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Preliminary Official Statement dtd. Oct 30,2009 - Bonds (NOTES for $3,340,000 and $2,890,000)In the opinion of Bond Counsel, according to present federal and Minnesota laws, regulations, rulings and decisions, the interest on the Series 2009A Bonds is excludable from gross income of the recipient for federal income tax purposes amt; to the same extent, is excludable f nm taxable net income of individuals, trusts, and estates for Minnesota income tax purposes, and is not a preference item for purposes ofthe computation ofthe federal alternative minimum tax, or the computation ofthe Mimiesota alternative minimum tax imposed on individuals, trusts and estates. However, interest on the Series 2009A Bonds is subject to Minnesota franchise taxes on corporations (including f rumcial institutions) measured by income. (See 'Tax Exemption" herein) The City will designate the Series 2009A Bonds as 'qualified tax - exempt obligations "for purposes of Section 265(b) (3) of the Internal Revenue Code of 1986, as amended relating to the ability offinancial institutions to deduct from income forfederal income tax purposes, interest expense that is allocable to carrying and acquiring tax - exempt obligations. Interest on the Series 2009B Bonds is includable in gross income of the recipient for United States and State of Minnesota income tax purposes according to present federal and Minnesota laws, regulations, rulings and decisions. The City will not designate the Series 2009E Bonds as 'qualified tax - exempt obligations " pursuant to Section 265 of the Internal Revenue Code of 1986, as amended which permits financial institutions to deduct interest expenses allocable to the Series 2009E Bonds to the extent permitted under prior law. New Issues Rating Application Made: Standard & Pooes PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 30, 2009 CITY OF HOPKINS, MINNESOTA $3,340,000* GENERAL OBLIGATION BONDS, SERIES 2009A $2,890,000** TAXABLE GENERAL OBLIGATION HOUSING IMPROVEMENT REFUNDING BONDS, SERIES 2009B PROPOSAL OPENING: November 17, 2009, 1:00 P.M., C.T. CONSIDERATION: November 17, 2009, 7:30 P.M., C.T. PURPOSE /AUTHORITY /SECURITY: The $3,340,000 General Obligation Bonds, Series 2009A (the "Series 2009A Bonds ") are being issued pursuant to Minnesota Statutes, Chapters 444 and 475, by the City of Hopkins, Minnesota (the "City"), for the purpose of (i) effecting a current refunding of the 2011 through 2015 maturities of the $1,545,000 General Obligation Storm Sewer Revenue Bonds, Series 1999C, dated August 1, 1999; (ii) effecting a current refunding of the 2011 through 2015 maturities ofthe $2,060,000 General Obligation Water Revenue Bonds, Series 2000A, dated April 1, 2000; (iii) to finance 2007, 2008 and 2009 water system improvements; and (iv) to finance 2007, 2008 and 2009 sanitary sewer system improvements. The $2,890,000 Taxable General Obligation Housing Improvement Refunding Bonds, Series 2009B (the "Series 2009B Bonds ") are being issued pursuant to Minnesota Statutes, Chapters 475 and 587, for the purpose of effecting a current refunding of the 2011 through 2021 maturities of the $1,465,000 Taxable G.O. Housing Improvement Area Bonds, Series 1999A, dated May 1, 1999; and a current refunding of the 2011 through 2021 maturities of the $2,565,000 Taxable General Obligation Improvement Area Bonds, Series 1999B, dated August 1, 1999. The Series 2009A Bonds and the Series 2009B Bonds will be general obligations of the City for which its full faith, credit and taxing powers are pledged. Delivery is subject to receipt of approving legal opinions of Kennedy & Graven, Chartered, Minneapolis, Minnesota. DATE OF SERIES 2009A BONDS: December 15, 2009 DATE OF SERIES 2009B BONDS: December 15, 2009 MATURITY: February 1 as follows: Year Amount Year Amount 2011 $380,000 2019 $125,000 2012 395,000 2020 125,000 2013 410,000 2021 135,000 2014 420,000 2022 135,000 2015 420,000 2023 145,000 2016 115,000 2024 145,000 2017 115,000 2025 155,000 2018 120,000 ADJUSTMENT: * See "Adjustment Option" herein. TERM BONDS: See "Term Bond Option" herein. INTEREST: August 1, 2010 and semiannually thereafter. REDEMPTION: Series 2009A Bonds maturing February 1, 2019 and thereafter are subject to call for prior redemption on February 1, 2018 and any date thereafter, at par. MINIMUM PROPOSAL: $3,306,600. GOOD FAITH DEPOSIT: $66,800. PAYING AGENT: Bankers Trust Company, Des Moines, Iowa. BOOK - ENTRY -ONLY: See "Book -Entry-Only System" herein. MATURITY: February 1 as follows: Year Amount ** Year Amount 2011 $215,000 2019 $290,000 2012 230,000 2020 300,000 2013 235,000 2021 320,000 2014 245,000 2015 255,000 2016 260,000 2017 265,000 2018 275,000 ADJUSTMENT: ** See "Adjustment Option" herein. TERM BONDS: See "Term Bond Option" herein. INTEREST: August 1, 2010 and semiannually thereafter. REDEMPTION: Series 2009B Bonds maturing February 1, 2019 and thereafter are subject to call for prior redemption on February 1, 2018 and any date thereafter, at par. MINIMUM PROPOSAL: $2,853,875. GOOD FAITH DEPOSIT: $57,800. PAYING AGENT: Bankers Trust Company, Des Moines, Iowa. BOOK - ENTRY -ONLY: See "Book -Entry-Only System" herein. This Preliminary Official Statement will be further supplemented by an addendum specifying the offering prices, interest rates, aggregate principal amount, principal amount per maturity, anticipated delivery date, and Syndicate Manager and Syndicate Members, together with any other information required by law, and, as supplemented, shall constitute a "Final Official Statement" of the City with respect to the Series 2009A Bonds and Series 2009B Bonds, as defined in S.E.C. Rule 15c2 -12. EHLERS LEADERS IN PUBLIC FINANCE www.ehiers- inc.com Minnesota phone 651 - 697 -8500 3060 Centre Pointe Drive Offices also in Wisconsin and Illinois fax 651 - 697 -8555 Roseville, MN 55113 -1122 REPRESENTATIONS No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representation other than those contained in this Preliminary Official Statement and. if given or made, such other information or representations must not be relied upon as having been authorized by the City. This Preliminary Official Statement does not constitute an offer to sell or a solicitation of an offer to buy any of the Series 2009A Bonds and the Series 2009B Bonds in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction. This Preliminary Official Statement is not to be construed as a contract with the Syndicate Manager or Syndicate Members. Statements contained herein which involve estimates or matters of opinion are intended solely as such and are not to be construed as representations of fact. Ehlers & Associates, Inc. prepared this Preliminary Official Statement and any addenda thereto relying on information of the City and other sources for which there is reasonable basis for believing the information is accurate and complete. Bond Counsel has not participated in the preparation of this Preliminary Official Statement except as described herein and is not expressing any opinion as to the completeness or accuracy of the information contained therein. Compensation of Ehlers & Associates, Inc., payable entirely by the City, is contingent upon the sale of the issue. COMPLIANCE WITH S.E.C. RULE 15c2 -12 Certain municipal obligations (issued in an aggregate amount over $1,000.000) are subject to General Rules and Regulations, Securities Exchange Act of 1934, Rule 15c2 -12 Municipal Securities Disclosure (the "Rule "). Preliminary Official Statement: This Preliminary Official Statement was prepared for the City for dissemination to potential customers. Its primary purpose is to disclose information regarding the Series 2009A Bonds and the Series 2009B Bonds to prospective underwriters in the interest of receiving competitive proposals in accordance "ith the sale notice contained herein. Unless an addendum is posted prior to the sale, this Preliminary Official Statement shall be deemed nearly final for purposes of the Rule subject to completion, revision and amendment in a Final Official Statement as defined below. Review Period: This Preliminary Official Statement has been distributed to members of the legislative body and other public officials of the City as well as to prospective bidders for an objective review of its disclosure. Comments or requests for the correction of omissions or inaccuracies must be submitted to Ehlers & Associates at least two business days prior to the sale. Requests for additional information or corrections in the Preliminary Official Statement received on or before this date will not be considered a qualification of a proposal received from an underwriter. Ifthere are any changes, corrections or additions to the Preliminary Official Statement, interested bidders will be informed by an addendum at least one business day prior to the sale. Final Official Statement: Upon award of sale of the Series 2009A Bonds and the Series 2009B Bonds, the Preliminary Official Statement together with any previous addendum of corrections or additions will be further supplemented by an addendum specifying the offering prices, interest rates, aggregate principal amount, principal amount per maturity. anticipated delivery date, and Syndicate Manager and Syndicate Members, together with any other information required by law, and. as supplemented, shall constitute a "Final Official Statement" of the City withrespectto the Series 2009A Bonds and the Series 2009B Bonds, as defined in S.E.C. Rule 15c2 -12. Copies of the Final Official Statement will be delivered to the underwriter (Syndicate Manager) within seven business days following the proposal acceptance. Continuing Disclosure: Subject to certain exemptions, issues in an aggregate amount over $1.000.000 may be required to comply with provisions of the Rule which require that underwriters obtain from the issuers of municipal securities (or other obligated party) an agreement for the benefit of the owners of the securities to provide continuing disclosure with respect to those securities. This Preliminary Official Statement describes the conditions under which the Series 2009A Bonds and the Series 2009B Bonds are exempt or required to comply with the Rule. CLOSING CERTIFICATES Upon delivery ofthe Series 2009A Bonds and the Series 2009B Bonds, the purchaser (underNNTriter) will be furnished with the following items: (1) acertificate of the appropriate officials to the effect that at the time of the sale of the Series 2009A Bonds and the Series 2009B Bonds and all times subsequent thereto up to and including the time of the delivery of the Series 2009A Bonds and the Series 2009B Bonds, this Preliminary Official Statement did not and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein. in the light of the circumstances under which they were made, not misleading; (2) a receipt signed by the appropriate officer evidencing payment for the Series 2009A Bonds and the Series 2009B Bonds, (3) a certificate evidencing the due execution of the Series 2009A Bonds and the Series 2009B Bonds, including statements that (a) no litigation of any nature is pending, or to the kno of signers, threatened, restraining or enjoining the issuance and delivery of the Series 2009A Bonds and the Series 2009B Bonds, (b) neither the corporate existence or boundaries of the City nor the title of the signers to their respective offices is being contested, and (c) no authority or proceedings for the issuance of the Series 2009A Bonds and the Series 2009B Bonds have been repealed, revoked or rescinded. and (4) a certificate setting forth facts and expectations of the City which indicates that the City does not expect to use the proceeds of the Series 2009A Bonds and the Series 2009B Bonds in a manner that would cause them to be arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or within the meaning of applicable Treasury Regulations. TABLE OF CONTENTS INTRODUCTORY STATEMENT ....................... 1 THE SERIES 2009A BONDS ........................... 1 GENERAL ....... ............................... 1 OPTIONAL REDEMPTION ........................ 2 AUTHORITY; PURPOSE .......................... 2 ESTIMATED SOURCES AND USES ................ 3 SECURITY ...... ............................... 4 LEGAL OPINION . ............................... 4 TAX EXEMPTION ............................... 5 QUALIFIED TAX - EXEMPT OBLIGATIONS .......... 5 THE SERIES 2009B BONDS ........................... 6 GENERAL ....... ............................... 6 OPTIONAL REDEMPTION ........................ 6 AUTHORITY; PURPOSE .......................... 7 SOURCES AND USES ............................ 8 SECURITY ............................... 9 LEGAL OPINION . ............................... 9 TAXABILITY OF INTEREST ...................... 9 NON - QUALIFIED TAX - EXEMPT OBLIGATIONS .... 10 PROVISIONS COMMON TO BOTH THE SERIES 2009A BONDS AND THE SERIES 2009B BONDS ........................... 10 RATING ........ ............................... 10 CONTINUING DISCLOSURE ..................... 10 FINANCIAL ADVISOR .......................... 10 RISK FACTORS . ............................... 11 VALUATIONS ...... ............................... 12 CURRENT PROPERTY VALUATIONS ............. 13 2008 /09 NET TAX CAPACITY BY CLASSIFICATION . 14 TREND OF VALUATIONS ....................... 14 LARGER TAXPAYING PARCELS ................. 15 THEISSUER ........ ............................... 30 CITY GOVERNMENT ........................... 30 EMPLOYEES; PENSIONS; UNIONS ............... 30 LIABILITIES FOR OTHER POST EMPLOYMENT BENEFITS ..... ............................... 30 FUNDS ON HAND .............................. 31 LITIGATION .... ............................... 31 ENTERPRISE FUNDS ........................... 32 SUMMARY GENERAL FUND INFORMATION ...... 33 GENERAL INFORMATION ........................... 34 LOCATION ............................... 34 LARGER EMPLOYERS .......................... 34 U.S. CENSUS DATA ............................. 35 EMPLOYMENT/UNEMPLOYMENT DATA ......... 35 BUILDING PERMITS ............................ 36 FINANCIAL INSTITUTIONS ..................... 36 EDUCATION .... ............................... 37 IN- PATIENT MEDICAL FACILITIES ............... 37 EXCERPTS FROM FINANCIAL STATEMENTS ......... A -1 FORM OF LEGAL OPINIONS ........................ B -1 BOOK - ENTRY -ONLY SYSTEM ...................... C -1 FORM OF CONTINUING DISCLOSURE CERTIFICATE.. D -1 TERMS OF PROPOSAL SERIES 2009A BONDS ......................... E -1 TERMS OF PROPOSAL SERIES 2009B BONDS ......................... E -6 DEBT .............. ............................... 16 DIRECT DEBT .. ............................... 16 SCHEDULES OF BONDED INDEBTEDNESS ........ 17 DEBT LIMIT .... ............................... 25 OVERLAPPING DEBT ........................... 26 DEBT RATIOS .. ............................... 27 DEBT PAYMENT HISTORY ...................... 27 FUTURE FINANCING ........................... 27 TAX LEVIES AND COLLECTIONS .................... 28 TAX COLLECTIONS ............................ 28 TAX CAPACITY RATES ......................... 29 LEVY LIMITS ... ............................... 29 iii CITY COUNCIL Gene Maxwell Mayor Rick Brausen Council Member Bruce Rowan Council Member Kristi Halverson Council Member Cheryl Youakim Council Member ADMINISTRATION Richard Getschow, City Manager Christine Harkess, Finance Director Terry Obermaier, City Clerk PROFESSIONAL SERVICES Kennedy & Graven, Chartered, Bond Counsel, Minneapolis, Minnesota Ehlers & Associates, Inc., Financial Advisors, Roseville, Minnesota (Other offices located in Brookfield, Wisconsin and Lisle, Illinois) IV INTRODUCTORY STATEMENT This Preliminary Official Statement contains certain information regarding the City of Hopkins, Minnesota (the "City ") and the issuance of its $3,340,000 General Obligation Bonds, Series 2009A (the "Series 2009A Bonds ") and $2,890,000 Taxable General Obligation Housing Improvement Refunding Bonds, Series 2009B (the "Series 2009B Bonds "), collectively referred to herein as the "Bonds ". Any descriptions or summaries of the Bonds, statutes, or documents included herein are not intended to be complete and are qualified in their entirety by reference to such statutes and documents and the forms of the Series 2009A Bonds and the Series 2009B Bonds to be included in the resolutions awarding the sale of the Series 2009A Bonds and the Series 2009B Bonds to be adopted by the City Council on November 17, 2009. Inquiries may be directed to Ehlers & Associates, Inc. ( "Ehlers" or the "Financial Advisor "), Roseville, Minnesota, (651) 697 -8500, the City's Financial Advisor. A copy of this Preliminary Official Statement may be downloaded from Ehlers' web site at www.ehiers- inc.com by connecting to the link to the Bond Sales and following the directions at the top of the site. THE SERIES 2009A BONDS GENERAL The Series 2009A Bonds will be issued in fully registered form as to both principal and interest in denominations of $5,000 each or any integral multiple thereof, and will be dated, as originally issued, as of December 15, 2009. The Series 2009A Bonds will mature on February 1 in the years and amounts set forth on the cover of this Preliminary Official Statement. Interest will be payable on February 1 and August 1 of each year, commencing August 1, 2010, to the registered owners of the Series 2009A Bonds appearing of record in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the MSRB. All Series 2009A Bonds of the same maturity will bear interest from date of issue until paid at a single, uniform rate. The Series 2009A Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( "DTC "). (See "Book -Entry-Only System" herein.) As long as the Series 2009A Bonds are held under the book -entry system, beneficial ownership interests in the Series 2009A Bonds may be acquired in book -entry form only, and all payments of principal of, premium, if any, and interest on the Series 2009A Bonds shall be made through the facilities of DTC and its Participants. If the book -entry system is terminated, principal of, premium, if any, and interest on the Series 2009A Bonds shall be payable as provided in the resolution awarding the sale of the Series 2009A Bonds. The City has selected Bankers Trust Company, Des Moines, Iowa, to act as paying agent (the "Paying Agent "). The City will pay the charges for Paying Agent services. The City reserves the right to remove the Paying Agent and to appoint a successor. OPTIONAL REDEMPTION At the option of the City, Series 2009A Bonds maturing on or after February], 2019 shall be subject to prior payment on February 1, 2018 or on any date thereafter, at a price of par plus accrued interest. Redemption may be in whole or in part of the Series 2009A Bonds subject to prepayment. If redemption is in part, the selection of the amounts and maturities of the Series 2009A Bonds to be prepaid shall be at the discretion of the City. If only part of the Series 2009A Bonds having a common maturity date are called for redemption, the City or Paying Agent, if any, will notify DTC of the particular amount of such maturity to be redeemed. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interest in such maturity to be redeemed. Notice of such call shall be given by mailing a notice not more than 60 days and not fewer than 30 days prior to the date fixed for redemption to the registered owner of each Series 2009A Bond to be redeemed at the address shown on the registration books. AUTHORITY; PURPOSE The $3,340,000 General Obligation Bonds, Series 2009A (the "Series 2009A Bonds ") are being issued pursuant to Minnesota Statutes, Chapters 444 and 475, by the City of Hopkins, Minnesota (the "City "), for the purpose of (i) effecting a current refunding of the 2011 through 2015 maturities of the $1,545,000 General Obligation Storm Sewer Revenue Bonds, Series 1999C (the "Series 1999C Bonds "), dated August 1, 1999; (ii) effecting a current refunding of the 2011 through 2015 maturities of the $2,060,000 General Obligation Water Revenue Bonds, Series 2000A (the "Series 2000A Bonds "), dated April 1, 2000; (iii) to finance 2007, 2008 and 2009 water system improvements; and (iv) to finance 2007, 2008 and 2009 sanitary sewer system improvements. Following are the maturities of the Series 1999C Bonds which are being refunded by this issue: Date of Maturities Principal Refunded Call Call Being Interest to be Issue Being Refunded Issue Date Price Refunded Rates Refunded Series 1999C Bonds 8/01/99 2/01/10 Par 2011 5.00% $110,000 2012 5.00% 115,000 2013 5.00% 120,000 2014 5.00% 130,000 2015 5.00% 135,000 Total Series 1999C Bonds Being Refunded 610 000 A portion of the proceeds of the Series 2009A Bonds will be used to call and prepay the maturities described above and to pay all or most of the costs of issuance. The City will pay the principal and interest payment due on February 1, 2010 from the Debt Service Fund for the Series 1999C Bonds. Following are the maturities of the Series 2000A Bonds which are being refunded by this issue: Date of Maturities Principal Refunded Call Call Being Interest to be Issue Being Refunded Issue Date Price Refunded Rates Refunded Series 2000A Bonds 4/01/00 2/01/10 Par 2011 5.20% $155,000 Portion 2012 5.25% 160,000 $625,000 2013 5.30% 170,000 $3,340,000 2014 5.40% 180,000 $1,020,000 2015 5.50% 190,000 Total Series 1999C Bonds Being Refunded $1,000,000 $1,800,000 855 000 A portion of the proceeds of the Series 2009A Bonds will be used to call and prepay the maturities described above and to pay all or most of the costs of issuance. The City will pay the principal and interest payment due on February 1, 2010 from the Debt Service Fund for the Series 2000A Bonds. 1,464,848 6,250 8,750 ESTIMATED SOURCES AND USES Sources Par Amount of Bonds Total Sources Uses Deposit to Project Fund Deposit to Current Refunding Fund Discount Allowance Finance Related Expenses Contingency Total Uses Storm Water Sanitary Sewer Revenue Water Sewer Refunding Refunding Revenue Revenue Total Portion Portion Portion Portion Bond Issue $625,000 $875,000 $820,000 $1,020,000 $3,340,000 $625,000 $875,000 $820,000 $1,020,000 $3,340,000 $ 0 $ 0 $800,000 $1,000,000 $1,800,000 609,937 854,911 0 0 1,464,848 6,250 8,750 8,200 10,200 33,400 7,111 9,955 9,329 11,605 38,000 1,702 1,384 2,471 1805 3,752 $625,000 $875,000 $820,000 $1,020,000 $3,340,000 3 Breakdown of Principal Payments: SECURITY The Series 2009A Bonds are general obligations of the City for which its full faith, credit and taxing powers are pledged without limitation as to rate or amount. Principal and interest on the Series 2009A Bonds will be paid entirely from net revenues of the water, storm sewer, and sanitary sewer systems which are owned and operated by the City. Should the revenues pledged for payment of the Series 2009A Bonds be insufficient to pay the principal and interest as the same shall become due, the City is required to pay maturing principal and interest from moneys on hand in any other fund of the City not pledged for another purpose and /or to levy a tax for this purpose upon all the taxable property in the City, without limitation as to rate or amount. LEGAL OPINION An opinion as to the validity of the Series 2009A Bonds and the exemption from taxation of the interest thereon will be furnished by Kennedy & Graven, Chartered, Minneapolis, Minnesota, bond counsel to the City, and will accompany the Series 2009A Bonds. The legal opinion will state that the Series 2009A Bonds are valid and binding general obligations ofthe City enforceable in accordance with their terms, except to the extent to which enforceability may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. il Storm Sewer Water Revenue Sanitary Sewer Payment Refunding Refunding Water Revenue Revenue Total Date Portion Portion Portion Portion Bond Issue 2/01/2011 $120,000 $170,000 $40,000 $50,000 $ 380,000 2/01/2012 120,000 170,000 45,000 60,000 395,000 2/01/2013 125,000 175,000 50,000 60,000 410,000 2/01/2014 130,000 180,000 50,000 60,000 420,000 2/01/2015 130.000 180,000 50,000 60,000 420,000 2/01/2016 50,000 65,000 115,000 2/01/2017 50,000 65,000 115,000 2/01/2018 55,000 65,000 120,000 2/01/2019 55,000 70,000 125,000 2/01/2020 55,000 70,000 125,000 2/01/2021 60,000 75,000 135,000 2/01/2022 60,000 75,000 135,000 2/01/2023 65,000 80,000 145,000 2/01/2024 65,000 80,000 145,000 2/01/2025 70,000 85,000 155,000 Total $625,000 $875,000 $820,000 $1,020,000 $3,340,000 SECURITY The Series 2009A Bonds are general obligations of the City for which its full faith, credit and taxing powers are pledged without limitation as to rate or amount. Principal and interest on the Series 2009A Bonds will be paid entirely from net revenues of the water, storm sewer, and sanitary sewer systems which are owned and operated by the City. Should the revenues pledged for payment of the Series 2009A Bonds be insufficient to pay the principal and interest as the same shall become due, the City is required to pay maturing principal and interest from moneys on hand in any other fund of the City not pledged for another purpose and /or to levy a tax for this purpose upon all the taxable property in the City, without limitation as to rate or amount. LEGAL OPINION An opinion as to the validity of the Series 2009A Bonds and the exemption from taxation of the interest thereon will be furnished by Kennedy & Graven, Chartered, Minneapolis, Minnesota, bond counsel to the City, and will accompany the Series 2009A Bonds. The legal opinion will state that the Series 2009A Bonds are valid and binding general obligations ofthe City enforceable in accordance with their terms, except to the extent to which enforceability may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. il TAX EXEMPTION In the opinion of Bond Counsel, under existing statutes, regulations, rulings and decisions, interest on the Series 2009A Bonds is not includible in the "gross income" of the owners thereof for purposes of federal income taxation and is not includable in taxable net income of individuals, estates or trusts for purposes of State of Minnesota income taxation, but is subject to State of Minnesota franchise taxes that are imposed upon corporations (including financial institutions) measured by income and the alternative minimum tax base. Noncompliance following the issuance of the Series 2009A Bonds with certain requirements of the Internal Revenue Code of 1986, as amended, (the "Code ") and covenants of the bond resolution may result in the inclusion of interest on the Series 2009A Bonds in gross income (for federal tax purposes) and taxable net income (for State of Minnesota tax purposes) of the owners thereof. No provision has been made for redemption of the Series 2009A Bonds, or for an increase in the interest rate on the Series 2009A Bonds, in the event that interest on the Series 2009A Bonds becomes subject to United States or State of Minnesota income taxation. The Code imposes an alternative minimum tax with respect to individuals and corporations on alternative minimum taxable income. Interest on the Series 2009A Bonds will not be treated as a preference item in calculating alternative minimum taxable income. However, such interest is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations. New American Recovery and Reinvestment Act provisions do not apply since a portion of the Bonds are refunding bonds issued prior to 2004. The Code provides that in the case of an insurance company subject to the tax imposed by Section 831 of the Code, the amount which otherwise would be taken into account as "losses incurred" under Section 832(b)(5) shall be reduced by an amount equal to 15% of the interest on the Series 2009A Bonds that is received or accrued during the taxable year. Interest on the Series 2009A Bonds may be included in the income of a foreign corporation for purposes of the branch profits tax imposed by Section 884 of the Code. Under certain circumstances, interest on the Series 2009A Bonds may be subject to the tax on "excess net passive income" of Subchapter S corporations imposed by Section 1375 of the Code. The above is not a comprehensive list of all Federal tax consequences which may arise from the receipt of interest on the Series 2009A Bonds. The receipt of interest on the Series 2009A Bonds may otherwise affect the Federal or State income tax liability of the recipient based on the particular taxes to which the recipient is subject and the particular tax status of other items or deductions. Bond Counsel expresses no opinion regarding any such consequences. All prospective purchasers of the Series 2009A Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax considerations for, purchasing or holding the Series 2009A Bonds. QUALIFIED TAX- EXEMPT OBLIGATIONS Prior to the adoption of the Code, financial institutions were generally permitted to deduct 80% of their interest expenses allocable to tax- exempt obligations. Under the Code, however, financial institutions are generally not entitled to such a deduction for tax- exempt obligations purchased after August 7, 1986. However, the City will designate the Series 2009A Bonds of this issue as qualified tax- exempt obligations pursuant to section 265(b)(3) of the Code which would permit financial institutions to deduct interest expenses allocable to the Series 2009A Bonds to the extent permitted under prior law. THE SERIES 2009B BONDS GENERAL The Series 2009B Bonds will be issued in fully registered form as to both principal and interest in denominations of $5,000 each or any integral multiple thereof, and will be dated, as originally issued, as of December 15, 2009. The Series 2009B Bonds will mature on February l in the years and amounts set forth on the cover of this Preliminary Official Statement. Interest will be payable on February 1 and August 1 of each year, commencing August 1, 2010, to the registered owners of the Series 2009B Bonds appearing of record in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the MSRB. All Series 2009B Bonds of the same maturity will bear interest from date of issue until paid at a single, uniform rate. The Series 2009B Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( "DTC "). (See "Book- Entry -Only System" herein.) As long as the Series 2009B Bonds are held under the book -entry system, beneficial ownership interests in the Series 2009B Bonds may be acquired in book -entry form only, and all payments of principal of, premium, if any, and interest on the Series 2009B Bonds shall be made through the facilities of DTC and its Participants. If the book -entry system is terminated, principal of, premium, if any, and interest on the Series 2009B Bonds shall be payable as provided in the resolution awarding the sale of the Series 2009B Bonds. The City has selected Bankers Trust Company, Des Moines, Iowa, to act as paying agent (the "Paying Agent "). The City will pay the charges for Paying Agent services. The City reserves the right to remove the Paying Agent and to appoint a successor. OPTIONAL REDEMPTION Atthe option of the City, Series 2009B Bonds maturing on or after February 1, 2019 shall be subject to prior payment on February 1, 2018 or any date thereafter, at a price of par plus accrued interest. Redemption may be in whole or in part of the Series 2009B Bonds subject to prepayment. If redemption is in part, the selection of the amounts and maturities of the Series 2009B Bonds to be prepaid shall be at the discretion of the City. If only part of the Series 2009B Bonds having a common maturity date are called for prepayment, the City or Paying Agent, if any, will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interest in such maturity to be redeemed. Notice of such call shall be given by mailing a notice not more than 60 and not fewer than 30 days prior to the date fixed for redemption to the registered owner of each Series 2009B Bond to be redeemed at the address shown on the registration books. AUTHORITY; PURPOSE The $2,890,000 Taxable General Obligation Housing Improvement Refunding Bonds, Series 2009B (the "Series 2009B Bonds ") are being issued pursuant to Minnesota Statutes, Chapters 475 and 587, for the purpose of effecting a current refunding ofthe 2011 through 2021 maturities of the $1,465,000 Taxable G.O. Housing Improvement Area Bonds, Series 1999A (the "Series 1999A Bonds "), dated May 1, 1999; and a current refunding of the 2011 through 2021 maturities of the $2,565,000 Taxable General Obligation Improvement Area Bonds, Series 1999B (the "Series 1999B Bonds "), dated August 1, 1999. Following are the maturities of the Series 1999A Bonds which are being refunded by this issue: Issue Being Refunded Series 1999A Bonds Date of Refunded Call Call Issue Date Price 5/01/99 2/01/10 Par Maturities Principal Being Interest to be Refunded Rates Refunded 2011 6.35% $ 65,000 2012* 6.35% 70,000 2013 6.65% 75,000 2014* 6.65% 80,000 2015 7.00% 85,000 2016 7.00% 90,000 2017 7.00% 95,000 2018* 7.00% 100,000 2019 7.10% 110,000 2020 7.10% 115,000 2021 * 7.10% 125.000 Total Series 1999A Bonds Being Refunded *Term bond maturities. $1,010.000 A portion of the proceeds of the Series 2009B Bonds will be used to call and prepay the maturities described above and to pay all or most of the costs of issuance. The City will pay the principal and interest payment due on February 1, 2010 from the Debt Service Fund for the Series 1999A Bonds. 7 Following are the maturities of the Series 1999B Bonds which are being refunded by this issue: Date of Maturities Refunding Principal Refunded Call Call Being Interest to be Issue Being Refunded Issue Date Price Refunded Rates Refunded Series 1999B Bonds 8/01/99 2/01/10 Par 2011 * 6.800% $ 115,000 Uses 2012 7.000% 120,000 Deposit to Current Refunding Fund 2013* 7.000% 130,000 Discount Allowance 2014 7.150% 140,000 Finance Related Expenses 2015* 7.150% 150,000 Contingency 2016 7.250% 160,000 2017* 7.250% 170,000 52,890,000 2018 7.350% 180,000 2019* 7.350% 195,000 2020 7.375% 210,000 2021 * 7.375% 225.000 Total Series 1999C Bonds Being Refunded $1,795,000 *Term bond maturities. A portion of the proceeds of the Series 2009B Bonds will be used to call and prepay the maturities described above and to pay all or most of the costs of issuance. The City will pay the principal and interest payment due on February 1, 2010 from the Debt Service Fund for the Series 1999B Bonds. SOURCES AND USES Series 1999A Series 1999B 8 Refunding Refunding Total Sources Portion Portion Bond Issue Par Amount of Bonds $1,040,000 $1,850,000 $2,890,000 Total Sources $1,040,000 $1,850,000 $2,890,000 Uses Deposit to Current Refunding Fund $1,009,987 $1,794,976 $2,804,963 Discount Allowance 13,000 23,125 36,125 Finance Related Expenses 16,194 28,806 45,000 Contingency 819 3,093 3,912 Total Uses $1,040,000 $1,850,000 52,890,000 8 Breakdown of Principal Payments: Payment Series 1999A Series 1999B Total Date Refunding Refunding Bond Issue Portion Portion 2/01/2011 $ 75,000 $ 140,000 $ 215,000 2/01/2012 85,000 145,000 230,000 2/01/2013 85,000 150,000 235,000 2/01/2014 90,000 155,000 245,000 2/01/2015 90,000 165,000 255,000 2/01/2016 95,000 165,000 260,000 2/01/2017 95,000 170,000 265,000 2/01/2018 100,000 175,000 275,000 2/01/2019 105,000 185,000 290,000 2/01/2020 105,000 195,000 300,000 2/01/2021 115,000 205,000 320,000 Total $1,040,000 $1,850,000 $2,890,000 SECURITY The Bonds are general obligations of the City and are secured by a pledge of the full faith, credit and taxing powers of the City. The debt service on the Bonds will be payable from housing improvement fees levied or to be levied on property within the housing improvement area in the City. Should the revenues pledged for payment of the Bonds be insufficient to pay the principal and interest as the same shall become due, the City is required to pay maturing principal and interest from moneys on hand in any other fund of the City not pledged for another purpose and/or to levy a tax for this purpose upon all the taxable property in the City, without limitation as to rate or amount. LEGAL OPINION An opinion as to the validity of the Series 2009B Bonds will be furnished by Kennedy & Graven, Chartered, of Minneapolis, Minnesota, bond counsel to the City, and will accompany the Series 2009B Bonds. The legal opinion will be issued on the basis of existing law and will state that the Series 2009B Bonds are valid and binding general obligations of the City enforceable in accordance with their terms, except to the extent to which enforceability may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. TAXABILITY OF INTEREST Under present federal and Minnesota laws, regulations, rulings and decisions, interest on the Series 2009B Bonds of this offering is includable in gross income for federal income tax purposes and in taxable net income of individuals, estates or trusts for Minnesota income tax purposes. 