the City) during calendar year 2022 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the City during calendar year 2022 have been designated for purposes of Section 265(b)(3) of the Code. 6.05. Procedural Requirements. The City will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. 15 6.06. Reimbursement. The City has or may have incurred certain expenditures with respect to the Equipment, the Assessable Improvements, the Utility Improvements, and the Street Reconstruction that were financed temporarily from other sources but are expected to be reimbursed with proceeds of the Bonds. The City hereby declares its intent to reimburse certain costs of the Equipment, the Assessable Improvements, the Utility Improvements, and the Street Reconstruction from proceeds of the Bonds (the “Declaration”). This Declaration is intended to constitute a declaration of official intent for purposes of the Section 1.150-2 of the Treasury Regulations promulgated under the Code. Section 7. Book-Entry System; Limited Obligation of City. 7.01. DTC. The Bonds will be initially issued in the form of a separate single typewritten or printed fully registered Bond for each of the maturities set forth in Section 1.08 hereof. Upon initial issuance, the ownership of each Bond will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York, and its successors and assigns (“DTC”). Except as provided in this section, all of the outstanding Bonds will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC. 7.02. Participants. With respect to Bonds registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, the City, the Registrar and the Paying Agent will have no responsibility or obligation to any broker dealers, banks and other financial institutions from time to time for which DTC holds Bonds as securities depository (the “Participants”) or to any other person on behalf of which a Participant holds an interest in the Bonds, including but not limited to any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person (other than a registered owner of Bonds, as shown by the registration books kept by the Registrar), of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any Participant or any other person, other than a registered owner of Bonds, of any amount with respect to principal of, premium, if any, or interest on the Bonds. The City, the Registrar and the Paying Agent may treat and consider the person in whose name each Bond is registered in the registration books kept by the Registrar as the holder and absolute owner of such Bond for the purpose of payment of principal, premium and interest with respect to such Bond, for the purpose of registering transfers with respect to such Bonds, and for all other purposes. The Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to or on the order of the respective registered owners, as shown in the registration books kept by the Registrar, and all such payments will be valid and effectual to fully satisfy and discharge the City’s obligations with respect to payment of principal of, premium, if any, or interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner of Bonds, as shown in the registration books kept by the Registrar, will receive a certificated Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City Manager of a written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the words “Cede & Co.” will refer to such new nominee of DTC; and upon receipt of such a notice, the City Manager will promptly deliver a copy of the same to the Registrar and Paying Agent. 7.03. Representation Letter. The City has heretofore executed and delivered to DTC a Blanket Issuer Letter of Representations (the “Representation Letter”) which will govern payment of principal of, premium, if any, and interest on the Bonds and notices with respect to the Bonds. Any Paying Agent or Registrar subsequently appointed by the City with respect to the Bonds will agree to take all action necessary for all representations of the City in the Representation Letter with respect to the Registrar and Paying Agent, respectively, to be complied with at all times. 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 interests in the Bonds that they be able to obtain Bond certificates, the City will notify DTC, whereupon DTC will notify the 16 Participants, of the availability through DTC of Bond certificates. In such event the City will issue, transfer and exchange Bond certificates as requested by DTC and any other registered owners in accordance with the provisions of this resolution. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and discharging its responsibilities with respect thereto under applicable law. In such event, if no successor securities depository is appointed, the City will issue and the Registrar will authenticate Bond certificates in accordance with this resolution and the provisions hereof will apply to the transfer, exchange and method of payment thereof. 