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HomeMy WebLinkAbout11.E.1. Set the Sale of Tax Abatement Bonds to Fund the Community Center/Ice Arena Project - Res. No. 7640 General Business 11. E. 1. SHAKOPEE TO: Mayor and City Council FROM: Kris Wilson, Assistant City Administrator DATE: 11/17/2015 SUBJECT: Set the Sale of Tax Abatement Bonds to Fund the Community Center/ Ice Arena Project - Res. No. 7640 (B) Action Sought The Council is asked to offer Resolution No. 7640, a resolution providing for the issuance and sale of general obligation tax abatement bonds, series 2016A, in the proposed aggregate principal amount of$31,845,000, and move its adoption. Background On September 22, the City Council conducted a public hearing and adopted Resolution No. 7615, approving the use of tax abatement bonds to finance construction of a new two-sheet ice arena and remodeling of the existing Community Center to include an indoor aquatic park. The Council is now asked to set the sale of the bonds for December 17, 2015. Secondly, the Council is asked to set a special City Council meeting for that evening, Thursday, December 17 at 7:00 pm., to award the sale of the bonds. The project is currently out for bids and Council will be asked to award bids at its meeting on Tuesday, December 15. If the bids are favorable, and the dollar amount of the bonds can be reduced, there will be time to do that between the December 15 Council meeting and the sale of bonds on December 17. Attached are two documents: 1. A report from Springsted, Inc., the City's financial advisors, making recommendations for the amount and terms of the bond sale; and 2. Resolution No. 7640, prepared by attorney Julie Eddington of Kennedy & Graven, setting the sale of the bonds. Mr. Paul Steinman from Springsted will be in attendance at the November 17 Council meeting to provide additional detail and answer any questions. Requested Action The Council is asked to offer Resolution No. 7640, a resolution providing for the issuance and sale of general obligation tax abatement bonds, series 2016A, in the proposed aggregate principal amount of$31,845,000, and move its adoption. Attachments: Springsted Report Resolution No 7640 City of Shakopee, Minnesota Recommendations for Issuance of Bonds $31,845,000 General Obligation Tax Abatement Bonds, Series 2016A The City Council has under consideration the issuance of bonds to fund renovations to the City's existing community center, as described in more detail below. This document provides information relative to the proposed issuance. KEY EVENTS: The following summary schedule includes the timing of some of the key events that will occur relative to the bond issuance. September 22, 2015 Tax Abatement Public Hearing conducted, City Council approval of issuance of Bonds November 17, 2015 City Council sets sale date and terms Week of November 23, 2015 Contruction bids are due December 2, 2015 Rating conference is conducted Est. December 11,2015 Rating is received December 17, 2015, 10:00 AM Competitive proposals are received December 17, 2015, 7:00 PM City Council considers award of bonds Special Council meeting On or about January 21, 2016 Proceeds are received RATING: An application will be made to Standard & Poor's Ratings Services for a rating on the Bonds. The City's general obligation debt is currently rated 'Aa2' by Moody's Investors Service and is not currently rated by S&P. THE MARKET: Performance of the tax-exempt market is often measured by the Bond Buyer's Index ("BBI") which measures the yield of high grade municipal bonds in the 20th year for general obligation bonds (the BBI 20 Bond Index) and the 30th year for revenue bonds (the BBI 25 Bond Index). The following chart illustrates these two indices over the past five years. 813125-bond(Revenue)and 20-bond(G.0.)Rates for 5 Years Ending 11/5/2015 6 696 ----BBI 25 Bona ,,a2a,s ---BBI 20 Bona 6 096 Mara 4(15. �.. 24 bond 3 tar. IIII 5 5% y `. — --- p0 5.0$u f f �'` __._....__.._........... * It I + . 4.096 I V ar K V\- 3.596 �• Ai 3-096 M N AQ A ' •� �l ti6 sti o°' o °" ya pyo ''v IfFe `yo ,�eger ,,o 7'", ,y 0\97,: (Io p .1w � g'.� ��sti�a �{n ,,�t3'' �Qa ax'1{tiFs",y Lh ,n 45 r` cu Dates Prepared by Sprargsted Mcarporated 0 O z = 4J 0 pringsted POST ISSUANCE The issuance of these bonds will result in post-issuance compliance responsibilities. The COMPLIANCE: responsibilities are in two primary areas: i)compliance with federal arbitrage requirements and ii)compliance with secondary disclosure requirements. Federal arbitrage requirements include a wide range of implications that have been taken into account as this issue has been structured. Post-issuance compliance responsibilities for tax-exempt issues include both rebate and yield restriction provisions of the IRS Code. In general terms the arbitrage requirements control the earnings on unexpended bond proceeds, including investment earnings, moneys held for debt service payments (which are considered to be proceeds under the IRS regulations), and/or