9 NON - QUALIFIED TAX - EXEMPT OBLIGATIONS The City will not designate the Series 2009B Bonds as "qualified tax - exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax- exempt obligations. PROVISIONS COMMON TO BOTH THE SERIES 2009A BONDS AND THE SERIES 2009B BONDS The following information pertains to both the Series 2009A Bonds and the Series 2009B Bonds which are collectively referred to hereinafter as the "Bonds ". RATING General obligation debt of the City is currently rated "AA -" by Standard & Poor's. The City has requested a rating on the Bonds from Standard & Poor's, and bidders will be notified as to the assigned rating prior to the sale. Such a rating, if and when received, will reflect only the view of the rating agency and any explanation of the significance of such rating may only be obtained from Standard & Poor's. There is no assurance that such rating, if and when received, will continue for any period of time or that it will not be revised or withdrawn. Any revision or withdrawal of the rating may have an effect on the market price of the Bonds. CONTINUING DISCLOSURE In order to comply with the provisions of Rule 15c2 -12 promulgated by the Securities and Exchange Commission underthe Securities Exchange Act of 1934 (the "Rule ") the City has entered into an undertaking (the "Undertaking ") for the benefit of the holders of the Bonds. Through the Undertaking, the City covenants and agrees to provide certain annual financial information and operating data about the City and to provide notice of the occurrence of certain material events. This information shall be provided according to the time parameters described in the Undertaking to the Municipal Securities Rulemaking Board as required by the Rule. The specific provisions of the Undertaking are set forth in the Continuing Disclosure Certificate in substantially the form attached hereto as Appendix D. The Continuing Disclosure Certificate will be executed and delivered by the City at the time the Bonds are delivered. The City is the only "obligated person" with respect to the Bonds within the meaning of the Rule. The City has complied in all material respects with any previous undertaking under the Rule. FINANCIAL ADVISOR Ehlers has served as Financial Advisor to the City in connection with the issuance of the Obligations. The Financial Advisor will not participate in the underwriting of the Obligations. The financial information included in this Preliminary Official Statement has been compiled by the Financial Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. Ehlers is not a firm of certified public accountants. El RISK FACTORS Following is a description of possible risks to holders of these Bonds without weighting as to probability. This description of risks is not intended to be all- inclusive, and there may be other risks not now perceived or listed here. Taxes: The Bonds of this offering are general obligations of the City, the ultimate payment of which rests in the City's ability to levy and collect sufficient taxes to pay debt service should other revenue (water and sewer revenues and housing area improvement fees) be insufficient. State Actions: Many elements of local government finance, including the issuance of debt and the levy of property taxes, are controlled by state government. Past and future actions of the State may affect the overall financial condition of the City, the taxable value of property within the City, and the ability of the City to levy property taxes. Ratings; Interest Rates: In the future, the City's credit rating may be reduced or withdrawn, or interest rates for this type of obligation may rise generally, either possibility resulting in a reduction in the value of the Obligations for resale prior to maturity. Tax Exemption (Series 2009A Bonds): If the federal government or the State of Minnesota taxes the interest on municipal obligations, directly or indirectly, or if there is a change in federal or state tax policy, the value of the Bonds may fall for purposes ofresale. Noncompliance following the issuance ofthe Bonds with certain requirements of the Code and covenants of the bond resolution may result in the inclusion of interest on the Bonds in gross income of the recipient for United States or in taxable net income of individuals, estates or trusts for State of Minnesota income tax purposes. No provision has been made for redemption of the Bonds, or for an increase in the interest rate on the Bonds, in the event that interest on the Bonds becomes subject to United States or State of Minnesota income taxation, retroactive to the date of issuance. Continuing Disclosure: A failure by the City to comply with the Undertaking for continuing disclosure (as described herein) will not constitute an event of default on the Bonds. Any such failure must be reported in accordance with the Rule and must be considered by any broker, dealer, or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. State Economy; State Aids: State cash flow problems could affect local governments and possibly increase property taxes. Book -Entry -Only System: The timely credit of payments for principal and interest on the Bonds to the accounts of the Beneficial Owners of the Bonds may be delayed due to the customary practices, standing instructions or for other unknown reasons by DTC participants or indirect participants. Since the notice of redemption or other notices to holders of these obligations will be delivered by the City to DTC only, there may be a delay or failure by DTC, DTC participants or indirect participants to notify the Beneficial Owners of the Bonds. Economy: A combination of economic, climatic, political or civil disruptions or terrorist actions could affect the local economy and result in reduced tax collections and/or increased demands upon local government. 11 VALUATIONS OVERVIEW All non - exempt property is subject to taxation by local taxing districts. Exempt real property includes Indian lands, public property, and educational, religious and charitable institutions. Most personal property is exempt from taxation (except investor -owned utility mains, generating plants, etc.). The valuation of property in Minnesota consists of two elements. (1) The estimated market value is set by city or county assessors. Not less than 20% of all real properties are to be appraised by local assessors each year. (2) The tax capacity (taxable) value of property is determined by class rates set by the State Legislature. The tax capacity rate . arks according to the classification of the property. Tax capacity represents a percent of estimated market % alue. The property tax rate for a local taxing jurisdiction is determined by dividing the total tax capacity or market value of property within the jurisdiction into the dollars to be raised from the levy. State law determines whether a levy is spread on tax capacity or market value. Major classifications and the percentages by which tax capacity is determined are: Type of Property Residential homestead' Agricultural homestead' Agricultural non - homestead Seasonal recreational residential Residential non - homestead: Indush ial/CommerciaVUtllity` 2006/07 First $500,000 - 1 OW% Over $500.000 - 1.25% First $500.000 HGA - 1.00% Over $500,000 HGA - 1.25% First $600.000 - 0.55°%' - Over $600.000 - 1.00% 2 Land - 1.00°-°' First $500,000 - 1.00°0' Over $500.000 - 1.25 1 unit - 1st $500,000 - 1.00% Over $500.000 - 1.25% 2 -3 units - 1.25% 4 or more - 1.25% Small Citv 1.25% First $150.000 - 1.50% Over $150.000 - 2.00% 2007/08 First $500.000 - 1.00% Over $500.000 - 1.25% First $500.000 HGA - 1.00% Over $500.000 HGA - 1.25 0 /o First S790.000- 0.55 %' Over $790.000 - 1.00 %' Land - 1.00% 2 First $500.000 - 1.00 %' Over $500.000 - 1.25°o' 1 unit - 1 st $500,000 - 1.00% Over $500,000 - 1.25 ° / 2 -3 units - 1.25°,'0 4 or more - 1.25% Small Cite' - 1.25% First $150,000 - 1.50% Oyer $150.000 - 2.00% 2008/09 First $500,000 - 1.00% Over $500,000 - 1.25% First $500,000 HGA - 1.00% Over $500,000 HGA - 1.250'o First $890,000 - 0.50 %' Over $890.000 - 1.00%2 Land - 1.00 °'0' First $500,000 - 1.00°%' Over $500.000 - 1.25 %' 1 unit - 1 st $500.000 - 1.00% Oyer $500.000 - 1.25% 2 -3 units - 1.25% 4 or more - 1.25% Small City 4 - 1.25% First $150.000 - 1.50 Oyer $150,000 - 2.00% I A residential property qualifies as "homestead" if it is occupied by the owner or a relative of the owner on the assessment date. 2 Applies to land and buildings. Exempt from referendum market value tax. 3 Exempt from referendum market value tax. 4 Cities of 5,000 population or less and located entirely outside the seven- county metropolitan area and the adjacent nine -county area and whose boundaries are 15 miles or more from the boundaries of a Minnesota city with a population of over 5,000. 5 The estimated market value of utility property is determined by the Minnesota Department of Revenue. 12 CURRENT PROPERTY VALUATIONS Estimated Full Value of Taxable Property, 2008/09 $1,746,921,775 ' 2008/09 Net Tax Capacity $ 21,520,922 166,852 $ 21,687,774 (1,455,229) (2,766,202) $17,466,343 2,840,070 $ 20,306,413 ' According to the Minnesota Department of Revenue, the Assessor's Taxable Market Value (the "ATMV ") for the City of Hopkins is about 96.2% of the actual selling prices of property most recently sold in the City. That sales ratio was calculated by comparing the selling prices with the ATMV. Dividing the ATMV of real estate by 0.962 and adding personal property and mobile home ATMV, if any, results in an "Estimated Full Value of Taxable Property" for the City of $1,746,921,775. 2 The captured tax increment value shown above represents the captured net tax capacity of tax increment financing districts in the City of Hopkins. 3 Each community in the seven - county metropolitan area contributes 40% of the growth in its commercial - industrial property tax base since 1972 to an area pool which is then distributed among the municipalities on the basis of population, special needs, etc. Each governmental unit makes a contribution and receives a distribution- - sometimes gaining and sometimes contributing net tax capacity for tax purposes. 13 2008/09 Assessor's Taxable Market Value Real Estate $1,672,423,700 Personal Property 8,435,600 Total Valuation $1,680,859,300 Less: Captured Tax Increment Tax Capacity Fiscal Disparities Contribution Taxable Net Tax Capacity Plus: Fiscal Disparities Distribution Adjusted Taxable Net Tax Capacity $1,746,921,775 ' 2008/09 Net Tax Capacity $ 21,520,922 166,852 $ 21,687,774 (1,455,229) (2,766,202) $17,466,343 2,840,070 $ 20,306,413 ' According to the Minnesota Department of Revenue, the Assessor's Taxable Market Value (the "ATMV ") for the City of Hopkins is about 96.2% of the actual selling prices of property most recently sold in the City. That sales ratio was calculated by comparing the selling prices with the ATMV. Dividing the ATMV of real estate by 0.962 and adding personal property and mobile home ATMV, if any, results in an "Estimated Full Value of Taxable Property" for the City of $1,746,921,775. 2 The captured tax increment value shown above represents the captured net tax capacity of tax increment financing districts in the City of Hopkins. 3 Each community in the seven - county metropolitan area contributes 40% of the growth in its commercial - industrial property tax base since 1972 to an area pool which is then distributed among the municipalities on the basis of population, special needs, etc. Each governmental unit makes a contribution and receives a distribution- - sometimes gaining and sometimes contributing net tax capacity for tax purposes. 13 2008109 NET TAX CAPACITY BY CLASSIFICATION Residential homestead Commercial /industrial Railroad operating property Non - homestead residential Commercial & residential seasonal /rec. Other Personal property Total TREND OF VALUATIONS 2008/09 Net Tax Capacity $10,320.848 8,072,464 47,756 3,020,589 2,910 56,355 1" RS $2 1,687,774 Percent of Total Net Tax Capacity 47.59% 37.22% 0.22% 13.93% 0.01% 0.26% 0.77% 100.00% ' Net Tax Capacity is before fiscal disparities adjustments and includes tax increment values. 2 Adjusted Taxable Net Tax Capacity is after fiscal disparities adjustments and does not include tax increment values. 14 Adjusted Assessor's Taxable Levy Taxable Net Tax Net Tax Percent +/- in Assessor's Year Market Value Capacity' Capacity' Taxable Market Value 2004/05 $1,340,217,400 $16,985,332 $ l 6,327,615 + 14.03% 2005/06 1,460,671,900 18,416,832 17,458,950 + 8.99% 2006/07 1,590,841,300 20,164,332 19,097,989 + 8.91% 2007/08 1,671,252,600 21,369,871 20,229,068 + 5.05% 2008/09 1,680,859,300 21,687,774 20,306,413 + 0.57% ' Net Tax Capacity is before fiscal disparities adjustments and includes tax increment values. 2 Adjusted Taxable Net Tax Capacity is after fiscal disparities adjustments and does not include tax increment values. 14 LARGER TAXPAYING PARCELS' Source: Current Property Valuations, Net Tax Capacity by Classification, Trend of Valuations and Larger Taxpaying Parcels have been furnished by Hennepin County. ' Hennepin County has provided only the ten largest taxpaying parcels which appear on the tax rolls of the County, and therefore the information stated above may not be reflective of the entire valuation of all parcels and may not include all classifications of property. 15 2008/09 2008/09 Assessor's Taxable Net Tax Taxpayer Type of Property Market Value Capacity SuperValu, Inc. Industrial $55,783,000 $1,114,910 Excelsior Crossings Investments LLC Commercial 22,000,000 439,250 Greenfield Apartments LLP Apartment 21,950,000 274,375 Duke Realty Corporation Industrial 12,500,000 249,250 Southwest Real Estate, Inc. Apartment 19,500,000 243,750 Hines Reit Minneapolis Industries LLC Industrial 11,500,000 229,250 The Luther Co. Ltd. Partnership Commercial 11,500,000 229,250 Ramsgate Apartments LLC Apartment 18,000,000 225,000 Oak Ridge Country Club Commercial 8,417,000 167,590 Steele & Bakken Investments LLC Commercial 6,800,000 135,250 Source: Current Property Valuations, Net Tax Capacity by Classification, Trend of Valuations and Larger Taxpaying Parcels have been furnished by Hennepin County. ' Hennepin County has provided only the ten largest taxpaying parcels which appear on the tax rolls of the County, and therefore the information stated above may not be reflective of the entire valuation of all parcels and may not include all classifications of property. 15 DEBT DIRECT DEBT' General Obligation Debt (see schedules following) Total g.o. debt being paid from housing improvement area fees (includes the Series 2009B Bonds of this offering) $ 3,245,000 Total g.o. debt being paid from revenues (includes the Series 2009A Bonds of this offering) 4,555,000 Total g.o. debt being paid from tax increment revenues 3,015,000 Total g.o. debt being paid from taxes 9,000,000 Total g.o. debt being paid from special assessments & tales 2,330,000 Total g.o. debt being paid from housing area improvement fees & tax increment revenues 1,250,000 Total g.o. debt being paid from revenues, special assessments & taxes 470,000 Total General Obligation Debt $ 23,865,000 Lease Purchase Obligations (see schedule following) Total lease purchase obligations paid by annual appropriations' $2,831,115 ' Outstanding debt is as of the dated date of the Bonds. 2 Non - general obligation debt has not been included in the debt ratios. 