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CR 09-096 Award Sale of Bonds - G. O. Bonds Series 2009A for $3,340,000November 13, 2009 1 Council Report 2009 -096 City of Hopkins AWARD SALE OF BONDS — G.O. Bonds Series 2009A for $3,340,000 Proposed Action Staff recommends approval of the following motion: Approve resolution No. 2009 -061 awarding the sale of $3,340,000 General Obligation Bonds, Series 2009A 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 Water and 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 revenue is or may be derived. The current projects in the water and sewer funds qualify for bond issuance. The bonds being issued will pay for projects approved in 2007, 2008 and 2009, for a total bond issue of approximately $1,800,000. Refunding Bonds: The City of Hopkins has the authority to issue refunding bonds to pay for early retirement of existing debt for new debt at a lower price. It has been demonstrated that current bond rates have gone down and the city has an opportunity to issue new bonds at a lower rates to pay off old bonds that are at higher rates. Both of the bonds being refunded, the 1999C Storm Sewer and 2000A Water Bonds are callable. The present value savings is estimated to be $37,493 for the Storm Sewer Fund and $61,396 for the Water Fund with total estimated net savings of $98,900. In the future, less funds will be needed to pay off our new obligation. At the October 20,2009 Council Meeting, the Council authorized the sale of $3,340,000 (proposed) bonds for financing 2007, 2008 and 2009 water and sewer improvements within the city. The bids will be accepted until 1:00 pm on November 17, 2009 at which time they will be reviewed and the recommendation incorporated into Resolution 2009 -061. Primary Issues to Consider At this time, there do not appear to be any primary issues relating to the award of the bond sales. Any significant issues affecting the sale will not be known until after the closing of the bids on November 17, 2009. Supporting Information • Resolution No. 2009 -061 • Official Statement (previously emailed to each council member) — included as part of the permanent minute files m�� Christine M. Harkess, CPA, CGFM Finance Director Financial Impact: $ $3,340,000 Budgeted: Y/N X N Source: Bond Proceeds Related Documents (CIP, ERP, etc.): CIP Notes: EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL OF THE CITY OF HOPKINS, MINNESOTA HELD: November 17, 2009 Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Hopkins, Minnesota, was called and held at the City Hall in Hopkins, Minnesota, on Tuesday, the 17th day of November, 2009, at 7:30 p.m. for the purpose, in part, of awarding the sale of the City's general obligation bonds 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 2009A, in the aggregate principal amount of $3,340,000. 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: 1 RESOLUTION NO. 2009-061 A RESOLUTION AWARDING THE SALE OF GENERAL OBLIGATION BONDS, SERIES 2009A, IN THE AGGREGATE PRINCIPAL AMOUNT OF $3,340,000; 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, Minnesota (the "City "), as follows: Section 1. Sale of Bonds 1.01. Storm Sewer Revenue Refunding Bonds (a) Certain improvements to the municipal storm water management system of the City have been made by the City pursuant to Minnesota Statutes, Section 444.075, and Minnesota Statutes, Chapter 475 (collectively, the "Act "). (b) The City is authorized by Section 475.67, Subdivision 3, of the Act to issue and sell its general obligation bonds to refund obligations and the interest thereon before the due date of the obligations, if consistent with covenants made with the holders thereof, when determined by the City Council to be necessary or desirable for the reduction of debt service cost to the City or for the extension or adjustment of maturities in relation to the resources available for their payment. (c) It is necessary and desirable to reduce debt service costs that the City issue its obligations pursuant to the Act (the "Storm Sewer Revenue Refunding Bonds ") in the aggregate principal amount of $625,000 to refund certain outstanding general obligations of the City. (d) The proceeds of the Storm Sewer Revenue Refunding Bonds will be used to refinance the improvements made to the municipal storm water management system of the City through the redemption and prepayment of the General Obligation Storm Sewer Revenue Bonds, Series 1999C (the "Storm Sewer Revenue Refunded Bonds "), dated August 1, 1999, issued by the City in the original aggregate principal amount of $1,545,000, of which $715,000 in principal amount is currently outstanding. The Storm Sewer Revenue Refunded Bonds maturing on or after February 1, 2011, will be called for redemption on February 1, 2010, in the principal amount of $610,000. 1.02. Water Reve nue Refunding Bonds. (a) Certain improvements to the water treatment and distribution system of the City have been made by the City pursuant to the Act. (b) The City is authorized by Section 475.67, Subdivision 3, of the Act to issue and sell its general obligation bonds to refund obligations and the interest thereon before the due date of the obligations, if consistent with covenants made with the holders thereof, when determined by the City Council to be necessary or desirable for the reduction of debt service cost to the City or for the extension or adjustment of maturities in relation to the resources available for their payment. 