reserves. Under certain circumstances any "excess earnings" will need to be paid to the IRS to maintain the tax- exempt status of the Bonds. Any interest earnings on gross bond proceeds or debt service funds should not be spent until it has been determined based on actual facts that they are not"excess earnings"as defined by the IRS Code. The arbitrage rules provide spend-down exceptions for proceeds that are spent within either a 6-month, 18-month or 24-month period in accordance with certain spending criteria. Proceeds that qualify for an exception will be exempt from rebate. These exceptions are based on actual expenditures and not based on reasonable expectations; and expenditures, including any investment proceeds, will have to meet the spending criteria to qualify for the exclusion. The City expects to meet the 24-month spending exception. Regardless of whether the issue qualifies for an exemption from the rebate provisions, yield restriction provisions will apply to the debt service fund under certain conditions and any unspent bond proceeds remaining after three years. These funds should be monitored throughout the life of the Bonds. Secondary disclosure requirements result from an SEC requirement that underwriters provide ongoing disclosure information to investors. To meet this requirement, any prospective underwriter will require the City to commit to providing the information needed to comply under a continuing disclosure agreement. Springsted and the City will enter into an Agreement for Municipal Advisor Services, under which Springsted will provide arbitrage and continuing disclosure compliance services for the City. SUPPLEMENTAL Supplementary information will be available to staff including detailed terms and conditions INFORMATION AND of sale, comprehensive structuring schedules and information to assist in meeting post- BOND RECORD: issuance compliance responsibilities. Upon completion of the financing, a bond record will be provided that contains pertinent documents and final debt service calculations for the transaction. PURPOSE: Proceeds of the Bonds will be used to finance (i) a new, two-sheet ice arena that will be built on the existing community center site and (ii) renovation of the existing community center. The renovations to the Community Center will include repurposing the existing ice arena space - a component within the current community center - into an indoor aquatics center, increasing the fitness area and adding a senior area, indoor playground and drop in child care. The renovated Community Center will also include a teen center, community room and increased office space. Page 2 AUTHORITY: Statutory Authority: The Bonds are being issued pursuant to Minnesota Statutes, Sections 469.1813 through 469.1815 and Chapter 475. Statutory Requirements: The City must specify the public benefit of the abatement, identify properties located within its jurisdiction whose value will equal the proposed amount of abatement and the term of the abatement, and further comply with the public hearing requirements. A public hearing was held on September 22, 2015 at which time the statutory requirements for issuing Tax Abatement bonds was met. SECURITY AND The Bonds will be general obligations of the City, secured by its full faith and credit and SOURCE OF taxing power. The Bonds will be paid from available tax abatement revenue. PAYMENT: The City will make its first levy for the Bonds in 2016 for collection in 2017. Capitalized interest has been included in the par amount of the Bonds in an amount sufficient to pay the August 1, 2016 and February 1, 2017 interest payments. Thereafter, each year's collection of taxes will be used to make the August 1 interest payment due in the collection year and the February 1 principal and interest payment due in the following year. STRUCTURING In consultation with the City, the Bonds have been structured over a term of 20 years with SUMMARY: level annual payments of debt service. The City has indicated the par amount of Bonds is not to exceed$32,225,000 and the annual levy, including the 5% overlevy,for the Bonds is not to exceed$2,500,000. Construction bids for the project will be received in late November, prior to the sale of the Bonds. Due to the size, term and credit profile of the issue, it is likely that the sale of the Bonds will result in premium pricing by underwriters. This occurs when the interest rates the underwriter bids for the Bonds are higher than market yields, resulting in premium reoffering prices and net proceeds to the City greater than the total principal amount of the Bonds. The additional proceeds may be used to reduce the size of the borrowing or be deposited into the project construction fund.The City will decide how to apply any premium received after taking construction bids. SCHEDULES Schedules attached include sources and uses of funds and estimated debt service ATTACHED: requirements, given the current interest environment. RISKS/SPECIAL The outcome of this financing will rely on the market conditions at the time of the sale. Any CONSIDERATIONS: projections included herein are estimates based on current market conditions. SALE TERMS AND Variability of Issue Size: A specific provision in the sale terms permits modifications to the MARKETING: issue size and/or maturity structure to customize the issue once the price and interest rates are set on the day of sale. Prepayment Provisions: Bonds maturing on or after February 1, 2026 may be prepaid at a price of par plus accrued interest on or after February 1, 2025. Bank Qualification: The City expects to issue more than $10 million in tax-exempt obligations in calendar year 2016; therefore the Bonds are not designated as bank qualified. Page 3 Good Faith Deposit: The lowest bidder will be required to provide a good faith deposit within a specified time after receipt of proposals. The good faith deposit will be deducted from the purchase price otherwise due at the time of closing. In the event the lowest bidder fails to comply with the accepted bid proposal, the Issuer will retain the good faith deposit. Page 4 $31,845,000 City of Shakopee, Minnesota General Obligation Tax Abatement Bonds, Series 2016A Sources& Uses Dated 01/21/2016 I Delivered 01/21/2016 Sources Of Funds Par Amount of Bonds $31,845,000.00 Total Sources $31,845,000.00 Uses Of Funds Ice Arena 18,797,770.00 Aquatics Center 11,619,009.00 Deposit to Capitalized Interest(CIF)Fund 932,885.63 Total Underwriter's Discount (1.200%) 382,140.00 Costs of Issuance 109,125.00 Rounding Amount 4,070.37 Total Uses $31,845,000.00 Series 2016A GO Tax Abate I Summary 111/5/2015 I 10:20 AM Springsted Pages $31,845,000 City of Shakopee, Minnesota General Obligation Tax Abatement Bonds, Series 2016A NET DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P+I CIF Net New D/S 105%Overlevy - 02/01/2016 - - - - - - 02/01/2017 - - 932,885.63 932,885.63 (932,885.63) - - 02/01/2018 1,365,000.00 1.000% 907,672.50 2,272,672.50 - 2,272,672.50 2,386,306.13 02/01/2019 1,380,000.00 1.200% 894,022.50 2,274,022.50 - 2,274,022.50 2,387,723.63 02/01/2020 1,395,000.00 1.450% 877,462.50 2,272,462.50 - 2,272,462.50 2,386,085.63 02/01/2021 1,415,000.00 1.700% 857,235.00 2,272,235.00 - 2,272,235.00 2,385,846.75 02/01/2022 1,440,000.00 1.950% 833,180.00 2,273,180.00 - 2,273,180.00 2,386,839.00 02/01/2023 1,465,000.00 2.100% 805,100.00 2,270,100.00 - 2,270,100.00 2,383,605.00 02/01/2024 1,500,000.00 2.350% 774,335.00 2,274,335.00 - 2,274,335.00 2,388,051.75 02/01/2025 1,535,000.00 2.550% 739,085.00 2,274,085.00 - 2,274,085.00 2,387,789.25 02/01/2026 1,570,000.00 2.650% 699,942.50 2,269,942.50 - 2,269,942.50 2,383,439.63 02/01/2027 1,615,000.00 2.900% 658,337.50 2,273,337.50 - 2,273,337.50 2,387,004.38 02/01/2028 1,660,000.00 3.100% 611,502.50 2,271,502.50 - 2,271,502.50 2,385,077.63 02/01/2029 1,710,000.00 3.300% 560,042.50 2,270,042.50 - 2,270,042.50 2,383,544.63 02/01/2030 1,770,000.00 3.450% 503,612.50 2,273,612.50 - 2,273,612.50 2,387,293.13 02/01/2031 1,830,000.00 3.550% 442,547.50 2,272,547.50 - 2,272,547.50 2,386,174.88 02/01/2032 1,895,000.00 3.600% 377,582.50 2,272,582.50 - 2,272,582.50 2,386,211.63 02/01/2033 1,965,000.00 3.650% 309,362.50 2,274,362.50 - 2,274,362.50 2,388,080.63 02/01/2034 2,035,000.00 3.700% 237,640.00 2,272,640.00 - 2,272,640.00 2,386,272.00 02/01/2035 2,110,000.00 3.750% 162,345.00 2,272,345.00 - 2,272,345.00 2,385,962.25 02/01/2036 2,190,000.00 3.800% 83,220.00 2,273,220.00 - 2,273,220.00 2,386,881.00 Total $31,845,000.00 - $12,267,113.13 $44,112,113.13 (932,885.63) $43,179,227.50 $45,338,188.88 SIGNIFICANT DATES Dated Date 1/21/2016 Delivery Date 1/21/2016 First Coupon Date 8/01/2016 Yield Statistics Bond Year Dollars $377,209.58 Average Life 11.845 Years Average Coupon 3.2520683% Net Interest Cost(NIC) 3.3533753% True Interest Cost(TIC) 3.3333893% Bond Yield for Arbitrage Purposes 3.2071519% All Inclusive Cost(AIC) 3.3698279% IRS Form 8038 Net Interest Cost 3.2520683% Weighted Average Maturity 11.845 Years Series 2016A GO Tax Abate I Summary 1 11/52015 I 10:20 AM Is 1 Springsted Page6 RESOLUTION NO. 7640 RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF GENERAL OBLIGATION TAX ABATEMENT BONDS, SERIES 2016A, IN THE PROPOSED AGGREGATE PRINCIPAL AMOUNT OF$31,845,000 BE IT RESOLVED By the City Council of the City of Shakopee, Minnesota (the "City"), as follows: 1. Authorization of Bonds. It is hereby determined that: (a) The City has determined to construct and equip an expansion of the Community Center in the City, including an expansion of the Shakopee Ice Arena, an aquatics center and related public infrastructure(the"Project"). (b) Under Minnesota Statutes, Chapter 475, as amended, and Sections 469.1812 through 469.1815 (collectively, the "Act"), the City is authorized to grant a property tax abatement on specified parcels in order to accomplish certain public purposes, including the acquisition or construction of public facilities and provide access to services to residents of the City. (c) Pursuant to a resolution adopted by the City Council of the City on September 22, 2015 (the "Abatement Resolution"), following a duly noticed public hearing, the City Council approved a property tax abatement (the "Abatements") for certain property in the City (the "Abatement Parcels") over a period of twenty years, in an amount sufficient to pay the principal amount of and all or a portion of interest on bonds issued to finance the Project in a maximum amount of$50,000,000. (d) In the Abatement Resolution, the City found and determined that the Project benefits the Abatement Parcels and that the maximum principal amount of bonds to be secured by Abatements (estimated to be $32,225,000) does not exceed the estimated sum of Abatements from the Abatement Parcels for the term authorized under the Abatement Resolution. (e) It is necessary and expedient to the sound financial management of the affairs of the City to issue its General Obligation Tax Abatement Bonds, Series 2016A (the "Bonds"), in the proposed aggregate principal amount of $31,845,000, pursuant to the Act, to provide financing for the Project. (f) The City is authorized by Section 475.60, subdivision 2(9) of the Act to negotiate the sale of the Bonds, it being determined that the City has retained an independent financial advisor in connection with such sale. The actions of the City staff and the City's municipal advisor in negotiating the sale of the Bonds are ratified and confirmed in all aspects. 2. Sale of Bonds. To provide monies to finance the Project,the City will therefore issue and sell Bonds in the proposed aggregate principal amount of $31,845,000, which amount is subject to adjustment in accordance with the official Terms of Proposal (the "Terms of Proposal"). The Bonds will be issued, sold and delivered in accordance with the Terms of Proposal attached hereto as EXHIBIT A. 470916v1 JAE SH155-391 3. Authority of Municipal Advisor. Springsted Incorporated is authorized and directed to advertise the Bonds for sale in accordance with the Terms of Proposal in the manner required by law. The City Council will meet at 7:00 P.M. on Thursday, December 17, 2015, to consider bids on the Bonds and take any other appropriate action with respect to the Bonds. 4. Authority of Bond Counsel. The law firm of Kennedy & Graven, Chartered, as bond counsel for the City, is authorized to act as bond counsel and to assist in the preparation and review of necessary documents, certificates and instruments relating to the Bonds. The officers, employees and agents of the City are hereby authorized to assist Kennedy&Graven, Chartered in the preparation of such documents, certificates, and instruments. 5. Covenants. In the resolution awarding the sale of the Bonds the City Council will set forth the covenants and undertakings required by the Act. 6. Official Statement. In connection with the sale of the Bonds,the officers or employees of the City are authorized and directed to cooperate with Springsted Incorporated, and participate in the preparation of an official statement for the Bonds and to execute and deliver it on behalf of the City upon its completion. (The remainder of this page is intentionally left blank.) 2 470916v1 JAE SH155-391 The motion for the adoption of the foregoing resolution was duly seconded by Councilor , and upon vote being taken thereon the following councilors voted in favor of the motion: and the following voted against: whereupon the resolution was declared duly passed and adopted. 3 470916v1 JAE SH155-391 EXHIBIT A TERMS OF PROPOSAL A-1 470916v1 JAE SH155-391 THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL 531,845,000* CITY OF SHAKOPEE,MINNESOTA GENERAL OBLIGATION TAX ABATEMENT BONDS,SERIES 2016A (BOOK ENTRY ONLY) Proposals for the Bonds will be received on Thursday, December 17, 2015 until 10:00 A.M.. Central Time, at the offices of Spiingsted Incorporated. 380 Jackson Street. Suite 300. Saint Paul. Minnesota. after which time proposals will be opened and tabulated. Consideration for award of the Bonds will be by the City Council at 7:00 P.M.,Central Time.of the same day. SUBMISSION OF PROPOSALS Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Bonds regardless of the manner in which the proposal is submitted. (a) Sealed Bidding Proposals may be submitted in a sealed envelope or by fax (651)223-3046 to Springsted. Signed proposals,without final price or coupons.may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final proposal price and coupons,by telephone(651)223-3000 or fax(651)223-3046 for inclusion in the submitted proposal. OR (b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via PARITY®. For purposes of the electronic bidding process. the time as maintained by PARITY® shall constitute the official time with respect to all proposals submitted to PARITY®. Each bidder shall be solely responsible for making necessary arrangements to access PARITY®for proposes of submitting its electronic proposal in a timely manner and in compliance with the requirements of the Terms of proposal. Neither the City, its agents nor PARITY® shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the City.its agents nor PARITY®shall be responsible for a bidder's failure to register to bid or for any failure in the proper operation of. or have any liability for any delays or interruptions of or any damages caused by the services of PARITY®. The City is using the services of PARITY® solely as a communication mechanism to conduct the electronic bidding for the Bonds,and PARITY®is not an agent of the City. If any provisions of this Terms of proposal conflict with information provided by PARITY®. this Terms of proposal shall control. Further information about PARITY, including any fee charged, may be obtained from: PARITY®. 1359 Broadway,2nd Floor,New York,New York 10018 Customer Support: (212)849-5000 Preliminary;subject to change. -i- A-2 470916v1 JAE SHI55-391 DETAILS OF THE BONDS The Bonds will be dated as of the date of delivery and will bear interest payable on February 1 and August 1 of each year,commencing August 1,2016. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Bonds will mature February 1 in the years and amounts*as follows: 2018 51.365.000 2022 81.440.000 2026 51.570.000 2030 $1.770,000 2034 $2.035.000 2019 81.380.000 2023 81.465.000 2027 S1.615.000 2031 $1,830.000 2035 $2.110,000 2020 S1.395.000 2024 81.500.000 2028 S1.660.000 2032 $1.895.000 2036 32.190.000 2021 81,415.000 2025 81.535.000 2029 81.710.000 2033 31.965.000 * The City reserves the right, after proposals are opened and prior to award,to increase or reduce the principal amount of the Bonds or the amount of any mauaity in multiples of 35,000. In the event the amount of any maturity is modified, the aggregate purchase price toll be adjusted to result in the same gloss spread per 31,000 of Bonds as that of the original proposal. Gross spread is the differential between the price paid to the Cityfor the new issue and the prices at which the securities are initially offered to the investing public. Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fiord redemption at a price of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify "Years of Term Maturities" in the spaces provided on the proposal form. BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bond,representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company("DTC").New York.New York.which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5.000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC;transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser. as a condition of delivery of the Bonds,will be required to deposit the Bonds with DTC. REGISTRAR The City will name the registrar which shall be subject to applicable SEC regulations. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The City may elect on February 1. 2025. and on any day thereafter, to prepay Bonds due on or after February 1. 2026. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all Bonds of a maturity are called for redemption. the City 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 interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. -n- A-3 470916v1 JAE SH155-391 SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition. the City will pledge available tax abatement revenues. The proceeds will be used to finance the construction of additions to the City's community center. BIDDING PARAMETERS Proposals shall be for not less than$31,462,860 plus accrued interest,if any,on the total principal amount of the Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Bonds is adjourned,recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity must be 98.0% or greater. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. GOOD FAITH DEPOSIT To have its proposal considered for award.the lowest bidder is required to submit a good faith deposit to the City in the amount of$318,450 (the"Deposit")no later than 1:00 P.M., Central Time on the day of sale. The Deposit may be delivered as described herein in the form of either(i) a certified or cashier's check payable to the City: or(ii) a wire transfer. The lowest bidder shall be solely responsible for the timely delivery of their Deposit whether by check or wire transfer. Neither the City nor Springsted Incorporated have any liability for delays in the receipt of the Deposit. If the Deposit is not received by the specified time. the City may, at its sole discretion.reject the proposal of the lowest bidder,direct the second lowest bidder to submit a Deposit.and thereafter award the sale to such bidder. Certified or Cashier's Check. A Deposit made by certified or cashier's check will be considered timely delivered to the City if it is made payable to the City and delivered to Springsted Incorporated. 380 Jackson Street, Suite 300,St.Paul,Minnesota 55101 by the specified time. Wire Transfer. A Deposit made by wire will be considered timely delivered to the City upon submission of a federal wire reference number by the specified time. Wire transfer instructions will be available from Springsted Incorporated following the receipt and tabulation of proposals. The successful bidder must send an e-mail including the following information: (i) the federal reference number and time released: (ii)the amount of the wire transfer:and(iii)the issue to which it applies. Once an award has been made. the Deposit received from the lowest bidder (the `purchaser") will be retained by the City and no interest will accrue to the purchaser. The amount of the Deposit will be deducted at settlement from the purchase price. In the event the purchaser fails to comply with the accepted proposal.said amount will be retained by the City. AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC)basis calculated on the proposal prior to any adjustment made by the City. The City's computation of the interest rate of'each proposal,in accordance with customary practice.will be controlling. -in- A-4 470916v1 JAE SH155-391 The City will reserve the right to: (i)waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds. (ii)reject all proposals without cause, and (iii)reject any proposal that the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION The City has not applied for or pre-approved a commitment for any policy of municipal bond insurance with respect to the Bonds. If the Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication. the maturities to be insured, and the name of the desired insurer must be set forth on the bidder's proposal. The City specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the City. All costs associated with the issuance and administration of such policy and associated ratings and expenses(other than any independent rating requested by the City)shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Bonds. CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds,but neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSP Service Bureau charge for the assignment of CUSP identification numbers shall be paid by the purchaser. SETTLEMENT On or about January 21.2016.the Bonds will be delivered without cost to the purchaser through DTC in New York,New York. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy&Graven,Chartered of Minneapolis.Minnesota,and of customary closing papers,including a no-litigation certificate. On the date of settlement,payment for the Bonds shall be made in federal, or equivalent,funds that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Bonds has been made impossible by action of the City,or its agents,the purchaser shall be liable to the City for any loss suffered by the City by reason of the purchaser's non-compliance with said terms for payment. CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(S),the City will undertake.pursuant to the resolution awarding sale of the Bonds. to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Bonds. Ot1-ICLAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Bonds, and said Preliminary Official Statement will serve as a nearly final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Preliminary Official Statement or for any additional information prior to sale. any prospective purchaser is referred to the Municipal Advisor to the City, Springsted Incorporated, 380 Jackson Street. Suite 300,Saint Paul.Minnesota 55101.telephone(651)223-3000. -iv- A-5 470916v1 JAE SH155-391 A Final Official Statement (as that term is defined in Rule 15c2-12) will be prepared specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law. By awarding the Bonds to an underwriter or underwriting syndicate, the City agrees that, no more than seven business days after the date of such award. it shall provide without cost to the sole underwriter or to the senior managing underwriter of the syndicate(the"Underwriter" for purposes of this paragraph) to which the Bonds are awarded up to 25 copies of the Final Official Statement. The City designates the Underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Such Underwriter agrees that if its proposal is accepted by the City,(i)it shall accept designation and(ii)it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated November 17,2015 BY ORDER OF THE CITY COUNCIL 1st Lori Hensen City Clerk -v- A-6 470916v1 JAE SH155-391 STATE OF MINNESOTA ) COUNTY OF SCOTT ) CITY OF SHAKOPEE ) I, the undersigned, being the duly qualified and acting City Clerk of the City of Shakopee, Minnesota (the "City"), hereby certify that I have carefully compared the attached and foregoing extract of minutes of a regular meeting of the City Council of the City held on Tuesday, November 17, 2015, with the original minutes on file in my office and the extract is a full, true and correct copy of the minutes, insofar as they relate to the issuance and sale of the City's General Obligation Tax Abatement Bonds, Series 2016A, in the proposed aggregate principal amount of$31,845,000. WITNESS My hand as City Clerk and the corporate seal of the City this day of , 2015. City Clerk City of Shakopee,Minnesota (SEAL) 470916v1 JAE SH155-391