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C } C O ; N�2 cD h O 01 O r N M C r N N N N N O O O O O O O O O O O O O O O 0 E i6 N W N N N N N N N N N N N N N N N Q LL 24 N C O (O a 0 a a Q c Q O C O Z Q m CD N O M O a� w n a N rl a_ DEBT LIMIT The statutory limit on debt of Minnesota municipalities other than school districts or cities of the first class (Minnesota Statutes, Section 475.53, subd. 1) is 3% of the Assessor's Taxable Market Value of all taxable property within its boundaries. "Net debt" (Minnesota Statutes, Section 475.51, subd. 4) is the amount remaining after deducting from gross debt: (1) obligations payable wholly or partly from special assessments levied against benefitted property; (2) warrants or orders having no definite or fixed maturity; (3) obligations issued to finance any public revenue producing convenience (e.g. the Series 2009A Bonds of this offering); (4) obligations issued to create or maintain a permanent improvement revolving fund; (5) funds held as sinking funds for payment of principal and interest on debt other than those deductible under 1 -4 above; (6) other obligations which are not to be included in computing the net debt of a municipality under the provisions of the law authorizing their issuance (e.g. the Series 2009B Bonds of this offering). Assessor's Taxable Market Value $1,680,859,300 Multiply by 3% 0.03 Statutory Debt Limit $ 50,425,779 Less: Long -Term Debt Outstanding Being Paid Solely from Taxes' (9,245,000) Less: Long -Term Debt Outstanding Being Paid Solely from Annual Appropriations (applies to issues in excess of $1,000,000 originally issued after 6/1/97 which do not have revenues pledged) (2,440,000) Unused Debt Limit $ 38,740,779 ' Includes a portion of the $3,735,000 General Obligation Refunding Bonds of 2001 that refunded the $2,065,000 General Obligation Recreational Facilities Refunding Bonds, Series 1993D that are payable solely from taxes. 25 OVERLAPPING DEBT' Taxing District Hennepin County I.S.D. No. 270 (Hopkins) I.S.D. No. 283 (St. Louis Park) Metropolitan Council Three Rivers Park District' City's Share of Total Overlapping Debt $27,419,038 ' Only those taxing jurisdictions with general obligation debt outstanding are included in this section. Does not include non - general obligation debt, self - supporting g.o. revenue debt, short-term general obligation debt, or general obligation tax/aid anticipation certificates of indebtedness. 2 Hennepin County also has General Obligation Solid Waste Revenue Bonds outstanding which are payable entirely from the County's solid waste enterprise fund; General Obligation Bonds (Century Plaza Debt) which are expected to be paid from building rental fees from County departments and non - County tenants; and General Obligation Ice Arena Revenue Bonds which are expected to be paid from building rental payments from Augsburg College. These issues have not been included in the overlapping debt or debt ratios. 3 The above debt includes all outstanding general obligation debt supported by taxes of the Metropolitan Council. The Council also has general obligation sewer revenue, wastewater revenue, and radio revenue bonds and lease obligations outstanding all of which are supported entirely by revenues and have not been included in the Overlapping Debt or Debt Ratios sections. 4 Formerly listed as Suburban Hennepin Regional Park District. 2008/09 Adjusted City's Taxable Net % In Total Proportionate Tax Capacity City G.O. Debt Share 1,612.555.494 1.2593% $ 545,415,000 - 6,868,243 110,597,596 18.1370% 135,800,000 24,630,048 56,467,584 0.4380% 58,345,000 255,548 3,646,549.630 0.5569% 208,840,000 1,162,960 1,198,620,162 1.6941% 80,895,000 1,370,482 26 DEBT RATIOS Direct G.O. Debt Being Paid From: Housing Improvement Area Fees Revenues Tax Increment Revenues Taxes Special Assessments & Taxes Housing Improvement Area Fees & Tax Increment Revenues Revenues, Special Assessments, & Taxes Total General Obligation Debt Less: Funds on Hand' Less: G.O. Debt Paid Entirely from Revenues z Net General Obligation Debt City's Share of Total Overlapping Debt DEBT PAYMENT HISTORY Debt/Estimated Full Value of Debt/17,481 Taxable Property Estimated G.O. Debt ($1,746,921,775) Population $ 3,245,000 4,555,000 3,015,000 9,000,000 2,330,000 1,250,000 470,000 $ 23,865,000 (1,566,456) (4,555,000) $ 17,743,544 1.02% $1,015.02 $ 27,419,038 1.57% $1,568.51 The City has never defaulted in the payment of principal and interest on its debt. FUTURE FINANCING The City reports no plans for additional financing in the next three months. ' Funds on hand for debt redemption (available for payment of principal and interest) have been deducted from total general obligation debt to determine net general obligation debt. 2 Debt service on the City's general obligation revenue debt is being paid entirely from revenues and therefore is considered self - supporting debt. 27 TAX LEVIES AND COLLECTIONS TAX COLLECTIONS % Collected 99.92% 99.77% 99.01% 98.64% Property taxes are collected in two installments in Minnesota - -the first by May 15 and the second by October 15. Mobile home taxes are collectible in full by August 31. Minnesota Statutes require that levies (taxes and special assessments) for debt service be at least 105% of the actual debt service requirements to allow for delinquencies. ' This reflects the Final Levy Certification of the City after all adjustments have been made. 2 Collections are through May 31, 2009. 28 Certified Total Collected Collected Tax Year Levy' Following Year to Date 2004/05 $ 8,120,078 $ 8,049,825 $ 8,113,201 2005/06 8,438,078 8,341,797 8,418,534 2006/07 8,805,758 8,647,150 8,718,786 2007/08 9,224,380 9,055,054 9,098,501 2008/09 9,603,114 r -------------- ------------------------ process of collection L ------------ - - - - In % Collected 99.92% 99.77% 99.01% 98.64% Property taxes are collected in two installments in Minnesota - -the first by May 15 and the second by October 15. Mobile home taxes are collectible in full by August 31. Minnesota Statutes require that levies (taxes and special assessments) for debt service be at least 105% of the actual debt service requirements to allow for delinquencies. ' This reflects the Final Levy Certification of the City after all adjustments have been made. 2 Collections are through May 31, 2009. 28 TAX CAPACITY RATES' 2006/07 2004/05 2005/06 Hennepin County 44.172% 41.016% City of Hopkins 48.944% 48.262% I.S.D. No. 270 (Hopkins) 19.176% 21.565% I.S.D. No. 283 (St. Louis Park) 22.762% 20.577% Hennepin County HRA 0.000% 0.000% Hennepin County RRA 0.636% 0.559% Metropolitan Council 1.132% 0.873% Metropolitan Mosquito Abatement 0.564% 0.509% Metropolitan Transit 1.608% 1.542% Park Museum 0.775% 0.685% Three Rivers Park District 2.667% 2.830% Referendum Market Value Rates: I.S.D. No. 270 (Hopkins) 0.14342% 0.15102% I.S.D. No. 283 (St. Louis Park) 0.16925% 0.17065% 2006/07 2007/08 2008/09 39.110% 38.571% 40.413% 45.862% 45.570% 47.574% 19.019% 19.218% 20.080% 23.485% 19.580% 20.337% 0.000% 0.000% 0.090% 0.871% 0.979% 0.380% 0.877% 0.812% 0.817% 0.499% 0.486% 0.489% 1.295% 1.264% 1.273% 0.700% 0.719% 0.771% 3.068% 3.137% 3.334% 0.14140% 0.13177% 0.14621% 0.13101% Source: Tax Collections and Tax Capacity Rates have been furnished by Hennepin County. LEVY LIMITS 0.12427% 0.14860% The State Legislature has periodically imposed limitations on the ability of municipalities to levy property taxes. In 2008, the Legislature imposed levy limits for all counties and all cities over 2,500 population for budget years 2009, 2010 and 2011. These limitations do not apply to taxes levied to pay debt service on general obligation bonds of the City or to pay bonds of another governmental unit. For more detailed information about Minnesota levy limits, contact the Minnesota Department of Revenue or Ehlers & Associates. ' After reduction for state aids. Does not include the statewide general property tax against commercial/industrial, non - homestead resorts and seasonal recreational residential property. 29 THE ISSUER CITY GOVERNMENT The City of Hopkins was organized as a municipality in 1893. The City operates under a home rule charter form of government consisting of a five- member City Council of which the Mayor is a voting member. The City Manager, Finance Director, and City Clerk are responsible for administrative details and financial records. EMPLOYEES; PENSIONS; UNIONS The City currently has 103 full -time, 7 part-time, and 19 seasonal employees. All full -time and certain part-time employees ofthe City are covered by defined benefit pension plans administered by the Public Employee Retirement Association ofMinnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost - sharing multiple- employer retirement plans. PERA members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security. See the Notes to Financial Statements in Appendix A for a detailed description of the Plans. Recognized and Certified Bargaining Units Expiration Date of Bargaining Unit Current Contract Hopkins Municipal Employees Association December 31, 2009 International Union of Operating Engineers (Local 49 IUOE) December 31, 2010 Hopkins Police Officer Association December 31, 2009 Hopkins Police Dispatcher & Public Service Officer Association (LELS December 31, 2009 #143) Hopkins Police Sergeants Union (LELS 4171) December 31, 2009 LIABILITIES FOR OTHER POST EMPLOYMENT BENEFITS The City has obligations for some post - employment benefits (some mandated by State Statute and others that cover a portion of the cost of health insurance during retirement) for the majority of its employees. Accounting for these obligations will be dictated by new Governmental Accounting Standards Board Statements Nos. 43 and 45 (GASB 43 and 45). Although the City is not yet required to implement GASB 43 and 45, it has completed a preliminary actuarial study of its obligations. The preliminary study shows an actuarial accrued liability of $2,297,909 as of January 1, 2007. The City is currently funding these obligations on a pay -as- you -go basis, but will be considering other funding options in the next year. iff FUNDS ON HAND (As of October 26, 2009) Fund General Special Revenue Tax Increment Debt Service Internal Service Capital Projects Enterprise Funds Total Funds on Hand Total Cash and Investments $1,689,895 771,271 725,435 1,566,456 2,080,759 591,788 (315,657) $ 7,109,947 LITIGATION There is no litigation threatened or pending questioning the organization or boundaries of the City or the right of any of its officers to their respective offices or in any manner questioning their rights and power to execute and deliver these Bonds or otherwise questioning the validity of these Bonds. 31 ENTERPRISE FUNDS Cash flows for the City's enterprise funds have been as follows as of December 31 each year: Sewer Total Operating Revenues 2006 2007 2008 Water (1, 608,1 16) (1, (1,753,1 1 1) Total Operating Revenues $ 1,063.361 $ 1,133,248 $ 1,188,610 Less: Operating Expenses ( 1,091,239) ( 1,173,033) (1,289,533) Operating Income $ (27,878) $ (39,785) $ (100,923) Plus: Depreciation 196,882 206,364 209,441 Revenues Available for Debt Service $ 169,004 $ 166,579 $ 108,518 Sewer Total Operating Revenues $ 1,645,661 $ 1,427,675 $ 1,474,474 Less: Operating Expenses (1, 608,1 16) (1, (1,753,1 1 1) Operating Income $ 37,545 $ (356,326) $ (278,637) Plus: Depreciation 123.337 174,858 139,774 Revenues Available for Debt Service $ 160,882 $ (181,468) $ (138,863) Storm Sewer Total Operating Revenues $ 735,183 $ 724,778 $ 725,029 Less: Operating Expenses (288,807) (310,159) (323,639) Operating Income $ 446,376 $ 414,619 $ 401,390 Plus: Depreciation 181.577 183,245 190,091 Revenues Available for Debt Service $ 627,953 $ 597,864 $ 591,481 Pavilion/Ice Arena Total Operating Revenues $ 672,739 $ 459,003 $ 358,645 Less: Operating Expenses (365.377) (385,062) (411,134) Operating Income $ 307,362 $ 73,941 $ (52,489) Plus: Depreciation 49,274 61,901 67,980 Revenues Available for Debt Service $ 356,636 $ 135,842 $ 15,491 32 SUMMARY GENERAL FUND INFORMATION Following are summaries of the revenues and expenditures and fund balances for the City's General Fund for the past five fiscal years. These summaries are not purported to be the complete audited financial statements of the City. Copies of the complete audited financial statements are available upon request. See Appendix A for excerpts from the City's 2008 audited financial statement. COMBINED STATEMENT Revenues Property taxes Intergovernmental Fees, licenses and permits Charges for services Fines Interest Other miscellaneous revenues Total Revenues Expenditures Current: General government Public safety Health and welfare Highways and streets Culture and recreation Capital outlay Total Expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses) Operating transfers in Operating transfers out Total Other Financing Sources (Uses) FISCAL YEAR ENDING DECEMBER 31 2004 2005 2006 2007 2008 $ 6,372,727 $ 6,947,865 $ 6,883,644 $ 7,209,319 $ 7,497,680 743,812 732,468 711,703 694,668 551,586 531,206 492,295 419,513 653,841 541,217 277,206 438,547 199,171 298,335 330,861 156,449 178,785 181,006 196,559 174,020 48,919 72,883 132,007 129,696 92,853 298.714 320.617 308,993 316,321 320,036 $ 8,429,033 $ 9,183,460 $ 8,836,037 $ 9,498,739 $ 9,508,253 $1,015,190 $1,251,717 $1,308,542 $ 1,504,597 $1,502,420 4,588,464 4,700,413 4,872,897 5,171,472 5,598,958 57,814 61,976 67,950 68,205 111,223 1,627,347 1,773,140 1,792,830 2,055,793 2,187,173 461,239 469,140 474,528 498,343 527,738 82.186 149.683 60,362 40.329 39,136 $ 7,832,240 $ 8,406,069 $ 8,577,109 $ 9,338,739 $ 9,966,648 $ 596,793 $ 777,391 $ 258,928 $ 160,000 $ (458,395) $ 0$ 0$ 0$ 0$ 0 (313,408) (537,492) (250,000) (18,252) (7,361) $ (313,408) $ (537,492) $ (250,000) $ (18,252) $ (7,361) Excess of revenues and other financing sources over (under) expenditures and other financing $ 283,385 $ 239,899 $ 8,928 $ 141,748 $ (465,756) uses General Fund Balance January 1 3,787,911 4,071,296 4,311,195 4,320,123 4,461,871 Prior Period Adjustment 0 0 0 0 0 Residual Equity Transfer in (out) 0 0 0 0 0 General Fund Balance December 31 $ 4,071,296 $ 4,311,195 $ 4,320,123 $ 4,461,871 $ 3,996,115 DETAILS OF DECEMBER 31 FUND BALANCE Reserved $ 97,740 $ 943,474 $ 974,517 $ 1,157,142 $ 111,806 Unreserved: Designated 3,973,556 3,367,721 3,345,606 3,304,729 3,884,309 Undesignated 0 0 0 0 0 Total $ 4,071,296 $ 4,311,195 $ 4,320,123 $ 4,461,871 $ 3,996,115 33 GENERAL INFORMATION LOCATION The City of Hopkins, with a current State Demographer's estimated population of 17,481 and comprising an area of four square miles, is located approximately eight miles southwest of the City of Minneapolis. LARGER EMPLOYERS Larger employers in the City include the following: Firm SuperValu, Inc. I.S.D. No. 270 (Hopkins) Augustana Chapel View Care Center Oak Ridge Country Club Rudy Luther's Hopkins Honda Thermotech City of Hopkins Hopkins Care Center SunGard Financial Systems EDCO & Arrowhead Products, Inc. Source: Written and telephone survey (October, 2009) and the 2009 Minnesota State Business Directory. ' Includes full -time, part-time and seasonal. 2 Reflects the total number of District employees, some of which work in the City. 34 No. of Type of Business /Product Employees' Food distributor /retailer 1,350 Elementary and secondary education 1,222 Nursing home 219 Country club 184 Automobile dealership 157 Precision injection moldings 152 Municipal government and services 129 Nursing home 125 Data processing 105 Outdoor building products 100 Source: Written and telephone survey (October, 2009) and the 2009 Minnesota State Business Directory. ' Includes full -time, part-time and seasonal. 2 Reflects the total number of District employees, some of which work in the City. 34 U.S. CENSUS DATA Population Trend: City of Hopkins, Minnesota 1990 U.S. Census 16,534 2000 U.S. Census 17,145 Current State Demographer's Estimate 17,481 Percent of Change 1990 - 2000 +3.70% Income and Age Statistics Housing Statistics City of Hopkins 1990 2000 All Housing Units 8,572 8,404 Source: 1990 and 2000 Census of Population and Housing. EMPLOYMENT /UNEMPLOYMENT DATA Rates are not compiled for individual communities within counties. Average Emplovment Year City of Hennepin State of 2006 Hopkins County Minnesota 1999 per capita income $26,759 $28,789 $23,198 1999 median household income $39,203 $51,711 $47,111 1999 median family income $50,359 $65,985 $56,874 2000 median gross rent $710 $654 $566 2000 median value owner occupied housing $132,400 $143,400 $122,400 2000 median age 34.1 yrs. 34.9 yrs. 35.4 yrs. Housing Statistics City of Hopkins 1990 2000 All Housing Units 8,572 8,404 Source: 1990 and 2000 Census of Population and Housing. EMPLOYMENT /UNEMPLOYMENT DATA Rates are not compiled for individual communities within counties. Average Emplovment Year Hennepin County 2005 627,854 2006 626,862 2007 629,593 2008 627,744 2009, September 613,237 Source: Minnesota Department of Employment and Economic Development. Percent of Change -1.96% Average Unemployment Hennepin County State of Minnesota 3.8% 4.2% 3.6% 4.1% 4.1% 4.6% 4.9% 5.4% 7.3% 7.1% 35 BUILDING PERMITS FINANCIAL INSTITUTIONS Financial institutions located in the City include the following: Citizens Independent Bank (Branch of St. Louis Park) Peoples Community Credit Union U.S. Bank National Association (Branch of Cincinnati, Ohio) Wells Fargo Bank, National Association (Branch of Sioux Falls, South Dakota) West Metro Schools Credit Union Source: American Financial Directory. ' As of October 26, 2009. 36 2005 2006 2007 2008 2009' New Single Family Homes No. of building permits 3 3 3 2 1 Valuation $1,965,000 $588,000 $829,900 $610,000 $175,000 New Multiple Family Buildings No. of building permits 2 2 0 0 0 Valuation $8.650,000 $10,484,000 $0 $0 $0 New Commercial/Industrial No. of building permits 5 4 5 6 3 Valuation $647,080 $1,064,800 $34,322,500 $30,579,314 $29,278,000 No. of All Building_ Permits 377 494 377 406 320 (including additions and remodelings) Valuation of All Building Permits $32,138.273 $14.242,117 $50.546,510 $39,403,166 $53,283,021 (including additions and remodelings) FINANCIAL INSTITUTIONS Financial institutions located in the City include the following: Citizens Independent Bank (Branch of St. Louis Park) Peoples Community Credit Union U.S. Bank National Association (Branch of Cincinnati, Ohio) Wells Fargo Bank, National Association (Branch of Sioux Falls, South Dakota) West Metro Schools Credit Union Source: American Financial Directory. ' As of October 26, 2009. 