2 (c) It is necessary and desirable to reduce debt service costs that the City issue its obligations pursuant to the Act (the "Water Revenue Refunding Bonds ") in the aggregate principal amount of $875,000 to refund certain outstanding general obligations of the City. (d) The proceeds of the Water Revenue Refunding Bonds will be used to refinance the improvements made to the water treatment and distribution system of the City through the redemption and prepayment of the General Obligation Water Revenue Bonds, Series 2000A (the "Water Revenue Refunded Bonds "), dated April 1, 2000, issued by the City in the original aggregate principal amount of $2,060,000, of which $1,000,000 in principal amount is currently outstanding. The Water Revenue Refunded Bonds maturing on or after February 1, 2011, will be called for redemption on February 1, 2010, in the principal amount of $855,000. 1.03. Water System and Sanitary Sewer System Improvements Bonds (a) The City engineer has recommended the construction of various improvements to the City's water system as part of City Project 06 -10, City Project 07 -10, and City Project 08 -10, as described more fully in Council Report 2006 -151, Council Report 2008 -014, and Council Report 2009 -008, respectively (collectively, the "Water System Improvements "), pursuant to the Act. (b) The City is authorized by the Act to finance all or a portion of the cost of the Water System Improvements by the issuance of general obligation bonds of the City payable from the net revenues of the water system. (c) The City finds it necessary to issue its obligations pursuant to the Act in the principal amount of $820,000 to provide to finance the costs of the Water System Improvements. 1.04. Sewer System Improvements Bonds (a) The City engineer has recommended the construction of various improvements to the City's sanitary sewer system as part of City Project 06 -10, City Project 07 -10, and City Project 08 -10, as described more fully in Council Report 2006 -151, Council Report 2008 -014, and Council Report 2009 -008, respectively (collectively, the "Sewer System Improvements "), pursuant to the Act. (b) The City is authorized by the Act to finance all or a portion of the cost of the Sewer System Improvements by the issuance of general obligation bonds of the City payable from the net revenues of the sanitary sewer system. (c) The City finds it necessary to issue its obligations pursuant to the Act in the principal amount of $1,020,000 to provide to finance the costs of the Sewer System Improvements. 1.05. Issuance of Bonds (a) The City finds it necessary and expedient to the sound financial management of the affairs of the City to issue its General Obligation Bonds, Series 2009A (the "Bonds "), in the original aggregate principal amount of $3,340,000, to provide financing for the Water System Improvements and the Sewer System Improvements and to redeem and prepay the outstanding Storm Sewer Revenue Refunded Bonds and the outstanding Water Revenue Refunded Bonds. Proceeds of the Bonds are expected to be expended as follows: Project Designation & Description: Total Project Cost Deposit to Refunding Fund —Storm Sewer Revenue Refunding Bonds $ 609,936.50 Deposit to Refunding Fund —Water Revenue Refunding Bonds 854,911.00 Deposit to Project Construction Fund —Water System Improvements 800,000.00 Deposit to Project Construction Fund —Sewer System Improvements 1,000,000.00 Costs of Issuance 38,000.00 Underwriter's Compensation 33,400.00 Rounding Amount 3,752.50 Total $ 34 (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 financial advisor in connection with such sale. The actions of the City staff and the City's financial 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 of the City is found and determined to be a reasonable offer and is accepted, the proposal being to purchase the Bonds at a price of $ (par amount of $3,340,000.00, [plus original issue premium of $ ,] [less original issue discount of $ ,] less underwriter's discount of $ plus accrued interest to date of delivery, if any, for Bonds bearing interest as follows: Year Interest Rate Year Interest Rate 2011 % 2019 % 2012 2020 2013 2021 2014 2022 2015 2023 2016 2024 2017 2025 2018 True interest cost: % 1.07. Purchase Contract The sum of $ , being the amount proposed by the Purchaser in excess of $3,306,600, shall be credited to the Debt Service Fund hereinafter created or deposited in the Construction Fund hereinafter created, as determined by the City Manager in consultation with the City's financial advisor. The City Manager is directed to retain the good faith check of the Purchaser, pending completion of the sale of the Bonds, and to return the good faith checks of the unsuccessful proposers. The Mayor and City Manager are directed to execute a contract with the Purchaser on behalf of the City. 1.08. Terms and Principal Amounts of the Bonds The City will forthwith issue and sell the Bonds pursuant to the Act in the total principal amount of $3,340,000, originally dated December 15, 2009, 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: Year Amount Year 2011 $ 2019 2012 2020 2013 2021 2014 2022 2015 2023 2016 2024 2017 2025 2018 Amount 1.08. Optional Redemption The City may elect on February 1, 2018, and on any day thereafter to prepay Bonds due on or after February 1, 2019. Redemption may be in whole or in part and if in part, at the option of the City and in such manner as the City will determine. If less than all Bonds of a maturity are called for redemption, the City will notify DTC (as defined in Section 8 hereof) of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a price of par plus accrued interest. [1.09. Term Bonds To be completed if Term Bonds are requested by the Purchaser.] Section 2. Registration and Pae 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 will be payable on February 1 and August 1 of each year, commencing August 1, 2010, 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 that day is a business day. 2.03. Registration The City will appoint a bond registrar, transfer agent, authenticating agent and paying agent (the "Registrar "). The effect of registration and the rights and duties of the City and the Registrar with respect thereto are as follows: (a) Re ig ster 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. (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 of 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 registered owners, 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 IN 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 Re gist rar 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 Manager must transmit to the Registrar moneys sufficient for the payment of all principal and interest then due. 2.05. Execution, Authentication and Delivery The Bonds will be prepared under the direction of the City Manager and executed on behalf of the City by the signatures of the Mayor and the City Manager, provided that those signatures may be printed, engraved or lithographed facsimiles of the originals. If an officer whose signature or a facsimile of whose signature appears on the Bonds ceases to be such officer before the delivery of a Bond, that signature or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. Notwithstanding such execution, a Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on a Bond is conclusive evidence that it has been authenticated and delivered under this Resolution. When the Bonds have been so prepared, executed and authenticated, the City Manager will deliver the same to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Purchaser is not obligated to see to the application of the purchase price. 2.06. Temporary Bonds The City may elect to deliver in lieu of printed definitive Bonds one or more typewritten temporary Bonds in substantially the form set forth in 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. Execution of Bonds The Bonds will be printed or typewritten in substantially the following form: 7 No. R- UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF HOPKINS GENERAL OBLIGATION BOND SERIES 2009A Date of Rate Maturj Original Issue CUSIP February 1, 20_ December 15, 2009 Registered Owner: Cede & Co. The City of Hopkins, Minnesota, a duly organized and existing municipal corporation in Hennepin County, Minnesota (the "City "), acknowledges itself to be indebted and for value received hereby promises to pay to the Registered Owner specified above or registered assigns, the principal sum of $ on the maturity date specified above, with interest thereon from the date hereof at the annual rate specified above, payable February 1 and August 1 in each year, commencing August 1, 2010, to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a business day) of the immediately preceding month. The interest hereon and, upon presentation and surrender hereof, the principal hereof are payable in lawful money of the United States of America by check or draft by Bankers Trust Company, Des Moines, Iowa, as Registrar, Paying Agent, Transfer Agent and Authenticating Agent, or its designated successor under the Resolution described herein. For the prompt and full payment of such principal and interest as the same respectively become due, the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. The City may elect on February 1, 2018, and on any day thereafter to prepay Bonds due on or after February 1, 2019. 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. The City Council has designated the issue of Bonds of which this Bond forms a part as "qualified tax - exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code ") relating to disallowance of interest expense for financial institutions and within the $30 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 $3,340,000 all of like original issue date and tenor, except as to number, amount, maturity date, redemption privilege, and interest rate, all issued pursuant to a resolution adopted by the City Council on November 17, 2009 (the "Resolution "), for the purpose of providing money to aid in financing various improvements to the water, storm sewer and sanitary sewer systems of the City and to redeem and prepay certain outstanding obligations of the City, pursuant to and in full conformity with the home rule charter of the City and the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Chapter 475 and Minnesota Statutes, Section and 444.075, and the principal hereof and interest hereon are payable primarily from the net revenues of the water, storm sewer, and sanitary sewer systems 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 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 water, storm sewer, and sanitary sewer systems 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 Water Fund, the Storm Sewer Fund, and Sanitary Sewer Fund, into which it will pay all of the gross revenues from the water, storm sewer, and sanitary sewer systems; that it will also create and maintain a General Obligation Bonds, Series 2009A Debt Service Fund, into which it will pay, out of the net revenues from the water, storm sewer, and sanitary sewer systems 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 revenues of the water, storm sewer, and sanitary sewer systems. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Registrar, by the registered owner hereof in person or by the owner's attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner or the owner's attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City and the Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Registrar will be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the home rule charter of the City and the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order to make it a valid and binding general obligation of the City in accordance with its terms, have been done, do exist, have happened and have been performed as so required, and that the issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional, statutory, or charter limitation of indebtedness. This Bond is not valid or obligatory for any purpose or entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon has been executed by the Registrar by manual signature of one of its authorized representatives. 9 IN WITNESS WHEREOF, the City of Hopkins, 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: December 15, 2009 CITY OF HOPKINS, MINNESOTA (Facsimile) (Facsimile) Mayor City Manager CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. BANKERS TRUST COMPANY L Authorized Representative ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Note, will be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common TEN ENT -- as tenants by entireties UNIF GIFT MIN ACT Custodian (Cust) (Minor) 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. 10 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 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. 11 Signature of Date of Registration Registered Owner Officer of Registrar Cede & Co. Federal ID #13- 2555119 [End of Form of Bond] 3.02. Approving Legal Opinion The City Clerk 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. Payment; Security; Pledges and Covenants 4.01. Debt Service Fund The City will continue to operate and maintain its Water, Storm Sewer, and Sanitary Sewer Funds to which will be credited all gross revenues of the water, storm sewer, and sanitary sewer systems and out of which will be paid all normal and reasonable expenses of current operations of the water, storm sewer, and sanitary sewer systems. Any balance therein are deemed net revenues and will be transferred, from time to time, to a General Obligation Bonds, Series 2009A Debt Service Fund (the "Debt Service Fund ") hereby created in the Water, Storm Sewer, and Sanitary Sewer Funds, which funds will be used only to 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 Manager must report any current or anticipated deficiency in the Debt Service Fund to the City Council. There is appropriated to the Debt Service Fund (i) capitalized interest financed from Bond proceeds, if any; (ii) any amount 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; and (iii) the accrued interest paid by the Purchaser upon closing and delivery of the Bonds, if any. 4.02. Construction Fund The proceeds of the Bonds, less the appropriations made in Section 4.01, together with any other funds appropriated during the construction of the Water System Improvements and the Sewer System Improvements financed by the Bonds, will be deposited in a separate construction fund (the "Construction Fund ") to be used solely to defray expenses of the Water System Improvements and the Sewer System Improvements and the payment of principal and interest on the Bonds prior to the completion and payment of all costs of the Water System Improvements and the Sewer System Improvements. When the Water System Improvements and the Sewer System Improvements are completed and the costs thereof paid, the Construction Fund is to be closed and any balance therein is to be deposited in the Debt Service Fund. 4.03. Refunding Proceeds of the Bonds in the amount of $ shall be deposited in the debt service fund established for the Storm Sewer Revenue Refunded Bonds for the purpose of refunding all of the 2011 through 2015 maturities of the outstanding Storm Sewer Revenue Refunded Bonds on February 1, 2010. Proceeds of the Bonds in the amount of $ shall be deposited in the debt service fund established for the Water Revenue Refunded Bonds for the purpose of refunding all of the 2011 through 2015 maturities of the outstanding Water Revenue Refunded Bonds on February 1, 2010. Any balance remaining in the debt service funds established for the Storm Sewer Revenue Refunded Bonds and the Water Revenue Refunded Bonds after the redemption of the Storm Sewer Revenue Refunded Bonds and the Water Revenue Refunded Bonds shall be deposited in the Debt Service Fund established herein for the Bonds. 12 4.04. City Covenants 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 water, storm sewer, and sanitary sewer 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 water, storm sewer, and sanitary sewer systems 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 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 water, storm sewer, and sanitary sewer systems 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 water, storm sewer, and sanitary sewer 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 water, storm sewer, and sanitary sewer 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 the water, storm sewer, and sanitary sewer systems to be deposited in a bank whose deposits are guaranteed under the Federal Deposit Insurance Law. (e) The Council will keep the water, storm sewer, and sanitary sewer 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 water, storm sewer, and sanitary sewer systems 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. 4.05. Net Revenue Pledge It is hereby determined that the estimated collection of net revenues from the water, storm sewer, and sanitary sewer systems of the City for the payment of principal 13 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. 4.06. Certification of Taxpayer Services Division Manager as to Registration The City Clerk is authorized and directed to file a certified copy of this resolution with the Taxpayer Services Division Manager of Hennepin County and to obtain the certificate required by Minnesota Statutes, Section 475.63. Section 5. Refunding; Findings; Redemption of Prior Bonds 5.01. Purpose of Refunding The Prior Bonds are the (i) General Obligation Storm Sewer Revenue Bonds, Series 1999C, issued by the City in the original aggregate principal amount of $1,545,000, dated August 1, 1999, of which $715,000 in principal amount is currently outstanding and $610,000 in principal amount will be called for redemption on February 1, 2010; and (ii) General Obligation Water Revenue Bonds, Series 2000A, issued by the City in the original aggregate principal amount of $2,060,000, dated April 1, 2000, of which $1,050,000 in principal amount is currently outstanding and $855,000 in principal amount will be called for redemption on February 1, 2010. It is hereby found and determined that based upon information presently available from the City's financial advisor, the issuance of the Bonds to redeem and prepay the Prior Bonds is consistent with covenants made with the holders of the Prior Bonds and is necessary and desirable for the reduction of debt service cost to the City. 5.02. Application of Proceeds of Bonds It is hereby found and determined that the proceeds of the Bonds deposited in the respective debt service funds established for the Prior Bonds, as defined the resolutions authorizing and providing for the issuance of the Water Revenue Refunded Bonds and the Storm Sewer Revenue Refunded Bonds, will be sufficient to prepay all of the principal of, interest on and redemption premium (if any) on the Prior Bonds, respectively. 5.03. Redemption; Date of Redemption; Notice of Call for Redemption The Storm Sewer Revenue Refunded Bonds maturing on February 1, 2011, and thereafter will be redeemed and prepaid on February 1, 2010. The Water Revenue Refunded Bonds maturing on February 1, 2011, and thereafter will be redeemed and prepaid on February 1, 2010. The Registrar for the Storm Sewer Revenue Refunded Bonds and the Registrar for the Water Revenue Refunded Bonds are authorized and directed to send a copy of the Notice of Redemption for each registered holder of the Prior Bonds, the forms of which are attached hereto as Exhibit B and Exhibit C, respectively. Section 6. Authentication of Transcript 6.01. City Proceedings and Records The officers of the City are authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records of the City relating to the Bonds and to the financial condition and affairs of the City, and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books and records in their custody and under their control, relating to the validity and marketability of the Bonds, and such instruments, including any heretofore furnished, will be deemed representations of the City as to the facts stated therein. 6.02. Certification as to Official Statement The Mayor, City Manager, and 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. 14 Section 7. Tax Covenant 7.01. Tax - Exempt Bonds The City covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the "Code "), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. 7.02. No Rebate Required 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 2009) exceed the small- issuer exception amount of $5,000,000. 7.03. Not Private Activi , Bonds The City further covenants not to use the proceeds of the Bonds or to cause or permit them or any of them to be used, in such a manner as to cause the Bonds to be "private activity bonds" within the meaning of Sections 103 and 141 through 150 of the Code. 7.04. Qualified Tax - Exempt Obligations 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) which will be issued by the City (and all subordinate entities of the City) during calendar year 2009 will not exceed $30,000,000; and (d) not more than $30,000,000 of obligations issued by the City during calendar year 2009 have been designated for purposes of Section 265(b)(3) of the Code. 7.05. Procedural Requirements The City will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. Section 8. Book -Entry System Limited Obligation of City. 8.01. DTC The Bonds will be initially issued in the form of a separate single typewritten or printed fully registered Bond for each of the maturities set forth in Section 1.08 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. 15 8.02. Participants With respect to Bonds registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, the City, the Registrar and the Paying Agent will have no responsibility or obligation to any broker dealers, banks and other financial institutions from time to time for which DTC holds Bonds as securities depository (the "Participants ") or to any other person on behalf of which a Participant holds an interest in the Bonds, including but not limited to any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person (other than a registered owner of Bonds, as shown by the registration books kept by the Registrar), of any notice with respect to the Bonds, 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 Bond, and for all other purposes. The Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to or on the order of the respective registered owners, as shown in the registration books kept by the Registrar, and all such payments will be valid and effectual to fully satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any, or interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner of Bonds, as shown in the registration books kept by the Registrar, will receive a certificated Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City Manager of a written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the words "Cede & Co." will refer to such new nominee of DTC; and upon receipt of such a notice, the City Manager will promptly deliver a copy of the same to the Registrar and Paying Agent. 8.03. Representation Letter The City has heretofore executed and delivered to DTC a Blanket Issuer Letter of Representations (the "Representation Letter ") which shall govern payment of principal of, premium, if any, and interest on the Bonds and notices with respect to the Bonds. Any Paying Agent or Registrar subsequently appointed by the City with respect to the Bonds will agree to take all action necessary for all representations of the City in the Representation Letter with respect to the Registrar and Paying Agent, respectively, to be complied with at all times. 8.04. Transfers Outside Book -Entry System In the event the City, by resolution of the City Council, determines that it is in the best interests of the persons having beneficial interests in the Bonds that they be able to obtain Bond certificate, 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 owner in accordance with the provisions of this Resolution. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and discharging its responsibilities with respect thereto under applicable law. In such event, if no successor securities depository is appointed, the City will issue and the Registrar will authenticate Bond certificates in accordance with this resolution and the provisions hereof will apply to the transfer, exchange and method of payment thereof. 8.05. Payments to Cede & Co. Notwithstanding any other provision of this Resolution to the contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC, payments with respect to principal of, premium, if any, and interest on the Bond and all notices with respect to the Bond will be made and given, respectively in the manner provided in DTC's Operational Arrangements, as set forth in the Representation Letter. 16 Section 9. Continuing Disclosure 9.01. 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. 9.02. 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. Section 10. Defeasance When all Bonds and all interest thereon, have been discharged as provided in this section, all pledges, covenants and other rights granted by this resolution to the holders of the Bonds will cease, except that the pledge of the full faith and credit of the City for the prompt and full payment of the principal of and interest on the Bonds will remain in full force and effect. The City may discharge all Bonds which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full. If any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. (The remainder of this page is intentionally left blank.) 17 Passed and adopted this 17th day of November, 2009. CITY OF HOPKINS MINNESOTA Mayor Attest: City Clerk 18 The motion for the adoption of the foregoing resolution was duly seconded by Member and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. 19 STATE OF MINNESOTA ) COUNTY OF HENNEPIN ) SS. CITY OF HOPKINS ) I, the undersigned, being the duly qualified and acting City Clerk of the City of Hopkins, Minnesota (the "City "), do hereby certify that I have carefully compared the attached and foregoing extract of minutes of a regular meeting of the City Council of the City held on November 17, 2009, 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 2009A, in the aggregate principal amount of $3,340,000. WITNESS My hand officially as such City Clerk and the corporate seal of the City this day of November, 2009. City Clerk Hopkins, Minnesota (SEAL) STATE OF MINNESOTA CERTIFICATE OF COUNTY AUDITOR - TREASURER AS TO CITY OF HOPKINS REGISTRATION WHERE NO AD VALOREM TAX LEVY I, the undersigned Taxpayer Services Division Manager of Hennepin County, Minnesota, hereby certify that a resolution adopted by the City Council of the City of Hopkins, Minnesota (the "City "), on November 17, 2009, relating to the City's General Obligation Bonds, Series 2009A, in the aggregate principal amount of $3,340,000, dated December 15, 2009, has been filed in my office and said obligations have been registered on the register of obligations in my office. WITNESS My hand and official seal this day of , 2009. (SEAL) Taxpayer Services Division Manager Hennepin County, Minnesota By Deputy EXHIBIT A PROPOSALS A -1 EXHIBIT B NOTICE OF CALL FOR REDEMPTION STORM SEWER REFUNDED BONDS $1,545,000 CITY OF HOPKINS, MINNESOTA GENERAL OBLIGATION STORM SEWER REVENUE BONDS SERIES 1999C NOTICE IS HEREBY GIVEN that, by order of the City Council of the City of Hopkins, Hennepin County, Minnesota, there have been called for redemption and prepayment on February 1, 2010 the principal amount outstanding of the City's General Obligation Storm Sewer Revenue Bonds, Series 1999C, issued in the original aggregate principal amount of $1,545,000, dated August 1, 1999, having stated maturity dates of February 1 in the years 2011 through 2015, both inclusive, totaling $610,000 in outstanding principal amount, and with the following CUSIP numbers. Year of Maturity Amount CUSIP 2011 $110,000 439866 TP9 2012 115,000 439866 TQ7 2013 120,000 439866 TR5 2014 130,000 439866 TS3 2015 135,000 439866 TTI The bonds are being called at a price of par plus accrued interest to February 1, 2010, on which date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for redemption are requested to present their bonds for payment to the main office of Bankers Trust Company, Des Moines, Iowa, on or before February 1, 2010, at the following address: Bankers Trust Company [Insert Address] Important Notice: In compliance with the Jobs and Growth Tax Relief Reconciliation Act of 2003, federal backup withholding tax will be withheld at the applicable backup withholding rate in effect at the time the payment by the redeeming institutions if they are not provided with your social security number or federal employer identification number, properly certified. This requirement is fulfilled by submitting a W -9 Form, which may be obtained at a bank or other financial institution. Dated: , 20 BY ORDER OF THE CITY COUNCIL By lsl Terry Obermaier City Clerk City of Hopkins, Minnesota MIN EXHIBIT C $2,060,000 CITY OF HOPKINS, MINNESOTA GENERAL OBLIGATION WATER REVENUE BONDS SERIES 2000A NOTICE IS HEREBY GIVEN that, by order of the City Council of the City of Hopkins, Hennepin County, Minnesota, there have been called for redemption and prepayment on February 1, 2010 NOTICE OF CALL FOR REDEMPTION WATER SYSTEM REFUNDED BONDS the principal amount outstanding of the City's General Obligation Water Revenue Bonds, Series 2000A, issued in the original aggregate principal amount of $2,060,000, dated April 1, 2000, having stated maturity dates of February 1 in the years 2011 through 2015, both inclusive, totaling $855,000 in outstanding principal amount, and with the following CUSIP numbers. Year of Matu Amount CUSIP 2011 $155,000 439866 UQ5 2012 160,000 439866 UR3 2013 170,000 439866 US 1 2014 180,000 439866 UT9 2015 190,000 439866 UU6 The bonds are being called at a price of par plus accrued interest to February 1, 2010, on which date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for redemption are requested to present their bonds for payment to the main office of Bankers Trust Company, Des Moines, Iowa, on or before February 1, 2010, at the following address: Bankers Trust Company [Insert Address] Important Notice: In compliance with the Jobs and Growth Tax Relief Reconciliation Act of 2003, federal backup withholding tax will be withheld at the applicable backup withholding rate in effect at the time the payment by the redeeming institutions if they are not provided with your social security number or federal employer identification number, properly certified. This requirement is fulfilled by submitting a W -9 Form, which may be obtained at a bank or other financial institution. Dated: , 20_ ;mil i •. r ,. BY ORDER OF THE CITY COUNCIL By /s/ Terry Obermaier City Clerk City of Hopkins, Minnesota HP 110-78 (JAE) 359891v1 C -2