7.05. Payments to Cede & Co. Notwithstanding any other provision of this resolution to the contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC, payments with respect to principal of, premium, if any, and interest on the Bond and all notices with respect to the Bond will be made and given, respectively in the manner provided in DTC’s Operational Arrangements, as set forth in the Representation Letter. Section 8. Continuing Disclosure. 8.01. Execution of Continuing Disclosure Certificate. “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate executed by the Mayor and City Manager and dated the date of issuance and delivery of the Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. 8.02. City Compliance with Provisions of Continuing Disclosure Certificate. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this resolution, failure of the City to comply with the Continuing Disclosure Certificate is not to be considered an event of default with respect to the Bonds; however, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this section. Section 9. Defeasance. When all Bonds and all interest thereon have been discharged as provided in this section, all pledges, covenants and other rights granted by this resolution to the holders of the Bonds will cease, except that the pledge of the full faith and credit of the City for the prompt and full payment of the principal of and interest on the Bonds will remain in full force and effect. The City may discharge all Bonds which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full. If any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. Passed and adopted this 5th day of April, 2022. Patrick Hanlon, Mayor Attest: Amy Domeier, City Clerk A-1 EXHIBIT A PROPOSALS B-1 EXHIBIT B LIST OF EQUIPMENT Equipment Cost Expected Life (in Years) Fire Engine $710,000 At least 10 Dump Truck 225,000 At least 10 C-1 EXHIBIT C FORM OF BOND No. R-_____ UNITED STATES OF AMERICA $_________ STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF HOPKINS GENERAL OBLIGATION BOND SERIES 2022A Rate Maturity Date of Original Issue CUSIP February 1, 20__ April 26, 2022 Registered Owner: Cede & Co. The City of Hopkins, Minnesota, a duly organized and existing municipal corporation in Hennepin County, Minnesota (the “City”), acknowledges itself to be indebted and for value received hereby promises to pay to the Registered Owner specified above or registered assigns, the principal sum of $__________ on the maturity date specified above, with interest thereon from the date hereof at the annual rate specified above (calculated on the basis of a 360 day year of twelve 30 day months), payable February 1 and August 1 in each year, commencing February 1, 2023, 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 Bond Trust Services Corporation, Roseville, Minnesota, 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, 2031, and on any day thereafter to prepay Bonds due on or after February 1, 2032. Redemption may be in whole or in part and if in part, at the option of the City and in such manner as the City will determine. If less than all Bonds of a maturity are called for redemption, the City will notify The Depository Trust Company (“DTC”) of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant’s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a price of par plus accrued interest. This Bond is one of an issue in the aggregate principal amount of $7,800,000 all of like original issue date and tenor, except as to number, maturity date, redemption privilege, and interest rate, all issued pursuant to a resolution adopted by the City Council on April 5, 2022 (the “Resolution”), for the purpose of providing money to defray the expenses incurred and to be incurred in acquiring certain capital equipment and in making and undertaking certain assessable local improvements, certain improvements to the sewer, water, and storm sewer systems of the City, and certain street reconstruction projects, pursuant to and in full conformity with the home rule charter of the City and the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Chapters 429, 444, and 475, as amended, including C-2 Section 475.58, subdivision 3b, and Minnesota Statutes, Sections 410.32 and 412.301, as amended. The principal hereof and interest hereon are payable in part from special assessments levied against property specially benefited by local improvements, from net revenues of the sewer, water, and storm sewer systems of the City, and from ad valorem taxes, 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 additional ad valorem taxes on all taxable property in the City in the event of any deficiency in special assessments, net revenues, and ad valorem taxes pledged, which additional taxes may be levied without limitation as to rate or amount. The Bonds of this series are issued only as fully registered Bonds in denominations of $5,000 or any integral multiple thereof of single maturities. The City Council has designated the issue of Bonds of which this Bond forms a part as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. 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 sewer system, water system, and storm sewer system free from competition by other like municipal utilities; that adequate insurance on said systems 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 Sewer Fund, the Water Fund, and the Storm Sewer Fund, into which it will pay all of the gross revenues from the sewer system, water system, and storm sewer system, respectively; that it will also create and maintain a Utility Improvements Account within the General Obligation Bonds, Series 2022A Debt Service Fund, into which it will pay, out of the net revenues from the sewer system, water system, and storm sewer system, a sum sufficient to pay principal of the Utility Revenue Bonds (as defined in the Resolution) and interest on the Utility Revenue Bonds when due; and that it will provide, by ad valorem tax levies, for any deficiency in required net revenues of the sewer system, water system, and storm sewer system. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Bond Registrar, by the registered owner hereof in person or by the owner’s attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar, duly executed by the registered owner or the owner’s attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City and the Bond Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Bond Registrar will be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the home rule charter of the City and the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order to make it a valid and binding general obligation of the City in accordance with its terms, have been done, do exist, have happened and have been performed as so required, and that the issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional, charter, or statutory limitation of indebtedness. C-3 This Bond is not valid or obligatory for any purpose or entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon has been executed by the Bond Registrar by manual signature of one of its authorized representatives. IN WITNESS WHEREOF, the City of Hopkins, Hennepin County, Minnesota, by its City Council, has caused this Bond to be executed on its behalf by the facsimile or manual signatures of the Mayor and City Manager and has caused this Bond to be dated as of the date set forth below. Dated: April 26, 2022 CITY OF HOPKINS, MINNESOTA (Facsimile) (Facsimile) Mayor City Manager ________________________ CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. BOND TRUST SERVICES CORPORATION By Authorized Representative ________________________ ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Bond, will be construed as though they were written out in full according to applicable laws or regulations: TEN COM – as tenants in common UNIF GIFT MIN ACT _________ Custodian _________ (Cust) (Minor) TEN ENT – as tenants by entireties under Uniform Gifts or Transfers to Minors Act, State of _______________ JT TEN – as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above list. C-4 ________________________ 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 guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange Act of 1934, as amended. The Registrar will not effect transfer of this Bond unless the information concerning the assignee requested below is provided. Name and Address: (Include information for all joint owners if this Bond is held by joint account.) Please insert social security or other identifying number of assignee ________________________ C-5 PROVISIONS AS TO REGISTRATION The ownership of the principal of and interest on the within Bond has been registered on the books of the Registrar in the name of the person last noted below. Date of Registration Registered Owner Signature of Officer of Registrar Cede & Co. Federal ID #13-2555119 D-1 EXHIBIT D TAX LEVY SCHEDULES Tax Levy Schedule for Equipment Certificates YEAR * TAX LEVY 2023 $ 2024 2025 2026 2027 2028 2029 2030 2031 _____________________________________ * Year tax levy collected. Tax Levy Schedule for Improvement Bonds YEAR * TAX LEVY 2023 $ 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 _____________________________________ * Year tax levy collected. D-2 Tax Levy Schedule for Street Reconstruction Bonds YEAR * TAX LEVY 2023 $ 2024 2025 2026 2027 2028 2029 2030 2031 2032 _____________________________________ * Year tax levy collected. STATE OF MINNESOTA ) ) COUNTY OF HENNEPIN ) SS. ) CITY OF HOPKINS ) I, being the duly qualified and acting City Clerk of the City of Hopkins, Hennepin County, Minnesota (the “City”), do hereby certify that I have carefully compared the attached and foregoing extract of minutes of a regular meeting of the City Council of the City held on April 5, 2022 with the original minutes on file in my office and the extract is a full, true and correct copy of the minutes insofar as they relate to the issuance and sale of the City’s General Obligation Bonds, Series 2022A, in the original aggregate principal amount of $7,800,000. WITNESS My hand officially as such City Clerk and the corporate seal of the City this ______ day of April, 2022. City Clerk City of Hopkins, Minnesota (SEAL) HP110-106 (JAE) 787295v2 Summary: Hopkins, Minnesota; General Obligation Primary Credit Analyst: Emily Powers, Santa Fe + 1 (312) 233 7030; emily.powers@spglobal.com Secondary Contact: Emma Drilias, Chicago (1) 312-233-7132; emma.drilias@spglobal.com Table Of Contents Rating Action Stable Outlook Credit Opinion Related Research WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 30, 2022 1 Summary: Hopkins, Minnesota; General Obligation Credit Profile US$8.89 mil GO bnds ser 2022A dtd 04/26/2022 due 02/01/2038 Long Term Rating AA+/Stable New Hopkins GO Long Term Rating AA+/Stable Affirmed Rating Action S&P Global Ratings assigned its 'AA+' rating to Hopkins, Minn.'s $8.9 million series 2022A general obligation (GO) bonds. At the same time, we affirmed our 'AA+' rating on the city's existing GO debt. The outlook is stable. The city's full-faith-and-credit pledge and ability to levy unlimited ad valorem property taxes secure the bonds. Officials intend to pay debt service with special assessments, net revenues of the sewer, water, and storm systems, and ad valorem property taxes, but the rating is based on the unlimited ad valorem tax pledge. The city's existing GO debt also includes various other pledged revenues such as tax-increment, tax abatement, special assessment revenues, and various enterprise fund revenues, but in each case, we rate to the city's GO pledge. Proceeds will be used for two purposes: New money will be used to finance various road and utility system improvements and for equipment purchases, and the remainder will refund the city's series 2014A GO bonds for interest cost savings. Credit overview Hopkins' financial profile remains strong, as highlighted by its history of mostly stable operational performance, complete with very strong available reserves. While the city has historically maintained sizable general fund receivables, including loans to its permanent improvement, Arts Center, and water funds, and various other governmental funds, it has managed to sustain very strong reserves. Given new information in its 2020 audit, as well as more recent updates from management, we expect the total receivable to shrink in the coming years as the city prioritizes eradicating reliance of other funds on the general fund. However, if these interfund loans continue to grow, there could be pressure on the city's general fund, which could worsen our view of its available reserves. Hopkins is backed by a strong management team that has implemented robust policies and practices, helping it maintain stability in operations. The city's debt profile, while somewhat elevated, has been historically managed within its budget and, even given sizable debt service carrying charges, we expect that to continue. Additionally, its other long-term liabilities (pension and other postemployment benefits [OPEBs]) are manageable, further supporting its underlying credit quality. The rating further reflects our assessment of the city's: • Healthy incomes and wealth levels in a Twins Cities suburb, supported by consistent valuation growth on a $2.5 billion tax base; • Solid financial position with very strong available reserves, even after adjusting for receivables due to the general fund, with stable operational performance; WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 30, 2022 2 • Strong financial policies and practices under our Financial Management Assessment (FMA) methodology, and strong institutional framework; and • Weak debt and liabilities profile with elevated debt costs, but a manageable pension and OPEB burden. Environmental, social, and governance The rating incorporates our view of Hopkin's environmental, social, and governance (ESG) risks relative to the city's economy, management, financial measures, and debt and liability profile, which we view as in line with the sector. Stable Outlook Upside scenario We could raise the rating if the city's balance sheet continues to improve and if economic measures, such as its income levels and per capita market values, were to improve to levels commensurate with those of higher-rated peers, all other credit factors remaining equal. Downside scenario We could lower the rating if budgetary pressures outside of the general fund, such as with the enterprise and Arts Center funds, continue to drain general fund resources, and if debt were to increase substantially beyond current expectations. Credit Opinion Consistently growing tax base, with high income and wealth levels and access to a broad and diverse metropolitan statistical area (MSA). Hopkins' proximity to the Twin Cities allows easy access to employment and retail opportunities and will become even more easily accessible with the expansion of the Minneapolis METRO light-rail system, which will include three new stops in Hopkins that are currently under development. Development throughout the city remains strong, including ongoing expansions and new developments near the light-rail stops, as well as steady growth in both multi- and single-family housing. The tax base consists primarily of residential (homestead/non-homestead) properties (63%), followed by commercial and industrial properties (36%). We think that the city's historic tax base growth, coupled with general economic stability and access to the larger Twin Cities MSA, will lead to continued strength in our view of the local economy. Steady operating performance and strong reserve levels, but including large general fund receivables that we expect to shrink in future audited years Hopkins' fiscal 2020 operations outperformed budgeted expectations, partially due to expenditure savings occurring from the COVID-19 pandemic, including hiring freezes and positions remaining open, in addition to one-time CARES Act money, $800,000 of which was received in the general fund. The budgets for fiscal years 2021 and 2022 are both structured with break-even results; year-end actual performance for 2021 reflected a $1.2 million general fund surplus, or 7.9% of expenditures, based on better-than-budgeted revenues and savings for salaries and benefits. The city was allotted roughly $2.0 million in American Rescue Plan Act (ARPA) funding, half of which was received in 2021, with WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 30, 2022 3 Summary: Hopkins, Minnesota; General Obligation the remainder coming in 2022. These funds have not yet been spent, but management expects them to be used on public safety, economic development, and revenue loss, as well as supporting some of the city's underperforming funds, primarily the Arts Center fund. In our calculation of available fund balance, which totaled 17.3% of general fund expenditures in 2020, we have reduced the balance to account for interfund loans to Hopkins' permanent improvement, Arts Center, and water funds, and various other governmental funds, which aggregately amounted to roughly $4.6 million in 2020. Even with this portion removed, the city's reserves have historically been maintained at levels we consider very strong. The total interfund loan has increased year over year, jumping sizably in 2020, although the largest portion (at $2.9 million), reflecting the permanent improvement fund, was held in the general fund due to timing of receipts from other government agencies, including Hennepin County and the Department of Transportation, for reimbursement of projects. We expect this to decrease as those reimbursements are received, with $1.5 million having already been repaid in fiscal 2021. The receivable from the Art Center fund dropped in 2020, to $997,000 from $1.1 million in 2019, and management expects it to continue to fall in 2021 as Arts Center staff worked to reduce expenditures. In addition, the city plans to use roughly $260,000 of ARPA funds to decrease the balance even further. The water fund receivable was nearly eliminated in fiscal 2020, and the remainder, which makes up only a small portion of the total general fund receivable, remains outstanding and is primarily due to timing of bond proceeds. Due to these developments, we expect that the total amount owed to the general fund will continue to fall in coming years as the receivables are repaid. If, however, the city is unable to reduce this amount, it could put downward pressure on what we consider the available fund balance. Strong financial management assessment, highlighted by long-term planning and formalized policies Highlights of the city's financial practices and policies include: • Historical look-back in the formulation of revenue and expenditure assumptions, using outside sources to produce the annual budget; • Quarterly reporting of budget-to-actual performance to the council with the ability to make amendments as needed; • A five-year, rolling long-term financial plan that projects revenues and expenditures; • A five-year long-term capital plan that addresses capital needs with sources and uses of funds identified; • Formalized investment management policy with quarterly reporting of investments and holdings; • Formalized debt management policy that sets guidelines for short-term borrowing, maturity lengths, and minimum allowable coverage on revenue debt; and • Formalized fund balance policy to maintain 42% of expenditures for cash-flow needs, with which the city has mostly been in compliance, with the exception of 2018, and which we calculate differently than the city given our adjustments to available reserves. Relatively weak debt profile, with elevated costs relative to the budget, but with rapid amortization We calculate total direct debt at $82.6 million; when excluding self-supporting GO debt paid from the city's enterprise funds, net direct debt amounts to approximately $70.8 million. The city plans to issue approximately $6.5 million in WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 30, 2022 4 Summary: Hopkins, Minnesota; General Obligation new-money GO debt in 2023 and $8.0 million in 2024 for ongoing street and utility projects. While debt service costs make up a considerable portion of the budget, the city has historically managed these costs well, which we expect will continue. In addition, it amortizes roughly the same amount that it issues every year, so we expect the debt profile will remain stable over the near term. Moderate pension exposure, with some long-term risks, although medium-term costs are unlikely to accelerate We do not believe that pensions represent a near-term credit pressure for Hopkins because the cost-sharing, multiple-employer, defined-benefit pension plans in which the city participates are reasonably well funded, and annual costs represent only a modest share of total spending. Although the city funds its OPEBs on a pay-as-you-go basis, exposing it to cost acceleration and volatility, we expect that medium-term costs will remain only a small share of total spending and, therefore, not a significant budgetary pressure. Hopkins participates in the following plans: • Minnesota General Employees Retirement Fund (GERF): 87% funded (as of June 30, 2021), with a proportionate share of the plan's net pension liability (NPL) of $4.7 million (as of Dec. 31, 2020). • Minnesota Public Employees Police and Fire Fund (PEPFF): 94% funded (June 30, 2021), with a city proportionate share of the plan's NPL of $3.9 million (as of Dec. 31, 2020). • An implicit rate subsidy arising from retirees staying on the city's health insurance plan while paying active premium rates: 12% funded (as of Dec. 31, 2020), with a net OPEB liability of $1.0 million. Both GERF and PEPFF have seen improvements in funded status in recent years, although plan statutory formula contributions have regularly fallen short of actuarial recommendations. Annual contributions are based on a statutory formula that has typically produced contributions lower than the actuarially determined contribution for each plan, and we think that this increases the risk of underfunding over time if the state legislature does not make adjustments to offset future funding shortfalls. Other key risks include a 7.5% investment rate-of-return assumptions, above our 6.0% guidance, and lengthy amortization periods. Nevertheless, pension costs remain only a modest share of total spending, and we believe they are unlikely to pressure the city's medium-term operational health. Strong institutional framework The institutional framework score for Minnesota cities with a population less than 2,500 is strong. Hopkins, MN -- Key Credit Metrics Most recent Historical information 2020 2019 2018 Very strong economy Projected per capita EBI % of U.S.123 Market value per capita ($)128,271 Population 19,484 19,213 18,808 County unemployment rate(%)6.6 Market value ($000)2,499,240 2,378,345 2,145,862 2,027,876 Ten largest taxpayers % of taxable value 21.4 WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 30, 2022 5 Summary: Hopkins, Minnesota; General Obligation Hopkins, MN -- Key Credit Metrics (cont.) Most recent Historical information 2020 2019 2018 Strong budgetary performance Operating fund result % of expenditures 8.5 3.2 (1.7) Total governmental fund result % of expenditures 10.9 6.9 (7.1) Very strong budgetary flexibility Available reserves % of operating expenditures 17.3 20.9 19.8 Total available reserves ($000)2,596 3,024 2,714 Very strong liquidity Total government cash % of governmental fund expenditures 120 87 95 Total government cash % of governmental fund debt service 496 363 475 Very strong management Financial Management Assessment Strong Weak debt & long-term liabilities Debt service % of governmental fund expenditures 24.3 23.8 20.1 Net direct debt % of governmental fund revenue 236 Overall net debt % of market value 4.4 Direct debt 10-year amortization (%)83 Required pension contribution % of governmental fund expenditures 3.8 OPEB actual contribution % of governmental fund expenditures 0.7 Strong institutional framework EBI--Effective buying income. OPEB--Other postemployment benefits. Related Research • Through The ESG Lens 3.0: The Intersection Of ESG Credit Factors And U.S. Public Finance Credit Factors, March 2, 2022 • S&P Public Finance Local GO Criteria: How We Adjust Data For Analytic Consistency, Sept. 12, 2013 • Criteria Guidance: Assessing U.S. Public Finance Pension And Other Postemployment Obligations For GO Debt, Local Government GO Ratings, And State Ratings, Oct. 7, 2019 Ratings Detail (As Of March 30, 2022) Hopkins GO bnds Long Term Rating AA+/Stable Affirmed Hopkins GO bnds ser 2017B dtd 07/13/2017 due 02/01/2033 Long Term Rating AA+/Stable Affirmed Hopkins GO bnds ser 2021A dtd 04/06/2021 due 02/01/2036 Long Term Rating AA+/Stable Affirmed WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 30, 2022 6 Summary: Hopkins, Minnesota; General Obligation Ratings Detail (As Of March 30, 2022) (cont.) Hopkins GO imp bnds Long Term Rating AA+/Stable Affirmed Hopkins GO tax abatement bnds Long Term Rating AA+/Stable Affirmed Hopkins GO tax increment rev rfdg bnds Long Term Rating AA+/Stable Affirmed Hopkins GO Long Term Rating AA+/Stable Affirmed Hopkins GO Long Term Rating AA+/Stable Affirmed Hopkins GO Long Term Rating AA+/Stable Affirmed Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 30, 2022 7 Summary: Hopkins, Minnesota; General Obligation WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 30, 2022 8 STANDARD & POOR’S, S&P and RATINGSDIRECT are registered trademarks of Standard & Poor’s Financial Services LLC. S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. 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