36 EDUCATION Independent School District No. 270 (Hopkins Public Schools) provides education for 7,258 students in grades K through 12. The District, with 1,222 employees, owns and/or operates ten schools, three of which are located in the City of Hopkins. Teachers' contracts in the District are currently in negotiations. A small portion of the City is also located in Independent School District No. 283 (St. Louis Park). IN- PATIENT MEDICAL FACILITIES IN THE CITY Name of Facility Augustana Chapel View Care Center Golden Living Center Hopkins Source: Minnesota Department of Health. Type of Facility No. of Beds Nursing Home 128 Nursing Home 138 N:\ Miimsota \HOPKINS\BISUM\2009B$289Dm.dec (taxable GO housing imp area ref)\os.mlr.2009A &B.wpd RK:DC /dll:pt 37 APPENDIX A EXCERPTS FROM FINANCIAL STATEMENTS Reproduced on the following pages are excerpts from the City's audited Financial Statements for the fiscal year ending December 31, 2008. The Financial Statements have been prepared by the City and audited by a certified public accountant. The Management's Discussion and Analysis and the Notes to Financial Statements are an integral part of the audit and any judgment of the Financial Statements should be based on the Financial Statements as a whole. Copies of the complete audited financial statements for the past three years and the current budget are available upon request from Ehlers. e s 4 i• 7 c u u. v w ;� >, w'- v "p " -° r m E E e ?' �° = C c t E c I S o s e_ c_ a v C '�J C C V q C E _ ° Z . Ear c E €^ E E E u e 2 E S r - c E E ° E F' C c C E j y Y n O E C �.' 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L A -7 3 City of Hopkins Statement of Net Assets December 31, 2008 A -8 Primary Government Governmental Business -type Activities Activities Total Assets Cash and investments $ 12,547,546 $ 1,191,102 $ 13,738,648 Taxes receivable 338,961 - 338,961 Special assessments receivable 7,544,396 7,544,396 Accounts receivable 435,861 301,659 737,520 Intergovernmental receivable 2,887,627 79,245 2,966,872 Interest receivable 47,232 2,616 49,848 Internal balances 1,147,757 (1,147,757) - Inventories 103,250 27,847 131,097 Prepaid items 8,921 74,220 83,141 Deferred charges 349,110 349,110 Long -term receivables 1,253,747 163,002 1,416,749 Capital assets, non depreciable 10,451,068 2,122,683 12,573,751 Capital assets, net of accumulated depreciation 35,755,227 17,386,139 53,141,366 Total assets 72,870,7 20,200,756 93,071,45 Liabilities Accounts payable 382,065 170,901 552,966 Salaries payable 243,896 26,781 270,677 Due to other governments 680 19,013 19,693 Accrued interest payable 445,936 65,065 511,001 Compensated absences due within one year 596,495 107,204 703,699 Unearned revenue 2,850,965 1,520 2,852,465 Capital lease due within one year 33,885 93,885 Bonds due within one year 1,805,000 505,000 2,310,000 Non current liabilities: Compensated absences 206,258 23,327 229,585 Net OPEB liability 67,264 15,522 82,786 Capital lease due in more than one year 391,115 - 391,115 Bonds due in more than one year 21,338,776 2,905,000 24,243,776 Total liabilities 28,362,335 3,8 32,201, Net Assets Invested in capital assets, net of related debt 30,769,922 16,081,209 46,851,131 Restricted for Economic development 940,119 - 940,119 Debt service 9,134,555 9,134,555 Unrestricted 3,663,772 280,214 3,943,986 Total net assets $ 44,508,368 $ 16,361,423 $ 60,869,791 A -8 V C w m m m � w C d Z m U) w L 41 CL c K C Ill to t y U Z m 0 O y) N y 3 � C w � w s E .— Y V O Q m m `O c o 0 E c U m � m N } m O LL V' N , N N ti ^ LO C) f` A m m &A N Ch m ^ r o L11) m ` Q , CD O co N LD N m C1 IO I� m N r 4J N Ln t� m 0 O LD 9 m t� c0 M Q) m N m O m 6 m Lrn 1- N O C"J N LND O Q1 lD N M L7 O O y c O (P jp LO c] LD N O) m (D m V N N V 7 LA N m p co 00 O O m ) p m .� LO A -9 67 t` N � p co 00 O O N ) p m .� N N N O N� L C (0 _D Q O u) r Q) co� C w m I- N t"1 L7 m O LP CD r p LT m m LA LO m m ±% LD O LD N M ['J `-' O m m C1 'T V [7 V m CO N O lA E v O C m r N 7 'o (7 en � ru w C C tf O LD ti M N LO r7 N O C7 r t� (D N Ql 2 c d m m ti D ' w 9 C m M 7 7 L• f� r- C7 .- (") O L` r a✓ 2': L N Q C C O Ln T n M m u a) C) y _ M N d f� N N N V7 O m 7 r Cl) cn N N C7 N N N E U� E 'El Lp N G m o a u a; C O C U La w E m C o m m m �' c c' C) p C o r m O N O Ln m ( y D c� OO. 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[V fD O 10 O yy r NN mp - Q p T r N t7 B u"1 1� h /� tYIO tp Q m t�C Q t�C3 to N m V) 10 r V1 r 6! rn ° ° a c7 ti w lei M > d _ N d � d L � V Q j N l yy QQEtt Q1 y d 6 N w ap E W O d U C 'per Yl y Y o) T CC N N C u m 5 0 cyi N y = C m m o U y0 is 'E Z m V L C i N n d T9 4l d Z p . ui a a r q u. c�� O u U IL E a to u. to , G d O o; U A -12 k N U 7 J N E c o .rgonEN o m N y ? 4J C)_ N rn e m m o` o E �9 v c y 3 C yy C O r- a � E N, [� N N m N ._ y N U Opp, to C y C as c c y W m N m m`cNNa LNa Nd 44 -0 w Nm d W U m 'fl 6 U S N U g y U m m 0 - m _ o ° N C ? M E � o rn v (9 �-r- k o 0 -a d tq G 7 O 4 A -13 N U 7 J N E c o .rgonEN o m N y ? 4J C)_ N rn e m m o` o E �9 v c y 3 C yy C O a � E N m N ._ y N U �ti c m o to C y C as c c y W m �,°, �r m m`cNNa LNa Nd 44 -0 w Nm d W U m 'fl 6 U S N U g y U m m 0 - m _ o ° N C ? M E � o rn v (9 �-r- m m G C 9 N y y cc 9 Ncc a E j 7 J 6 61 O C - 9ai m y O >, is R :7f - O � N O N co�X NN �mEE4:> 4' Ec Q c W m m E m c N G o N v 7 m a x m y U ro > N L L V ( p�� II m V 9 r � N F 3 O p a' cS 7 E N- c y o 0 -a d tq G 7 O 4 A -13 City of Hopkins intergovernmental Market value aid credit 7,350 246,855 126,391 1 of 5 State grants Statement of Revenues. Expenditures and Changes in Fund Balance 104,510 180,025 15,515 Budget and Actual 165,000 165,000 168,790 3,790 General Fund 104,000 104,000 76,022 (27,979) For the Year Ended December 31, 2008 1,000 - (1,000) Other grants 6,000 6,000 Variance with (5,642) Total Intergovernmental 440,510 687,365 final budget (135,779) Budget 92,853 115,054) positive 290,000 Original Final Actual (negative) Re-, enues 162,100 174,020 11,920 Total Other Taxes 411,107 412,889 1,782 General property taxes 5 7,969,380 S 6,673,142 S 6,597,466 S (75,676) Fiscal disparities 949,383 900,214 (49,169) Total Taxes 7,869,380 7,62,525 7,497,680 (124,845) Licenses and permits Business 139,500 139,500 129,930 (9.570) Non- business 342,070 342,070 411257 692)7 Total Licenses and permits 481.570 481.570 541,1' 17 59,647 intergovernmental Market value aid credit 7,350 246,855 126,391 (120,464) State grants 164,510 104,510 180,025 15,515 Insurance premium - police 165,000 165,000 168,790 3,790 Insurance premium - fire 104,000 104,000 76,022 (27,979) Federal grants 1,000 1,000 - (1,000) Other grants 6,000 6,000 358 (5,642) Total Intergovernmental 440,510 687,365 551.596 (135,779) 107,907 92,853 115,054) Fines and Forfeitures 290,000 290,000 287,263 (2,737) Court fines 162.100 162,100 174,020 11,920 Charges for services General government 7,350 7,350 12,889 5.539 Public safety 134,250 134,250 262,194 127,944 Public works 2,600 2,600 4,952 2.352 Recreation 63,300 63,300 50,826 (12,474) Total Charges for services 207.500 207,500 330,861 123,361 Other Investment earnings 107,907 107,907 92,853 115,054) Franchise fees 290,000 290,000 287,263 (2,737) Miscellaneous 13,200 13 ,200 32.773 19,573 Total Other 411.107 411,107 412,889 1,782 Total Revenues 9.571167 9.57,167 9,508,253 (63.914) Expenditures General Government: Mayor and council Salaries and employee benefits 26,497 26,497 26,776 (279) Materials, supplies and services 53,885 53,885 40,548 13,337 Total 80,382 80,382 67.324 13,058 A -14 Cit} ofllopkins Statement of ReN cnues. F and Changes in Fund Balance Budget and Actual General Fund For the Year Ended December 31.'_008 Expenditures, (continued) General Go\ernment, (continued): Administrative services Salaries and employee benefits Materials, supplies and services Total Less expenditures charged to other acre [tics Net 2 0 1' 5 Finance 126,625 l "8'.132 Variance with (1,116) Salaries and employee benefits 309,752 final budget 13UJgct (9,010) Materials, supplies and senices posime Onginal Final Actual (negative) S 467,956 S 469.015 S 472,827 S (3.5121 5i,609 57,83.4 46,294 11.540 523,565 52(,,549 519.121 7.728 t l D0.000) (100,0001 (100,000) 423,565 426,849 41 U.1 ' 1 7,724 Finance 126,625 l "8'.132 {11.507) (1,116) Salaries and employee benefits 309,752 311,076 320,056 (9,010) Materials, supplies and senices 71,440 71, = ' [ 68,279 3,161 Total 381,19 352.516 348,365 (5,849) Less expenditures charged to other act[` [ties ('_09,3501 (209,150) ( 209,850) (40,000) Net 171.31 172,666 1"'x.,;15 (5.849) Legal Services Materials. supplies and services Municipal Building Salaries and employee benefits Materials, supplies and services Capital outlay Total Les% expenditures charged to other actmtic, Net Elections Salaries and employee benefits Materials, supplies and sen ices Total City Clerk and Reception Salaries and employee benefits Materials, supplies and service, Capital outlay Total Less expenditures charged to other activities Net Assessing 126,625 126,625 l "8'.132 {11.507) (1,116) Materials, supplies and services 120,689 12 1, 717 1(18,646 13,()71 10,536 210,536 189337 21,199 1[[.012 1 0,r,12 3,497 2,115 341.83' 342,865 306,-180 36,385 (40,000) (40,000) (40,000) 301,537 302,865 266,480 36,385 31.901 31,901 31,1(4 797 '_4,837 '_4,817 '_6,625 (1,788) 56.735 5t�.738 57.729 (991 ) 119,579 119,919 113,080 6,839 19.362 19,862 2) 2,772 (2,910) 8,000 5.000 6,436 1,564 147,741 147,731 142,288 5,493 {3;,000) (37,000) (37,0001 110.741 110.731 105 2SS 5,493 Salaries and employee benefits 70,344 75,054 76,200 (1,116) Materials, supplies and services 96,537 1 1 1.5? I I i... 56 1,381 Total 166,851 146,021 156,356 265 Less expenditure% charged to other activities (24,000) (24,000) (24,000) Net 142,881 16'_,621 16_2356 265 A -15 3 City of Hopkins Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual General Fund For the Year Ended December 31, 2008 3 of5 Total General Government Public Safety: Police Police Administration Salaries and employee benefits Materials, supplies and services Net Police Patrol and Investigation Salaries and employee benefits Materials. supplies and services Total Police Services Salaries and employee benefits Materials, supplies and services Capital outlay Total Total Police Fire Salaries and employee benefits Materials, supplies and services Total Inspections Salaries and employee benefits Materials, supplies and services Total Total Public safety 1,526,243 1,565,298 1,508,282 57,016 349,782 350,566 368,915 (18,349) Variance with 103,663 81,406 22,257 453,445 final budget 450,321 Budget 2,279,762 positive 2,523,371 Original Final Actual (negative) Expenditures, (continued) 2,611,437 2,630,453 2,, (234.253) General Government, (continued): 809,422 839.279 848,279 (9,()00) PIanning and economic development 200,072 164.858 35,214 5,147 Salaries and employee benefits S 100,355 S 99,404 S 98,389 S 1,015 Materials, supplies and services 31,777 46,367 34,948 11.419 Total 132,132 145,771 133,337 12,434 Less expenditures charged to other activities ( 20,000) (20,000) (20,000) 331.500 Net 112.132 125,771 113,337 12,434 Total General Government Public Safety: Police Police Administration Salaries and employee benefits Materials, supplies and services Net Police Patrol and Investigation Salaries and employee benefits Materials. supplies and services Total Police Services Salaries and employee benefits Materials, supplies and services Capital outlay Total Total Police Fire Salaries and employee benefits Materials, supplies and services Total Inspections Salaries and employee benefits Materials, supplies and services Total Total Public safety 1,526,243 1,565,298 1,508,282 57,016 349,782 350,566 368,915 (18,349) 103,663 103,663 81,406 22,257 453,445 454,229 450,321 3,908 2,279,762 2,298,778 2,523,371 (224.593) 331,675 331,675 331.335 340 2,611,437 2,630,453 2,, (234.253) 809,422 839.279 848,279 (9,()00) 200,072 200,072 164.858 35,214 5,147 5.147 5.120 27 1,014,641 1,044,498 1,018,257 26,241 4,079,523 4.129.180 4,323,284 (194.104) 465,796 466,843 513,498 (46.655) 291,541 291,541 331.500 (39,959) 757,337 758,384 844,998 (86,614) 359,555 361,727 366,301 (4,574) 82,529 80,659 69,495 11.164 442,084 442,386 435.796 6,590 5,278,944 5329,950 5,604,078 (274,128) A -16 City of l lopkirts Statement of Re%enues, Expenditures and Changes in Fund Balance Budget and Actual General f urni For the Year Ended Deeenibcr 31, 2008 Budget On einnl Final Expenditures, (continued) Health and Welfare: Inspections Salaries and employee benefits Materials, supplies and ser ices Total Total Health and welfare S 47.004 S 49,961 S 24,206 :( 4 o t' 5 Variance with linal budget positi%c \ctual (negative) 56,456 S (16,495) -1.767 1,369 71.270 7(,,(19' 111.1_} ,_ 5.126' Highways and Streets: Public works buildings and equipment seen ices Salaries and employee benefits 210,363 '_ 1 1 ,4 70 216,865 (5,3951 Materials, supplies and services 90.602 90,602 84.81 %' 5.785 Capital outlay 8,000 8,000 7,035 965 Total 308.965 310,0 -2 308",1 1355 Less expenditures charged io oihcr acti�iiie, (213.000) (213,000) ('_'01,075) (11,922) Net 95,96; 97,072 107 r.a_ (10,570) Public Work% Administration and E:u6neering Salaries and employee benefits 318.018 317,468 310,10`{ 7,300 Materials, supplies and services 52.211 52,2 4 8,597 Total 370.229 369,679 353,72 15,957 Less expenditures charted to other acticiucs ('_ 13.000) (_213,000) { 149,06'_) (63,938) Net 15 ?_, a 156,679 204,660 (47,981) Streets and Alleys Salaries and employee benefits 379 ,595 374,784 441,375 (66,591) Materials, supplies and services 57',. 11 5 77 1, 11 57.t t (10,375) Total 956,906 952.095 1.029,064 ( Less expenditures charged to oth--r acn�inc� ( 110,000) (1 10,0(101 110.000) Net 846,906 842,095 919.064 (76,969) Snow and Ice Removal Salaries and employee benefits 90,163 90,163 101,896 (1 1 733 ) Materials, supplies and sen ices 63,565 (3,568 8!,699 ; 1 � :,3 Total S ,731 1 731 183,595 (29,864) Municipal parks and tree service: Salaries and employee benefits 478,583 485,446 522,908 (37,462) Materials, supplies and services 285,257 2S1.257 256,339 24,918 Capital outlay 4,000 4,020 (20) Total 763,840 7 11,703 783,267 i 12.5(4) Total Highways and Streets 2,017,671 ?,020? S0 2,198.228 177.94.E 1 A -17 Expenditures, (continued) Culture and Recreation: Activity center Salaries and employee benefits Materials, supplies and services Capital outlay Total Park and Recreation Salaries and employee benefits Materials, supplies and services Total Total Culture and Recreation Unallocated Materials, supplies and services Total Expenditures Other Financing Sources (Uses): Transfers out: Net change in fund balance Fund Balance - January I Fund Balance - December 31 City of Hopkins Statement of Revenues. Expenditures and Changes in Fund Balance Budget and Actual General Fund For the Year Ended December 31. 2008 5of5 A -18 Variance w ith final budget Budget positive Original Final Actual (negative) S 199,555 S 199,527 S 222,057 S (22,530) 110,685 110,685 105,220 5,465 - - 8,028 (8,028) 310,240 310.212 335,305 (25,093) 57,681 57,683 42,679 1 5,004 159.118 159.118 157,782 1.336 216.799 216,801 200,461 16,340 527.0.39 527,013 535,766 (ts.753) 136,000 38,529 9,071 29,458 9,557,167 9.557,167 9,966,648 (409.481) (15,000) (15,000) (7,361) 7,639 — (465,756) (165,756) 4,461,871 4,461,871 4,461,871 — S 4,461,871 S 4,461,871 S 3.996.115 S (465,756) A -18 City of Hopl.ins Economic Development Special Re%enue Fund Statement of Revenues, E \penditures , and Changes in Fund Balance - 13,idgel and Actual Year Ended December 31, 2008 Original and final budget Revenues: General property taxes Investment earnings Other Total Revenues S 30,000 S '0,00(1 X0,000 Expenditures: Variance with Salaries and employee benefits final budget 154,546 positiN - c Actual (negatitie) 66.504 19,239 28,568 S (1,432) 40,592 20,592 27,721 27 .721 96,851 46,SS 1 Salaries and employee benefits 152,625 154,546 (1,921) Materials. supplies and scrn ices 86,043 66.504 19,239 Total 238,668 221,330 17,315 Less expenditures charged to other actiNities (37,500) (37,500) Net 201.168 1 53,850 17,318 Other Financing Sources (Uses); Transfer to Art Center Fund Net change in fund balance Fund Balance - January I Fund Balance - December 31 101.000) (61,00(j) (212,168) (147.969) 64.199 3,057,895 3,057,595 ti `+3.730 S 2,909.929 64.199 A -19 City of Hopkins Tax Increment 1.2 - Entertainment Center Special Revenue Fund Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Year Ended December 31, 2008 Revenues: Taxes: Tax increment Investment earnings Total Revenues Expenditures: Materials, supplies and services Capital outlay: Public improvements Total Expenditures Net change in fund balance Variance with Original and final budget final positive budget Actual (negative) S 50,000 S 50,124 S t24 1,000 4,608 3,608 51,000 54.732 3,732 1,100 1,443 ( 343 ) 75,000 75,000 - 70.100 76,443 (343) (25,100) (21,711) 3,389 Fund Balance - January 1 (74,479) (74,479) Fund Balance - December 31 S (99,579) S (96,190) S 3,389 A -20 i x i C � H J L .. 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'i o'- m � 3 � •� � i .' t n % '� � �' e y s � * � •y E � �''�' �� m gS d `�2 Z G am' y� 3 g' c#- r •r " r •? aG 4 S x i f : ✓�+, J 6�0 f. j i�, 3.J' V i Y J' - i,� y� ? Y -`•i 7 2 z ! {: _ `� �.#> Lid i " r :ic �'5.' ° ff K a '� t s F3o. t�`� �• ° 'fin i.- .'�`'.��:� : n � /, 'A a � WA l � �t v ¢a G d �. •r L ° '3 ie Sri � 'L ^ `A 'L °> ;'�' �., o i 4 F r s ce- ` s• t l• J r r, F, gZ ...}}},,, � .� . � � f :e nnn��� ! -o e � � v �y,'�' �, �' „� Y 3 L ;t c, t ' � � � 'y � � G i F r . JY q �i R , Y r G C�c �f G ^' -'i i f G V ,', f G '�'.- G S cam ✓ ' F L 3 ,�, X $ n r n A r, ss �. .f. r �`.3 F � f ,g ` c +o- � G '� 3 � � �• ` r $ � G ; � i � k 7 � s � ?, P'7 7 e A-35 \\ \� )\ �_% \ \ / � }\ \\} fa ::\ ���� � (\\ � § �- \� \ \\ ® � �\ t_ Lf ;: - \_: - - ® ® } E L' le ta I-r 3 _ ] ;) » )y! ±t� \ \.- � \ } \ \ }� - - - Z4 \ \ \ \\ \2 \ \ \)\ { ® /`� \7 \ }}Z \ j - - � 0 77 F — ; q -- �E " A-35 •� a ,.. t 'n y r s h� Y o i• A' e i s a r is L y � ' . � A -36 a City of Hopkins Combmime Statement ol'Nct Assets Internal Ser\ice Funds December 31. 2008 ASSETS Current assets: Cash and investments Due from other governments Advance to other funds Accrued interest receivable Total current assets Property and equipment Machinery and Lquipmcnt Less accumulated depreciation Net property and equipment Total Assets LIABILITIES Current Liabilities: Accounts payable .Accrued interest payable Due to other governments Compensated absences pa}oblc Capital lease - current Total Current Liabilities Noncurrent Liabilities Compensated absences payable Capital lease payable Total Noncurrent Liabilities Total Liabilities NET ASSETS invested in capital assets, net of related debt Unrestricted Total Net Assets 9,201 6,855 tntemal 3,889 Service Equipment insurance Employee Fund Total Replacement Risk Benefits 2008 33,885 33.885 S 1.031.170 ti 124,64-t S 909,716 S 1065,530 12,154 206,258 1 2,154 114- 392 114,392 3.562 432 2.734 6.728 1.161,275 125,076 917 a5U 2,198,804 2,731.457 2,731,487 6,569,575 i l 11? 1 S 109,697 6,569,575 {3,413,058) S 1 1 x' 1 S S I W).6t) 7 0).4 13,088) 3,156,487 3,156,487 4.3:7.765 125.076 912,450 5.355?91 9,201 6,855 16,059 3,889 3,889 91 91 596,495 596,495 33,885 33.885 47,1(,, 6.858 596,495 6;0.419 206,258 206,258 391,115 391.115 393.115 = 06, 597.; 3 Y: x.151 6,455 '�02.753 1. ?.-1 - - 792 2,731.457 2,731,487 1,148,097 i l 11? 1 S 109,697 1,376,012 S 3.879,584 S 1 1 x' 1 S S I W).6t) 7 S 4,107.499 A -37 CITY OF HOPKINS, MINNESOTA Combining Statement of Revenues Expenses, and Changes in Net Assets Internal Service Funds Year Ended December 31, 2008 Equipment Insurance Employee Replacement Risk Benefits Operating revenues: Charges l S 287,127 S 19.599 S Operating expenses (excluding depreciation): Materials, supplies and services Operating income before depreciation Depreciation expense Operating loss Nonoperating revenues (expenses): Intergovernmental grants Investment earnings Gain on sale of property and equipment Interest expense Total nonoperating revenues Change in net assets Fund Equity: Net assets - January 1 Net assets - December 31 Total - S 306,726 25,604 107.980 11,223 144,807 261,523 (88,381) (11,223) 161,919 405,639 - - 405,639 (144,116) (88,381) (11,223) (243,720) 12,154 - - 12, 154 37,376 5,637 26,337 69,350 16,150 - 16,150 (3,889) - - (3,889) 61,791 5,637 26,337 93365 (82,325) (82,744) 15,114 (149,955) 3,961,909 200,962 94,583 4,257,454 S 3,879.584 S 118,218 S 109.697 S 4,107.499 A -38 Ctp of Ilopkrn, Combining Statement of Cash Fio%N Intcmul Sernrce Funds For the Year Ended Dccemher 31, 2008 Equipt7ent In Replacement Cash Floes from Operating Activities Receipts from customers and uu:rs S S Receipts from interfund services pro\ tded Payments to suppliers Payments for interfund sen ices used Payments for interfund wry ices used Net cash provided (used) by operating ncti� roes Cash Flows from Capital and Related Finam:mv Acm Ines: Proceeds from capital lease Purchases of capital aswts Proceeds from Sale, of capital assets Net cash used by capital and related financing activities Cash Flows From Investing Activities Net increase (decrease) in cash and ca,h eyut%alcnts Cash and Cash Equivalents - Januarn I Cash and Cash Equivalents - December = I Reconciliation of operating income (lo,s } to net cash provided (used) by operating actn rties: Operating income (loss) Adjustments to reconcile operating mcvme {lo,$) to net cash provided (used) by operating acn\ rites: Depreciation expense (Increase) decrease in: Accounts receivable Due from other funds Increase (decrease) in; Accounts, compensated absence~ and accrued interesct payable Net Cash Provided (Used) by Operating Artluties 310,344 (10,7 ?91 (:`;,259) surance Employee Risk I3enciits Totals 19,599 S 19,599 31 n.' 44 (1(10'22x) (111, 04) (597) (9,186) 5.93 109,372 109,372 (51.523) 109371 31„ 125 425,000 425,000 ( 1.109.014) (1,109,(114 1 50 (66', 564) (66".%4) ,454 5.93 26,662 71.1 >1 (;35,1;4) 75,58x) 136,034 (277,OKS) 1,369.304 200,_232 773,652 2.343,2 IS 11'0 S 124.644 S n > 71 ( S 2,1165,530 S (144,116) C (SN,351) S (11.2231 S (2 43,7 4()5,(139 - - 405,639 23 _ _ 23 fi.536 (1,S5S 120,595 133,9`) S 291..' - n S 51,5' 3) S 109,37' S 31 ).125 A -39 APPENDIX B FORM OF LEGAL OPINION K p pp Offices in emed- 470 U.S. Bank Plaza 200 South Sixth Street ,J Minneapolis Minneapolis MN 55402 QG Saint Paul Ga e (612) 337 -9300 telephone (612) 337 -9310 fax l Y St. Cloud " http: / /www.kennedy- graven.com Affirmative Action Equal Opportunity Employer General Obligation Bonds, Series 2009A City of Hopkins Hennepin County, Minnesota We have acted as bond counsel to the City of Hopkins, Hennepin County, Minnesota (the "Issuer ") in connection with the issuance by the Issuer of its General Obligation Bonds, Series 2009A, (the "Bonds "), originally dated as of December 15, 2009, and issued in the original aggregate principal amount of $ In such capacity and for the purpose of rendering this opinion we have examined certified copies of certain proceedings, certifications and other documents, and applicable laws as we have deemed necessary. Regarding questions of fact material to this opinion, we have relied on certified proceedings and other certifications of public officials and other documents furnished to us without undertaking to verify the same by independent investigation. Under existing laws, regulations, rulings and decisions in effect on the date hereof, and based on the foregoing we are of the opinion that: 1. The Bonds have been duly authorized and executed, and are valid and binding general obligations of the Issuer, enforceable in accordance with their terms. 2. The principal of and interest on the Bonds are payable primarily from revenues of the water, storm sewer, and sanitary sewer system of the Issuer, but if necessary for the payment thereof ad valorem taxes are required by law to be levied on all taxable property of the Issuer, which taxes are not subject to any limitation as to rate or amount. 1.%1 3. Interest on the Bonds is excludable from gross income of the recipient for federal income tax purposes and, to the same extent, is excludable from taxable net income of individuals, trusts, and estates for Minnesota income tax purposes, and is not a preference item for purposes of the computation of the federal alternative minimum tax, or the computation ofthe Minnesota alternative minimum tax imposed on individuals, trusts and estates. However, such interest is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income and the alternative minimum tax base. The opinion set forth in this paragraph is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes and from taxable net income for Minnesota income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes and taxable net income for Minnesota income tax purposes retroactively to the date of issuance of the Bonds. We express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. 4. The rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditor's rights generally and by equitable principles, whether considered at law or in equity. We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Dated December_, 2009 at Minneapolis, Minnesota. I:�t7 FORM OF LEGAL OPINION Offices in K eTmed 470 U.S. Bank Plaza 200 South Sixth Street V �+. Minneapolis Minneapolis MN 55402 p� QG. Saint Paul Graven (612) 337 -9300 telephone ( 612) 337 -9310 fax St. Cloud http: / /www.kennedy- graven.com Affirmative Action Equal Opportunity Employer $ Taxable General Obligation Housing Improvement Refunding Bonds, Series 2009B City of Hopkins Hennepin County, Minnesota We have acted as bond counsel in connection with the issuance by the City of Hopkins, Hennepin County, Minnesota, of its Taxable General Obligation Housing Improvement Refunding Bonds, Series 2009B, originally dated as of December 15, 2009, in the total principal amount of $ . For the purpose of rendering this opinion we have examined certified copies of certain proceedings taken by the City in the authorization, sale and issuance of the Bonds, including the form of the Bonds, and certain other proceedings and documents furnished by the City. From our examination of such proceedings and other documents, assuming the genuineness of the signatures thereon and based upon laws, regulations, rulings and decisions in effect on the date hereof, it is our opinion as of the date hereof that: 1. The Bonds are in due form, have been duly executed and delivered, and are valid and binding general obligations of the City, enforceable in accordance with their terms, except as such enforcement may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights. 2. The principal of and interest on the Bonds are payable primarily from housing improvement fees levied or to be levied on property within a housing improvement area in the City, but if necessary for the payment thereof ad valorem taxes are required by law to be levied on all taxable property in the City, which taxes are not subject to any limitation as to rate or amount. We express no opinion as to the status of the interest on the Bonds for federal or state income tax purposes. We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. Dated at Minneapolis, December ___, 2009. NIN APPENDIX C BOOK - ENTRY -ONLY SYSTEM DTC will act as securities depository for the securities (the "Securities "). The Securities will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Security certificate will be issued for each maturity of the Securities of each series, in the aggregate principal amount of such maturity, and will be deposited with DTC. 2. DTC, the world's largest securities depository, is a limited - purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning ofthe New York Banking Law, a member ofthe Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A ofthe Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ( "Direct Participants ") deposit with DTC. DTC also facilitates the post trade settlement among Direct Participants of sales and other bond transactions in deposited bonds, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of bond certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ( "DTCC "). DTCC, in turn, is owned by a number of Direct Participants of DTC and members ofthe National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non -U.S. bond brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants "). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission (the "Commission "). More information about DTC can be found at wN�w.dtcc.com. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ( "Beneficial Owner ") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. C -1 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all ofthe Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Securities unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detailed information from the City or Registrar, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with bonds held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Registrar, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. DTC may discontinue providing its services as securities depository with respect to the Securities at any time by giving reasonable notice to the City or the Registrar. Under such circumstances, in the event that a successor securities depository is not obtained, Security certificates are required to be printed and delivered. 10. The City may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 11. The information in this section concerning DTC and DTC's book -entry system has been obtained from DTC, and the City takes no responsibility for the accuracy thereof. C -2 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate ") is executed and delivered by the City of Hopkins, Minnesota (the "Issuer') in connection with the issuance of its General Obligation Bonds, Series 2009A, in the original aggregate principal amount of $ and Taxable General Obligation Housing Improvement Refunding Bonds, Series 2009B, in the original aggregate principal amount of $ (collectively, the "Bonds "). The Bonds are being issued pursuant to award resolutions for each issue adopted by the City Council of the Issuer on November 17, 2009 (collectively, the "Resolutions ") and delivered to (the "Purchaser ") on the date hereof. Pursuant to the Resolutions, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events. In addition, the Issuer hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders (defined herein) of the Bonds in order to assist the Participating Underwriters (defined herein) in complying with SEC Rule 15c2- 12(b)(5). This Disclosure Certificate, together with the Resolutions, constitutes the written agreement or contract for the benefit of the Holders of the Bonds that is required by the Rule. Section 2. Definitions In addition to the defined terms set forth in the Resolutions, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" means any annual report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Audited Financial Statements" means the Issuer's annual financial statements, prepared in accordance with generally accepted accounting principles (" GAAP ") for Governmental Units as Prescribed by the Governmental Accounting Standards Board ("GASB "). "EMMA" means the Electronic Municipal Market Access system operated by the MSRB and the primary portal for complying with the continuing disclosure requirements of the Rule. "Final Official Statement" means the deemed final official statement dated 2009, plus the addendum thereto which together constitute the final official statement delivered in connection with the Bonds, which is available from the MSRB. "Fiscal Year" means the fiscal year of the Issuer. "Holder" means the person in whose name a security is registered or a beneficial owner of such a security. "Issuer" means the City of Hopkins, Hennepin County, Minnesota, which is the obligated person with respect to the Bonds. "Material Event" means any of the events listed in Section 5(a) of this Disclosure Certificate. "MSRB" means the Municipal Securities Rulemaking Board located at 1900 Duke Street, Suite 600, Alexandria, VA 22314. JOIN "Participating Underwriter" means any of the original underwriter(s) of the Bonds (including the Purchaser) required to comply with the Rule in connection with the offering of the Bonds. "Repository" means EMMA. "Rule" means SEC Rule 15c2- 12(bx5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and including written interpretations thereof by the SEC. "SEC" means Securities and Exchange Commission. Section 3. Provision of Annual Financial Information and Audited Financial Statements (a) The Issuer shall provide, as soon as available, but not later than 12 months after the end of the Fiscal Year commencing with the year that ends December 31, 2009, the Repository with an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross - reference other information as provided in Section 4 of this Disclosure Certificatte; Lop vided that the Audited Financial Statements of the Issuer may be submitted separately from the balance of the Annual Report and will be submitted as soon as available. (b) If the Issuer is unable or fails to provide to the Repository an Annual Report by the date required in subsection (a), the Issuer shall send a notice of that fact to the Repository and the MSRB. (c) The Issuer shall determine each year prior to the date for providing the Annual Report the name and address of each Repository. Section 4. Content of Annual Reports The Issuer's Annual Report shall contain or incorporate by reference the following sections of the Final Official Statement: 1. Current Property Valuations 2. Direct Debt 3. Tax Levies & Collections 4. Population Trend 5. Employment(Unemployment In addition to the items listed above, the Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Disclosure Certificate. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to the Repository or the SEC. Ifthe document incorporated by reference is a final official statement, it must also be available from the MSRB. The Issuer shall clearly identify each such other document so incorporated by reference. Section 5. Reporting of Material Events (a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events if material with respect to the Bonds: D -2 I . Principal and interest payment delinquencies; 2. Non - payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties, 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax- exempt status of the security; 7. Modifications to rights of security holders; 8. Bond calls; 9. Defeasances; 10. Release, substitution or sale of property securing repayment of the securities; and 11. Rating changes. (b) Whenever the Issuer obtains knowledge of the occurrence of a Material Event, the Issuer shall promptly file a notice of such occurrence with the Repository or with the MSRB. Notwithstanding the foregoing, notice of Material Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Resolutions. (c) Unless otherwise required by law and subject to technical and economic feasibility, the Issuer shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the Issuer's information. Section 6. EMMA The SEC has designated the Electronic Municipal Market Access ( "EMMA ") system operated by the MSRB, as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. Until the EMMA system is amended or altered by the MSRB and the SEC, the Issuer shall make all filings required under this Disclosure Certificate solely with EMMA. Section 7. Termination of Reporting Obligation The Issuer's obligations under the Resolutions and this Disclosure Certificate shall tenninate upon the legal defeasance, or upon the redemption or payment in full of all the Bonds. Section 8. Agent The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under the Resolutions and this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent. D -3 Section 9. Amendment: Waiver Notwithstanding any other provision ofthe Resolutions or this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not in and of itself, cause a violation of the Rule. The provisions of the Resolutions constituting the undertaking and this Disclosure Certificate, or any provision hereof, shall be null and void in the event that the Issuer delivers to the Repository an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require the Resolutions and this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Bonds. The provisions of the Resolutions and this Disclosure Certificate may be amended without the consent of the Holders ofthe Bonds, but only upon the delivery by the Issuer to the Repository ofthe proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance of the Resolutions and this Disclosure Certificate and by the Issuer with the Rule. Section 10. Additional Information Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 11. Default In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate any Holder of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer to comply with its obligations under the Resolutions and this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Bonds and the sole remedy under this Disclosure Certificate in the event of any failure ofthe Issuer to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Beneficiaries This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Participating Underwriters and Holders from time to time of the Bonds, and shall create no rights in any other person or entity. D -4 IN WITNESS WHEREOF, we have executed this Disclosure Certificate in our official capacities effective as of the date and year first written above. CITY OF HOPKINS, MINNESOTA Mayor City Manager APPENDIX E TERMS OF PROPOSAL $3,340,000* GENERAL OBLIGATION BONDS, SERIES 2009A CITY OF HOPKINS, MINNESOTA Proposals for the purchase of $3,340,000 General Obligation Bonds, Series 2009A (the "Series 2009A Bonds ") of the City of Hopkins, Minnesota (the "City ") will be received at the offices of Ehlers & Associates, Inc. ('Ehlers "), 3060 Centre Pointe Drive, Roseville, Minnesota 55113 -1105, Financial Advisors to the City, until 1:00 P.M., Central Time, and ELECTRONIC PROPOSALS will be received via PARITY, in the manner described below, until 1:00 P.M. Central Time, on November 17, 2009, at which time they will be opened, read and tabulated. The proposals will be presented to the City Council for consideration for award at a meeting to be held at 7:30 P.M., Central Time, on the same date. The proposal offering to purchase the Series 2009A Bonds upon the terms specified herein and most favorable to the City will be accepted unless all proposals are rejected. PURPOSE The Series 2009A Bonds are being issued pursuant to Minnesota Statutes, Chapters 444 and 475, for the purpose of (i) effecting a current refunding of the 2011 through 2015 maturities of the $1,545,000 General Obligation Storm Sewer Revenue Bonds, Series 1999C, dated August 1, 1999; (ii) effecting a current refunding of the 2011 through 2015 maturities ofthe $2,060,000 General Obligation Water Revenue Bonds, Series 2000A, dated April 1, 2000; (iii) to finance 2007, 2008 and 2009 water system improvements; and (iv) to finance 2007, 2008 and 2009 sanitary sewer system improvements. The Series 2009A Bonds will be general obligations of the City for which its full faith, credit and taming powers are pledged. DATES AND MATURITIES The Series 2009A Bonds will be dated December 15, 2009, will be issued as fully registered bonds in the denomination of $5,000 each, or any integral multiple thereof, and will mature on February 1 as follows: Year Amount Year Amount Year Amount 2011 $380,000 2016 $115,000 2021 $135,000 2012 395,000 2017 115,000 2022 135,000 2013 410,000 2018 120,000 2023 145,000 2014 420,000 2019 125,000 2024 145,000 2015 420,000 2020 125,000 2025 155,000 ADJUSTMENT OPTION The City reserves the right to increase or decrease the principal amount of the Series 2009A Bonds on the day of sale, in increments of $5,000 each. Increases or decreases may be made in any maturity. If any principal amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross spread per $1,000. E -1 TERM BOND OPTION Proposals forthe Series 2009A Bonds may contain a maturity schedule providing for any combination of serial bonds and term bonds, subject to mandatory redemption, so long as the amount of principal maturing or subject to mandatory redemption in each year conforms to the maturity schedule set forth above. All dates are inclusive. INTEREST PAYMENT DATES AND RATES Interest will be payable on February l and August 1 of each year, commencing August 1, 2010, to the registered owners of the Series 2009A Bonds appearing of record in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the MSRB. All Series 2009A Bonds of the same maturity must bear interest from date of issue until paid at a single, uniform rate, not exceeding the rate specified for Series 2009A Bonds of any subsequent maturity. Each rate must be expressed in an integral multiple of 5 1100 or 1/8 of 1 %. BOOK - ENTRY -ONLY FORMAT The Series 2009A Bonds will be designated in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( "DTC "). DTC will act as securities depository for the Series 2009A Bonds, and will be responsible for maintaining a book -entry system for recording the interests of its participants and the transfers of interests between its participants. The participants will be responsible for maintaining records regarding the beneficial interests of the individual purchasers of the Series 2009A Bonds. So long as Cede & Co. is the registered owner of the Series 2009A Bonds, all payments of principal and interest will be made to the depository which, in turn, will be obligated to remit such payments to its participants for subsequent disbursement to the beneficial owners of the Series 2009A Bonds. PAYING AGENT The City has selected Bankers Trust Company, Des Moines, Iowa, to act as paying agent (the "Paying Agent "). The City will pay the charges for Paying Agent services. The City reserves the right to remove the Paying Agent and to appoint a successor. OPTIONAL REDEMPTION At the option ofthe City, Series 2009A Bonds maturing on or after February 1, 2019 shall be subject to prior payment on February 1, 2018 or on any date thereafter, at a price of par plus accrued interest. Redemption may be in whole or in part of the Series 2009A Bonds subject to prepayment. If redemption is in part, the selection of the amounts and maturities of the Series 2009A Bonds to be prepaid shall be at the discretion of the City. If only part of the Series 2009A Bonds having a common maturity date are called for redemption, the City or Paying Agent, if any, will notify DTC of the particular amount of such maturity to be redeemed. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interest in such maturity to be redeemed. Notice of such call shall be given by mailing a notice not more than 60 days and not fewer than 30 days prior to the date fixed for redemption to the registered owner of each Series 2009A Bond to be redeemed at the address shown on the registration books. E -2 DELIVERY On or about December 15, 2009, the Series 2009A Bonds will be delivered without cost to the original purchaser at DTC. On the day of closing, the City will furnish to the purchaser the opinion of bond counsel hereinafter described, an arbitrage certification, and certificates verifying that no litigation in any manner questioning the validity of the Series 2009A Bonds is then pending or, to the best knowledge of officers of the City, threatened. Payment for the Series 2009A Bonds must be received by the City at its designated depository on the date of closing in immediately available funds. LEGAL OPINION An opinion as to the validity of the Series 2009A Bonds and the exemption from taxation of the interest thereon will be furnished by Kennedy & Graven, Chartered, Minneapolis, Minnesota, bond counsel to the City, and will accompany the Series 2009A Bonds. The legal opinion will state that the Series 2009A Bonds are valid and binding general obligations of the City enforceable in accordance with their terms, except to the extent to which enforceability may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. SUBMISSION OF PROPOSALS Proposals must not be for less than $3,306,600 plus accrued interest on the principal sum of $3,340,000 from date of original issue of the Series 2009A Bonds to date of delivery. A signed proposal form must be submitted to Ehlers prior to the time established above for the opening of proposals as follows: 1) In a sealed envelope as described herein; or 2) A facsimile submission to Ehlers, Facsimile Number (651) 697 -8555; or 3) Electronically via PARITY in accordance with this Terms of Proposal until 1:00 P.M. Central Time, but no proposal will be received after the time for receiving proposals specified above. To the extent any instructions or directions set forth in PARITY conflict with this Terms of Proposal, the terms of this Terms of Proposal shall control. For further information about PARITY, potential bidders may contact Ehlers or i -Deal LLC at 1359 Broadway, 2n Floor, New York, New York 10018, Telephone (212) 849 -5021. Proposals must be submitted to Ehlers via one of the methods described above and must be received prior to the time established above for the opening of proposals. Each proposal must be unconditional except as to legality. Neither the City nor Ehlers shall be responsible for any failure to receive a facsimile submission. A good faith deposit (the "Deposit ") in the amount of $66,800, complying with the provisions below, must be submitted with each proposal. The Deposit must be in the form of a certified or cashier's check, or a financial surety bond or a wire transfer of funds to KleinBank, 1550 Audubon Road, Chaska, Minnesota, ABA No. 091915654 for credit: Ehlers & Associates Good Faith Account No. 3183661. The Deposit will be retained by the City as liquidated damages if the proposal is accepted and the bidder fails to comply therewith. The Deposit will be returned to the Purchaser at the closing for the Series 2009A Bonds. The Deposit, payable to the City, shall be retained in the offices of Ehlers with the same effect as if delivered to the City. Alternatively, bidders may wire the Deposit to KleinBank,1550 Audubon Road, Chaska, Minnesota, ABA No. 091915654 for credit: Ehlers & Associates Good Faith Account No. 3183661. The City and any bidder who chooses to so wire the Deposit hereby agree irrevocably that Ehlers shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: 1) All income earned thereon shall be retained by the E -3 escrow holder as payment for its expenses; 2) If the proposal is not accepted, Ehlers shall, at its expense, promptly return the Deposit amount to the losing bidder; 3) If the proposal is accepted, the Deposit shall be returned to the purchaser at the closing; 4) Ehlers shall bear all costs of maintaining the escrow account and returning the funds to the bidder; 5) Ehlers shall not be an insurer of the Deposit amount and shall have no liability hereunder except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and 6) FDIC insurance on deposits within the escrow account shall be limited to $250,000 per bidder. If a financial surety bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to Ehlers prior to the opening of the proposals. Such bond must identify each bidder whose Deposit is guaranteed by such financial surety bond. If the Series 2009A Bonds are awarded to a bidder using a financial surety bond, then that bidder is required to submit its Deposit to Ehlers in the form of a certified or cashier's check or wire transfer as instructed by Ehlers not later than 3:00 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the financial surety bond may be drawn by the City to satisfy the Deposit requirement. The amount securing the successful proposal will be retained as liquidated damages if the proposal is accepted and the bidder fails to comply therewith. No proposal can be withdrawn after the time set for receiving proposals unless the meeting of the City scheduled for award of the Series 2009A Bonds is adjourned, recessed, or continued to another date without award of the Series 2009A Bonds having been made. AWARD The Series 2009A Bonds will be awarded to the bidder offering the lowest interest rate to be determined on a True Interest Cost (TIC) basis. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. In the event of a tie, the sale of the Series 2009A Bonds will be awarded by lot. The City reserves the right to reject any and all proposals and to waive any informality in any proposal. BONDINSURANCE If the Series 2009A Bonds are qualified for any bond insurance policy, the purchase of such policy shall be at the sole option and expense of the purchaser. Any cost for such insurance policy is to be paid by the purchaser, except that, if the City requested and received a rating on the Series 2009A Bonds from a rating agency, the City will pay that rating fee. Any rating agency fees not requested by the City are the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after the Series 2009A Bonds are awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery of the Series 2009A Bonds. CUSIP NUMBERS The City will assume no obligation for the assignment or printing of CUSIP numbers on the Series 2009A Bonds or for the correctness of any numbers printed thereon, but will permit such numbers to be printed at the expense of the purchaser, if the purchaser waives any delay in delivery occasioned thereby. QUALIFIED TAX - EXEMPT OBLIGATIONS The City will designate the Series 2009A Bonds as qualified tax- exempt obligations for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. E -4 CONTINUING DISCLOSURE In order to assist the Underwriters in complying with the provisions of Rule 15c2 -12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 the City will enter into an undertaking (the "Undertaking ") for the benefit of the holders of the Series 2009A Bonds. A description of the details and terms of the Undertaking is set forth in the Official Statement. The City has complied in all material respects with any undertaking previously entered into by it under the Rule. INFORMATION FROM PURCHASER The successful purchaser will be required to provide, in a timely manner, certain information relating to the initial offering prices of the Series 2009A Bonds necessary to compute the yield on the Series 2009A Bonds pursuant to the provisions of the Internal Revenue Code of 1986, as amended. PRELIMINARY OFFICIAL STATEMENT Bidders may obtain a copy of the Preliminary Official Statement relating to the Series 2009A Bonds prior to the proposal opening by request from Ehlers at www.ehlers - inc.com by connecting to the link to the Bond Sales. The Syndicate Manager will be provided with an electronic copy and up to 10 printed copies upon request of the Final Official Statement within seven business days of the proposal acceptance. Additional copies of the Final Official Statement will be available at a cost of $10.00 per copy. Information for bidders and proposal forms may be obtained from Ehlers at 3060 Centre Pointe Drive, Roseville, Minnesota 55113 -1105, Telephone (651) 697 -8500. By Order of the City Council City of Hopkins, Minnesota E -5 TERMS OF PROPOSAL $2,890,000'k'"` TAXABLE GENERAL OBLIGATION HOUSING IMPROVEMENT REFUNDING BONDS, SERIES 2009B CITY OF HOPKINS, MINNESOTA Proposals forthe purchase of $2,890,000 Taxable General Obligation Housing Improvement Refunding Bonds, Series 2009B (the "Series 2009B Bonds ") of the City of Hopkins, Minnesota (the "City ") will be received at the offices of Ehlers &Associates, Inc. ( "Ehlers "), 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105, Financial Advisors to the City, until 1:00 P.M., Central Time, and ELECTRONIC PROPOSALS will be received via PARITY, in the manner described below, until 1:00 P.M. Central Time, on November 17, 2009, at which time they will be opened, read and tabulated. The proposals will be presented to the City Council for consideration for award at a meeting to be held at 7:30 P.M., Central Time, on the same date. The proposal offering to purchase the Series 2009B Bonds upon the terms specified herein and most favorable to the City will be accepted unless all proposals are rejected. PURPOSE The Series 2009B Bonds are being issued pursuant to Minnesota Statutes, Chapters 475 and 587, for the purpose of effecting a current refunding of the 2011 through 2021 maturities of the $1,465,000 Taxable G.O. Housing Improvement Area Bonds, Series 1999A, dated May 1, 1999; and a current refunding of the 2011 through 2021 maturities of the $2,565,000 Taxable General Obligation Improvement Area Bonds, Series 1999B, dated August 1, 1999. The Series 2009B Bonds will be general obligations of the City for which its full faith, credit and taxing powers are pledged. DATES AND MATURITIES The Series 2009B Bonds will be dated December 15, 2009, will be issued as fully registered bonds in the denomination of $5,000 each, or any integral multiple thereof, and will mature on February 1 as follows: Year Amount ** 2011 $215,000 2012 230,000 Year Amount ** 2015 $255,000 2016 260,000 2017 265,000 2018 275,000 Year Amount ** 2013 235,000 2014 245,000 ADJUSTMENT OPTION 2019 $290,000 2020 300,000 2021 320,000 ** The City reserves the right to increase or decrease the principal amount of the Series 2009B Bonds on the day of sale, in increments of $5,000. Increases or decreases may be made in any maturity. If any principal amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross spread per $1,000. TERM BOND OPTION Proposals for the Series 2009B Bonds may contain a maturity schedule providing for any combination of serial bonds and term bonds, subject to mandatory redemption, so long as the amount of principal maturing or subject to mandatory redemption in each year conforms to the maturity schedule set forth above. All dates are inclusive. E -6 INTEREST PAYMENT DATES AND RATES Interest will be payable on February 1 and August 1 of each year, commencing August 1, 2010, to the registered owners of the Series 2009B Bonds appearing of record in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the MSRB. All Series 2009B Bonds of the same maturity must bear interest from date of issue until paid at a single, uniform rate, not exceeding the rate specified for Series 2009B Bonds of any subsequent maturity. Each rate must be expressed in an integral multiple of 51100 or 1/8 of 1 %. BOOK - ENTRY -ONLY FORMAT The Series 2009B Bonds will be designated in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( "DTC "). DTC will act as securities depository for the Series 2009B Bonds, and will be responsible for maintaining a book -entry system for recording the interests of its participants and the transfers of interests between its participants. The participants will be responsible for maintaining records regarding the beneficial interests of the individual purchasers of the Series 2009B Bonds. So long as Cede & Co. is the registered owner ofthe Series 2009B Bonds, all payments of principal and interest will be made to the depository which, in turn, will be obligated to remit such payments to its participants for subsequent disbursement to the beneficial owners of the Series 2009B Bonds. PAYING AGENT The City has selected Bankers Trust Company, Des Moines, Iowa, to act as paying agent (the "Paying Agent "). The City will pay the charges for Paying Agent services. The City reserves the right to remove the Paying Agent and to appoint a successor. OPTIONAL REDEMPTION At the option of the City, Series 2009B Bonds maturing on or after February 1, 2019 shall be subject to prior payment on February 1, 2018 or any date thereafter, at a price of par plus accrued interest. Redemption may be in whole or in part of the Series 2009B Bonds subject to prepayment. If redemption is in part, the selection of the amounts and maturities of the Series 2009B Bonds to be prepaid shall be at the discretion of the City. If only part of the Series 2009B Bonds having a common maturity date are called for prepayment, the City or Paying Agent, if any, will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interest in such maturity to be redeemed. Notice of such call shall be given by mailing a notice not more than 60 and not fewer than 30 days prior to the date fixed for redemption to the registered owner of each Series 2009B Bond to be redeemed at the address shown on the registration books. DELIVERY On or about December 15, 2009, the Series 2009B Bonds will be delivered without cost to the original purchaser at DTC. On the day of closing, the City will furnish to the purchaser the opinion of bond counsel hereinafter described, an arbitrage certification and certificates verifying that no litigation in any manner questioning the validity of the E -7 Series 2009B Bonds is then pending or, to the best knowledge of officers of the City, threatened. Payment for the Series 2009B Bonds must be received by the City at its designated depository on the date of closing in immediately available funds. LEGAL OPINION An opinion as to the validity of the Series 2009B Bonds will be furnished by Kennedy & Graven, Chartered, of Minneapolis, Minnesota, bond counsel to the City, and will accompany the Series 2009B Bonds. The legal opinion will be issued on the basis of existing law and will state that the Series 2009B Bonds are valid and binding general obligations of the City enforceable in accordance with their terms, except to the extent to which enforceability may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. SUBMISSION OF PROPOSALS Proposals must not be for less than $2,853,875 plus accrued interest on the principal sum of $2,890,000 from date of original issue of the Series 2009B Bonds to date of delivery. A signed proposal form must be submitted at Ehlers prior to the time established above for the opening of proposals as follows: 1) In a sealed envelope as described herein; or 2) A facsimile submission to Ehlers, Facsimile Number (651) 697 -8555; or 3) Electronically via PARITY in accordance with this Terms of Proposal until 1:00 P.M. Central Time, but no proposal will be received after the time for receiving proposals specified above. To the extent any instructions or directions set forth in PARITY conflict with this Terms of Proposal, the terms of this Terms of Proposal shall control. For further information about PARITY, potential bidders may contact Ehlers or i -Deal LLC at 1359 Broadway, 2 "d Floor, New York, New York 10018, Telephone (212) 849 - 5021.. Proposals must be submitted to Ehlers via one of the methods described above and must be received prior to the time established above for the opening of proposals. Each proposal must be unconditional except as to legality. Neither the City nor Ehlers shall be responsible for any failure to receive a facsimile submission. A good faith deposit (the "Deposit ") in the amount of $57,800, complying with the provisions below, must be submitted with each proposal. The Deposit must be in the form of a certified or cashier's check, or a financial surety bond or a wire transfer of funds to KleinBank, 1550 Audubon Road, Chaska, Minnesota, ABA No. 091915654 for credit: Ehlers & Associates Good Faith Account No. 3183661. The Deposit will be retained by the City as liquidated damages if the proposal is accepted and the bidder fails to comply therewith. The Deposit will be returned to the Purchaser at the closing for the Series 2009B Bonds. The Deposit, payable to the City, shall be retained in the offices of Ehlers with the same effect as if delivered to the City. Alternatively, bidders may wire the Deposit to K1einBank,1550 Audubon Road, Chaska, Minnesota, ABA No. 091915654 for credit: Ehlers & Associates Good Faith Account No. 3183661. The City and any bidder who chooses to so wire the Deposit hereby agree irrevocably that Ehlers shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: l) All income earned thereon shall be retained by the escrow holder as payment for its expenses; 2) If the proposal is not accepted, Ehlers shall, at its expense, promptly return the Deposit amount to the losing bidder; 3) If the proposal is accepted, the Deposit shall be returned to the E -8 purchaser at the closing; 4) Ehlers shall bear all costs of maintaining the escrow account and returning the funds to the bidder; 5) Ehlers shall not be an insurer of the Deposit amount and shall have no liability hereunder except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and 6) FDIC insurance on deposits within the escrow account shall be limited to $250,000 per bidder. If a financial surety bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to Ehlers prior to the opening of the proposals. Such bond must identify each bidder whose Deposit is guaranteed by such financial surety bond. If the Series 2009B Bonds are awarded to a bidder using a financial surety bond, then that purchaser is required to submit its Deposit to Ehlers in the form of a certified or cashier's check or wire transfer as instructed by Ehlers not later than 3:00 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the financial surety bond may be drawn by the City to satisfy the Deposit requirement. The amount securing the successful proposal will be retained as liquidated damages if the proposal is accepted and the bidder fails to comply therewith. No proposal can be withdrawn after the time set for receiving proposals unless the meeting of the City scheduled for award of the Series 2009B Bonds is adjourned, recessed, or continued to another date without award of the Series 2009B Bonds having been made. AWARD The Series 2009B Bonds will be awarded to the bidder offering the lowest interest rate to be determined on a True Interest Cost (TIC) basis. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. In the event of a tie, the sale of the Series 2009B Bonds will be awarded by lot. The City reserves the right to reject any and all proposals and to waive any informality in any proposal. BONDINSURANCE Ifthe Series 2009B Bonds are qualified for any bond insurance policy, the purchase of such policy shall be at the sole option and expense of the purchaser of the Series 2009B Bonds. Any cost for such insurance policy is to be paid by the purchaser, except that, if the City requested and received a rating on the Series 2009B Bonds from a rating agency, the City will pay that rating fee. Any rating agency fees not requested by the City are the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after the Series 2009B Bonds are awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery of the Series 2009B Bonds. CUSIP NUMBERS The City will assume no obligation for the assignment or printing of CUSIP numbers on the Series 2009B Bonds or for the correctness of any numbers printed thereon, but will permit such numbers to be printed at the expense of the purchaser, if the purchaser waives any delay in delivery occasioned thereby. NON - QUALIFIED TAX - EXEMPT OBLIGATIONS The City will not designate the Series 2009B Bonds as qualified tax- exempt obligations for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. E -9 CONTINUING DISCLOSURE In order to assist the Underwriters in complying with the provisions of Rule 15c2 -12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 the City will enter into an undertaking (the "Undertaking ") for the benefit of the holders of the Series 2009B Bonds. A description of the details and terms of the Undertaking is set forth in the Official Statement. The City has complied in all material respects with any undertaking previously entered into by it under the Rule. INFORMATION FROM PURCHASER The successful purchaser will be required to provide, in a timely manner, certain information relating to the initial offering prices of the Series 2009B Bonds necessary to compute the yield on the Series 2009B Bonds pursuant to the provisions of the Internal Revenue Code of 1986, as amended. PRELIMINARY OFFICIAL STATEMENT Underwriters may obtain a copy of the Preliminary Official Statement relating to the Series 2009B Bonds prior to the proposal opening by request from Ehlers at «NN N\ .ehlers- inc.com by connecting to the link to the Bond Sales. The Syndicate Manager will be provided with an electronic copy and up to 10 printed copies of the Final Official Statement upon request within seven business days of the proposal acceptance. Additional copies of the Final Official Statement will be available at a cost of $10.00 per copy. Information for bidders and proposal forms may be obtained from Ehlers at 3060 Centre Pointe Drive, Roseville, Minnesota 55113 -1105, Telephone (651) 697 -8500. By Order of the City Council City of Hopkins, Minnesota E -10 PROPOSALFORM The City Council November 17, 2009 City of Hopkins, Minnesota RE: $3,340,000* General Obligation Bonds, Series 2009A DATED: December 15, 2009 For all or none ofthe above Series 2009A Bonds, in accordance with the Terms of Proposal and terms ofthe Global Book -Entry System as stated in this Preliminary Official Statement, we will pay you $ (not less than $3,306,600) plus accrued interest to date of delivery for fully registered bonds bearing interest rates and maturing in the stated years as follows: % due 2011 % due 2016 % due 2021 % due 2012 % due 2017 % due 2022 % due 2013 % due 2018 % due 2023 % due 2014 % due 2019 % due 2024 % due 2015 % due 2020 % due 2025 The City reserves the right to increase or decrease the principal amount of the Series 2009A Bonds on the day of sale, in increments of $5,000 each. Increases or decreases may be made in any maturity. If any principal amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross spread per $1,000. We enclose our good faith deposit in the amount of $66,800, to be held by you pending delivery and payment. Alternatively, we have provided a financial surety bond or have wired our good faith deposit to the 10einBank,1550 Audubon Road, Chaska, Minnesota, ABA No. 091915654 for credit: Ehlers & Associates Good Faith Account No. 3183661. If our proposal is not accepted, said deposit shall be promptly returned to us. If the good faith deposit is wired to such escrow account, we agree to the conditions and duties of Ehlers & Associates, Inc., as escrow holder of the good faith deposit, pursuant to this Preliminary Official Statement dated October 30, 2009. This proposal is for prompt acceptance and is conditional upon deposit of said Series 2009A Bonds to The Depository Trust Company, New York, New York, in accordance with the Terms of Proposal. Delivery is anticipated to be on or about December 15, 2009. This proposal is subject to the City's covenant and agreement to enter into a written undertaking to provide continuing disclosure under Rule 15c2 -12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 as described in the Preliminary Official Statement for this Issue. We have received and reviewed the Preliminary Official Statement and have submitted our requests for additional information or corrections to the Final Official Statement. As Syndicate Manager, we agree to provide the City with the reoffering price of the Series 2009A Bonds within 24 hours of the proposal acceptance. Account Manager: By: Account Members: Award will be on a true interest cost basis. According to our computations (the correct computation being controlling in the award), the total dollar interest cost (including any discount or less any premium) computed from December 15, 2009 ofthe above proposal is $ and the true interest cost (TIC) is %. The foregoing offer is hereby accepted by and on behalf of the City Council of the City of Hopkins, Minnesota, on November 17, 2009. By: By: Title: Title: PROPOSALFORM The City Council November 17, 2009 City of Hopkins, Minnesota RE: $2,890,000 ** Taxable General Obligation Housing Improvement Refunding Bonds, Series 2009B DATED: December 15, 2009 For all or none ofthe above Series 2009B Bonds, in accordance with the Terms of Proposal and terms ofthe Global Book -Entry System as stated in this Preliminary Official Statement, we will pay you $ (not less than $2,853,875) plus accrued interest to date of delivery for fully registered bonds bearing interest rates and maturing in the stated years as follows: % due 2011 % due 2015 % due 2019 % due 2020 % due 2021 % due 2012 % due 2013 % due 2014 % due 2016 % due 2017 % due 2018 ** The City reserves the right to increase or decrease the principal amount of the Series 2009B Bonds on the day of sale, in increments of $5,000. Increases or decreases may be made in any maturity. If any principal amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross spread per $1,000. We enclose our good faith deposit in the amount of $57,800, to be held by you pending delivery and payment. Alternatively, we have provided a financial surety bond or have wired our good faith depositto the 10einBank,1550 Audubon Road, Chaska, Minnesota, ABA No. 091915654 for credit: Ehlers & Associates Good Faith Account No. 3183661. If our proposal is not accepted, said deposit shall be promptly returned to us. If the good faith deposit is wired to such escrow account, we agree to the conditions and duties of Ehlers & Associates, Inc., as escrow holder of the good faith deposit, pursuant to this Preliminary Official Statement dated October 30, 2009. This proposal is for prompt acceptance and is conditional upon deposit of said Series 2009B Bonds to The Depository Trust Company, New York, New York, in accordance with the Terms of Proposal. Delivery is anticipated to be on or about December 15, 2009. This proposal is subject to the City's covenant and agreement to enter into a written undertaking to provide continuing disclosure under Rule 15c2 -12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 as described in the Preliminary Official Statement for this Issue. We have received and reviewed the Preliminary Official Statement and have submitted our requests for additional information or corrections to the Final Official Statement. As Syndicate Manager, we agree to provide the City with the reoffering price of the Series 2009B Bonds within 24 hours of the proposal acceptance. Account Manager: I By: Account Members: Award will be on a true interest cost basis. According to our computations (the correct computation being controlling in the award), the total dollar interest cost (including any discount or less any premium) computed from December 15, 2009 ofthe above proposal is $ and the true interest cost (TIC) is %. The foregoing offer is hereby accepted by and on behalf of the City Council of the City of Hopkins, Minnesota, on November 17, 2009. Title: Title: