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HomeMy WebLinkAbout04/24/1984 TENTATIVE AGENDA ADJ .REG.SESSION SHAKOPEE, MINNESOTA APRIL 24, 1984 Mayor Reinke presiding —RQ1 1_-f:.PJ 1 t ,77-,nn ., ,. 23 REUUGNITI43N By CI'YY Z-OA3NZIL OF 111-1-hRESTED CITIZENS 3] Presentation from fiscal consultants: a. 7 :00 p.m. - Ehlers and Associates b . 7 : 40 p .m. - Miller & Schroeder C . 8: 20 p.m. - Springsted Inc . 41 Fox Run 1st Addition - Review of Proposed Road Alignment 51 Huber Park Trail Restroom Facility 6] Computer System Cost 71 Consulting Services from Westwood Planning & Engineering 81 Other business: a. b . C . 9] Adjourn. John K. Anderson t P E R S O N N E L STAFF PROFILE Ehlers and Associates, Inc. currently has twenty staff members, including nine finance professionals, an office/projects manager, supervisory and research analysts, and other support personnel. Ehlers' professional staff has education and experience in law, business, banking, accounting, finance, education, urban planning and public administration, and over 175 years of combined experience in public finance. Ehlers and Associates, Inc. is especially proud of the quality and experience of our support staff. Ehlers' "back office" has a well-deserved reputation for attention to detail and quality of work product. Ehlers and Associates, Inc. is confident that we have the personnel and resources to provide clients with superior service. SERVICE DELIVERY; TEAM APPROACH Ehlers and Associates, Inc. uses a team approach in working with clients. This means that one Account Executive will have primary responsibility for a client's account, but will be assisted by one or more associate account executives and research analysts. This approach fixes responsibility and assures continuity of service for the client from the time of the proposal through any follow-up work on a bond issue. Additionally, it allows a better match of Ehlers' staff expertise and experience to the particular needs of our clients. PROJECT TEAM Ehlers and Associates, Inc. offers a group of individuals with an exceptional combination of expertise and experience to act as the financial advisory team for the City of Shakopee. The following section introduces the project team and highlights the role of each member. Full resumes of the team members follow this summary section. William E. Fahey, First Vice President. Mr. Fahey will be the lead Account Executive for the contract with the City of Shakopee. He will coordinate and review all work performed under the contract and act as the primary liaison to the City. Mr. Fahey has experience in local government, finance, law and administration since 1971, joining Ehlers and Associates in 1976 as financial advisor to local governments. He obtained his formal education from the Minnesota School of Business, Minnesota Junior College System, University of Minnesota and Syracuse University. He served Thief River Falls, Northfield and Shakopee as City Administrator with primary responsibility for administration and finance. Additional offices held by Mr. Fahey include assessor, H.R.A. Director, Planning and Grant Director. - 6 - Mr. Fahey has been an instructor in short courses sponsored by the League of Cities, the University of Minnesota, and the Minnesota Municipal Clerks and office. he served on several committees of the League of Cities and Metro League of Cities. Mr. Fahey is a registered lobbyist and has provided testimony supporting local government and sound financing laws. He has served as President of the Minnesota Municipal Clerks and Finance Officers Association and a member of Minnesota City Managers Association. .eve Apfelbacher. Steve Apfelbacher has over 14 years in public -mance irk. His public finance experience include tax increment development, lojections, and financings; advance refundings; pure revenue financing; cash nw analysis; short term cash flow financing; debt defeasance; development of 4i_ts-L ijr_ov_ement lqrorrams;_ municipal budgeting; referendums for capital cpenditures; program administration; tax impact analysis and presentation; ?ase back financing of municipal buildings; bond fund or working capital ivestment programs; successful funding of federal and state grant ?plications; and securing private financing for private developers. its experience has aided numerous cities, counties, sanitary districts, and ,hool districts in undertaking successful projects for highway, health care, lectrical, storm sewer, wastewater treatment, water, solid waste, public silding, airport, urban renewal downtown development/redevelopment, housing, ?creational and industrial development facilities. These projects may have acorporated any combinations of project revenues including special ssessments, user charges, tax increment revenues, general property tax levy, tate or federal payments, special property tax levy, contract revenues, and pecial revenue charges. KPERIENCE 971 to 1976 - Secondary teacher for St. Paul Schools. Elected three terms to the South St. Paul, Minnesota City Council and selected Finance Chairperson and City Council President. rb 'tO L fTLl'ytrL'L:%YC-uL-I, W!L-0kR' n--'* ...f'. �91J:t;va Ti�J'1�!tnr �f _the_ Housing & Redevelopment Authority (HRA), and Executive Dltectbr oi- the Economic Development Authority (EDA) for the City of South St. Paul in a $12 million development/redevelopment and housing program. to present - Joined Ehlers and Associates, Inc. - 7 - 1I1 197! WHAT DOES EHLERS & ASSOCIATES DO FOR THEIR CLIENTS AS THEIR FINANCIAL ADVISOR IN ADDITION TO SELLING BONDS? 1. Regular visits Example: Service clients within the area (i.e. Eden Prairie). 2. Attendance at Budget Sessions as Requested Example: Fairmont, Virginia. 3. Scheduling of Regular Visits by Representatives of Moody's Investors Service, Inc. Example: Dinner - May 2, 1984 Tour - May 4, 1984 Seminar - May 29, 1984 Tour - May 30-31, 1984 4. Contacting Clients to Pass on Important Developments Example: City of Plymouth's recent visit to Moody's. Moody's reconsideration of cash in the debt service sinking funds for debt per capita calculations. 5. Seminars for Clients Example: Cash flow seminar on May 5, 1982. 6. Meeting with Staff to Jointly Examine Special Projects for Preliminary Financial Planning and Feasibility Example: Eden Prairie and South St. Paul tax increment projects. 7. Special Alerts to Program, Policy and Law Changes Example: UDAG, state legislation, Moody's rating policy changes. 8. Staff/City Council Workshops Example: Hutchinson, Redwood Falls, Virginia, Faribault, Blue Earth. 9. Internal Rating Reviews and Analysis of Credit Reports Example: Fairmont, Virginia, Owatonna, Hutchinson, Redwood Falls, Blue Earth, Eden Prairie. i CITY OF SHAKOPEE, MINNESOTA FINANCIAL ADVISORY PROPOSAL April 24, 1984 T A B L E O F C O N T E N T S Page I. PROFILE OF FIRM ......................................... 1 History................................................. 1 Independence............................................1 Philosophy of Service ................................... 1 Continuity of Service ................................... 2 Areasof Expertise......................................3 -Planning & Marketing of Public Debt ................... 3 -Recognition in Investment World ....................... 3 -Computer Capabilities ................................. 4 -Other Financial Services .............................. 5 II. PERSONNEL ............................................... 6 StaffProfile ........................................... 6 ServiceDelivery; Team Approach ......................... 6 ProjectTeam ............................................ 6 ................... .. 7 III. SCOPE OF SERVICES ....................................... 10 FinancialPlanning ...................................... 10 BondSale Preparation ................................... 11 BondSale ............................................... 12 PostSale...............................................12 Compensation............................................ 13 IV. EXPERIENCE & REFERENCES OF THE FIRM ..................... 17 Dollar Volumes & Sample Projects ........................ 17 ProfessionalReferences ................................. 20 V. APPENDIX Client/Project List Q_the r Fi A*LrJ_°L S4.''�t&2-2�L _ zi�- iiJiii�iuL T resources and staff expertise in finance, analysis, and budgeting allows us to provide clients a broad range of financial advisory services in addition to the planning and marketing of specific debt issues. Debt Management Policy. Because the financing costs associated with the placement of bond issues is directly affected by a community's outstanding debt and credit position, effective debt management is an important component of a sound fiscal policy. Ehlers and Associates, Inc. can review existing short and long term debt, applying economic indices and other market standards to evaluate the client's credit Position. Ehlers can then advise actions and policy changes to improve debt management. Capital Improvements Programming. Sound fiscal management also entails the anticipation of future capital requirements. Ehlers and Associates, Inc. can assist in the development of a multi-year capital improvement program, providing computer-generated projections of project costs and capital requirements for various financing alternatives. With an adopted capital improvement program, all gradects can be evaluated in light of future needs, and new debt issues can be structured to accommodate anticipated future debt service requirements. Investment Analysis. The investment of idle public funds can be a significant source of revenue. Ehlers' computer capabilities and knowledge of the financial markets will enable us to analyze investment opportunities and develop a program to enhance the interest earned on a'aiiable public funds. Special Studies. Ehlers has the expertise to undertake special studies of a variety of project or development proposals. A fiscal impact analysis of a proposed annexation program based on a proposed development of a residential subdivision would enable county officials to be more fully Df4-Lr!mPd t.Ve�u4aagc^�di�• 11ugtrC of urian growth. Similarly, a cost -benefit analysis of alternative arrangements for the provision of public services will help county officials to better evaluate all alternatives propflsed for their consideration. Ehlers can undertake financial feasibility studies of utility projects such as hydroelectric, cogeneration and solid waste projects that will assist clients in formulating construction programs that most efficiently meet the needs of the service area. - 5 - Mr. Fahey has been an instructor in short courses sponsored by the League of Cities, the University of Minnesota, and the Minnesota Municipal Clerks and Finance Officers Association. During his years in municipal office, he served on several committees of the League of Cities and Metro League of Cities. Mr. Fahey is a registered lobbyist and has provided testimony supporting local -•- -----„..�AyP��c�p��� d'S�iti1Sf J1Si'6 •id�S'a . - He has has served as President of the Minnesota Municipal Clerks and Finance Officers Association and a member of Minnesota City Managers Association. Steve Apfelbacher. Steve Apfelbacher has over 14 yetrz ja public fi:&nt�e work. His public finance experience include tax increment development, projections, and financings; advance refundings; pure revenue financing; cash flow analysis; short term cash flow financing; debt defeasance; development of capital improvement programs; municipal budgeting; referendums for capital expenditures; program administration; tax impact analysis and presentation; lease back financing of municipal buildings; bond fund or working capital investment programs; successful funding of federal and state grant applications; and securing private financing for private developers. This experience has aided numerous cities, counties, sanitary districts, and school districts in undertakirgg eiectricaI, storm sewer, wastewater treatment, water, solid waste, public building, airport, urban renewal downtown development/redevelopment, housing, recreational and Insius-t-ri-a7 Aq-x, i_mga,- &&-. :«g�-oJects may Have incorporated any combinations of project revenues including special assessments, user charges, tax increment revenues, general property tax levy, state or federal payments, special property tax levy, contract revenues, and special revenue charges. EXPERIENCE 1971 to 1976 - Secondary teacher for St. Paul Schools. Elected three terms to the South St. Paul, Minnesota City Council and selected Finance Chairperson and City Council President. 1976 to 1979 - Director of Development, Executive Director of the Housing &-RR-=�,n 1L AA'tuhsul=itiy 'M&) -anh'hxecutiv”-iract-nr_nf the Economic Development Authority (EDA) for the City of �n� rrQai'n -program. present - Joined Ehlers and Associates, Inc. - 7 - 1979 to i * Lecturer for MFOA meetings. * Cosponsored seminars on municipal finance and tax increment financing. ivn-hu­fteh numerous Yinancing feasibility studies for clients' special needs. as a Bachelor of Arts Degree in Economics & Finance from Drake Moines, Iowa. Additionally, he has courses in computer is a member of the Municipal Finance Officers Association and Association of School Business Officials. CE: istrict Manager for Office Business Machine company. alesman for calculator firm. ,Senior Vice President. Jana Ristamaki acts as the Firm's )erations manager. Ms. Ristamaki has nineteen years of 1 Ehlers and Associates, Inc. in virtually every aspect of the irketing of municipal debt. She is responsible for project and company billings. She will also coordinate the details of igs and the delivery of the bond proceeds to the City of .1 as assisting the issuer in dealing with inquiries of the throughout the maturity of the issue. Supervisory Analyst. Marge Stanton has been with Ehlers for and has extensive experience in research, debt service flow studies, property tax structures, legal and accounting omputer operations. She has researched and written, or completion of more than 300 offering statements for new issues. Marge Stanton will supervise the research and the official statement. istant Account Executive. As an assistant account executive at ciates, Inc., Nancy DeMarais works closely with the account e preparation of official statements. Ms. Liss does extensive collection and computer analysis for Ehlers' official addition, she supervises the printing and mailing of the ents, acts as liaison between the issuer, the account the rating agencies, and coordinates follow-up activity after Ms. Liss will be working closely with the team account he research and preparation of the official statement. cDDUA1T0A': Mr. Chenoweth h University, Des Dro£rza nli_0yc.Dd AFFILIATIONS: Mr. Chenoweth the Minnesota OTHER EXPERIEN - Former - Former Jana Ristamaki business and o] experience wit] planning and mi record-keeping the bond closir Shakopee as we] broker/investor Marge Stanton, over six years planning, cash functions and c supervised the municipal bond preparation of Nancy Liss, Ass Ehlers and Asso executive in th research, data statements. In official statem executive, and the bond sale. executives in t. �4: rJ, -n_ P_ F_ -n-F S P R V T _r- F- S to the City of Shakopee, Ehlers and Associates, Inc. will As financial advisor letailed in the following sections: perform services as d FINANCIAL PLANNING :isting Debt -- Our first action, if employed as financial Review Resources & Ex study the City's economic resources and review its advisor, will be to s Ehlers believes that a thorough understanding of the financial objectives. 'inancial position is a necessary prerequisite to the City's economic and f ,nd marketing of new debt obligations. We will review successful planning a fidgets and capital improvement programs, the outstanding current and recent bu er pertinent social, physical and economic data bearing on debt, as well as oth and creditworthiness of the issuer. If appropriate, the financial health mprove an issuer's debt management will be offered. recommendations to ii Refunding Opportunities -- As part of our review of the Analysis of Advance 11 identify any opportunities for saving debt service existing debt, we wi tages that might be available through an advance refunding costs or other advan ffecting the feasibility of an advance refunding include of bonds. Factors a d bonds, current interest rates, the call date on the interest rates on ol, he call premium, the years the old bonds have to run after outstanding bonds, t' covenants, arbitrage regulations, availability of the call date, bond value of savings, total economic value. investments, present rojects -- For each proposed capital financing project, we Review of Proposed P; aluate all available financing options, considering any will identify and ev rojects and capital market conditions. With the aid of anticipated future p; s, we will analyze the impact of the alternative financing our computer program es and/or utility rates through the financing period. We options on local tax, mit written reports, including printed computer will prepare and subs staff and governing board outlining the feasibility of the projections, to the ng alternative methods of financing, including the projects and compari, osts, tax and utility rates. We will advise the City of resulting interest c, t of the alternative financing options and recommend the the long-range impac that best fit the project, resources of the issuer, and methods of financing market conditions. Issue -- In developing the maturity schedule, Structuring the Debt st given to the maturities of existing debt. The new debt consideration is fir around" the old debt. The utility rates or property tax may then be "wrapped ortize both the existing and new debts will be structured rates required to am ly possible to reflect service, benefits and ability to as close as reasonab is also given to how the maturity schedule will affect the pay. Consideration new issue and the total interest costs. We will assist marketability of the g the best maturity schedule for the new debt and the City in selectin, - 10 - offer recommendations regarding bond denominations, call provisions, debt service reserves, and bond covenants, appropriate to the particular debt issue. Authorization of the Debt; communication with the public -- Ehlers' staff will attend all meetings and public hearings necessary to properly explain the project financing and assist in preparing public information materials including brochures, news releases and visual aids regarding the financing, if necessary. We will consult with attorneys of the City's choice relative to all minutes, resolutions and proceedings necessary to authorize the financing. BOND SALE PREPARATION Bond Market Conditions -- We will advise the City on bond market conditions and recommend a sale schedule that will best assure the successful marketing of the City's issue. Preparation of Official Statement -- We will provide leadership and maximum cooperation with the City's staff in the preparation of an Official Statement which completely and accurately represents the City of Shakopee to rating agencies and to investors. We welcome the involvement of the City's staff in data collection, and in the review and approval of the final draft. To avoid costly last-minute revisions, the Official Statement will be as complete as possible when sent to the approved printer. Representation to Rating Agencies -- We recognize the importance of retaining and improving the "A" rating now enjoyed by the City of Shakopee. We will supplement the Official Statement as deemed advisable with additional information for rating agencies. We will also act on the City's behalf in responding to any questions buy the rating agencies regarding the City's issue. Ehlers will advise when a trip to New York appears to be in the issuer's best interest or, perhaps, if inviting the rating service's staff to Shakopee would be wise or both. If special conferences with the rating services are necessary, Ehlers will provide leadership in developing an effective presentation. Notice of Sale -- In cooperation with attorneys of the City's choice we will prepare and publish the Official Notice of Sale in compliance with all requirements specified in state laws. In addition, we will advertise the sale in such financial publications as will best assure competitive bidding. Preparation of Bid Form -- We will provide a Uniform Bid Form appropriate to the particular bonds offered for sale. Structuring the Bond Issue -- This service addressed in FINANCIAL PLANNING, section, above. Coordination of Professional Services -- We will cooperate fully with the City's bond counsel and other professionals to ensure that legal and procedural details are properly followed and that all necessary documents are prepared. We will also work closely with the engineers and architects in structuring debt issues to meet the actual needs of the project and, if requested, to invest idle construction funds as effectively as possible. - 11 - Bond Registration -- Bond registration has been moving forward since July 1 without any great disruption to the bond markets, and it appears that registration will result in a more efficient closing and transfer of securities. We will assist the issuer in selecting an appropriate Registrar/Paying Agent. Prospective Bidders -- A comprehensive listing of regional and national prospective bidders and buyers is maintained and current in the Ehlers' office, to which local banks and underwriters will be added to provide the widest possible distribution of the official statement. Ehlers will solicit interest in the issue through personal contact with prospective bidders and will be available to answer their questions. BOND SALE Competitive Sale -- Ehlers' involvement on "sale day" will be geared to the best interest of the City of Shakopee. We will advise the City as to market conditions on the day of the sale, market trends and recent comparable sales. As an independent agent, we will receive, complete and deliver bids to the sale on behalf of any underwriters requesting such service in order to maximize the number of competitive bids. Ehlers' staff will attend the sale and assure procedural compliance with the provisions as set forth in the Official Notice of Sale. The accuracy of the bids received will be immediately verified by our staff on our computers. You will then be advised as to the accuracy of the bids and on the acceptability of those bids. If bids are not acceptable for whatever reason, the City will be advised, options will be thoroughly explained and reviewed, and appropriate action will be advised. Negotiated Sale -- Where required or desirable, and in lieu of certain services specified above (official statement, advertising), Ehlers will negotiate on behalf of the issuer with interested purchasers for the sale of obligations to obtain the best possible terms thereon for the community. POST SALE Bond Closing -- A prompt, trouble-free closing is a vital part of any bond transaction and can affect underwriter relationships in future transactions. The great detail required in the last stages of issuance is addressed by firm procedure in the Ehlers' office so nothing is overlooked. Coordination with the approved bond printer, bond counsel, successful bidder, registrar/paying agency, bond signers, designated banks and the City's staff on the various final stages will be careful and complete. Ehlers' staff will attend the bond closing, supervise the execution of all necessary documents, assure delivery of bonds, and ensure the prompt transfer (same day) of funds to the issuer for prompt investment. - 12 - Investment of Bond Proceeds -- At the request of the issuer, we will assist in the investment of the sale proceeds consistent with the safety and financial requirements of the community. Our specialized computer software will enable us to develop an investment program that structures investment maturities to maximize investment earnings while ensuring adequate funds to meet financial obligations. Records of Issue -- The City will be furnished a complete bond transcript and a permanent bond record book and Ehlers will maintain copies of proceedings (hard copy or microfilm) until final maturity of the obligations. The City will be invited to contact our office at any future time with any questions pertaining to the issue(s). Annual Rating Agency Reports -- As the City's financial advisor, Ehlers will provide computer printouts of the maturity schedules of all outstanding issues. At the City's request, we will also prepare the annual rating agencies' reports to best ensure maintenance of the current rating. COMPENSATION In return for the services described above in connection with the financing of a project and for each issue or series of obligations, we shall be entitled to a fee, due and payable only upon the award of the sale of the obligations or commitment from the appropriate state or federal agency of a grant or loan for the project, as follows: $ 12.50 per $1,000 for the first $500,000 bonds issued $ 6.23 per $1,000 for the next $500,000 bonds issued $ 3.12 per $1,000 for the next $1,000,000 bonds issued $ 1.61 per $1,000 for the next $8,000,000 bonds issued $ .81 per $1,000 for any amount in excess of $10,000,000 The gross fee for any offering processed above shall not be less than $5,875. When more than one bond issue is sold in a single offering, the fee for the small issue(s) of the offering shall be reduced by twenty-five percent; provided, however, that the fee for any issue shall not be less than $4,400. For revenue bonds, including "double barrelled" general obligation revenue bonds, the above fee shall be multiplied by 1.5. From said fee we are to pay the costs of computer services furnished or ordered by us in connection with processing such issues, advertising the sale, preparation and distribution of the official statement, printing of the obligations, and normal company personnel travel and overhead expense required to service a normal bond issue. - 13 - All legal fees, C.P.A. or accountant's charges, and the charges for any other professional work required to complete the project financing, and all bond rating expenses and the cost of any authenticating agent shall be paid by the government. It is further agreed that the City reserve the right to reject all offers secured for the obligations. Failure to Receive Offers; No Fee -- If no offer is received for the bonds or if the best offer is determined to be unreasonable in the light of various indices recognized by the trade for bonds of similar maturities and quality and is rejected, we shall not be entitled to any fee under this portion of the agreement (marketing bonds), but we shall be reimbursed our out of pocket expenses incurred in advertising, printing and distribution of the official statement, and travel expense. In such case, for a period of one year, we shall be authorized to solicit further offers, either through solicitation or public sale and, if successful in obtaining an offer reasonably close to market rates, or which is accepted notwithstanding, we shall be entitled to the fees described above, less any previous reimbursements of expenses. Such time to seek additional offers shall be extended if we are prevented from entertaining offers because of statutory interest rate or other legal limitations. Abandonment -- If a project is abandoned before receiving bids on bonds, we shall be reimbursed for our actual time and out of pocket expenses spent on the project. If the project is abandoned after market rate bids have been received for bonds, we shall be entitled to the entire fee determined for the schedule above, less bond printing expense if no bonds have been printed. At our option, a project shall be deemed abandoned if bonds are not issued within nine months after authorization by election, hearings, and governing body action, or other required proceedings; provided, however, that if a bond sale is in process, the project shall not be deemed abandoned. If, after it shall have been abandoned, a project is reactivated, any fees previously billed for travel and other out of pocket expense shall not be credited against the fee and expenses involved in completing the reactivated project, except as further agreed between the parties. Limitation of Liability; Bond Market and Interest Rates -- The bond market and interest rates can be volatile and fast changing, subject to factors beyond the control or knowledge of the consultant, and Ehlers and Associates, Inc. shall not be liable for differential interest costs which might be determinable only after the sale. For example, should we recommend a bond sale and it later appears that, had the sale been advanced or postponed, a lower interest rate might have been obtained, neither the company nor employees of the company shall be held liable for the differential interest cost. - 14 - Government Regulations; Renegotiation -- The United States government recently adopted and may in the future adopt laws and regulations relating to the sale and issuance of municipal bonds. Depending upon future regulations and interpretations thereof, substantial additional duties and responsibilities may be imposed not contemplated in the description of services above. Should such laws and regulations result in such added work and costs that they cannot be performed within the compensation provided in this proposal, the company reserves the right to renegotiate the company's compensation, provided however, that if the parties cannot renegotiate an agreement to their mutual satisfaction, this contract may be terminated, provided that the company shall be compensated for services and expenses incurred to that time according to the terms of this proposal. Work Product; Computer Programs -- Upon completion of work for which billings are made, copies of all computer runs, analyses, reports, and official statements, shall be delivered to the government, provided, however, no such documents shall be used in soliciting offers for the puchase of bonds or other investment without our permission. All computer programs used by the Company in preparing fiscal analyses shall remain the property of the Company. - 15 - EXECUTION OF PROJECT FINANCING CALCULATION OF FEE EHLERS AND ASSOCIATES PROPOSAL Security Issue Minimum fee $500,000 600,000 700,000 800,000 900,000 1,000,000 1,100,000 1,200,000 1,300,000 1,400,000 1,500,000 1,750,000 2,000,000 2,500,000 3,000,000 4,000,000 5,000,000 7,500,000 10,000,000 - 16 - Fee $ 5,875 $ 6,694 7,361 8,029 8,696 9,364 10,031 10,365 10,699 11,033 11,366 11,700 12,535 13,369 14,231 15,094 16,819 18,544 22,856 27,169 E X P E R I E N C E & R E F E R E N C E S Ehlers and Associates, Inc. offers clients nearly thirty years of public finance experience gained over an eight -state area in the Upper Midwest. Three lists of clients and references are included in the Appendix. The first list includes some of our long-term clients and the total dollar volume of debt issued throughout the years. The second list provides information on projects completed since the beginning of 1983, while the third list indicates 1981 and 1982 projects. In order to obtain a better view of our services, we invite the City to contact any of the communities or people mentioned below or listed in the Appendix material. DOLLAR VOLUMES & SAMPLE PROJECTS In the last twelve months Ehlers and Associates, Inc. has participated in the planning and marketing of 135 bond issues for a total dollar volume of $149,375,000. We have included for the City's review official statements and sale results of four bond projects which are summarized below. City of Plymouth, Minnesota $7,000,000 General Obligation Tax Increment Bonds of 1984 $4,900,000 General Obligation Improvement Bonds of 1984 The $7,000,000 General Obligation Tax Increment Bonds were sold by the City to finance interchange improvements on I-494 for the development of the Minneapolis Industrial Park. The City sold these bonds based on developments projected by Carlson Properties, the real estate group of Carlson Companies, in the City's development district. In the event sufficient tax increment revenues are not generated, Carlson Properties has provided an indemnity bond by St. Paul Fire & Marine Insurance Company to guarantee the payment of debt service on this bond issue for the City. Four bids were received from the New York, Chicago, Minneapolis, and Milwaukee financial markets. Contact Persons: Mr. James Willis, City Manager Mr. Lloyd Ricker, Finance Director 3400 Plymouth Blvd. Plymouth, MN 55447 (612) 559-2800 - 17 - City of South Saint Paul, Minnesota The City has retained Ehlers and Associates continuously as their fiscal consultants for over 22 years. During that time the City has issued over $21,000,000 in general obligation bonds and $10,000,000 in Residential Mortgage Revenue Bonds. Ehlers and Associates, with South St. Paul, issued the first General Obligation Tax Increment bonds in Minnesota. Issuing general obligation bonds saved the City numerous dollars in interest expense over the terms of the three general obligation Tax Increment Bonds. General Obligation Tax Increment bonds are now issued by all communities throughout Minnesota. Due to the success of the Tax Increment District two of these issues have been defeased with available cash in the tax increment district. This has now allowed the City to finance more Tax Increment projects than originally projected. Contact Persons: Mayor Charles Michelson James Cosgrove, City Coordinator City Hall 125 Third Avenue North South St. Paul, MN 55075 (612) 451-2787 Lakeview Downtown Development Authority of Battle Creek Township $5,200,000 Limited Obligation Development Bonds of 1982 The $5,200,000 limited obligation bonds were issued to finance site development work and other improvements in support of a $35 million three department store regional shopping center. This issue represents a very complex and innovative use of tax increment financing and was critical to the financial feasibility of the entire project. The proceeds of this issue were escrowed until the developer constructed the shopping center and public improvements. Once the increment was certified, the bond issue proceeds were released from the escrow account and the developer reimbursed for all costs. The issue was insured by AMBAC and received a Standard & Poor's rating of "AAA". The bonds were sold on a semi -competitive basis at a net interest rate of 11.9557 Contact Persons: Mr. John Faus, Chairman Lakeview Downtown Development Authority 1125 West Territorial Road Battle Creek, MI 49015 (616) 968-1330 - 18 - Battle Creek Contact Persons (cont.) Mr. Maurice Cohen Forbes/Cohen Properties 30840 Northwestern Highway Suite 230 Farmington Hills, MI 48018 (313) 851-8800 City of Eden Prairie, Minnesota $19,800,000 General Obligation Advance Refunding Tax Increment Bonds of 1983 and $2,900,000 General Obligation Bonds and Certificates of Indebtedness The $19,800,000 G.O. Advance Refunding Tax Increment Bonds were issued to refund $18,000,000 in 1982 G.O. Tax Increment Bonds. The original tax increment bonds were issued to finance the construction of interchange improvements. This $18,000,000 bond issue was the first General Obligation Tax Increment issue to be sold with AMBAC insurance. This innovative approach was used to lower the interest rate on the bond issue so that the bonds could be sold. At that time, the market interest rate was greater than the maximum interest rate allowed under state law. Ehlers and Associates was able to sell this bond issue and the City started construction on the interchange improvements on schedule. Ehlers and Associates, Inc. recommended the refunding to achieve savings in debt service costs. The sale of the Advance Refunding Tax Increment Bonds resulted in a savings of $1,970,000. The $2,900,000 G.O. Bonds and Certificates are being issued to finance a variety of street and water system improvements and to purchase equipment. Contact person: Mr. John Frane Finance Officer -Clerk City of Eden Prairie Eden Prairie, MN 55344 (612) 937-2262 - 19 - EHLERS AND ASSOCIATES, INC. Professional References Banking References American National Bank of St. Paul, Mr. William Langford, (612) 298-6059 Continental Illinois National Bank & Trust, Chicago, IL, Mr. Hal Werner (312) 828-4825 F & M Marquette National Bank of Minneapolis, Mr. Paul Roche, Ms. Barbara Graham, (612) 341-6568 First Bank Minneapolis, Mr. Lee Hamilton, Mr. Donald Bergum, (612) 340-4141 First Bank (N.A.), Milwaukee, Mr. Tom Steele, (414) 278-6064 First National Bank of St. Paul, Mr. John Mullen, Mr. John Wooldridge, Mr. Alan Vagstad, (612) 291-5674 Marine Bank, N.A., Milwaukee, WI, Ms. Vera McRoberts, (414) 765-2516 Northern Trust Company, Chicago, IL, Ms. Beatrice Mahlum, (312) 444-3712 Norwest Bank Minneapolis, N.A., Mr. Jon L. Van Valkenburg, Ms. Pamela Mohr, Trust Department, (612) 372-8971 Bond Rating Agencies Moody's Investors Service, New York, Ms. Freda Stern Ackerman, (212) 553-0300 Standard and Poor's, Mr. Richard Huff, (212) 248-2525 Municipal Bond Insurance Companies AMBAC (American Municipal Bond Assurance Corporation), Milwaukee Regional Office, Mr. Thomas Sackett, (800) 588-9900; New York Executive Office, Mr. Kenneth Hall, (800) 221-1854 MBIA (Municipal Bond Insurance Association), New York, Mr. Thomas Scherer, (914) 946-4242 - 20 - Bond Attorney References Ahlers, Cooney, Dorweiler, Haynie & Smith, Des Moines, IA, Mr. Kenneth H. Haynie, Mr. Philip J. Dorweiler, Des Moines, (515) 243-7611 Arntson, Hagen, Wentz & Klein, Fargo, ND, Mr. Jon Arntson, (701) 293-9159 Birdzell and Beauclair, Bismark, ND, Mr. Robert Birdzell, Mr. Leo Beauclair, Mr. Maurice E. Cook, (701) 255-1008 Boardman, Suhr, Curry & Field, Madison, WI, Mr. James A. Flader, (608) 257-9521 Borge and Pitt, Chicago, IL Mr. Mike Borge, (312) 726-6080 Briggs and Morgan, St. Paul, MN, Mr. Bernard P. Friel (612) 291-1215 Chapman and Cutler, Chicago, IL, Mr. Herbert H. Hanson, (312) 726-6130 Davis, Hochenberg, Wine, Brown and Koehn, Des Moines, IA Mr. Dave Van Sickle (515) 243-2300 Dorsey & Whitney, Minneapolis, MN, Mr. A. B. Whitney, (612) 340-2600 Faegre and Benson, Minneapolis, MN, Mr. Stephen Rosholt, Mr. Walter Duffy, (612) 338-7571 Honigman, Miller, Schwartz and Cohn, Detroit, MI, Mr. John M. Kamins, (313) 962-6700 LeFevere, Lefler, Kennedy, O'Brien and Drawz, Minneapolis, MN, Mr. Clayton LeFevere, (612) 333-0543 Miller, Canfield, Paddock and Stone, Detroit, MI, Mr. Stratton S. Brown, Mr. George T. Stevenson, (313) 963-6420 Mulcahy & Wherry, Milwaukee, WI, Mr. Paul R. Schilling, (414) 278-7110 O'Connor and Hannan, Minneapolis, MN, Mr. William McGrann, (612) 341-3800 Ohnstad, Twichell, Breitling, Rosenvold, Wanner, Nelson, Neugebauer & Maring, P.C., Fargo, ND, Mr. Dan Twichell, Mr. Brian Neugebauer (701) 282-3249 Quarles & Brady, Milwaukee, WI, Mr. Darryl Bell, (414) 277-5000 Wurst, Pearson, Hamilton, Larson and Underwood, Minneapolis, Mr.Curtis A. Pearson, (612) 338-4200 - 21 - Bond Dealer References Columbian Securities, Chicago, IL, Ms. Marie Luth, (312) 977-1777 Croake Roberts, Inc., Chicago, IL, Mr.Bob Croake, (312) 346-4949 Cronin & Marcotte, Inc., Minneapolis, MN, Mr. Richard Cronin, Mr. Warren Jones, (612) 339-8561 Dain Bosworth, Inc., Minneapolis, MN, Ms. Shirley M. Hogan, (612) 371-2899, Mr. Lance Levitan, (612) 341-2958 First Boston Corporation, New York, NY, Ms. Claire Devine, (212) 909-3210 Merrill Lynch White Weld, Minneapolis, MN, Mr. Nicholas Schaps, Mr. John Iten, Mr. Robert Boeck, (612) 371-7387; Chicago, IL, Mr. Steve Wilson, (312) 933-2373 John Nuveen & Co. Inc., Chicago, IL, Ms. Evaliene Schwarz, (312) 621-30127; Minneapolis office - Mr. Paul C. Williams, Mr. Daniel Hazen, (612) 341-2400 Paine Webber Jackson & Curtis, Inc., Minneapolis, MN, Mr. Paul A. Lynch, (612) 371-4022 Piper, Jaffray & Hopwood, Inc., Minneapolis, MN, Mr. D. V. (Duke) Steenson, Mr. Gerald Bowers, (612) 271-8271 - 22 - Total Dollar Amount Name of Client # of Issues of All Issues Reference Name/Address MINNESOTA City of Blue Earth 19 $11,573,000 Mr. John S. Rudd (since 1960) City Administrator City of Blue Earth 125 W. 6th St. Blue Earth, MN 56013 (507) 526-7336 City of Buffalo 22 $13,163,000 Mr. Wallace I. Peterson (since 1961) City Clerk -Treasurer City of Buffalo 212 Central Avenue Buffalo, MN 55313 (612) 682-1181 City of Eden Prairie 36 $119,813,000 Mr. John Frane (since 1968) Finance Officer -Clerk City of Eden Prairie 8950 Eden Prairie Road Eden Prairie, MN 55344 (612) 937-2262 City of Fairmont 20 $16,220,000 Mr. Gary Klaphake (since 1955) City Administrator City of Fairmont 114 East First Street Fairmont, MN 56031 (507) 235-5563 City of Faribault 16 $13,425,000 Mr. Robert Yochum (since 1957) City Administrator City of Faribault 208 N.W. 1st Avenue Faribault, MN 55021 (507) 334-2222 City of Fridley 17 $21,615,000 Mr. Nasim M. Qureshi (since 1961) City Manager City of Fridley 6431 University Ave. N.E. Fridley, MN 55432 (612) 571-3450 Total Dollar Amount Name of Client # of Issues of All Issues Reference Name/Address MINNESOTA (CON'T) City of Hibbing 3 $11,500,000 Mr. Karl Marietta (Hibbing Public Utilities) P,E., General Manager (since 1979) Mr. David Strafaccia Assis. General Mgr -Sec. Hibbing Public Utilities 6th Ave. E. & 19th Street Hibbing, MN 55746 (218) 263-7515 City of Hutchinson 7 $5,900,000 Mr. Gary D. Plotz (since 1979) City Administrator City of Hutchinson 37 Washington Ave. W. Hutchinson, MN 55350 (612) 587-5151 City of Mounds View 14 $12,525,000 Mr. Donald F. Pauley (since 1960) City Clerk -Administrator City of Moundsview 2401 Highway #10 P.O. St. Paul, MN 55112 (612) 784-3055 City of Owatonna 11 $14,745,000 Mr. Thomas Mealey (since 1976) City Clerk -Treasurer City of Owatonna 540 West Hills Circle Owatonna, MN 55060 (507) 451-4540 City of Plymouth 19 $72,070,000 Mr. James Willis (since 1972) City Manager Mr. Lloyd Ricker Finance Director City of Plymouth 3400 Plymouth Blvd Plymouth, MN 55447 (612) 559-2800 City of Virginia 13 $26,335,000 Ms. Norma Nekich (since 1973) City Clerk City of Virginia Virginia, MN 55792 (218) 741-3890 MINNESOTA NAME OF ISSUER DATE AMOUNT & PURPOSE REFERENCE Independent School District 1/22/81 $510,000 School Building Bonds Mr. Patrick De Sutter No. 1 (Aitkin) Superintendent 306 2nd St. N.W. Aitkin, MN 56431 (218) 927-2115 Independent School District 8/30/82 $1,700,000 Aid Anticipation Dr. Clayton Hovda No. 206 (Alexandria) Certificates of Indebtedness Superintendent Ms. Janice Esala Business Manager I.S.D. No. 206 P.O. Box 308 Alexandria, MN 56308 (612) 762-2141 Independent School District 8/12/81 $795,000 G.O. School Building Mr. Roland Theis No. 566 (Askov) Bonds Supertintendent I.S.D. No. 566 Askov, MN 55704 (612) 838-3111 City of Audubon 9/01/82 $215,000 G.O. Temporary Improvement Mr. Parry Jacobson Bonds (sewer improvement) City Clerk -Treasurer City of Audubon Audubon, MN 56511 (218) 439-6318 City of Aurora 4/21/81 $335,000 Temporary Improvement Mrs. Geraldine Boben Bonds City Clerk -Treasurer City of Aurora 16 West 2nd Ave. No. Aurora, MN 55705 (218) 229-2614 City of Barnesville 12/08/82 $105,000 Telephone Revenue Bonds Mr. David J. Pederson $ 65,000 Electric Revenue Bonds City Clerk -Treasurer City of Barnesville P.O. Box 207 Barnesville, MN 56514 (218) 354-2292 Town of Bass Brook 4/08/81 $875,000 Temporary Improvement Ms. Diana Skelly Bonds (water system) Town Clerk Town of Bass Brook Box 146 Cohasset, MN 55721 (218) 328-6677 City of Belle Plaine 5/18/82 $425,000 G.O. Temporary Improvement Mr. David Unmacht Bonds (streets, storm sewer, curb City Clerk -Treasurer and gutter) City of Belle Plaine 420 E. Main Street Belle Plaine, MN 56011 (612) 873-5553 City of Blue Earth 8/11/81 $900,000 G.O. Temporary Mr. John S. Rudd Improvement Bonds City Administrator 6/08/82 $2,250,000 G.O. Temporary City of Blue Earth Improvement Bonds 125 W. 6th St. (81/82 projects storm sewer, water Blue Earth, MN 56013 & sewer & street improv. -HUD Grant) (507) 526-7336 City of Boyd 10/05/81 $275,000 G.O. Temporary Ms. Karen Engelke Construction Bonds City Clerk -Treasurer (water improvement (FmHA) City of Boyd Boyd, MN 56218 (612) 855-2242 NAME OF ISSUER DATE City of Buffalo 6/18/81 9/22/81 11/16/81 2/22/82 4/28/82 9/14/82 City of Cambridge 5/27/81 9/28/82 MINNESOTA (Continued) AMOUNT E PURPOSE $1,375,000 G.O. Water Revenue Bonds $700,000 G.O. Tax Increment Redevelopment Bonds $250,000 G.O. Improvement Bonds $895,000 G.O. Municipal Building Bonds (public works bldg - city hall remodeling) $1,440,000 Temporary Construction Bonds $525,000 G.O. Improvement Bonds (street, storm sewer, water mains) $950,000 G.O. Bonds (tax increment and temporary improvement) $480,000 G.O. Improvement bonds (refunding and streets) City of Clarkfield 10/15/81 $225,000 G.O. Improvement Bonds 12/08/81 $475,000 G.O. Medical Facilities Revenue Bonds City of Cottage Grove 7/07/82 $155,000 G.O. Certificates of Indebtedness (equipment) City of Dilworth 3/24/82 $225,000 G.O. Building Bonds (community center, fire hall) Independent School District 1/14/81 $570,000 G.O. School Building No. 147 (Dilworth) Bonds of 1981 11/22/82 $350,000 School Aid Anticipation Certificates of Indebtedness City of Echo 6/17/81 $180,000 Loan Anticipation Notes (FmHA) City of Eden Prairie 3/02/82 $18,000,000 G.O. Tax Increment Bonds (highway interchange) $2,900,000 G.O. Puhlic Bldg Bonds (safety bldg. (law enforcement) E addition to public works facility) $1,100,000 G.O. Improvement Bonds (water san. sewer, storm sewer, drainage street, sidewalk curb and gutter) $300,000 G.O. Equipment Certifi- cates of Indebtedness 11/18/82 $6,200,000 G.O. Improvement Bonds $2,300,000 G.O. State -Aid Bonds REFERENCE Mr. Wallace I. Peterson City Clerk -Treasurer City of Buffalo 212 Central Avenue Buffalo, MN 55313 (612) 682-1181 Mr. Scott Larson City Administrator -Clerk City of Cambridge Cambridge Municipal Bldg. Cambridge, MN 55008 (612) 689-3211 Ms. Margaret Mc Roden City Clerk Mr. Leo Flattum, Mayor The City of Clarkfield Clarkfield, MN 56223 (612) 669-4435 Mr. Carl F. Meissner City Clerk -Administrator City of Cottage Grove 7516 80th St. S. Cottage Grove, MN 55016 (612) 458-2800 Mr. Gary Cowden City Clerk -Treasurer City of Dilworth 107 Center Ave. E. Dilworth, MN 56529 (218) 287-2313 Mr. Don Vellenga Superintendent I.S.D. No. 147 Box 188 Dilworth, MN 56529 (218) 287-2371 C. W. Brown Clerk -Treasurer City of Echo P.O. Box 215 Echo, MN 56237 (507) 925-4190 Mr. John Frane Finance Officer -Clerk City of Eden Prairie 8950 Eden Prairie Road Eden Prairie, MN 55344 (612) 937-2262 MINNESOTA (Continued) NAME OF ISSUER DATE AMOUNT & PURPOSE REFERENCE Independent School District No. 272 (Eden Prairie) 8/05/82 $1,220,000 Aid Anticipation Mr. Merle 0. Gamm Certificates of Indebtedness $490,000 Tax Anticipation Dir. of Business Affairs Certifi- I.S.O. No. 272 cates of Indebtedness 8100 School Road Eden Prairie, MN 55344 (612) 937-1650 City of Eveleth 8/04/81 $200,000 G.O. Energy Improvement Mr. Elmer A. Milbridge 7/06/82 Bonds $825,000 G.O. Grant Anticipation City Clerk -Treasurer City of Eveleth Bonds (EPA -PCA sanitary sewer Eveleth, MN 55734 system improvements) (218) 744-2501 City of Fairmont 9/28/81 $975,000 G.O. Temporary Improvement Mr. Gary Klaphake Bonds City Administrator City of Fairmont 114 East First Street Fairmont, MN 56031 (507) 235-5563 City of Falcon Heights 10/05/82 $225,000 G.O. Improvment Bonds Mr. Dewan Barnes (streets) City Administrator $675,000 Temporary Improvement City of Falcon Heights Bonds (sanitary sewer, water, 1644 W. Larpenteur Ave. storm sewer and streets) St. Paul, MN 55113 (612) 644-5050 City of Faribault 6/23/81 $2,785,000 G.O. Bonds (local im- Mr. Robert Yochum provements, improvements in City Administrator development area) City of Faribault 10/19/82 $ 660,000 G.O. Bonds 208 N.W. 1st Avenue Faribault, MN 55021 (507) 334-2222 Faribault County 6/01/82 $320,000 G.O. Drainage System Mr. Palmer N. Eckhardt Bonds Faribault County Auditor Faribault County Court- house Blue Earth, MN 566013 (507) 526-5145 City of Fridley 1/19/81 $2,200,000 G.O. Tax Increment Mr. Nasim M. Qureshi Redevelopment Bonds City Manager 7/26/82 $1,425,000 Special Assessment Fund City of Fridley Bonds (sewer, water, streets) 6431 University Ave. N.E. $625,000 G.O. Tax Increment Fridley, MN 55432 Redevelopment Bonds (612) 571-3450 11/08/82 $600,000 G.O. Tax Increment Redevelopment Bonds, Series II City of Gibbon 4/01/81 $140,000 G.O. Improvement Bonds Mr. Floyd Kent 12/16/82 $110,000 G.O. Community Center City Clerk Bonds of 1982 City of Gibbon Gibbon, MN 55335 (507) 834-6667 City of Glyndon 5/13/81 $635,000 G.O. Improvement Bonds Mr. Dennis Johnson City Clerk -Treasurer City of Glyndon Glyndon, MN 56547 (218) 498-2157 MINNESOTA (Continued) NAME OF ISSUER DATE AMOUNT Y, PURPOSE REFERENCE City of Goodview 7/13/81 $1,000,000 Improvement Bonds Mr. Daryl K. Zimmer 10/04/82 $160,000 G.O. Improvement Bonds City Administrator (sanitary sewer, storm sewer, City of Goodview streets) Winona, MN 55987 (507) 452-1630 City of Granite Falls 6/22/81 $275,000 G.O.Improvement Bonds Mr. Richard Voller 4/19/82 $575,000 G.O. Hospital and City Manager Nursing Home Bonds City of Granite Falls 10/18/82 $2,235,000 G.O. Hospital, Nursing 885 Prentice Home 8 Medical Facilities Bonds Granite Falls, MN 56241 (612) 564-4430 City of Greenfield 6/01/82 $75,000 G.O. Improvement Bonds Mr. David Wilde City Clerk -Treasurer City of Greenfield Route 2, Box 298 Rockford, MN 55373 (612) 477-6201 City of Hawley 11/24/81 $365,000 G.O. Temporary Mr. Lawrence L. Quam Construction Bonds (medical City Clerk/Treasurer facility FmHA) City of Hawley Hawley, MN 56549 (218) 483-3331 City of Hibbing 10/19/82 $1,390,000 Grant Anticipation Notes Mr. Karl Marietta (Hibbing Public Utilities) (water plant) P.E., General Manager Mr. David Strafaccia Assis. General Mgr -Sec. Hibbing Public Utilities 6th Ave. E. E 19th Street Hibbing, MN 55746 (218) 263-7515 City of Hugo 9/21/81 $170,000 G.O. Temporary Improvement Ms. Mary Ann Creager Bonds City Clerk -Treasurer The City of Hugo 5524 Upper 146th St. Hugo, MN 55038 (612) 429-6676 City of Hutchinson 6/30/81 $3,350,000 G.O. Bonds Mr. Gary D. Plotz 7/27/82 $135,000 G.O. Tax Increment Bonds City Administrator 8/10/82 $490,000 G.O. Improvement Bonds City of Hutchinson $1,275,000 G.O. Water Revenue Bonds 37 Washington Ave. W. (improvements to water utility) Hutchinson, MN 55350 (612) 587-5151 Isanti County 12/01/82 $2,140,000 Loan Anticipation Notes Mr. George Rindelaub (jail building) Executive Secretary Isanti County Courthouse 237 S.W. 2nd Avenue Cambridge, MN 55008 (612) 434-9400 Kanabec County 12/08/82 $590,000 G.O. Jail Building Bonds Mr. Jerry T. Tvedt Kanabec County Auditor Kanabec County Courthouse Mora, MN 55051 (612) 679-1030 MINNESOTA (Continued) NAME OF ISSUER DATE AMOUNT & PURPOSE REFERENCE City of Mountain Iron 5/24/82 $100,000 G.O. Equipment Certif- Mr. Peter Von Drak icates of Indebtedness $200,000 G.O. Tax Anticipation City Administrator Certificates City of Mountain Iron 9/13/82 $520,000 G.O. Improvement Bonds Mountain Iron, MN 55768 (218) 735-8267 (streets) City of Nashwauk 3/30/82 $625,000 G.O. Temporary Ms. Arleen Halliday Construction Bonds City Clerk City of Nashwauk Nashwauk, MN 55769 (218) 885-1210 City of New Ulm 1981 Power Planning Study: Alternate Mr. Richard D. Salvati Power Sources City Manager Mr. Karl Huber, Jr. City Clerk City of New Ulm 100 North Broadway New Ulm, MN 56073 (507) 359-8259 City of Olivia 6/20/82 $625,000 Grant Anticipation Bonds Mr. Richard Carlson (wastewater treatment facility, Executive Director -Clerk sewer rehab (EPA -PCA)) City of Olivia 1009 W. Lincoln Ave. Olivia, MN 56277 (612) 523-2361 City of Orono 11/22/82 $475,000 G.O. Improvement Bonds Mr. Thomas Kuehn (sanitary sewer, water main, Finance Director streets) City of Orono Box 66 Crystal Bay, MN 55323 (612) 473-7357 City of Ortonville 10/18/82 $185,000 G.O. Improvement Bonds Mr. Donald E. Geier (storm sewer) $185,000 G.O. Public Utility City Clerk -Treasurer City of Ortonville Revenue Bonds (waste water 135 Madison Avenue treatment plant) Ortonville, MN 56278 (612) 839-3428 City of Owatonna 7/07/81 $1,140,000 G.O. Improvement Bonds Mr. Thomas Mealey 7/20/82 $1,610,000 G.O. Bonds (street, City Clerk -Treasurer curb and gutter, storm sewer, City of Owatonna sidewalk, public improvements in 540 West Hills Circle redevelopment area) Owatonna, MN 55060 (507) 451-4540 City of Pelican Rapids 5/26/81 $410,000 G.O. Improvement Bonds Mr. Richard Jenson (streets, water, sewer) City Clerk -Treasurer City of Pelican Rapids Pelican Rapids, MN 56572 (218) 863-6571 City of Plymouth 4/04/81 $2,625,000 G.O. Improvement Bonds Mr. James Willis 8/16/82 $1,300,000 G.O. Improvement Bonds City Manager (various local improvements) Mr. Lloyd Ricker $525,000 G.O. Water Revenue Bonds Finance Director (well construction & trunk water City of Plymouth main) 3400 Plymouth Blvd Plymouth, MN 55447 (612) 559-2800 MINNESOTA (Continued) NAME OF ISSUER DATE AMOUNT & PURPOSE REFERENCE City of Redwood Falls 6/02/81 $210,000 G.O. Tax Increment Bonds Mr. Neil Ruddy 12/07/82 $215,000 G.O. Improvement Bonds City Administrator City of Redwood Falls 207 E. 4th Street Redwood Falls, MN 56283 (507) 637-5755 City of Remer 8/23/82 $305,000 G.O. Grant and Loan Mr. Arlie Fundaun Anticipation Bonds (water, City Clerk -Treasurer sanitary system (FmHA)) City of Remer Remer, MN 56672 (218) 566-2382 City of Round Lake 11/30/81 $385,000 Temporary Improvement Mrs. Lorraine Huehn Bonds, Series 1981 City Clerk -Treasurer City of Round Lake Round Lake, MN 56167 (507) 945-8127 City of Silver Lake 7/15/81 $105,000 G.O. Improvement Bonds Mr. Howard F. Chalupsky City Clerk -Treasurer City of Silver Lake Silver Lake, MN 55381 (612) 327-2362 City of Slayton 8/16/82 $355,000 G.O. Temporary Improvement Mr. Ed Suedbeck Bonds (street improvements) Mayor City of Slayton 2451 Broadway Slayton, MN 56172 (507) 836-6756 City of Sleepy Eye 2/1/83 $725,000 G.O. Bonds (consisting of Mr. Edwin Treml $400,000 G.O. Hospital Revenue and City Clerk $325,000 G.O. Building Bonds) City of Sleepy Eye 108 Main St. W. Sleepy Eye, MN 56085 (507) 794-3731 City of Stacy 12/07/82 $375,000 G.O. Improvement Bonds Mr. Gerald Fladland Mayor City Hall Stacy, MN 55079 (612) 462-4486 Independent School District No. 793 (Staples) 11/16/82 $500,000 G.O. School Building Bonds Dr. Duane R. Lund $2,000,000 Loan Anticipation Notes Superintendent (building) I.S.D. No. 793 Third Street Staples, MN 56479 (218) 894-2430 Independent School District 9/16/82 $2,030,000 G.O. Aid Anticipation Dr. Robert Miller No. 834 (Stillwater) Certificates of Indebtedness Superintendent I.S.D. No. 834 1875 S. Greeley Street Stillwater, MN 55082 (612) 439-5160 Independent School District 1/26/83 $235,000 G.O. Tax Anticipation Mr. Sig Rimestad No. 140 (Taylors Falls) Certificates of Indebtedness Superintendent I.S.D. No. 140 Taylors Falls, MN 55084 (612) 465-6225 MINNESOTA (Continued) NAME OF ISSUER DATE AMOUNT & PURPOSE REFERENCE City of Kasson 6/09/81 $1,420,000 G.O. Grant Anticipation Ms, nolores Meyer Bonds (wastewater treatment (plant (EPA City Clerk -Administrator 11/24 82 / -PCA grants)) $250,000 G.O. Swimming Pool Bonds City of Kasson 122 W. Main Kasson, MN 55944 (507) 634-7071 City of Lake Benton 7/21/82 $675,000 G.O. Temporary Improvement Mr. Pat Krick Bonds, Series 1982 (local City Clerk -Treasurer improvements) City of Lake Benton Lake Benton, MN 56149 (507) 368-4641 Independent School District 1/13/81 No. 194 (Lakeville) $3,650,000 School Building Bonds Mr. Raymond Jesh Business Manager I.S.D. No. 194 8670 210 St. W Lakeville, MN 55044 (612) 469-4461 Lincoln County 6/29/82 $155,000 Drainage System Bonds Mr. D. D. Sagmoe Lincoln County Auditor Lincoln County Courthouse Ivanhoe, MN 56142 (507) 694-1529 City of Mahnomen 4/05/82 $170,000 G.O. Grant Anticipation Mr. Dean Johnson bonds (sewer system) City Clerk City of Mahnomen Mahnomen, MN 56557 (218) 935-2957 City of Marietta 4/19/82 $450,000 G.O. Temporary Mr. W. Bill Steinke Construction Bonds (wastewater City Clerk treatment facility (FmHA)) City of Marietta Marietta, MN 56257 (612) 668-2167 City of Medina 9/29/81 $700,000 G.O.Improvement Bonds Ms. Donna Roehl City Clerk -Treasurer City of Medina 2052 County Road 24 P.O. Hamel, MN 55340 (612) 473-4643 City of Montevideo 7/06/81 $550,000 G.O. Tax Increment Mr. R. Ben Bifoss Redevelopment Bonds (Hunt City Manager Hotel complex (HUD & CDBG) land City of Montevideo acquisition, sewer, sidewalk) 103 Canton Ave. $380,000 G.O. Improvement Bonds Box 676 (street improvement, sewer and Montevideo, MN 56265 water) (612) 269-6575 Independent School District 11/23/82 No. 332 (Mora) $150,000 G.O. School Building Bonds Mr. Pius Lacher Superintendent I.S.D. No. 332 400 E. Maple Mora, MN 55051 (612) 679-3560 City of Mounds View 11/09/81 $1,275,000 G.O. Improvement Bonds Mr. Donald F. Pauley (local improvements - streets, City Clerk -Administrator water, sewer, curb and gutter) City of Moundsview 2401 Highway #10 P.O. St. Paul, MN 55112 (612) 784-3055 MINNESOTA (Continued) NAME OF ISSUER DATE AMOUNT 8 PURPOSE City of Victoria 12/01/81 $565,000 G.O. Municipal Building Bonds of 1981 (new fire hall, maintenance building, remodel city administrative offices) City of Virginia 3/24/81 6/22/82 City of Wanamingo 8/10/81 City of Wayzata 12/08/81 Independent School District 6/21/82 No. 284 (Wayzata) City of Wells 5/12/82 City of Winnebago 5/04/82 City of Winthrop 3/16/82 $900,000 G.O. Improvement Bonds $450,000 Temporary Improvement Bonds $950,000 G.O. Tax Increment Bonds (public improvements in develop- ment district) $125 000 G 0 REFERENCE Mr. Larry Bodahl City Administrator City of Victoria 1600 Arboretum Blvd. Victoria, MN 55386 (612) 443-2363 Ms. Norma Nekich City Clerk City of Virginia Virginia, MN 55792 (218) 741-3890 Improvement Bonds Mrs. Julia Mason City Clerk City of Wanamingo Wanamingo, MN 55983 (507) 824-2984 $305,000 G.O. Improvement Bonds Mr. Dave Bangasser (water main, sanitary sewer, City Manager storm sewer street resurfacing, City of Wayzata curb and gutter) 600 Rice Street Wayzata, MN 55391 (612) 473-0234 $4,590,000 G.O. School Building Dr. Thomas Brodie Bonds Acting Superintendent I.S.D. No. 284 210 D State Hwy 101 N Wayzata, MN 55391 (612) 473-1108 $150,000 G.O. Grant Anticipation Mrs. Dolly Schultz Bonds City Clerk -Treasurer $260,000 G.O. Temporary Improvement City of Wells Bonds 125 So. Broadway Wells, MN 56097 (507) 553-5823 $70,000 G.O. Improvement Bonds Mr. James Keinath $110,000 G.O. Tax Anticipation City Administrator Certificates of Indebtedness City of Winnebago Winnebago, MN 56098 (507) 893-3217 $300,000 G.O. Water and Sewer Mr. Samuel Shult Revenue Bonds Clerk -Treasurer City of Winthrop 106 E. 1st Street Winthrop, MN 55396 (507) 647-5308 WISCONSIN NAME OF ISSUER DATE AMOUNT & PURPOSE REFERENCE City of Arcadia 11/17/82 $1,025,000 G.O. Promissory Notes Ms. Jeannine Davis (storm sewer, street, municipal City Clerk building) City of Arcadia 203 West Main Street Arcadia, WI 54612 (608) 323-3359 Village of Baldwin 10/13/82 $800,000 Promissory Notes Mr. Calvin Hop 11/03/82 $465,000 Water System Mortgage Village Clerk -Treasurer Revenue Bonds Village of Baldwin P.O. Box 113 Baldwin, WI 54002 (715) 684-3426 City of Baraboo 3/10/81 $1,700,000 G.O. Sewer Bonds Mr. Dean T. Bothell City Clerk City of Baraboo Municipal Building 135 Fourth Street Baraboo, WI 53913 (608) 356-8361 City of Blair 11/29/82 $735,000 G.O. Promissory Notes Mr. Larry A. Ruff City Clerk -Treasurer City of Blair 122 S. Urberg Blair, WI 54616 (608) 98902517 City of Clintonville 5/12/81 $1,650,000 G.O. Corporate Purpose Mrs. Nancy Harris Bonds (street, water and sewer City Clerk -Treasurer improvement, police and fire City of Clintonville safety building) 50 Tenth Street Clintonville, WI 54929 (715) 823-6584 City of Cumberland 5/11/81 $1,875,000 Sewerage System Mr. Dennis Rockow Mortgage Revenue Bonds City Clerk -Treasurer City of Cumberland Box 155 Cumberland, WI 54829 (715) 822-2752 Village of Dousman 3/04/81 $700,000 Promissory Notes Ms. Bonnie J. Morris 12/06/82 $200,000 Promissory Notes Village Clerk Village Hall P.O. Box 325 Dousman, WI 53118 (414) 965-3792 City of Edgerton 1/14/81 $2,390,000 G.O. Corporate Purpose Mr. Norman L. Burdick Bonds (sewage treatment plant, City Clerk -Treasurer water system and street improve- City of Edgerton ments) 12 Albion Street Edgerton, WI 53534 (608) 884-3341 City of Elroy 11/18/81 $375,000 G.O. Pronissory Notes Ms. Alice Brooks 12/09/81 $950,000 Sewerage Mortgage City Clerk -Treasurer Revenue Bonds, Series 1981 City of Elroy 102 Liberty Street Elroy, WI 53929 (608) 462-8245 unur nr I -- WISCONSIN (Continued) DATE AMOUNT E PURPOSE School District of Florence 10/27/82 $600,000 G.O. Refunding Bonds County Village of Grafton 9/08/81 $1,800,000 G.O. Promissory Notes 3/02/82 $1,600,000 G.O. Promissory Notes Village of Hartland 12/09/81 $610,000 Corporate Purpose Bonds City of Hillsboro 7/20/82 $925,000 G.O. Promissory Notes Village of Holmen 3/30/82 $1,075,000 G.O. Sewerage Treatment Bonds City of Independence 6/29/81 $325,000 Sewage System Mortgage Revenue Bonds Village of Lake Delton 6/25/82 $2,975,000 G.O. Promissory Notes (wastewater treatment plant, interceptor sewers, public improvements) City of Mauston 9/02/81 $1,325,000 G.O. Corporate Purpose Notes 9/29/82 $1,050,000 G.O. Promissory Notes 11/30/82 $2,625,000 Bond Anticipation Notes REFERENCE Mr. James Falkner District Administrator School District of Florence County 425 Olive Avenue Florence, WI 54121 (715) 528-3217 Mr. Emory R. Sacho Village Administrator Village of Grafton 1102 Bridge Street Grafton, WI 53024 (414) 377-3610 Mrs. Karen M. Compton Village Clerk Village of Hartland 210 Cottonwood Avenue Hartland, WI 53029 (414) 367-2714 Mr. Rockford Johnson City Clerk -Treasurer City of Hillsboro 836 Prairie Avenue P.O. Box 447 Hillsboro, WI 54634 (608) 489-2521 Mr. Roland Gullickson Village Clerk Village of Holmen Box 148 Holmen, WI 54636 (608) 526-4336 Ms. Sandra Maule City Clerk City of Independence City Clerk's Office Independence, WI 54747 (715) 985-3055 Mrs. Kay C. Mackesey Village Clerk -Treasurer Village of Lake Delton P.O. Box 87 Lake Delton, WI 53940 (608) 254-2558 Mr. Russell W. Bergh City Clerk City of Mauston 303 Mansion Street Mauston, WI 53948 (608) 847-6676 WISCONSIN (Continued) NAME OF ISSUER DATE AMOUNT & PURPOSE REFERENCE Village of West Milwaukee 5/18/81 $1,450,000 G.O. Promissory Notes Mr. Clarence Quandt (community building and purchase Acting Administrator 6/07/82 equipment) $1,200,000 G.O. Promissory Notes Village of West Milwaukee 4755 W. Beloit Road (public works and improvements) West Milwaukee, WI 53214 (414) 645-1530 City of Monona 12/08/81 $3,165,000 G.O. Promissory Notes Mr. Gregory A. Knowles (water utility & sewer utility City Administrator improvements, capital works and City of Monona 10/18/82 improvements) $2,000,000 Promissory Notes 5211 Schulter Road Monona, WI 53716 (captial works & improvements, (608) 222-2525 water utility improvements) City of Muskego 7/13/82 $1,840,000 G.O. Promissory Notes Ms. Charlotte L. Stewart Clerk -Comptroller City of Muskego W182 S8200 Racine Avenue Muskego, WI 53150 (414) 679-2660 Village of Nashotah 12/08/82 $840,000 G.O. Corporate Purpose Ms. Betty A. Bulen Bonds Village Clerk Village of Nashotah N44 W32950 Watertown Plank Road Nashotah, WI 53058 (414) 367-8440 School District of New Berlin 8/10/81 $4,400,000 School Orders Mr. Jerry Engstrom 6/02/82 7/28/82 $800,000 G.O. Promissory Notes $5,900,000 School Orders Business Manager School District of New Berlin 4333 S. Sunny Slope Road New Berlin, WI 53151 (414) 786-1440 Village of Prairie du Sac 4/28/81 $550,000 G.O. Promissory Notes Mrs. Dorothy Bostad Village Clerk Village of Prairie du Sac 560 Park Avenue Prairie du Sac, WI 53578 (608) 643-2421 City of Princeton 1/27/81 $950,000 G.O. Promissory Notes Mr. Duane G. Norem City Clerk City of Princeton City Clerk's Office Princeton, WI 54968 (414) 295-6612 City of Reedsburg 6/08/81 51,050,000 G.O. Promissory Notes Mrs. Caroline R. Held City Clerk -Treasurer City Of Reedsburg 134 S. Locust Street Reedsburg, WI 53959 (608) 524-6404 Village of Saukville 3/4/82 51,600,000 G.O. Corporate Purpose Mr. Michael C. Harrigan Bonds Village Administrator-Clk Village of Saukville 100 South Main Street Saukville, WI 53080 (414) 284-9423 WISCONSIN (Continued) NAME OF ISSUER DATE AMOUNT & PUPPOSE City of Seymour 4/13/81 $1,400,000 G.O. Water Treatment Facility Bonds Village of Slinger 6/09/81 $1,300,000 Sewerage System Mortgage Revenue Bonds Village of Spring Green 6/30/82 $265,000 Promissory Notes Village of Sullivan 12/07/82 $450,000 Promissory Notes Village of Sussex 3/11/81 $600,000 G.O. Promissory Notes 7/27/82 $1,250,000 Bond Anticipation Notes Trempealeau County 5/18/81 $1,600,000 G.O. Jail Facilities Bonds City of Viroqua 11/09/82 $600,000 G.O. Promissory Notes City of Whitehall 9/09/82 $270,000 Promissory Notes Village of Wrightstown 5/06/81 $485,000 G.O. Corporate Purpose Bonds REFERENCE Mrs. Judith I. Zeuske City Clerk City of Seymour 328 N. Main Street Seymour, W1 54165 (414) 833-2209 Mr. Dean A. Otte Village Clerk Village of Slinger 220 Slinger Road Box 227 Slinger, WI 53086 Ms. Peggy Carpenter Village Clerk -Treasurer Village of Spring Green 112 West Monroe Street P.O. Box 188 Spring Green, WI 53588 (608) 588-2335 Mrs. Lucille B. Graves Village Clerk -Treasurer Village of Sullivan P.O. Box 55 Sullivan, WI 53178 (414) 593-2220 Mr. William R. Ross Village Administrator Village of Sussex N63 W23626 Silver Spring Drive Sussex, WI 53089 (414) 246-8044 Nr. Harold Tomter Trempealeau County Clerk Trempealeau County Court- house Whitehall, WI 54773 (715) 538-2311 Mrs. Geraldine Haun City Clerk City of Viroqua 202 N. Main Street Viroqua, WI 54665 (608) 637-7154 Mr. Lynn Johnson City Clerk City of Whitehall 1631 Main Whitehall, WI 54773 (715) 538-4353 Mr. Steve Johnson Village Clerk Village of Wrightstown 529 Main Street Wrightstown, WI 54180 (414) 532-5562 NAME OF ISSUER Township of Battle Creek (Lakeview Downtown Development Authority) City of Marquette (Board of Light & Power) City of Traverse City (Light & Power Board) NAME OF ISSUER Dickinson Public S/D No. 1 City of Fargo City of Grafton City of Devils Lake MICHIGAN DATE AMOUNT & PURPOSE REFERENCE 6/01/82 $5,200,000 Limited Obligation Mr. John Faus Development Bonds (tax increment) Chairman Lakeview Downtown Devel- opment Authority 1125 W. Territorial Road Battle Creek, MI 49015 (616) 968-1330 also: Mr. Maurice Cohen Forbes/Cohen Properties 30840 Northwestern Hwy Suite 230 Farmington Hills MI 48018 (313) 851-8800 10/16/78 $51,040,000 Electric Utility Revenue Bonds, 1978 Series (generating plant) 10/12/82 $4,500,000 1982 Electric Utility System Revenue Notes (Fuel Supply) 10/27/82 $9,000,000 Electric Utility Revenue Bonds, 1982 Series (generating plant) 1982 Feasibility Study: Hydro -Electric Generating Plant NORTH DAKOTA DATE AMOUNT & PURPOSE 5/18/82 $1,900,000 School Building Unlimited Tax Bonds 12/06/82 $2,550,000 Refunding Improvement Bonds (skyways, parking) $1,275,000 G.O. Bonds (tax increment) 11/09/81 $1,310,000 Temporary Improvement Warrants 1982 $2,800,000 Steam Heating District Project Mr. Wilbert W. Wiitala Director Board of Light & Power 2200 Wright Street Marquette, MI 49855 (906) 228-6900 Mr. William Strom Executive Director Light and Power Board 400 Boardman Avenue Traverse City, MI 49684 (606) 941 2309 REFERENCE Dr. Donovan Benzie Superintendent Mr. Ross Julson Business Manager 202 East Villard Dickinson, NO 58601 (701) 225-1550 Mr. F. R. Fahrlander City Auditor City of Fargo 201 N. 4th Street Fargo, NO 58102 (701) 241-1300 Mr. Earl Machart City Auditor P.O. Box 547 Grafton, NO 58237 (701) 352-1561 Mr. Mike Connors City Administrator City of Devils Lake P.O. Box 773 Devils Lake, NO (701) 662-4098 SOUTH DAKOTA NAME OF ISSUER DATE AMOUNT & PURPOSE REFERENCE City of Mitchell 1981 Financing Study: Dam improvements Mr. Paul Tobin and water treatment plant Mayor City of Mitchell 612 North Main Street Mitchell, SD 57301 (605) 996-2142 IOWA NAME OF ISSUER DATE AMOUNT & PURPOSE REFERENCE City of Cedar Falls 1/07/82 $980,000 G.O. Bonds (Corporate Mr. Douglas Sharp 9/02/82 Purpose) (solid waste disposal) $15,150,000 G.O. Bonds Mayor $3,025,000 Sewer Revenue Bonds City of Cedar Falls 220 Clay Street Cedar Falls, IA 50613 (319) 268-0141 City of Cedar Falls (Public Utilities 1983 Study: Defeasance of outstanding Mr. Dean Crowe Commission) bonds General Manager Cedar Falls Utilities 612 East 12th Street Cedar Falls, IA 50613 (319) 266-1761 City of Decorah Iowa 1983 Wastewater Treatment Facility: Mr. David T. Nelson Amount of financing presently Mayor under study, estimated at $2.5 $3 Ms. Patricia A. Luren - million City Administrator -Clerk City of Decorah Decorah, IA 52101 (319) 382-3651 PRELIMINARY OFFICIAL STATEMENT DATED APRIL 19, 1984 NEW ISSUE Standard & Poor's Rating: "AAA" In the opinion of LeFevere, Lefler, Kennedy, O'Brien & Drawz, a Professional Association, bond counsel, under existing laws, regulations, rulings, and court decisions, interest on the Bonds is not includable in gross income for purposes of United States and State of Minnesota income taxation, except for State of Minnesota corporate and bank excise taxes measured by income. $79850,000* CITY OF MINNETONKA, MINNESOTA TAX INCREMENT REVENUE BONDS (CARLSON PROPERTIES, INC. PROJECT) SERIES 1984 Dated: May 1, 1984 Due: As Shown Below The Bonds will be issued as fully registered bonds without coupons in the denominations of $5,000 and any integral multiple thereof. Principal of the Bonds is payable at the principal corporate trust office of the Trustee, First Trust Company of Saint Paul, St. Paul, Minnesota; and interest on the Bonds is payable semiannually on each December 1 and June 1, beginning December 1, 1984, by check or draft by the Trustee to the registered owners of the Bonds. The Bonds are not general obligations of the City of Minnetonka, Minnesota, but are special limited obligations of the City payable solely from the funds and other security held by the Trustee and appropriated to payment of the Bonds pursuant to the terms of the Indenture of Trust between the City and the Trustee. The taxing powers of the City are not available to pay principal, premium, or interest on the Bonds. See "SECURITY FOR THE BONDS" and "THE INDENTURE OF TRUST" herein. MATURITY SCHEDULE Due Principal Interest Due Principal Interest June 1 Amount Rate June 1 Amount Rate 1989 $200,000 % 1992 $1,400,000 % 1990 $500,000 % 1993 2,050,000 % 1991 $700,000 % 1994 3,000,000 % (Plus Accrued Interest from May 1, 1984) (Price: 100%) The Bonds will be subject to redemption prior to maturity as more fully described under "THE BONDS — Redemption Prior to Maturity." The Bonds are offered, when, as and if issued by the City and accepted by Miller & Schroeder Municipals, Inc. as Underwriter, and subject to the approving opinion as to validity and tax exemption of LeFevere, Lefler, Kennedy, O'Brien & Drawz, a Professional Association, Minneapolis, Minnesota, bond counsel, and certain other conditions. Certain legal matters will be passed upon for the Underwriter by Holmes & Graven, Chartered, of Minneapolis, Minnesota. It is expected that delivery of the Bonds will be made on or about May 15, 1984, in Minneapolis, Minnesota, against payment therefor. Subject to prevailing market conditions, the Underwriter may, but is not obligated to, effect secondary market transactions. Although the Underwriter intends to engage in secondary market transactions there can be no assurance that a secondary market will develop. For information with respect to the Underwriter, see "UNDERWRITING" herein. 0 Miller &Schroeder Municipals, Inc. The date of this Official Statement is May , 1984 *Subject to change. No person has been authorized to give any information or to make any representations other than those contained in this Official Statement in connection with the offers made hereby, and if given or made, such information or representations must not be relied upon as having been authorized by the City, the Developer, or the Underwriter. Neither the delivery of this Official Statement nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of the City, the Developer, or the Surety since the date hereof. This Official Statement does not constitute an offer or solicitation in any jurisdiction in which such offer or solicitation is not authorized, or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation. The information set forth herein has been obtained from the City, the Developer, and the Surety, and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the Underwriter. CONTENTS OF OFFICIAL STATEMENT Page Introductory Statement .................................... ................ ......... 2 TheBonds...................................................................... ... 4 Security for the Bonds................................................................. 5 5 Source and Application of Funds........................................................... The City.................................................................. 8 The Project................................................................. ............. .......... 9 The Development........................................................................ 9 The Developer........................................................................... 10 The Contract for Development ................................................. 13 Cash Flow Projections.......................................................... ..... 15 The Guaranty Agreement................................................................. 17 The Surety.................................................................... ...... 17 The Surety Bond................................................................... ..... 18 The Indenture of Trust................................................................... 22 Enforceability of Remedies.....................................................•.. 22 Legal Matters............................................................................ 22 Tax Exemption........................................................... 22 Underwriting............................................................................ ............. 23 Rating............................................................... ............ 23 Miscellaneous........................................................... 23 23 Definitions............................................................. ................. Appendix A — Form of Surety Bond ....................................................... THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION BY REASON OF THE PROVISIONS OF SECTION 3(a)(2) OF THE SECURITIES ACT OF 1933, AS AMENDED. THE REGISTRATION OR QUALIFICATION OF THESE SECURITIES UNDER THE SECURITIES OR BLUE SKY LAWS OF THE JURISDICTIONS IN WHICH THEY HAVE BEEN REGISTERED OR QUALIFIED, IF ANY, AND THE EXEMPTION FROM REGISTRATION OR QUALI- FICATION IN OTHER JURISDICTIONS SHALL NOT BE REGARDED AS A RECOM- MENDATION THEREOF. NEITHER THESE JURISDICTIONS NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THESE SECURITIES OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESEN- TATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. ii OFFICIAL STATEMENT $7,850,000 CITY OF MINNETONKA, MINNESOTA TAX INCREMENT REVENUE BONDS (CARLSON PROPERTIES, INC. PROJECT) SERIES 1984 INTRODUCTORY STATEMENT This Official Statement is furnished in connection with the offering of $7,850,000 aggregate principal amount of Tax Increment Revenue Bonds (Carlson Properties, Inc. Project), Series 1984, of the City of Minnetonka, Minnesota. This Official Statement may not be reproduced or used, in whole or in part, for any other purpose. The Introductory Statement of this Official Statement should be regarded as a brief overview and, therefore, this Official Statement should be read in its entirety. Where agreements, reports, or other documents are referred to herein, reference should be made to such agreement, reports, or other documents for more complete information regarding the rights and obligations of parties thereto, facts and opinions contained therein, and the subject matter thereof. No statement contained in this Official Statement should be considered less important than any other by reason of its position herein. The Bonds are being issued in accordance with the provisions of the Development District Act and the Tax Increment Act and pursuant to the Indenture between the City and the Trustee. The proceeds from the sale of the Bonds will be used to acquire certain real property located in the City adjacent to U. S. Highway No. 12, to construct a highway interchange on such land, and to undertake certain additional public improvements in the Development District (the "Project"). Portions of the cost of such acquisition and construction will be paid by the Minnesota Department of Transportation and the United States Department of Transportation and by Special Assessments imposed on certain adjacent property benefited by the proposed improvements. The purpose in constructing the proposed interchange and public improvements is to provide convenient access to and from U. S. Highway No. 12 and the Development District. The City has entered into the Contract for Development with Carlson Properties, Inc. (the "Developer"), to provide for the development of the land located within the Development District and the Tax Increment District. Pursuant to the terms of the Contract for Development, the Developer is proposing to construct improvements in the Development District and the Tax Increment District which will generate Tax Increment pledged by the City to pay the principal, premium, if any, and interest on the Bonds when due. The Developer has also agreed to pay Special Assessments imposed on certain of its property in the Development District. The Special Assessments are also pledged by the City to payment of the principal, premium, if any, and interest on the Bonds. The Developer has also agreed, pursuant to the terms of the Guaranty Agreement, to pay Guaranty Payments sufficient to pay the principal, premium, and interest on the Bonds in the event the Tax Increment is insufficient to do so. In addition, St. Paul Fire and Marine Insurance Company (the "Surety"), has issued a Surety Bond to guaranty that the Developer will make timely payments of required Guaranty Payments pursuant to the terms of the Guaranty Agreement. Although the City and the Developer expect the Tax Increment generated from the improvements in the Tax Increment District and the Special Assessments to be sufficient to pay the principal, premium, and interest on the Bonds when due, no assurance can be given that this amount of Tax Increment and Special Assessments will, in fact, be generated from the Tax Increment District. Therefore, in assessing the security of this investment, prospective investors should not rely on projected payments of Tax Increment and Special Assessments as a source of payment on the Bonds. See "THE GUARANTY AGREEMENT" and "THE SURETY BOND" herein. In the event Tax Increment and Special Assessments are insufficient to pay the principal, premium, and interest on the Bonds, the Developer has agreed to pay all such deficiencies in order to ensure that all principal, premium, and interest on the Bonds is paid in full in a timely manner. The Developer expects that it will be able to pay any such deficiencies throughout the term of the Bonds. In the event the Developer does not make the required Guaranty Payments when due, for whatever reason, then the Surety is required to pay on its Surety Bond. In the event a Guaranty Payment is not paid when due, the Trustee will cause a notice of redemption to be made with respect to all Bonds in which event the Bonds will be due and payable on the next redemption date for which adequate notice of reSurety will can be given. On the date established by the terms of the Surety Bond and the Indenture, thethen be required to pay an amount to the Trustee equal to the aggregate principal amount of all outstanding Bonds. Such amount will be applied to the payment of Bonds on the date established by the Trustee for payment. (Accrued interest will be paid from amounts deposited in the Reserve Fund.) Prospective purchasers of the Bonds should not evaluate the security of this investment and the creditworthiness of the Bonds on the basis of the adequacy of the Tax Increment or Special Assessments or the financial strength of the Developer. Tax Increment generated by the Tax Increment District, Special Assessments, Guaranty Payments made pursuant to the Guaranty Agreement, and Surety Bond Payments made pursuant to the terms of the Surety Bond will be pledged and assigned by the City to the Trustee under the Indenture for the payment of the principal, premium, or interest on the Bonds. Tax Increment and Special Assessments will be paid by the City to the Trustee periodically throughout each year while any Bonds are outstanding. 1ll be ilDeveloperhe tly oe Trustee when due. Surety Bandyents underr the SuretyBond wl bepaid by theSuretydirectlyto the Trustee when due. The Bonds are not general obligations of the City, but are special limited obligations of the City payable solely from the funds and other security held by the Trustee pursuant to the terms mens of the Indenture, including the proceeds of the Bonds and investment earnings thereon, Guaranty Payments, and Surety Bond Payments. The Bonds and the premium and interest thereon do not constitute an indebtedness of the City, Hennepin County, or the State of Minnesota, within the meaning of any constitutional provision or charter or statutory limitation, and will never constitute or give rise to a pecuniary liability of the City (except for Tax Increment, Guaranty Payments, and Surety Bond Payments pledged to payment of the Bonds), Hennepin County, or the State of Minnesota. In addition, the Bonds and the premium and interest thereon can never constitute a charge against the general credit or taxing powers of the City, Hennepin County, or the State of Minnesota. This Official Statement contains descriptions of, among other matters, the Indenture, the Guaranty Agreement, the Surety Bond, the Bonds, and the security for the Bonds. All summaries and descriptions of documents and agreements are qualified in their entirety by reference to such documents and agreements, and all summaries of the Bonds are qualified in their entirety by reference to the form thereof included in the Indenture, copies of all of which are available for inspection. Copies of the Indenture and the Guaranty Agreement are available upon request at the principal office of the Trustee. his A copy the Surety Bond d such documents will be availabls contained in an appendix toe at the principal pal office o Miller & Schroeder cial Statement. During the period of the offeriri ng, copies Municipals, Inc., Minneapolis, Minnesota. THE BONDS General Description The Bonds are special limited obligations of the City, payable solely from the funds and other security held by the Trustee pursuant to the terms of the Indenture. The date on the Bonds on the original date of issue of the Bonds will be May 1, 1984. The Bonds will bear interest from such date at the rates, and will mature in the amounts and on the dates, shown on the cover page of this Official Statement. Interest on the Bonds will be payable semiannually on December 1 and June 1 of each year, commencing on December 1, 1984. X The Bonds will be issued as fully registered bonds in the denominations of $5,000 or any integral multiple thereof. The principal of the Bonds is payable upon presentation of the Bonds at the principal corporate trust office of the Trustee. The interest on the Bonds is payable by check or draft of the Trustee, mailed to the registered owners thereof, at their addresses as such names and addresses appear on the Bond registration books maintained by the Trustee as of the fifteenth day of the month preceding the Interest Payment Date. Bonds may be transferred to a new registered owner upon presentation of the Bond duly endorsed for transfer at the principal corporate office of the Trustee, provided however that the Trustee is not required to transfer or exchange any Bond called or being called for redemption in whole or in part. Redemption Prior to Maturity Mandatory Redemption in Part. The Bonds maturing on and after June 1, 1992, are subject to mandatory redemption and prepayment from Excess Tax Increment and Excess Special Assessments, in whole or in part, on any Interest Payment Date on or after June 1, 1991, at a price equal to the principal amount of the Bonds to be redeemed, plus accrued interest to the redemption date. Optional Redemption. The Bonds maturing on and after June 1, 1990, are each subject to optional redemption and prepayment, at the option of the City, in whole or in part, on any Interest Payment Date on or after June 1, 1989, at a price equal to the principal amount of the Bonds to be redeemed, plus accrued interest to the redemption date, plus a premium, expressed as a percentage of the principal amount of Bonds to be redeemed, for the various redemption dates set forth below. Redemption Date Premium June 1, 1989, to December 1, 1989 2% June 1, 1990, to December 1, 1990 1% June 1, 1991, and thereafter 0% It is provided in the Indenture that Bonds of a denomination larger than $5,000 may be redeemed in part ($5,000 or a whole multiple thereof) and that upon any partial redemption of any such Bond the same shall be surrendered in exchange for one or more new Bonds in authorized form for the unredeemed portion of principal. Extraordinary Optional Redemption. If the City and the Developer determine, on or before February 15, 1985, that available funds from all sources are insufficient to pay the costs of constructing the Highway 12 Interchange Improvements (as defined in the Indenture), then the City and the Developer may elect to cause the redemption and prepayment of all Bonds on June 1, 1985, at a price of par plus accrued interest to the date of redemption. Mandatory Redemption in Whole. The Bonds are also subject to mandatory redemption and prepayment, in whole, in the event that the Developer fails to pay to the Trustee, when due, a Guaranty Payment in the amount of the sum of the aggregate principal amount of all Outstanding Bonds on such date and the interest which will accrue on such Bonds to the next Interest Payment Date on the Bonds, as required under the terms of the Guaranty Agreement. In such event, all Bonds are subject to redemption and prepayment on the first Interest Payment Date following the event giving rise to the redemption in whole for which notice of redemption can be given as provided in the Indenture, at a redemption price equal to the principal amount of the Bonds to be redeemed plus accrued interest to the redemption date. Notice and Effect of Redemption Notice of redemption will be published at least once not less than twenty days before the redemption date in a daily or weekly periodical published in a Minnesota city of the first class, or its metropolitan area, which circulates throughout the state and furnishes financial news as a part of its service. Notice of redemption will also be mailed at least twenty days before the redemption date to each Holder of the Bonds to be redeemed at the Holder's last address appearing on the Bond Register; but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for redemption of any Bond not affected by such failure or defect. All Bonds so called for redemption will 3 cease to bear interest on the specified redemption date, provided funds for their redemption have been duly deposited, and, except for the purpose of payment, shall no longer be protected by the Indenture and shall not be deemed Outstanding under the provisions of the Indenture. Additional Bonds No additional Bonds or other obligations may be issued under the Indenture, but other obligations payable from Tax Increment may be issued by the City under certain conditions. See " INDENTURE OF TRUST — Pledge and Assignment" herein. SECURITY FOR THE BONDS General The Bonds will be special limited obligations of the City payable solely from the following sources: (i) a portion of the proceeds of the Bonds; (ii) Tax Increment and Special Assessments generated from the Tax Increment District; (iii) Guaranty Payments, if any, made by the Developer pursuant to the Guaranty Agreement; (iv) Surety Bond Payments, if any, made pursuant to the Surety Bond by the Surety; and (v) investment earnings derived from the investment of any of the foregoing. Under the Indenture, the City will pledge and assign all of its right, title, and interest in and to the foregoing to the Trustee for the benefit of the Bondholders. Tax Increment zes the use of tax increment financing to pay the capital and The Tax Increment Act authori administrative costs of a development district created pursuant to the Development District Act. The Development District was created pursuant to the Development District Act and is therefore eligible to use tax increment financing. As a prerequisite to the use of tax increment financing, the Tax Increment Act requires the creation of a tax increment financing district within a project such as a development district. The Tax Increment District was created as an economic development tax increment financing district within the Development District pursuant to the requirements of the Tax Increment Act. The term "tax increment" is used to describe the portion of real estate taxes generated within a tax increment financing district which is permitted by the Tax Increment Act to be specially allocated to further the development or redevelopment of a development district. In order to calculate the amount of tax increment in any tax increment financing district which is available for such purposes it is necessary to determine the Assessed Market Value, Assessed Value, Original Assessed Value, and Captured Assessed Value of the real property located within the tax increment financing district. The Assessed Market Value of taxable real property for ad valorem tax purposes in Minnesota is established as of January 2 of the year of assessment. Through a statutory local, county and state appraisal and review process an Assessed Market Value is assigned to each parcel of property and the structures, if any, upon it. At least one-fourth of all existing real estate in a taxing unit must be reappraised by the local assessor each year. Each year the appraisal and review process is completed by November 15th. The Assessed Value of taxable property is determined by multiplying the Assessed Market Value for such property by a statutorily prescribed percentage. Assessed Value depends upon the property's tax classification. Minnesota law treats different types of real property differently for assessment purposes. The result is that some classes of property bear a greater share of the property tax burden than others. For example, commercial and industrial property (with certain exceptions) is statutorily categorized as Class 4c property and Minnesota statutes currently provide that Assessed Value for Class 4c property shall equal forty percent (40%) of the first $50,000 of Assessed Market Value and forty-three percent (43%) of the remaining Assessed Market Value. Captured Assessed Value is the Assessed Value of the taxable property in a tax increment financing district in excess of the Original Assessed Value. The Original Assessed Value of the taxable property in the Tax Increment District is equal to $821,000 which was the Assessed Value of such property on January 2, 1983, the date used for certifying such property for tax increment financing purposes. Captured Assessed Value increases can be the result of revaluation, inflationary growth or the construction of real estate inprovements. The annual Tax Increment is determined by multiplying the Captured Assessed Value times the combined Mill Rate computed for taxes levied by all taxing authorities upon the taxable real property located in the Tax Increment District, which includes the City, the county, the school district and certain special taxing districts. The combined Mill Rate for such taxes is determined by the County Auditor. Each of the taxing authorities submits its tax levy to the County Auditor. The County Auditor determines the Mill Rate for each taxing authority by computing the rate at which taxable Assessed Value, excluding Captured Assessed Value, must be taxed in order to generate the tax dollars required by that taxing authority. The combined Mill Rate is then applied against the Assessed Value of all taxable property, including the Captured Assessed Value. The taxes generated by application of the Mill Rate to the Captured Assessed Value is the Tax Imcrement, which, if collected, is paid to the City and transferred to the Trustee under the Indenture. See "TAX INCREMENT PROJECTIONS" herein. Guaranty Payments Pursuant to the terms of the Guaranty Agreement, the Developer has agreed to guarantee the payment of all principal, premium, and interest on the Bonds when due. In the event Tax Increment and Special Assessments generated by the Tax Increment District will be insufficient to pay the principal, premium, and interest on the Bonds on any Interest Payment Date, then the Developer is required to deposit with the Trustee an amount equal to such deficiency. The obligations of the Developer to make such Guaranty Payments are irrevocable and unconditional. Surety Bond Pursuant to the terms of the Guaranty Agreement, the Developer has agreed to deliver to the Trustee, on or before the date of issuance of the Bonds, the Surety Bond. In the event the Developer fails to make a Guaranty Payment when due, then a Guaranty Payment equal to the principal amount of all outstanding Bonds will become due and the Surety will be required to pay the principal amount of all such Bonds. SOURCE AND APPLICATION OF FUNDS The total source and application of funds to complete the Project are estimated as follows: Source of Funds Minnesota Department of Transportation ...... . U. S. Department of Transportation ..... .............................$ 5,995,000 Special Assessments Bond Proceeds . 2,366,000 Bond Proceeds ......... 5,000,000 Total .......... _ 7,850,000 $21,211,000 5 Application of Funds Construction Costs: .. , , . , , _ , $10,632,000 Highway #12 Improvements ....................................... 5,000,000 Carlson Parkway and Other Improvements .................... 1,445,000 Acquisition Costs............................................................. Councilperson Engineering Fees: . , . , , 783,680 Design and Traffic Engineering .................................:::::::: 1,200,000 Construction Engineering ......................... ...........:: 35,000 Soil Engineering ............................................. Fred E. n Miscellaneous Project Costs: 720,070 Capitalized Interest .............................................. ..,.,,.,.,. 344,000 Administrative Costs ............................................. 85,000 Appraisals.................................................... December 31, 1987 Financing Costs: 196,250 Underwriting Discount ....................................... .............. 343,000 Reserve Fund ................................................... 433,000 Costs of Issuance and Miscellaneous .................................... $21,211,000 Total...................................................... THE CITY The City, which is a suburb located west of the City of Minneapolis in Hennepin County, was originally incorporated as a municipal corporation in 1956. In 1969, pursuant to adoption of a home rule City Charter by the qualified voters of the City, the City instituted a council-manager form of government. The City covers an area of 28 square miles and its population is currently estimated to be 40,130. The City Council The City Council is the legislative and policy making body of the City and is composed of seven members. Four councilpersons are elected from each of the City's four wards for four year terms; two Councilpersons are elected at -large for four year terms, and the mayor, who presides over council meetings, is elected at -large for a two year term. The responsibilities of the City Council include; enacting ordinances, resolutions and orders necessary for the proper governing of the City's affairs; (ii) reviewing and adopting the annual budget; (iii) reviewing and deciding on recommendations from various boards and commissions; (iv) appointing a City Manager and citizens to various boards and commissions; (v) establishing policies and measures to promote the general welfare of the City and safety and health of its citizens; and (vi) representing the City at official functions with other organizations and governmental agencies. The present members of the City Council and the expiration of their respective terms of office are as follows: Title Expiration of Term Name Mayor December 31, 1985 Larry A. Donlin Councilperson December 31, 1987 Robert J. DeGhetto Councilperson December 31, 1987 nneke Mark Re n Councilperson December 31, 1985 Fred E. n Councilperson December 31, 1985 n Cotton Peter Cotton Councilperson December 31, 1985 William Councilperson December 31, 1987 Jane G. Gordon City Administration The City Manager, Mr. James F. Miller, employed by the City on December 2, 1979, is Chief Executive Officer of the City, responsible for planning, organizing and directing the activities of the 0 municipality by interpreting City Council -determined policy, coordinating departmental efforts, handling citizens inquiries and complaints and representing the City in its relations with the public and other governmental and private agencies. Prior to his appointment to City Manager, Mr. Miller was Assistant City Manager for the City of Des Moines, Iowa from June, 1971 to December, 1979. Mr. Miller received his B.A. Degree from the University of Wisconsin, Eau Claire; a Master's Degree in Public Administration from the University of Pittsburgh; and a Doctor of Public Administration Degree from Nova University, Center for Public Affairs and Administration, Fort Lauderdale, Florida. The Finance Director/Clerk-Treasurer, Mr. Dale L. Eggenberger, is responsible for the financial management of the City. Specifically, the Finance Director/Clerk-Treasurer prepares and administers annual operating budgets, provides periodic financial reports to the City Council, the City Manager, City departments, other governmental agencies, investors and the general public, and provides for the maintenance of public records and receipt, disbursement, and custody of public funds. Prior to his appointment as Finance Director/Clerk-Treasurer in 1981, Mr. Eggenberger served the City as Director of Finance/Treasurer (1977-1980) as Director of Finance (1973-1977) and as Assistant Finance Director (1972-1973). Mr. Eggenberger received his B.A. from Winona State University in 1966. Principal Governmental Services Performed by the City Various departments of the City provide the following services for the residents of the City: Operations and Maintenance. The Operations and Maintenance Department is responsible for the maintenance of public roadways within the City, including patching, resurfacing, snow and ice removal, sweeping, tree removal, as well as the maintenance and repair on all City -owned vehicles and motorized equipment (except the equipment of the Fire Department), and the maintenance of public lands and recreational facilities within the City including grass maintenance, ice and hockey facilities, general parks maintenance, ballfield preparation, garbage and litter pickup and weed abatement. Police. The Police Department includes 52 full-time police officers and is responsible for the preservation of life and property, maintenance of public peace and order, and prevention of crime. Fire. The City provides fire protection to residents within the City through trained and equipped volunteers and through a program of fire inspection and fire prevention education. The Fire Department includes one full-time Fire Marshall and approximately 53 part-time volunteer firefighters. Public Works and Engineering Department. The Public Works and Engineering Department provides for the preparation of plans, specifications and estimates for the design, construction, maintenance and operation of physical facilities including sanitary sewers, storm sewers and water mains. Assessing. The City is the public agency responsible for establishing estimated market value on all residential, vacant, commercial and industrial property within the City in accordance with the applicable laws of the State. Recreation. The City provides various recreational programs to all areas of the City including recreation classes for all ages, youth sport activities, senior citizen activities, public ice skating facilities, public swimming beaches, playgrounds, day camps, handicapped adult programs and community theatre and symphony programs. Planning. The City's Planning Department, primarily responsible for the coordination of physical, social and economic changes in the City, is designed to develop and refine ordinances which implement plans for City growth. Regional Governmental Agencies Affecting the City The following regional governmental agencies are involved in the governance of the metropolitan area in which the City is located. Metropolitan Council. The Metropolitan Council, created by the 1967 State Legislature, is empowered to coordinate and ensure the orderly planning and economic development of the Minneapolis -St. Paul metropolitan area. The Metropolitan Council has jurisdiction over a seven - 7 county area (Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington Counties). The Council is appointed, with 16 district representatives serving four-year terms, and a chairman appointed by the Governor of the State. The Council has standing committees for personnel and work programs, human resources, and physical development. In addition, the Council appoints advisory committees on aging, arts, criminal justice, health, housing and redevelopment, communications, transportation, parks, land use, modest cost private housing and solid waste. The Metropolitan Council has adopted a budget of $10.9 million for 1984. ApprAximately 30% of the funds, to operate the Council, are expected to come from federal sources; 4% from state sources and the balance approximately 66%, from local sources, in the foof property tax levy on the seven - base and charges of regional county area of 8/30ths of one mill, on the seven -county property commissions for services provided by the Council. The funds are used to carry out the Council's responsibilities as the Twin Cities area's long-range planning and coordinating agency. Metropolitan Airports Commission. The Metropolitan Airports Commission plans, constructs and operates regional airports in the Minneapolis -St. Paul metropolitan area. The Commission has the power to levy a tax upon taxable property over a seven -county area (Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington Counties), but has not currently levied such a tax. Metropolitan Transit Commission. The Metropolitan Transit Commission operates a public ground transportation system in Minneapolis -St. Paul metropolitan area. Metropolitan Waste Control Commission. The Metropolitan Waste Control Commission operates sewage treatment and disposal facilities servicing a seven -county metropolitan area, including the City. City Employees The City presently has approximately 174 full-time employees, as follows: Administration .....................•••••• 29 Planning................................. 7 Engineering .............................. 13 Inspection & licenses ...................... 46 15 Operation & maintenance .......... • • • • ... 52 Police 4 Fire department (1) ....................... 8 Recreation ............................... 174 (1) Approximately 53 part-time volunteers comprise the balance of the fire department. THE PROJECT The Project consists of the acquisition of certain real property in the City adjacent to U. S. Highway No. 12 and the construction thereon of a highway interchange and certain related public improvements. The area of Highway 12 west of Interstate 494 has long been identified in City plans as an area of congested and hazardous traffic conditions which require correction. Past plans have proposed an interchange to provide this correction. The Project will be to construct this interchange — a full -access, folded -diamond design — at the location of the proposed Carlson Parkway, approximately 500 feet east of Parker's Lake Road and to do such further improvements along Highway 12 as are necessary to safely and efficiently accommodate projected traffic and to integrate the interchange with Highway 12 and the planned Interstate 394. The improvements to Highway 12 will be made in cooperation with the Minnesota Department of Transportation, which will pay a portion of the total cost. The balance of the costs will be paid from a combination of projected Tax Increment and Special Assessments against abutting benefited properties. The City will construct the internal roadways, storm sewer, sanitary sewer, and watermains needed to provide service to the Development, which costs will be paid from Special Assessments to be levied against benefited property. A project somewhat similar in scope is being constructed by the adjacent City of Plymouth, Minnesota to the north. The City of Plymouth has issued and sold its $7,000,000 General Obligation Tax Increment Bonds of 1984, dated April 1, 1984, to finance that project. The City's and Developer's obligations concerning the construction and timing of the various public and private improvements in the Project is described in the Contract for Development. See "THE CONTRACT FOR DEVELOPMENT" herein. THE DEVELOPMENT The proposed Project will be an energy efficient, environmentally sensitive, living -working community on a 207 -acre site in the City, a developing suburb west of Minneapolis. See "THE CITY" herein. It is part of a 307 -acre mixed use complex in the City and the adjacent City of Plymouth, a developing suburb northwest of Minneapolis. The Project, as approved by the City and described in the Contract for Development, consists of approximately 867,500 square feet of corporate headquarters, 344,000 square feet of office, 302,525 square feet of office -distribution, 383,500 square feet of commercial, 131 townhome units, 312 condominium units, and 135 acres of ponds, recreational areas, and open space. Construction of the Project will occur in several phases over a period of approximately ten years. However, the exact type and size of individual development components and the sequence of development phases is subject to change. See the "CONTRACT FOR DEVELOPMENT" herein. The Project site is located north of U.S. Highway No. 12 and east and west of I-494, two principal arterial routes. Within a one and one-half mile radius of the site are the 1,000,000 square foot Ridgedale Shopping Center, a regional facility which includes four major department stores and approximately one hundred smaller shops, three other shopping centers and several commercial, office and residential developments. The Project is approximately ten miles from downtown Minneapolis and approximately forty minutes from the Minneapolis/St. Paul International Airport. The Carlson Companies World Headquarters is the key planned component of the integrated multi -structure complex on the southwest portion of the Project site. At full development of the Project, the world headquarters building may be connected by a covered walkway to a commercial facility which may include some or all of the following components: hotel, restaurant and food service, conference center, retail shops, cafeteria, racquet club, and medical services area. Structured parking will serve the world headquarters and, if built, the integrated commercial facility. The Project will include a wide variety of active recreational facilities both accessible for public use and reserved for private use. Open space and landscaped areas will comprise approximately 60 percent of the site, including extensive waterways and ponding areas and nature/hiking and bicycle trails. Linkages will be provided to surrounding uses, including connections to the proposed metropolitan bikeway system. Energy -conserving site planning, building orientation, and architectural design techniques will be utilized in the development of the Project. THE DEVELOPER The Developer is Carlson Properties, Inc., a wholly owned subsidiary of Carlson Companies, Inc. Carlson Properties, Inc. is a professional real estate management, property development, investment, and leasing firm with holdings throughout the continental United States, and management interests in Hawaii. The diversified holdings of Carlson Properties, Inc., are valued at over $100 million, ranging from modern high-rise office buildings to suburban shopping malls and industrial parks. The firm has participated in several important downtown development projects around the country and is continuing to expand its development, investment, and management activities into such new areas as personal storage warehouses and industrial village developments. In the late 1950s and 1960s, Curt Carlson, the founder of Carlson Companies, Inc., laid the groundwork for a major industrial park in the Minneapolis suburb of Plymouth, Minnesota. A new Gold Bond Stamp Company headquarters was the first portion developed in 1962. The regional park, which was named Minneapolis Industrial Park, now includes over 1,000 acres. In 1972, the management of Minneapolis Industrial Park and all other real estate interests of the Carlson Companies were consolidated under a new corporate operating group, Carlson Properties, Inc. Minneapolis Industrial Park remains a cornerstone of Carlson Properties' operations as a national model of successful industrial park development. entered into real estate transactions with other operating groups Carlson Properties, Inc., has also of the Carlson Companies, such as TGI Friday's, a member of Carlson Companies' Hospitality Group, and the Radisson Hotel Corporation. THE CONTRACT FOR DEVELOPMENT The Contract The Developer intends to develop the land located within the Tax Increment strict inhe lopme phases, each one of which is subject to final site plan approval by the City. The City approved plan for development of the Project (the "Master Development Plan") on November 22, 1982. See "THE PROJECT" herein. Although the Master Development Plan sets forth a specific sequence for construction of the phases of development of the Project, the City has agreed that the Developer may alter that sequence and develop portions of those phases without the necessity of an amendment to the Master Development Plan upon certain terms and conditions as set forth in the Contract for Development. The Developer must start construction of improvements in some portion of the Project no later than twelve months after substantial completion of the U.S. Highway No. 12 interchange at proposed Carlson Parkway and substantial completion of Carlson Parkway and Cheshire Lane within the Project. Final site plans for any improvements to be constructed, except public improvements, must be approved by the City in the manner prescribed in the City's Zoning Ordinance, prior to commencement of construction. Contract for Development, the Developer must retain exclusive Pursuant to the terms of the al for each building or phase of the Project to ensure responsibility for obtaining final site plan approv consistency of development, to facilitate negotiations on individual site plans, and to otherwise carry on the final site plan review process, even if the Developer divests itself of all or a portion of the property within the Project. Any agreement entered into by the Developer whereby the Developer divests itself of ownership of more than fifty percent (50%) of any parcel of land within the Project must expressly incorporate the obligation of the Developer to retain exclusive responsibility for obtaining final site plan approval for each building or phase within the Project and must further secure the commitment of the other party to the agreement to comply with the Master Development Plan and final site plan or plans as approved by the City. The Developer must construct, operate, and maintain the improvements within the Project in accordance with the terms of the Contract for Development and all applicable local, state, and federal laws and regulations. The Developer must obtain, in a timely manner, all required permits, licenses, and approvals. The Developer must pay all real property taxes due and payable on the Project in a timely manner. Pursuant to the terms of the Contract for Development, the City has granted to the Developer the rights authorized by Minnesota Statutes, Section 462.358, Subd. 3(c), for a period of fifteen years. That Section provides that, unless the Developer and the City agree otherwise, no amendment to a comprehensive plan or official control shall apply to or affect the use, development density, lot size, lot layout, or dedication or platting required or permitted by the approved subdivision. The Contract for Development provides for construction of public improvements within the Project including street improvements, storm sewer improvements, sanitary sewer improvements, water main improvements, permanent street improvements, traffic signing and lighting improvements, and subdivision monuments. These public improvements will be installed and constructed upon written request from the Developer and will be available for use at such time as is mutually agreeable to the City 10 and the Developer. All construction, installation, materials, and equipment in connection with the public improvements will be in accordance with plans and specifications approved by the City Engineer. The cost of the public improvements, except those installed or constructed by the Developer, will be assessed against the Project for a period of ten years, pursuant to Minnesota Statutes, Chapter 429, and the policy of the City. The cost of any public improvements installed by the Developer will be paid directly by the Developer. Upon allocation of sufficient funds by the Minnesota Department of Transportation and the United States Department of Transportation for the State Trunk Highway 12 interchange, and provided that the Developer is in compliance with the Contract for Development, the City has agreed to construct or cause to be constructed the U.S. Highway No. 12 interchange. Financing for the U.S. Highway No. 12 interchange is to be provided by a combination of state, federal, city and Developer funds. See "SOURCE AND APPLICATION OF FUNDS" herein. If the proceeds of the Bonds, together with state and federal financing, are insufficient to cover the cost of constructing the U.S. Highway 12 interchange, the Contract for Development becomes null and void. See "THE BONDS — Redemption Prior to Maturity — Extraordinary Optional Redemption" herein. Pursuant to the terms of the Contract for Development, the Developer must insure the improvements constructed within the Project in the manner and in the amounts usual and customary for facilities of the same general nature, but in no event may such insurance be less than the outstanding principal of and six months' interest on the Bonds. If the improvements, or a major portion thereof, are destroyed by fire or other casualty and a determination is made by the Developer not to reconstruct or repair such improvements, the proceeds of such insurance must be used as follows: (A) First, to pay to the mortgagee of such improvements the outstanding principal of and interest on the notes secured by such mortgagee's mortgage; (B) Second, to pay to the City the amount necessary to pay the outstanding principal of and interest on the Bonds; and (C) Third, to pay from remaining proceeds the amount necessary to pay not to exceed twenty- five percent (25%) of the outstanding principal of and not to exceed twenty-five percent (25%) of the interest remaining unpaid on the improvement bonds for the public improvements. The Contract for Development further provides that if title to and possession of the improvements constructed in the Project or any material part thereof, are taken by eminent domain by any governmental body or other person (except the City) prior to the maturity of the Bonds, the proceeds of the award will be used by the Developer to either: (A) Reconstruct the improvements; or (B) First, pay to the mortgagee of the improvements the outstanding principal of and interest on the note secured by said mortgagee's mortgage, and second, to pay to the City the amount necessary to pay the outstanding principal of and interest on the Bonds remaining unpaid. Default and Remedies The following are Events of Default under the Contract for Development: (A) Events of Default by the Developer: (1) Failure by the Developer to observe and perform any covenant, condition, obligation, or agreement on its part to be observed or performed under the Contract for Development, unless attributable to an unavoidable delay, as defined in the Contract for Development, within thirty days after written notice to the Developer specifying such failure and requesting that it be remedied (or within such other period as otherwise expressly provided in the Contract for Development), or within such further period of time as is reasonably necessary to cure such failure, but only if the Developer has within thirty days provided the City with reasonable assurances that the Developer will cure the failure as soon as is reasonably possible. 11 (2) If the Developer admits in writing its inability to pay its debts generally as they become due, or files a petition in omenof aecever ofitself orof the bankruptcy, Triassignment tthe whole to � any f its creditors, or consents to the app substantial part of the Project. (3) If the Developer files a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws. (4) If the Developer, on a petition in bankruptcy filed against it, is adjudicated a bankrupt, or a court of competent jurisdiction enters an order or decree appointing, without the consent of the Developer, a receiver of the Developer or of the whole or substantially all of its property, or approves a petition filed against the Developer seeking reorganization or r the tcy laws, and such order, or a Tee is of nott vacated or setDeveloper easide or federal ayed within pone hundred eighty days fromthe order, or decree date of entry thereof. (B) Events of Default by the City: (1) Failure of the City to commence and complete construction of the public improvements upon petition from the Developer and ordering in by the City Council, unless attributable to an unavoidable delay, and unless the Developer shall have elected to construct the public improvements pursuant to the Contract for Development. (2) Failure of the City to commence and complete construction of the U. S. Highway No. 12 interchange, unless attributable to an unavoidable delay, on or before allocation of funds by the Minnesota Department of Transportation and Federal Highway Administration. (3) Failure of the City to observe and perform any covenant, condition, obligation, or agreement on its part to be observed or performed under the Contract for Development, unless attributable to an unavoidable delay, within thirty days after written notice to the City specifying such failure and requesting that it be remedied (or within such other period as otherwise expressly provided in the Contract for Development) or within such further period of time as is reasonably necessary to cure such failure, but only if the City has, within thirty days, provided the Developer with reasonable assurances that the City will cure the failure as soon as is reasonably possible. Whenever an Event of Default occurs under the Contract for Development, the aggrieved party may take any one or more of the following actions: (A) The City may take one or more of the following actions in the event of default by the Developer: (1) Suspend its performance under the Contract for Development until it receives assurances from the Developer that the Developer will cure its default and continue its performance under the Contract for Development. (2) Cancel and rescind the Contract for Development. (3) Take whatever action at law or in equity may appear necessary and desirable to the City to collect any payments due under the Contract for Development, or to enforce performance and observance of any obligation, agreement, or covenant of the Developer under the Contract for Development. (B) The Developer may take one or more of the following actions in the event of default by the City: (1) Suspend its performance under the Contract for Development until it receives assurances from the City that the City will cure its default and continue its performance under the Contract for Development. 12 (2) Cancel and rescind the Contract for Development, but only prior to the issuance of the Bonds or prior to the award of bids for any public improvements. (3) Take whatever action at law or in equity may appear necessary or desirable to the Developer to enforce performance and observance of any obligation, agreement, or covenant of the City under the Contract for Development. No remedy conferred upon or reserved to the City or the Developer in the Contract for Development is intended to be exclusive of any other available remedy or remedies unless otherwise expressly stated therein, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under the Contract for Development or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default will impair any such right or power or will be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the City or the Developer to exercise any remedy reserved to it, it is not necessary to give notice, other than such notice as may be required pursuant to the default and remedy provisions of the Contract for Development. If any agreement contained in the Contract for Development is breached by either party and thereafter waived by the other party, such waiver will be limited to the particular breach so waived and will not be deemed to waive any other concurrent, previous, or subsequent breach thereunder. The Contract for Development does not obligate the Developer to any level of development of or construction of improvements in the Project, other than a requirement that the Developer must commence construction of some improvements within the Project within twelve months after substantial completion of the U. S. Highway No. 12 interchange, Carlson Parkway, and Cheshire Lane. CASH FLOW PROJECTIONS The following projected cash flow schedule for the Bonds assumes no mandatory or optional redemption features are exercised, but instead it is designed to show estimated fund availability without such early redemption features being exercised. CASH FLOW PROJECTION 13 Special Tax Assessments Investment Earnings Debt Service Increment Reserve Bond Project Cumulative Date Revenue Principal Interest Fund Fund Fund Principal Interest Balance 5/01/84 12/01/84$ 16,026 $33,183 $ 400,677 $ 720,070 368,602 6/01/85 12/01/85 $ 115,500 13,737 12,415 $ 27,950 343,438 79,266 6/01/86 $ 91,000 13,737 287,070 343,438 243,135 12/01/86 $ 83,500 115,500 115,500 91,000 80,893 13,737 13,737 343,438 119,934 6/01/87 83,500 115,500 80,893 13,737 343,438 343,438 70,126 20,318 12/01/87 221,500 115,500 70,787 13,737 343,438 98,404 6/01/88 221,500 115,500 70,787 13,737 343,438 176,490 12/01/88 384,500 115,500 60,681 13,737 343,438 407,470 6/01/89 384,500 115,500 60,681 13,737 $ 200,000 343,438 438,450 12/01/89 581,500 115,500 50,575 13,737 334,687 865,075 6/01/90 581,500 115,500 50,575 13,737 500,000 334,687 791,700 12/01/90 889,000 115,500 40,468 13,737 312,813 1,537,592 6/01/91 889,000 115,500 40,468 13,737 700,000 312,813 1,583,484 12/01/91 1,108,000 115,500 30,362 13,737 282,188 2,568,895 6/01/92 1,108,000 115,500 30,362 13,737 1,400,000 282,188 2,154,306 12/01/92 1,418,000 115,500 20,256 13,737 220,938 3,500,861 6/01/93 1,418,000 115,500 20,256 13,737 2,050,000 220,938 2,797,416 12/01/93 1,732,000 115,500 10,150 13,737 131,250 4,537,553 6/01/94 1,732,000 116,500 10,150 13,737 3,000,000 131,250 3,278,690 $12,836,000 $2,080,000 $910,344 $277,029 $45,598 $315,020 $7,850,000 $6,055,371 $3,278,690 13 The cash flow projection is based on the following assumptions: 1. Tax Increment (a) Base Value — The base assessed value of the Tax Increment District is $821,000 at January 1, 1983. (b) Projected Assessed Values — The following is a projection of the Assessed Values of the Tax Increment District over the term of the Bonds: As of January 2, 1985 ..................................... $ 2,450,000 As of January 2, 1986 ..................................... 5,426,000 37,000 As of January 2, 1987 .............................. • • • • • .. 18963,000 As of January 2, 1988 .............................. • • • .... 19,756,000 As of January 2, 1989 ..................................... As of January 2, 1990 ..................................... 24,472,000 As of January 2, 1991 ..................................... 31,116,000 As of January 2, 1992 ..................................... 37,849,000 (c) Pass Through of Tax Increment — It is assumed any tax increment generated from value in place as of January 2, 1984 will not be captured by the Tax Increment District, but instead will be distributed in a normal manner to underlying tax jurisdictions. The first year's receipt of tax increment (with eight years' receipts being the maximum legally permitted) will be the increment from value in place as of January 2, 1985 for taxes collectible in 1986. (d) Receipt of Tax Increments — It is assumed eight full years of Tax Increment will be received by the Tax Increment District in the years 1986-1993. (e) Mill Rate — A constant rate of 93.88 mills has been used in the calculation of Tax Increment throughout the cash flow projection. (f) Fiscal Disparities Effect — The loss of incremental valuation due to the effect of Fiscal Disparities is assumed to be 29% of total commercial -industrial valuation created within the Tax Increment District. (g) Inflation — No consideration has been given to the effect of inflation on the captured valuation within the Tax Increment District, or the mill rates in effect during the life of the District. It is assumed that inflation on the Base Value will be 5% per year, which increase is not captured as revenue to the District. (2) Special Assessment Revenue — Revenue to the Tax Increment District from special assessments will come from total assessments of approximately $2,080,000, assessed on October 1, 1984 with equal annual installments of principal over ten years, carrying interest on the unpaid principal balance at the bond rate of interest. (3) Interest Earnings — It is assumed the Project Fund, the Bond Fund, and the Reserve Fund will earn interest from the investments of amounts deposited therein at a rate of 9.0%, 8.0%, and 8.0%, respectively. (4) Redemption of Principal — The cash flow projection does not reflect the early redemption of principal permitted by the receipt of excess revenues to the Tax Increment District. (5) Interest on Bonds — The cash flow projection assumes an average interest rate on the bonds of 8.75%. (6) Capitalized Interest — Interest funded from bond proceeds is expected to be sufficient, together with other revenues, to pay interest on the bonds until tax increment revenue is received in 1987. If any of the foregoing assumptions are incorrect, this could adversely affect the Tax Increment generated by the Tax Increment District and the sufficiency of cash flow. No assurance can be given to the Bondholders that such assumptions are accurate. 14 THE GUARANTY AGREEMENT The City and the Developer will execute the Guaranty Agreement, dated as of May 1, 1984. The following is a summary of certain provisions of the Guaranty Agreement and is qualified in its entirety by reference to the Guaranty Agreement, a copy of which is on file with the Trustee. Guaranty Pursuant to the terms of the Guaranty Agreement, the Developer guarantees, unconditionally and irrevocably, the timely payment of principal, premium, and interest on the Bonds. The obligations of the Developer under the Guaranty Agreement are irrevocable and unconditional. Under no circumstances may the Guaranty Agreement be altered, amended, revoked, or terminated, notwithstanding any event, foreseen or unforeseen, except as may be approved in writing by the City, the Developer, and the Trustee. The Trustee may approve changes to the Guaranty Agreement only in accordance with the terms of the Guaranty Agreement providing for such changes. The Developer has stated in the Guaranty Agreement that it recognizes that the purchasers of the Bonds have relied and will be relying, on the obligations of the Developer under the Guaranty Agreement as security for the prompt payment of the principal of, premium, if any, and interest on the Bonds. The obligations of the Developer under the Guaranty Agreement are not entitled to any abatement, diminution, set-off, abrogation, waiver, or modification thereof, nor to any termination for any reason (except in accordance with the express terms thereof) regardless of any rights of set-off, recoupment, or counterclaim that the Developer may otherwise have against the City, the Trustee, any Bondholder, the Surety, and any other person, and regardless of any contingency, act of God, event or cause of any nature, and notwithstanding any circumstance or occurrence that may arise or take place before, during, or after the issuance of the Bonds. On each July 30 and January 30 from and after the date hereof, on which any Bonds are outstanding, the Trustee will calculate the Tax Increment, Special Assessments, proceeds of the Bonds allocated to payment of interest on the Bonds, and interest earnings on the foregoing which have been deposited in the Bond Fund and are available to pay principal, premium, and interest on the Bonds on the following Interest Payment Date. The Trustee will also determine the amounts of principal, premium, and interest due and payable on the Bonds (and any other obligations of the City payable, in whole or in part, from the Tax Increment and Special Assessments) on the Interest Payment Date following each such July 30 and January 30. Based on this data the Trustee will determine whether and to what extent the Tax Increment, Special Assessments, proceeds of the Bonds allocated to payment of interest on the Bonds, and interest earnings on the foregoing on deposit with the Trustee on such July 30 or January 30 would be insufficient to pay all principal, premium, and interest on the Bonds when due on such Interest Payment Dates. If this information shows that the available funds would not be sufficient to provide for full and timely payment of principal, premium and interest on the Bonds on such Interest Payment Dates, then the Trustee will deliver written notice to the Developer of the deficiency (such deficiency being hereinafter referred to as the "Shortfall"). Such notice will be delivered to the Developer and the Surety on or before February 1 for deficiencies with respect to June 1 interest payment dates and on August 1 for deficiencies with respect to December 1 interest payment dates. The Developer will be required to pay to the Trustee an amount equal to the Shortfall. For Shortfalls with respect to June 1 interest payment dates the Developer must deposit such amount with the Trustee on the preceding February 15. For Shortfalls with respect to December 1 interest payment dates the Developer must deposit such amount with the Trustee on the preceding August 15. All amounts transferred to the Trustee by the Developer must be made pursuant to an instrument which provides immediately available funds to the Trustee and which provides for payment in any coin or currency which at the time of payment is legal tender for the payment of public or private debts in the United States of America. 15 The Developer will be obligated to pay a Guaranty Payment to the Trustee equal to the aggregate amount of all outstanding Bonds plus accrued interest to the date of payment in the event a petition in bankruptcy is filed by or against the Developer under the United States Bankruptcy Code. In the event that the amount of funds which are available to pay principal, premium, and interest on the Bonds on any Interest Payment Date, are in excess of the principal, premium, and interest due on the Bonds (and any other obligations of the City secured in whole or in part by Tax Increment) on such Interest Payment Date, then the City must use such excess funds to redeem and prepay as many Bonds as possible on such Interest Payment Date in accordance with the terms of the Indenture. In order to secure its obligations under the Guaranty Agreement, the Developer agrees to deliver to the Trustee, on or before the date of issuance of the Bonds, the Surety Bond. Default and Remedies The following are events of default under the Guaranty Agreement: (A) Failure by the Developer to pay any amounts required to be paid under the Guaranty Agreement at the times specified therein; (B) Failure by the Developer to observe and perform any covenant, condition, or agreement on its part to be observed or performed, other than as referred to in (A) above, for a period of thirty days after written notice specifying such failure and requesting that it be remedied shall have been given to the Developer by the City or the Trustee; provided, however, that if the default be such that it cannot be corrected within such period, it will not constitute an event of default if corrective action is instituted by the Developer within such period and diligently pursued until corrected; or (C) The filing of a petition in bankruptcy by or against the Developer under the United States Bankruptcy Code. Whenever any event of default occurs under the Guaranty Agreement, the Trustee (or the City with the consent of the Trustee) may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement, or covenant of the Developer under the Guaranty Agreement. No remedy conferred upon or reserved to the City and the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy will be cumulative and will be in addition to every other remedy given under the Guaranty Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any event of default will impair any such right or power or will be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. Amendments to the Guaranty Agreement The Guaranty Agreement may be amended with the consent of the Surety and without the consent of the Holders of two-thirds in aggregate principal amount of the Bonds outstanding if such amendment is in writing, is executed by the City, the Trustee, and the Developer, and is necessary to accomplish any one or more of the following: (A) To cure any ambiguity or formal defect or omission in the Guaranty Agreement; (B) To provide security for obligations to be issued to refund all Bonds; and (C) To provide for any other change which, in the judgment of the Trustee, is not to the prejudice of the Trustee or the Bondholders. The Trustee is required to retain an original, executed counterpart of all such amendments until all Bonds are paid in full. Other than the foregoing amendments, neither the City, the Developer, nor the Trustee shall consent to any other amendment to the Guaranty Agreement unless such amendment has first been approved by the Surety and by the Holders of not less than two-thirds in aggregate principal amount of 16 Bonds outstanding, provided that the consent of all Holders of Bonds outstanding is required for any amendment of the Guaranty Agreement that would permit the termination of the Guaranty Agreement, or that would permit a reduction in or postponement of any payments due from the Developer under the Guaranty Agreement, or that would amend the terms of the Guaranty Agreement providing for amendments to the Guaranty Agreement. If at any time the City or the Developer request the Trustee's consent to any amendment, then the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such supplemental indenture to be published at least twice in a newspaper of general circulation in Minneapolis, Minnesota, and to be given by registered or certified mail to the owner of each Bond shown by the list of Bondholders required to be kept at the principal corporate trust office of Trustee. Any notice mailed as so provided will be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Such notices will briefly set forth the nature of the proposed amendment and shall state that copies thereof are on file at the principal corporate trust office of Trustee for inspection by all Bondholders. If, within sixty days or such longer period as shall be prescribed by the City following such notices, the owners of not less than two-thirds (2/3) in aggregate principal amount of the Bonds outstanding at the time of execution of any amendment shall have consented to and approved the execution thereof as herein provided, no owner of any Bond will have any right to object to any of the terms and provisions contained in such amendment, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the City from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such amendment, the Guaranty Agreement shall be and be deemed to be modified and amended in accordance therewith. THE SURETY The principal office of the Surety is located at 385 Washington Street, Saint Paul, Minnesota 55102. The Surety is subject to regulation and supervision by the Minnesota Commissioner of Insurance and the insurance laws and regulations of all jurisdictions in which it is authorized to do business. Those laws and regulations, which are intended to protect insurance policyholders, provide for the periodic examination of insurance companies, the imposition of reserve requirements, and the submission of periodic reports, including financial statements. The Surety was incorporated on April 18, 1925, under the insurance laws of the State of Minnesota and is wholly owned, except for directors' qualifying shares, by The St. Paul Companies, Inc., which was organized in 1853. The Surety is licensed under the insurance laws of all states, the District of Columbia, and Puerto Rico to write all general forms of fire, marine, and casualty insurance policies, including surety and indemnity bonds. As of December 31, 1983, the Surety's total assets amounted to $5,594,723,000 and shareholders' equity equalled $1,286,712,000. THE SURETY BOND Concurrently with the issuance and delivery of the Bonds, the Surety will issue and deliver the Surety Bond to the Trustee. On such date the Surety will also deliver to the Trustee an opinion of counsel to the Surety to the effect that the Surety Bond is a valid and binding obligation of the Surety enforceable in accordance with its terms. The Surety Bond is issued to secure the obligations of the Developer under the Guaranty Agreement to make Guaranty Payments. In the event Tax Increment and Special Assessments are insufficient to pay all principal and interest due on the Bonds on any Interest Payment Date, then the Developer is required to make Guaranty Payments in an amount sufficient to pay the deficiency. If the Developer does not pay such deficiency then all Bonds may be subject to redemption and prepayment in whole and, in such event, the Developer will be obligated to pay a Guaranty Payment equal to the principal amount of all outstanding Bonds plus accrued interest to the redemption date. If the Developer does not make this payment when due then the Surety will be required to pay to the Trustee the aggregate principal amount of all outstanding Bonds. The Trustee may also make demand for payment under the Surety Bond in the event a petition in bankruptcy is filed by or against the Developer. 17 The Surety Bond expires on June 1, 1994, unless a demand for payment has been made to the Surety on or before such date. The form of the Surety Bond is attached hereto in Appendix A. THE INDENTURE OF TRUST The City and the Trustee will execute the Indenture, dated as of May 1, 1984. The following is a summary of certain provisions of the Indenture and is qualified in its entirety by reference to the Indenture, a copy of which is on file with the Trustee. Pledge and Assignment Pursuant to the terms of the Indenture, the City has pledged and assigned to the Trustee, on behalf of all Bondholders, the Tax Increment, Special Assessments, Guaranty Payments, and Surety Bond Payments. Guaranty Payments and Surety Bond Payments are to be paid directly to the Trustee when and if made. Tax Increment and Special Assessments will be paid periodically by the City to the Trustee as and when received by the City. The City has reserved to itself the right to pledge the Tax Increment to obligations other than the Bonds, upon the approval of the Developer, on a parity basis with the Bonds, but only under certain terms and conditions. First, the interest payment dates on the additional obligations must be the same as the Interest Payment Dates on the Bonds. Second, the City must determine and certify to the Trustee and the Developer that the Tax Increment will be sufficient to pay the principal, premium, and interest on the Bonds and the additional obligations in full and in a timely manner. Third, the City may pledge to the additional obligations only the amount of Tax Increment sufficient to pay annual principal, premium, and interest due on such additional obligations. Revenues and Funds The following funds have been established by the Indenture to be held by the Trustee with respect to the Bonds: Bond Fund. An initial deposit will be made to the Bond Fund on the date of issue of the Bonds consisting of accrued interest on the Bonds and a certain portion of the proceeds from the sale of the Bonds. The initial deposit to the Bond Fund will be applied to payment of interest on the Bonds. The Trustee will deposit to the credit of the Bond Fund, as received, the entire Tax Increment and Special Assessments paid to it by the City, all Guaranty Payments paid to it by the Developer pursuant to the Guaranty Agreement, all Surety Bond Payments paid to it by the Surety pursuant to the Surety Bond and any other moneys received by it for the payment of the Bonds and the interest thereon. The Trustee will apply amounts in the Bond Fund solely to the payment of the principal and interest coming due on all Bonds outstanding on any Interest Payment Date by redemption, upon acceleration or otherwise. Project Fund. An initial deposit will be made to the Project Fund on the date of issue of the Bonds in an amount equal to the proceeds derived from the sale of the Bonds less the amounts deposited in the Bond Fund and the Reserve Fund. Moneys in the Project Fund will be used (i) to pay the costs of issuing the Bonds (including bond counsel fees, fees of counsel to the City, Underwriter, and Trustee, printing costs, and Trustee's fees); and (ii) to pay costs of acquiring and constructing the Highway 12 interchange improvements. The Trustee will disburse moneys from the Project Fund to pay or reimburse such costs by check or other manner requested by the City and acceptable to the Trustee, but only upon receipt by the Trustee of the following: (A) a certificate of an officer of the City setting forth the following: (1) A detailed statement as to the application of the amounts to be disbursed pursuant to such certificate; 18 (2) With respect to costs incurred under an approved contract, the name and address of the person to whom payment is to be made and the amount to be paid, the nature of the services or work performed and materials and equipment provided (or to be performed or provided) by such person, and a description of the approved contract; (3) With respect to costs incurred other than under an approved contract, a brief description of the application of the amounts to be disbursed and, if applicable, a brief description of services or work performed and material and equipment provided for which payment or reimbursement is sought; (4) A statement that costs in the aggregate amount stated in such certificate have been paid or incurred and are now due and payable; (5) A statement that none of the costs for which payment or reimbursement is requested has formed the basis for any payment or reimbursement theretofore made from the Project Fund; (6) A statement that no default under the Indenture has occurred which has not been waived, consented to, or cured; and (7) A statement that all conditions precedent relating to such withdrawal and payment have been complied with. On the Completion Date, all moneys remaining in the Project Fund will be transferred to the Bond Fund and thereafter used for the purposes of said Bond Fund. Reserve Fund. An initial deposit will be made to the Reserve Fund on the date of issue of the Bonds in the amount of the maximum amount of interest which will have accrued on the Bonds on any interest payment date after December 1, 1984. Upon an event of default and the acceleration of the principal of the Bonds in accordance with the terms of this Indenture or upon redemption of the Bonds in whole, the Trustee will transfer from the Reserve Fund to the Bond Fund the amount needed to pay interest on the Bonds on the date fixed for payment thereof pursuant to the terms of this Indenture. If not used for such purpose, the Trustee will hold the Reserve Fund in trust to be applied toward payment of the final payment or payments of principal and interest on the Bonds or toward redemption of outstanding Bonds when Bonds are by their terms redeemable and all of the outstanding Bonds are to be redeemed and paid in full. Investments Amounts held in the Project Fund will be invested by the Trustee in accordance with directions from the City. Amounts held in the Bond Fund and the Reserve Fund will be invested in such investments as are permitted by applicable laws of the State of Minnesota and the limitations imposed by the Indenture and at the direction of the City. The Trustee will, without further direction from the City, terminate or sell such investments as and when required to make any payment for the purpose of which such investments are held. Any income received on such investments will be credited to the respective fund for which it is held, subject to the provision of the Indenture requiring certain investment earnings from the Reserve Fund to be deposited in the Bond Fund. Discharge of Indenture The Indenture will be discharged if: (A) all fees and expenses of the Trustee have been paid and the City has performed all of its other covenants in the Bonds and the Indenture; and (B) sufficient monies or securities which are general obligations of the United States or unconditionally guaranteed as to payment by the United States, or both, and which do not permit the redemption thereof at the option of the City, in such aggregate face amount, and bearing interest at such rates, and maturing on such dates, as will without reinvestment, provide amounts sufficient in the aggregate for the payment or redemption of all the Bonds at or prior to maturity and with interest and premium, if any, has been deposited with the Trustee in accordance with the Indenture. 19 Defaults and Remedies The following are events of default under the Indenture: (A) default in the payment of any interest upon any Bond when it becomes due and payable; or (B) default in the payment of the principal of any Bond when it becomes due and payable; or (C) default in the performance, or breach, of any covenant or warranty of the City in the Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere specifically dealt with), and the continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the City by the Trustee or to the City and the Trustee by the Holders of at least ten percent (10%) in principal amount of the outstanding Bonds, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default"; provided, however, that if the default be such that it cannot be corrected within such period, it will not constitute an event of default if corrective action is instituted by the City within such period and diligently pursued until corrected; or (D) the failure or refusal of the Surety to honor any demand for payment under the Surety Bond and the occurrence of the "Event of Default" under the Guaranty Agreement relating to the filing of a petition in bankruptcy by or against the Developer. Whenever any event of default occurs under the Indenture, the Trustee will have the following remedies: (A) If an event of default under (A), (B), or (D) above occurs and is continuing, then and in every such case the Trustee may declare the principal of all the Bonds to be due and payable immediately, by a notice in writing to the City and the Developer, and upon any such declaration such principal shall become immediately due and payable. Upon any declaration of acceleration hereunder, the Trustee is required to take all actions necessary to draw upon or otherwise enforce the Surety Bond. All amounts received by the Trustee pursuant to the Surety Bond will be deposited in the Bond Fund and applied to payment of the principal of the Bonds. (B) Upon the occurrence of an event of default under (C) above, the Trustee may pursue any remedy available at law or in equity (other than a draw upon, or enforcement of the terms of, the Surety Bond). If an event of default shall have occurred and be continuing under (C) above, and if requested to do so by the Holders of not less than twenty-five percent in aggregate principal amount of outstanding Bonds, the Trustee shall be obligated to exercise such one or more of the remedies referred to herein as the Trustee, being advised by counsel, deems most expedient in the interests of the Bondholders. Bondholders Acts No Holder of any Bond will have any right to institute any proceeding, judicial, or otherwise, with respect to the Indenture, the Guaranty Agreement, or the Surety Bond, or for the appointment of a receiver or trustee, or for any remedy hereunder, unless: (A) such Holder previously gave written notice to the Trustee of a continuing Event of Default; (B) the Holders of not less than twenty-five percent (25%) in principal amount of outstanding Bonds have made written request to the Trustee to institute proceedings in respect to such event of default in its own name or Trustee hereunder; (C) such Holder or Holders have offered the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (D) the Trustee for sixty (60) days after its receipt of such written request and offer of indemnity has failed to institute any such proceeding; and (E) no direction inconsistent with such written request has been given to the Trustee during such 60 -day period by the Holder of a majority in principal amount of outstanding Bonds. No one or more Holders of Bonds will have any right, in any manner whatever, by virtue of, or by availing of, any provision of this Indenture to affect, disturb, or prejudice the rights of any other Holders 20 of Bonds or to obtain or seek to obtain priority or preferences over any other Holders or to enforce any right under this Indenture, or the Guaranty Agreement, or the Surety Bond, except in the manner provided in the Indenture and for the equal and ratable benefit of all the Holders of the Bonds. The Holders of not less than a majority in principal amount of the Bonds may, by act of such Bondholders delivered to the Trustee and the City on behalf of the Holders of all the Bonds, waive any past default hereunder and its consequences, except a default (A) in the payment of the principal of or interest on any Bond, or (B) the bankruptcy of the Developer, or (C) in respect of a covenant or provision hereof which under the terms of the Indenture cannot be modified or amended without the consent of the Holder of each outstanding Bond affected. Upon any such waiver, such default shall cease to exist, and any event of default arising therefrom shall be deemed to have been cured, for every purpose of the Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Supplemental Indentures Without the consent of the Holders of any Bonds, the City, with the consent of the Surety and when authorized by a resolution of the City Council of the City, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental to the Indenture, in form satisfactory to the Trustee, for any one of the following purposes: (A) To evidence the succession of another entity to the City, and the assumption by any such successor of the covenants of the City therein and in the Bonds contained; or (B) To add to the covenants of the City, for the benefit of the Holders of the Bonds, or to surrender any right or power therein conferred upon the City; or (C) To authorize the exchange of registered Bonds for Bonds in coupon form and to establish the form of such coupon Bonds; or (D) To cure any ambiguity, to correct or supplement any provision of the Indenture which may be inconsistent with any other provision of the Indenture, or to make any other provisions with respect to matters or questions arising under the Indenture which shall not be inconsistent with the provisions of the Indenture, provided such action will not adversely affect the interests of the Holders of the Bonds. With the consent of the Surety and the Holders of not less than a majority in principal amount of the Bonds outstanding by act of said Holders delivered to the City and the Trustee, the City, when authorized by a resolution of the City Council, and the Trustee may enter into an indenture or indentures supplemental to the Indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of modifying any of the provisions of the Indenture or of modifying in any manner the rights of the Holders of the Bonds under the Indenture, provided, however, that no such supplemental indenture may, without the consent of the Holder of each outstanding Bond affected thereby, (A) change the stated maturity of the principal of, or any installment of interest on, any Bond, or reduce the principal amount thereof or the interest thereon, or change any place of payment where, or the coin or currency in which, any Bond is payable, or impair the right to institute suit for the enforcement of any such payment on or after the stated maturity thereof (or, in the case of redemption, on or after the redemption date), or (B) reduce the percentage in principal amount of the outstanding Bonds, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of the Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or 21 (C) modify any of the provisions of the Indenture establishing the conditions for entering into supplemental indentures except to increase any such percentage of Holders required to consent or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Bond affected thereby. ENFORCEABILITY OF REMEDIES While the Bonds are secured by Guaranty Payments and Surety Bond Payments, the practical realization of such security upon any default may depend upon the exercise of various remedies specified by the Indenture. These and other remedies may be dependent upon judicial actions which are subject to discretion and delay. Under existing constitutional, statutory, and judicial law, such remedies may not be readily available or may be limited. A court may decide not to order the specific performance of covenants contained in such documents. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by state and federal laws affecting remedies and by bankruptcy, reorganization or other laws affecting the enforcement of creditor's rights. LEGAL MATTERS Legal matters incident to the authorization, issuance, and sale by the City of the Bonds and with regard to the tax-exempt status thereof will be passed upon by LeFevere, Lefler, Kennedy, O'Brien & Drawz, a Professional Association, bond counsel. Certain legal matters will be passed upon for the Underwriter by Holmes & Graven, Chartered, as counsel for the Underwriter; for the Developer by Larkin, Hoffman, Daly & Lindgren, Ltd., as counsel for the Developer; and for the Surety by its counsel. TAX EXEMPTION In the opinion of LeFevere, Lefler, Kennedy, O'Brien & Drawz, a Professional Association, Minneapolis, Minnesota, bond counsel, under existing laws, regulations, rulings, and court decisions, interest on the Bonds is not includable in gross income for purposes of United States and State of Minnesota income taxation, except for State of Minnesota corporate and bank excise taxes measured by income. UNDERWRITING Pursuant to the terms and conditions of a Bond Purchase Agreement, Miller & Schroeder Municipals, Inc. has agreed to purchase the Bonds from the City at an aggregate purchase price of $7,653,750 plus accrued interest from May 1, 1984, to the date of delivery of the Bonds. The Underwriter is obligated to take and pay for all of the Bonds, if any Bond is purchased. The Bonds are being offered for sale to the public at the initial prices or yields determined to produce the yields or prices to maturity stated on the cover page of this Official Statement, plus accrued interest. The public offering prices may be changed from time to time and may be reduced for sales to selected dealers. During the initial offering period the Bonds will be sold at par. The Underwriter reserves the right to join with other dealers in offering the Bonds to the public. The Bonds are offered, subject to prior sale, when, as and if issued by the City, subject to the opinions as to validity and certain other matters of LeFevere, Lefler, Kennedy, O'Brien & Drawz, a Professional Association, Minneapolis, Minnesota, and certain other conditions. Under the Bond Purchase Agreement, certain of the parties will indemnify certain other parties with respect to matters relating to this Official Statement and the information provided herein. Subject to prevailing market conditions the Underwriter intends, but is not obligated, to effect secondary market transactions for the Bonds. However, the Underwriter is not obligated to repurchase any of the Bonds at the request of the Holders thereof. 22 RATING Standard & Poor's Corporation ("Standard & Poor's"), a New York corporation located at 25 Broadway, New York 10004, telephone (212) 248-2525, has been engaged in providing ratings for corporate bonds since 1923 and municipal bonds since 1940. Long-term debt ratings assigned by Standard & Poor's reflect its analysis of the overall level of credit risk involved in financings. At present, Standard & Poor's assigns long-term debt ratings with the symbols "AAA" (the highest rating) through "D" (the lowest rating). Standard & Poor's has given the Bonds a rating of "AAA". This rating is defined as follows: Debt rated "`AAA" has the highest rating assigned by Standard & Poor's. Capacity to pay interest and repay principal is extremely strong. Any further explanation of the significance of such rating may only be obtained from Standard & Poor's. There has been furnished to such rating agency certain information and materials concerning the financing and the Bonds. Generally, rating agencies base their ratings on such information and materials and on investigations, studies and assumptions by the rating agencies. This rating expresses only the views of the agency issuing the rating. There is no assurance that the rating will continue for any given period of time or that it may not be lowered or withdrawn entirely by the rating agency, if in its judgment circumstances so warrant. Any such downward change in or withdrawal of such rating can be expected to have an adverse effect on the market price of the Bonds. MISCELLANEOUS Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the City, the Developer, the Surety, or the Underwriter and the purchasers or Holders of any of the Bonds. Certain provisions of the operative legal documents relating to the Bonds are summarized in this Official Statement. Such summaries do not purport to be comprehensive or definitive and reference is made to such documents for a full and complete statement of their respective provisions. Copies of such documents are available upon request at the principal office of the Trustee. The City, the Developer, and the Surety have consented to the distribution of this Official Statement. DEFINITIONS The following are definitions of certain of the terms used in this Official Statement. Such terms, when used in this Official Statement, are spelled with initial capital letters. Certain terms used in this Official Statement have been given specialized meanings in the Bonds, the Indenture, the Guaranty Agreement, or the Surety Bond, but have not been defined herein and are not spelled with initial capital letters. Reference is hereby made therefore to the Bonds, the Indenture, the Guaranty Agreement, and the Surety Bond for the definitions of such terms. Assessed Market Value means the value assigned to taxable real property in Minnesota as of January 2 of every year for ad valorem tax purposes. Assessed Value means the value determined by multiplying the Assessed Market Value by a percentage established by statutes of the State of Minnesota. Bond Fund means the fund by that name created by the Indenture and maintained by the Trustee under the Indenture. Bondholder means a person in whose name a Bond is registered in the Bond Register. 23 Bond Purchase Agreement means the Bond Purchase Agreement, dated as of May 7, 1984, among the Underwriter, the City, the Developer, and the Surety. Bonds means the $7,850,000 City of Minnetonka, Minnesota, Tax Increment Revenue Bonds (Carlson Properties, Inc. Project), Series 1984, and the term "Bond" means any one of such Bonds. Contract for Development means the Contract for Development made on or as of the first day of July, 1983, by and between the City and the Developer, as amended. City means the City of Minnetonka, Minnesota. City Council means the governing body of the City. Captured Assessed Value means any amount by which the current Assessed Value of the real property in a tax increment financing district exceeds the Original Assessed Value of such real property. Completion Date means the date the City certifies that the Project has been substantially completed. County Auditor means, with respect to the Bonds, the Director of Property Taxation of the County of Hennepin. Developer means Carlson Properties, Inc., a Minnesota corporation, its successors and assigns. Development District means Development District #1 established by the City in the City pursuant to the provisions of the Development District Act. Development District Act means Minnesota Statutes, Chapter 472A, as amended. Excess Special Assessments means Special Assessments generated in any year which, together with any other funds available to pay principal and interest on the Bonds will be in excess of the amounts needed to pay principal, premium, and interest on the Bonds and on any other obligations to which Special Assessments are pledged. Excess Tax Increment means Tax Increment generated in any year which, together with any other funds available to pay principal and interest on the Bonds will be in excess of the amounts needed to pay principal, premium, and interest on the Bonds and on any other obligations to which Tax Increment is pledged. Guaranty Agreement means the Guaranty Agreement, dated as of May 1, 1984, among the City, the Developer, and the Trustee. Guaranty Payments means payments made by the Developer pursuant to the terms of the Guaranty Agreement. Holder means a Bondholder. Indenture means the Indenture of Trust, dated as of May 1, 1984, between the City and the Trustee. Interest Payment Date means each date on which interest on the Bonds is required to be paid, which shall be December 1, 1984, and each June 1 and December 1 thereafter. Mill Rate means the combined rate established by the County Auditor at which Assessed Value of taxable property is taxed. Official Statement means this Official Statement. Original Assessed Value means the Assessed Value of all taxable real property within a tax increment financing district, as most recently certified by the Commissioner of Revenue of the State of Minnesota, as of the date of the request for certification of such Original Assessed Value. Project means the improvements described in "THE PROJECT" herein. Project Fund means the fund by that name created by the Indenture and maintained by the Trustee under the Indenture. 24 Reserve Fund means the fund by that name created by the Indenture and maintained by the Trustee under the Indenture. Shortfalls means the amount by which the Tax Increment Special Assessments, proceeds of the Bonds allocated to payment of interest on the Bonds, and interest earnings on the foregoing are less than the sum of the principal, premium, and interest due on the Bonds on any Interest Payment Date. Special Assessments means the special assessments imposed upon certain property located in the District. Surety means St. Paul Fire and Marine Insurance Company, a Minnesota corporation, its successors and assigns, with its principal office at 385 Washington Street, Saint Paul, Minnesota 55102. Surety Bond means the Surety Bond dated as of May 1, 1984, by the Surety to secure payment of the Bonds. Surety Bond Payment means any payment made to the Trustee by the Surety pursuant to the terms of the Surety Bond. Tax Increment means the taxes generated by the application of the Mill Rate to the Captured Assessed Value. Tax Increment Act means Minnesota Statutes, Sections 273.71-273.78, as amended. Tax Increment District means the economic tax increment financing district created by the City within the Development District pursuant to the Tax Increment Act. Trustee means First Trust Company of Saint Paul, its successors and assigns. Underwriter means Miller & Schroeder Municipals, Inc. 25 (This Page Has Been Left Blank Intentionally.) APPENDIX A SURETY BOND A-1 SURETY BOND KNOW ALL MEN BY THESE PRESENTS that we, Carlson Properties, Inc., a Minnesota corporation having its principal offices in Plymouth, Minnesota, as Principal, and St. Paul Fire and Marine Insurance Company, a Minnesota Corporation having its principal office in the City of St. Paul, Minnesota, as Surety, are hereby held and firmly bound unto the City of Minnetonka, hereafter called the Obligee, in the full and just sum of for the payment of which the Principal and the Surety do hereby, jointly and severally, bind themselves and their respective heirs, personal representatives successors and assigns firmly by these presents. Made, executed and delivered on this WHEREAS, the Principal has, on the entered into that certain GUARANTY AGREEMENT, hereinafter referred to as the "AGREEMENT", by and among the Principal, the Obligee; and First Trust Company of St. Paul, hereinafter called the Trustee; and WHEREAS, the Principal has, in the AGREEMENT, undertaken certain duties and obligations to the Obligee as more specifically set forth therein, including, but not limited to, the obligation to guarantee the full and timely payment of the principal on the Tax Increment Bonds (as those terms are defined in the AGREEMENT); and WHEREAS, for the benefit of the Obligee and its assignee, if any, the Principal and the Surety have agreed to provide this Surety Bond which applies only to the obligation of the Principal to make payment of the principal on the Tax Increment Revenue Bonds to the Obligee as specified in the AGREEMENT. NOW, THEREFORE, THE CONDITION OF THIS SURETY BOND IS SUCH that, if the Principal shall make payment of the principal, premium and interest on the Tax Increment Revenue Bonds as required under the provisions of the Agreement, then this obligation shall be null and void; otherwise, it shall be and remain in full force and effect. This Surety bond is made, executed and delivered by the Principal and the Surety and is accepted by the Obligee upon the following express conditions: A. Once issued this Surety Bond is an irrevocable and non -cancelable obligation of the Surety. The premium for this Surety Bond is prepaid and is a non-refundable charge. B. The liability of the Principal or the Surety, or both, under the provisions of this Surety Bond, shall not exceed, at any time, the amount specified in the first paragraph of this Surety Bond. C. Notwithstanding any other provision hereof, the liability of the Principal or the Surety, or both, under the provisions of this Surety Bond, shall be as specified in the following Schedule of Liability during each period specified in said Schedule (the amounts in the following Schedule of Liability shall in no event be deemed to be cumulative from year to year or from period to period): Schedule of Liability D. Upon any default (as defined in the AGREEMENT) by the Principal under the provisions of the AGREEMENT, the Trustee shall give the Surety written notice as provided in the AGREEMENT. If such notice is given to Surety in accordance with the terms of the AGREEMENT the notice shall be A-2 deemed to have become effective as the date of the Principal's default. Otherwise, the notice shall be deemed to have become effective as of the date of mailing. Any such notice shall be sent to the surety at 385 Washington Street, St. Paul, Minnesota 55102, Attention: Vice President, Fidelity and Surety Bond Department, or at such other address as the Surety may, from time to time, specify in a written notice mailed to the Obligee at its address as specified in the AGREEMENT. Upon receipt of such notice the Surety shall make payment as specified in the AGREEMENT no later than 15 days after receipt of such notice. If this Surety Bond be assigned by the Obligee, any such change of address notice shall be mailed by the Surety to the assignee by Certified U.S. Mail. E. This Surety Bond is for the sole benefit only of the Obligee and, if this Surety Bond is assigned, the assignee or the Trustee for the Tax Increment Revenue Bonds, if any, and no suit may be brought hereon by any other person, corporation or governmental body. F. Irrespective of any other duties or obligations imposed upon the Principal under the provisions of the AGREEMENT, this Surety Bond shall apply only to the Principal's duty and obligation to pay the principal, premium and interest on the Tax Increment Revenue Bonds and does not apply to any other of the Principal's duties, obligations or performance requirements under the AGREEMENT or under or by virtue of any other contract, ordinance, law or regulations as may be binding upon the Principal. (SEAL) ATTEST: Its (SEAL) ATTEST: Its A-3 CARLSON PROPERTIES, INC. Principal By Its ST. PAUL FIRE AND MARINE INSURANCE COMPANY Surety LIM Its TABLE OF CONTENTS A. Letter of Transmittal B. History of Miller & Schroeder Municipals, Inc. C. Experience of Miller & Schroeder Municipals, Inc. D. Miller & Schroeder Computer Capabilities E. Miller & Schroeder's Opinion of Services F. Miller & Schroeder's Project Team and Resumes G. Miller & Schroeder's Criteria for Improvement of Credit Rating H. Miller & Schroeder's Revelant Experience (Minnesota - National) I. Estimated Issuance Costs (Financial Consulting Contract) J. Additional Data 1. CREDENTIALS Z. Statement of Financial Condition, October 31, 1983 3. Official Statement a. City of Minnetonka, :Minnesota %w Toll Free Minnesota (800) 862-6002 Toll Free Other States (800) 328-6122 Miller & Schroeder Municipals, Inc. Northwestern Financial Center, 7900 Xerxes Avenue South, Minneapolis, Minnesota 55431 • (612) 831-1500 April 19, 1984 The Honorable Eldon Reinke, Mayor Members, Shakopee City Council Mr. John Anderson, City Administrator City of Shakopee 129 East First Avenue Shakopee, Minnesota 55397 Re: Fiscal Advisory Services Dear Mayor Reinke: Thank you for the opportunity to submit this proposal for your consideration covering Miller & Schroeder Municipals, Inc. services as fiscal advisor to the City of Shakopee. I bring to your attention the portions of our proposal that cover our services as fiscal advisor and also the opinion of Miller & Schroeder Municipals, Inc. in your ability to enhance the credit quality of your upcoming bond issue. On behalf of myself and the entire staff of Miller & Schroeder Municipals, Inc., we would be privileged to commence work immediately on your proposed project. If chosen as your fiscal advisor, I promise you the full dedication of the entire project team and assure you that you would indeed be a high priority client for us. Thank you for your interest in Miller & Schroeder Municipals, Inc. and your consideration of this proposal. Sincerely, 6�R�(A'V Steven C. Emerson Public Finance Advisor SCE/djg Enclosure %W Headquarters: Minneapolis, Minnesota Branch Offices: Downtown Minneapolis • Solana Beach, California • Northbrook, Illinois • St. Paul, Minnesota • Naples, Florida • Carson City, Nevada Member of the Securities Investor Protection Corporation HISTORY AND REVIEW OF MILLER & SCHROEDER MUNICIPALS, INC. Since its establishment in 1965, Miller & Schroeder Municipals, Inc. ("Miller & Schroeder") has grown to a staff of approximately 160 professionals. The firm has offices in Minneapolis, Bloomington, and St. Paul, Minnesota; Solana Beach, California; Naples and Tallahassee, Florida; Chicago, Illinois; and Carson City, Nevada. Miller & Schroeder provides a wide range of services to its issuer clients. These services include help with initial feasibility studies, consultation on the appropriate structure and timing of an issue, coordinating the preparation of documents necessary for a tax-exempt financing, distribution of the official statement to potential buyers, and pricing the issue so that the borrower will have the lowest possible interest cost. After bonds have been issued, Miller & Schroeder will maintain a secondary market in them. As a major factor in the municipal securities market, Miller & Schroeder has been a pioneer in using credit enhancement mechanisms, such as letters of credit and pooled security devices. Since 1973 Miller & Schroeder has been managing underwriter for the Saint Paul Port Authority. The Authority is one of the largest issuers of tax- exempt revenue bonds with $240 million outstanding. Revenue bonds secured by the Port Authority's Common Reserve receive a Standard & Poor's rating of "A". This is one of the highest rated pooled fund vehicles in the country. Miller & Schroeder was active in designing this system and modifying it as needed to allow the agency maximum flexibility while still maintaining its high credit rating. As interest rates began increasing rapidly during the late 1970's and early 1980's, Miller & Schroeder was able to continue to help small borrowers, public agencies, and tax-exempt entities to have access to tax-exempt capital markets. Because of their excellent relationships with a number of large banks, Miller & Schroeder was able to help borrowers obtain letters of credit and to use other creative structures to borrow funds at the lowest possible cost. In addition to providing underwriting services, Miller & Schroeder also serves as fiscal advisor for a number of cities and public agencies who need to issue debt that is often underwritten on a competitive bid basis. Miller & Schroeder has helped these issuers obtain higher credit ratings from rating agencies which, in turn, has enabled them to reduce their debt service costs. As an active participant in the municipal market, Miller & Schroeder is in a good position to provide advice on the timing of competitively offered issues. In today's market with interest rates changing rapidly, intimate knowledge of the market is a prerequisite to a successful financing. EXPERIENCE OF MILLER & SCHROEDER MUNICIPALS, INC. Local governmental jurisdictions throughout our nation are confronting new financial problems resulting from a rapidly changing economy and a public demanding more accountability for their tax dollar. Miller & Schroeder Municipals, Inc. is responsive to such phrases as initiative referendum, Proposition 13, escalating prime interest rate, declining enrollments, deficit spending and promised tax cuts. We are acutely aware of the financial road blocks that cities, school districts and other local governmental units must deal with in this time of inflation, decreasing governmental aids and levy limits, while attempting to maintain necessary services. The financial requirements of government have encouraged us to become innovative and responsive to the drastic changes in our local economy. We realize the financial services rendered to the public sector are of paramount importance, demanding not only technical expertise, but also a theoretical approach to long-range interrelated municipal and educational finance. Miller & Schroeder Municipals, Inc. is unique and different. For, in addition to those individuals involved in Municipal Financial Consulting, there is a large staff that devotes its full time to underwriting and marketing tax-exempt bonds. Their sole concern is dealing with municipal, industrial develoment, and hospital bonds. The combined staff knowledge of the municipal bond industry enables the firm to provide the municipality with a financing program that will attract the largest number of bidders. Our awareness of other competitive offerings and their projected entrance into the market place insures our clients a minimum of competition on the sale date of their prospective municipal bond issue. Our excellent marketing ability keeps potential underwriters constantly informed of the progress of proposed offerings to insure the availability of underwriting. We are constantly aware of how bonds are trading in the secondary market through our wire services. We have an excellent relationship with the major rating services and are aware of the detailed information required,by the services necessary to enable the assign- ment of a rating that will accurately reflect the financial credit of the municipality. Miller & Schroeder has worked closely with most of the recognized bond approving attorneys in the United States, as well ,as the major engineering firms and architects. Miller & Schroeder's municipal consulting staff has extensive experience in structuring and marketing the following securities: general obligation bonds and notes; special assessment B bonds; tax increment bonds and notes; tax and other revenue anticipation notes; certificate of indebtedness and warrants; revenue bonds for cities, utilities and special authorities; airport general obligation revenue bonds; refunding and advance refunding bonds; public housing authority bonds and notes; industrial development revenue and pollution control revenue bonds; tax-exempt mortgages; hospital and nursing home revenue bonds and notes; and single family mortgage revenue bonds. MILLER & SCHROEDER COMPUTER CAPACITIES Miller & Schroeder Municipals, Inc. acquired its first computer, a Hewlett- Packard 9830, in 1974 to meet the increasing need for prompt, accurate and diversified financial calculations. The proprietary programs created by Miller & Schroeder have been designed to calculate a wide variety of cashflow scenarios, from simple debt service schedules to complex tax increment pro -formas and advance refundings. While the basis for the computer operations was established almost a decade ago, Miller & Schroeder has modified its computer operations to keep pace with the dynamic needs of the finance industry. Two in-house analysts have the capability to design new, and modify existing, software to accomodate individual client require- ments. These analysts, both with accounting and underwriting backgrounds, have an understanding of the range of challenges confronting clients in today's economic climate and are equipped to help meet each challenge with innovation and creativity. Miller & Schroeder Municipals, Inc. has recently expanded its investment in state of the art computer hardware to provide its consultants with more efficient under- writing tools. Each employee is encouraged to attend training sessions in the use of computer and commercial available software such as electronic worksheets. While the computer capabilities at Miller & Schroeder are worthy of at least a modest degree of pride, such capabilities mean little if, in the end, the client is not afforded with the best possible financing package available, given current market and credit conditions. The computer operations personnel work closely with the municipal trading desk in both public sales and negotiated offerings to develop a marketable interest rate scale and competitive net interest cost to the issue. Philosophy of Relationship Between the City of Shakopee and Miller & Schroeder Municipals, Inc. The role of the financial consultant should not only involve the traditional structuring and sale of bond issues, but also the presenting and developing of new concepts and assistance in designing public participation in development programs. These additional services will be discussed in inverse order. PUBLIC/PRIVATE PARTNERSHIP: The last six years have seen a rapid decline in the contributions by the state and federal government to local development programs. Increasingly, cities have been left to fend for themselves. This dearth of state and federal funds has been accompanied by an explosion of innovative financing techniques to help the cities compensate for these losses. Almost every major development and redevelopment program seems to involve a partnership between the public and private sectors. The use of housing revenue bonds, industrial development revenue bonds, commercial rehabilitation loan programs, interest rate reduction programs, reserve fund revenue bond programs, tax increment general obligation bonds, tax increment revenue bonds and the creation of project areas are only some of the concepts and programs a city must consider to remain competitive. Our philosophy is simply to assist the city in being as competitive as possible, while seeking a maximum return on the public investment. We believe that financing is only the end result of a good planning process that attempts to integrate the city's development and redevelopment programs. To that end, we believe in very large planning areas, preferrably a single planning area, and we believe in very small tax increment districts. We believe every developer should have to make some repayment of the public subsidy, bonds should be used for financing only when no other means are available, new development which generates substantial tax revenues should help finance renewal of those older urban areas that require the greatest public investment and when cities are acting as "bankers", they should receive all the security and assurance that good banking practices dictate. In order to play a responsible and creative role in the city, we would ask to be included in the city's planning process. We would also want to work with the city's attorneys, helping them design any amendments to the city's development plan. In addition, we would appreciate participating in the negotiating sessions with the developers when the amount and extent of public finance is being discussed. We are able to do an analysis of any proposal, and we are able to integrate that cost into the city's overall financial program. PRESENTATION AND DEVELOPMENT OF NEW CONCEPTS: Miller & Schroeder's ability to design and implement innovative financing techniques is recog- nized throughout the upper Midwest. Nationally, Miller & Schroeder is playing a major role in shaping the current revenue bond legislation before Congress. Richard Graves and Lou DeMars, from Miller & Schroeder, have been drafting and promoting legislation which should help preserve a small city's legitimate use of industrial development revenue bonds and housing bonds. The concept of a city making some contribution in an industrial development revenue bond issue would fit in perfectly with the city's present development program. If this concept becomes law, Shakopee will be in a very aggressive position. At the state level, Miller & Schroeder is an active advocate of allowing cities to design and finance their local development programs. With Miller & Schroeder's many years of involvement with the Saint Paul Port Authority, ;Minneapolis Community Development Agency and the Iron Range Resources and Rehabilitation Board, almost every element of local public finance is currently being implemented or analyzed for a client issuer. Any changes necessitated by the state or federal activities can be immediately dealt with. Changes that work especially to the city's advantage will be immediately forwarded. In conclusion, the financial consulting relationship between the City of Shakopee and Miller & Schroeder Municipals, Inc. would be more than the traditional one of consultant util-*zation only as funding is needed by the issuer. Miller & Schroeder anticipates becoming an active participant in offering informed and independent assistance before, during and after the issuance of debt. PROJECT TEAM Those staff members specifically available to the City of Shakopee, Minnesota for Fiscal Advisory Service are as follows: James Casserly Project Manager Steven C. Emerson Richard Graves George McMahon RESUMES James R. Casserly, Vice President, received his undergraduate degree from St. Johns University and his Juris Doctor degree from the University of Minnesota. Before joining Miller & Schroeder, Mr. Casserly served four terms (1972-1980) in the Minnesota House of Representatives. During this service, he chaired the House Committee which provided bonding authorizations for regional, county and local units of government. In 1981, Mr. Casserly returned full time to the practice of law, working primarily in the assistance of assembling economic development, redevelop- ment and housing programs. He also engaged in government relations work for clients with bonding, finance and development concerns. Steven C. Emerson, Financial Consultant, received a Bachelor of Arts degree from Gustavus Adolphus College. Mr. Emerson's experience includes Investment and Trust Banking with the American National Bank in St. Paul, Minnesota, and, most recently, seven years of Public Fiscal Advisory Experience with Springsted, Inc., St. Paul, Minnesota. Mr. Emerson's special areas of expertise include special assessment policy development, tax increment financing, solid waste handling and recovery facilities financing, revenue bond financing for electric, gas, water and sewer utilities. Richard R. Graves, Vice President, received his B.A. in Economics from the University of Minnesota with graduate work in Urban Studies at Mankato State University. Prior to joining the Miller & Schroeder, Mr. Graves was Director of Research at a local law firm and worked with tax exempt bond mechanisms. Mr. Graves also served as the Director of Technical Assistance and Research Service for the League of Minnesota Cities and became Director of a statewide task force which resulted in the enactment of the 1979 Minnesota Tax Increment Financing Act and Common Bond Reserve Financing Systems, as well as amendments of numerous other laws relating to housing. George McMahon, Financial Consultant, joined Miller & Schroeder in 1982 after serving as a member of the St. Paul City Council for eight years. While on the Council, he chaired the Public Works and Finance Committees where his responsi- bilities included the preparation and supervision of the City's $100 million annual budget. He was also vice chairman of the St. Paul Port Authority. Mr. McMahon has worked on college equipment loan programs and multi -family housing Frograms. He attended the University of Minnesota and has taken additional courses in public finance and management. CRITERIA FOR THE IMPROVEMENT OF A BOND RATING In evaluating the possibilities of the City of Shakopee to upgrade their credit rating, the following four broad areas of concern should be considered. 1. ADMINISTRATIVE FACTOR This area examines the type of government along with the management of the government entity. Tax rates, levy limitations and debt limitations are an important consideration under this categorey. Management of the government entity as well as turnover of personnel and labor/ management relations are examined by the rating agency. Z. DEBT FACTOR Debt factors include the type of security being pledged for debt retirement, overall debt burden, debt history and trend. 3. ECONOMIC FACTOR These factors take into account diversity and growth in employment opportunities, with creation of jobs and income levels a vital ingredent in that review. 4. FISCAL FACTOR The annual audit and the balance sheet of that audit are the main items that will be examined by the rating agencies for trends that might show fiscal weakness or strength of the government entity. On an overall basis, the rating agencies consider the economic base and the fiscal factors as the critical elements in the determination of a municipal bond rating. The credit rating agencies will examine the management's ability to administer fiscal controls and policies for the preservation of a strong, bottom-line position in each annual audit. In reviewing the annual audit, the rating agency makes a judgment of the rating in direct proportion to the fiscal results over the previous reporting period as well as the planning and budgeting for the future reporting period. One of the unrecognized tools which should be used more fully in the possible upgrading of the rating for Shakopee, is for management of the City to take a stronger approach and a more direct approach in making the upgrading possible. In every city, planning and budgeting could possibly be improved, and financial results of these improvements will be reflected with those improvements. Avoid- In every city, planning and budgeting could possibly be improved, and financial results of these improvements will be reflected with those improvements. Avoid- ance or reliance of short-term debt is a management decision which is a desirable characteristic by the rating agencies. The rating agencies prefer to see a balanced debt policy so that bonds, not notes, are issued to pay for capital projects when all costs are in. 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(D b (D O Oa w w (D (D E +o m rt m ri O �t r+ m (D ri rt p w pL r+ w m Cn (D fi ~ m G F 0o m y Go m rt rt C:) �' � O m m w w m`C I-V C C I� c r, m n o, cr H PO �� a.w wµ m n z c w CO C7' (D rr o o ao W 00 w 00 ( w 00 w (D (D o w ® rt N w w w w o rt (D �.O r* rr rT n �-n H r7 0 �^ w w ~- o o Dn 0 ((DN C vmi ° .moi r (f o zs co r m n o W (D w m 0 o (D w o a rD a o Gs b z 0 (D G a t n °Cy m n (D ( L r* w O O O (D w v M (D a m (D a. r(D„ c m w G rY �-o O rt N¢ co co (D (D w (D wrT > - o ao MILLER & SCHROEDER MUNICIPALS, INC. FINANCIAL CONSULTANT CONTRACT Miller & Schroeder Municipals, Inc. (M&S) is pleased to make this Proposal which shall constitute the Financial Consultant Contract ("Contract") between the City of Shakopee, Minnesota, ("Client") and M&S (i) upon Client's execution of an acceptance of the proposal, or (ii) upon M&S's performance of a Service or Additional Service, (See IA and IIB)) at Client's request, whichever event occurs first. L DUTIES AND REPRESENTATIONS OF MILLER & SCHROEDER Section A. Services For each debt offering (an "Issue") undertaken by Client during the term of the Contract, as appropriate, M&S shall (in coordination with the staff designated by the client): 1. Prepare a sale calendar which will indicate dates and events of all major financial activities. These activities will be scheduled around regular committee board or Council meetings. 2. Research and identify potential revenues, grants, user fees, loans, assessments, etc. that could offset property tax demands upon the citizens. 3. Recommend possible changes in or additions to the existing financial resources and revenues within the municipality. 4. Provide recommendations as to the need for short or intermediate term financing prior to or in conjunction with long-term financing and any desirable call/redemption privileges. 5. Submit for approval several maturity schedules, coordinated with the existing debt of the Client that present choices for repayment of principal and interest. 6. Coordinate activities with the Client's bond approving attorney re- garding required resolutions and ordinances. 7. Advise the Client as to whether the issue would best be negotiated or sold at public sale. 8. Select a sale date, day and time that will attract the most competitive bidding to assure the Client of the lowest possible interest costs. 9. Prepare the necessary financial details for the Official Notice of Sale and initiate required publication. 10. Collect the following information; audits, budgets, capital improve- ment programs, initial resolutions and request for rating application to the rating services as appropriate. 11. Compile, in cooperation with Client staff and auditors, the information to be included in the Official Statement. 12. Prepare, assemble, arrange for printing and distribute the Official Statement to potential bidders and institutional buyers. 13. Submit final detailed financial, revenue, tax and budget data to the rating agencies. At the option of the Client, this could be a personal interview with representatives of the Client and M&S with repre- sentatives of the rating agencies. 14. Answer all verbal and written inquiries from potential bidders prior to actual hour of sale and supervise the mechanics of the sale, tabulate bids for accuracy, advise the Client regarding the acceptance or rejection of bids, notify all bidders of the award and return the good faith checks to the unsuccessful bidders. 15. Arrange for printing of the bonds, supervise delivery and attend closing. 16. Assist the Client in the initial investment of proceeds to obtain the highest interest rates consistent with funding requirements. 17. Compile and produce transcript book of all activities and present a copy to the Client. Each of the foregoing, 1-17, shall be referred to herein as a "Service", or, collectively, the "Services". Section B. Purchase and Resale of Issue M&S shall not participate directly or indirectly in the purchase or resale of any Issue, unless the Client requests our participation in writing, either as a sole bidder or a partner in a syndicate. Section C. Title VI of the Civil Rights Acta M&S shall abide by the requirements of Title VI of the Civil Rights Act of 1964. Section D. Independent Contractor Status of Miller & Schroeder M&S shall perform its duties pursuant to the Contract as an independent contractor and M&S employees shall not be deemed to be Client's employees. Claims that may or might arise under any workmen's compensation act on behalf of M&S's employees while engaged in the performance of duties pursuant to the Contract and any claims made by any third party as a consequence of any act or omission on the part of M&S's employees or other persons while so engaged by M&S in the performance of duties pursuant to the Contract shall not be Client's obligation or responsibility. Section E. Handling of Potential Conflicts M&S shall disclose to Client any contract, agreement or understanding M&S has as of the date of submission of the Contract, or in the future may have, with any entity or individual which in M &S's opinion may represent a conflict, then M &S shall forthwith resign from such conflicting contract, agreement or understanding, in which event the Contract shall remain in full force and effect. In the event M&S does not so resign, then Client shall have the option of terminating the Contract forthwith by written notice to M&S and Client shall be liable to M&S for only those amounts due M&S by the terms of the Contract to the date of such termination. IL RIGHTS AND DUTIES OF CLIENT Section A. Rights of Client 1. Client's Proprietary Rights The Client shall have title to all finished or unfinished documents, data, studies, surveys, drawings, maps, models, photographs, reports, memoranda, etc. prepared by M&S, except internal records of M&S. Z. Confidentiality of Information The Client shall have the right to have all reports, information, data, etc. C, by Client to M&S, or prepared or assembled by M&S pursuant to the Contract, kept confidential by M&S except as its release is necessary to the performance of a Service or Additional Service pursuant to the Contract. Section B. Duties of Client 1. Fees for Services The Client shall pay fees for services, according to M&S's then standard fee schedule, which will be amended from time to time. (see attached Exhibit) Z. Additional Fees for Services In the event Client requests and M&S performs a service other than one of the Services described in Section I herein, or if M&S repeats any of the said Services, which repetition is not the fault of M&S, Client shall pay for such "Additional Service". 3. Expenses of the Issue The Client shall be responsible for all fees and expenses in.:urred regarding the issue of bonds, including, but not limited to, attorneys fees, fees for bond counsel, printing and mailing of official statements, publication costs, printing of certificates, rating agency fees, paying and transfer agent fees, etc. III. INDEMNIFICATION The Client and M&S shall each indemnify and hold harmless the other from and against any and all losses, claims, damages, expenses, including legal fees for defences, or liabilities, collectively, "Damages", to which either may be subjected by reason of the other's acts, errors or omissions except however, neither will indemnify the other from or against Damages by reason of changed events and conditions beyond the control of either or errors of judgement reasonably made. IV. CONTRACT TERM The Contract between Client and M&S shall continue until such time as either party terminates it by not less than 60 days written notice to the other party except that the Contract shall continue in full force and effect with respect to an Issue commenced during the time the Contract is in effect until completion of such Issue. The Contract may be amended in whole or in part from time to time by mutual consent of the parties. Submitted this V. OTHER AGREEMENTS day of , 1984. MILLER & SCHROEDER MUNICIPALS, INC. BY: Steven C. Emerson, Public Finance Advisor The foregoing proposal by Miller & Schroeder Municipals, Inc. is accepted this day of , 19 on behalf of the BY: Our numbers speak for M Miffer & Schroeder. A company built on hard work, imovation and results. We're specialists in tax-exempt finance. Specialists in under- writing, initial marketing, financial consulting and maintaining secondary markets. And our numbers speak for themselves. Last year we accomplished over $2 billion in combined under- writing and secondary market sales. We entered our ninth year as sole underwriter for the City of St. Paul Port Authority — having managed 158 issues totaling over $500 million. We're co -managers of all bonds issued under the Minneapolis Bond Fund Program. We've been the managing underwriter for $1 billion in residential home mortgage revenue bond financings. Our experience now covers over 500 forms of tax-exempt bonds. As pioneer in tax-exempt hospital finances, we have under- written over $1 billion in hospital and nursing home revenue bonds. We have acted as lead manager in syndicates which have included every major broker/dealer firm in the nation. Our active retail customer list has grown to over 40,000 clients. And Miller & Schroeder has consistently ranked among Institutional Investor Magazine's top 20 national underwriters of municipal bonds. In fact, we're now the largest outside of Wall Street. The list goes on and on. But that's not surprising. Because the potential of a skilled and dedicated team of specialists is virtually unlimited. Miller & Schroeder Municipals, Inc. Northwestern Financial Center, 7900 Xerxes Avenue South Minneapolis, Minnesota 55431 (612) 831-1500 Branch Offices: Minneapolis, MN Solana Beach, CA Naples, FL Chicago, IL Carson City, NV Tallahassee, FL 7900 Xerxes Avenue South Minneapolis, Minnesota 55431 612-893-8014 505 Lomas Santa Fe Drive Solana Beach, California 92075 619481-5894 Flagship National Bank Building 801 Laurel Oak Drive Naples, Florida 33940-9990 813-597-2971 899 Skokie Boulevard Northbrook, Illinois 60062 312-564-4010 901 East Second Street Carson City, Nevada 89701 702-882-2234 Suite F-229 Woodcrest Office Park 325 John Knox Road Tallahassee, Florida 32303 904-386-3660 Miller & Schroeder Municipals, Inc. /j Z O Z O U J _a U Z Q Z_ E LL O H Z LLI 2 w Mco Qi U r � U r � m M a O E O 3 r.+ V L O o z O O U) T Cl) (p N N c O L CL d 4) H N > rn a) a) a) a al o cin con � E- o c 7F; 0 cO cO y E � � co o `o > o � ->, , " °" ° rn »� _ o O > c 'N°c co �•� cop)EU 0p °� t=Uo coo _ m a) c w m LL ° L6 c o E c°o 3 a m w o '2_ ro n E ° ._� cma Co m N ca c ri N 0 m a) E c j E .`� a a >co O eco >,65Ua� 00 0 0 tea, 000cE a) E m E E o o 3 �, c, °' L rn ° ca 0) 00 o o '= rnU E �� ro° ro-c o>��amE mr coca00 0 0 03 roto �`a a) U U� c o map m T� c 000000 0 c 3 c ! 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PWO (fl Y ro o U) 0 m o U1 0 N � -0 F U 9 Z W X al +- w 0) U) (D T ca i -0 Cl) w Q > a O 03 w .o ° Z is co d O ZT a) 'O Q J CLL O wo U) a F-cn m -0 O 0 co Cn w E Q a) O J:3 E . � ca pC Q a D E CO U O E a CO j Q - CO a) 0 a) W > CO Cn a) o Q E L y CO Cn ca 2 Z C7 (n > O N O O Z U Z 2 0 = O W U) O L H 0 Q� m T E w w U m 0 H Q d (&m LU 0 C a) a) i9 0 0 ca CL m C) ca) c� m a) co w (3) O c .T c ca CZ E O U U ca a) L F- New Issue Moody's Rating: In the opinion of Bond Counsel, the interest to be paid on the Bonds is not includable in the gross income of the recipient for United States or Minnesota income tax purposes, but is subject to Minnesota taxes on banks and corporations measured by income, according to present federal and Minnesota laws, regulations, rulings and decisions. CITY OF MINNETONKA HENNEPIN COUNTY, MINNESOTA $119000,000 General Obligation Improvement Bonds Series 1984 Dated: May 1, 1984 Due: May 1, as shown below The Bonds are being issued in fully registered form in any authorized whole multiple of $5,000. Interest on the Bonds is payable on each May 1 and November 1, commencing May 1, 1985. The Registrar, Transfer Agent and Paying Agent will be. Norwest Bank Minneapolis N.A., Minneapolis, Minnesota. MATURITY SCHEDULE Maturity Interest Amount (May 1) Rate $250,000 1985 575,000 1986 775,000 1987 775,000 1988 775,000 1989 775,000 1990 775,000 1991 775,000 1992 Maturity Interest Yield Amount (May 1) Rate $775,000 1993 775,000 1994 775,000 1995 775,000 1996 775,000 1997 775,000 1998 875,000 1999 (Plus accrued interest from May 1, 1984) Yield All Bonds of this issue maturing after May 1, 1996 will be subject to prior redemption at the option of the City in inverse order of maturity and by lot within a maturity on said date and any interest payment date thereafter at a price of par plus accrued interest to date of redemption. The Bonds are general obligations of the City. The Bonds are payable primarily from special assessments against property specially benefited by the improvements to be financed therefrom and, to the extent necessary, from annual levies of ad valorem taxes on all taxable property within the City. The Bonds do not constitute a debt or general obligation of the County of Hennepin or the State of Minnesota. The bonds are offered when, as and if issued, subject to the opinion as to their validity and tax exemption of LeFevere, Lefler, Kennedy, O'Brien and Drawz, Minneapolis, Minnesota, Bond Counsel. It is expected that delivery of the Bonds to the Underwriter will be made on or about June 12, 1984. The Date of the Official Statement is April 13, 1984. No dealer, salesman or any other person has been authorized by the Village or the Financial Advisor to give any information or to make any representations other than those contained in this Official Statement, and if given or made, such information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or a solicitation of an offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Village since the date hereof. TABLE OF CONTENTS Pa ge INTRODUCTORY STATEMENT 1 THE BONDS 1 Description of the Bonds 1 Redemption Provisions 2 Authority of Issuance 2 The Improvements 2 Application of Funds 2 Security for the Bonds 2 Constitutional and Statutory Considerations and Limitations Concerning the City's Power to Incur Indebtedness and Procedure for Issuance of Debt 3 THE CITY 4 The City Council 4 City Administration 5 Principal Governmental Services 21 Provided by the City 5 Regional Governmental Agencies 21 Affecting the City 6 City Employees 7 INDEBTEDNESS OF THE CITY 8 General Obligation 22 Bonded Indebtedness 8 Debt Service Schedule 10 Five Year Summary of 23 General Obligation 23 Bonded Indebtedness 11 Overlapping Indebtedness 24 of the City 12 Page Statistical Summary Relating to Indebtedness of the City 13 Debt Limit 13 FINANCIAL INFORMATION 14 Financial Records 15 Tax Levies, Rates and Collections 15 Special Assessment Levies and Collections 17 Limitation on City Tax Levy 17 City Revenue 18 Assessed and Market Valuations 18 Metropolitan Fiscal Disparities Act 19 Major Taxpayers in the City 21 GENERAL INFORMATION RELATING TO THE CITY 21 Population of the City 21 Major City Developments 21 Employment in the City 22 Construction Permits 22 Miscellaneous 23 Future Financing 23 UNDERWRITING 23 FINANCIAL ADVISOR 23 TAX EXEMPTION 24 LITIGATION 24 LEGAL MATTERS 24 RATINGS 24 MISCELLANEOUS 24 APPENDIX A APPENDIX B OFFICIAL STATEMENT CITY OF MINNETONKA, HENNEPIN COUNTY, MINNESOTA $11,00011000 GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 1984 INTRODUCTORY STATEMENT This Official Statement presents certain information relating to the City of Minnetonka (the "City"), Hennepin County (the "County"), Minnesota in connection with the sale of the City's $11,000,000 General Obligation Improvement Bonds Series 1984 (the "Bonds"). The Bonds are to be issued pursuant to the Constitution and laws of the State of Minnesota (the "State"), including Chapters 429 and 475, Minnesota Statutes, and resolutions adopted by the City Council and other proceedings and determinations related thereto. A portion of the proceeds from the sale of the Bonds ($7,807,000) will be applied to various sewer, water, street, and storm sewer improvements within the City. Approximately $1,593,000 has been provided out of the proceeds of the Bonds as contingency funds, administrative costs, engineering and issuance costs for the construction projects. Approximately $100,000 of the proceeds from the sale of the Bonds will be used for additional interest incidental to the issuance of the Bonds. Approximately $1,500,000 of the proceeds of the Bonds represents capitalized interest which, until exhausted, will be used by the City to pay, as due, the interest on the Bonds. The Bonds are payable primarily from special assessments against property specially benefited by the improvements to be financed therefrom and to the extent necessary from annual levies of ad valorem taxes on all taxable property within the City without limitation as to rate or amount. This Official Statement contains descriptions of and information concerning the Bonds and the City (including the City's audited financial statements.) Such descriptions and information have been obtained from the City and other sources as so indicated. All summaries and explanations of the laws of the State and resolutions and proceedings of the City contained herein do not purport to be complete and are qualified in their entirety by reference to the definitive form of the Bonds. Copies of the resolutions and other documents may be obtained from the Financial Advisors upon request. THE BONDS Description of the Bonds The Bonds will be dated May 1, 1984 and will date at the rate and mature in the amount and on the cover of this Official Statement. The Bonds -1- bear interest from that the date as set forth on will be issued in fully registered form in any authorized whole multiple of $5,000. Interest on the Bonds will be payable semiannually on May 1 and November 1, commencing May 1, 1985 Norwest Bank Minneapolis, N.A., Minneapolis, Minnesota will be Registrar, Transfer Agent and Paying Agent. Redemption Provisions All bonds of this issue maturing after May 1, 1996 will be subject to prior redemption at the option of the City in inverse order of maturity and by lot within a maturity on said date and any interest payment date thereafter at a price of par plus accrued interest to date of redemption. Authority for Issuance The Constitution of the State and legislation enacted pursuant thereto authorize the City (and other cities of the State) to issue bonds _ for purposes specified by statute. Proper purposes enumerated by statute include, but are not limited to, the financing of betterments and improvements to municipal water and sewer systems and street improvements, as authorized by Minnesota Statutes, Chapter 429 and 475. The Improvements A portion of the proceeds from the sale of the Bonds will be applied to various sewer, water, street and storm sewer improvement projects within the City. The City has determined that improvements for several project areas within the City are necessary in order that new developments can occur. Such improvements include Projects No. 5344, 5368, 5369, 5370, 5374, 5381, 5385, 5387, 5389, 5380, 5363, 4759, 4757, 4760, 5346, 4763, 5364, 5373, 5396, 4766, 4770, 4764, and 5382. Application of Funds Set forth below is a summary of the application of funds related to the Bonds: APPLICATION: Cost of Improvements $ 7,807 000 Issuance and Administrative Costs, Engineering and Contingency 1,593,000 Capitalized Interest 1,500,000 Additional Interest (discount) 100,000 $11,000,000 Security for the Bonds The General Obligation Improvement Bonds of 1984 will be payable primarily from special assessments levied and to be levied by the City against property specially benefited by the improvements to be financed therefrom. The City will levy as necessary additional taxes on all taxable property in the City without limitation as to rate or amount to pay the principal of and interest on the Bonds. -2- Statutory Considerations and Limitations Concerning the City's Power to Incur Indebtedness and Procedure for Issuance of Debt The laws of the State limit the power of the City (and other cities in the State) to issue obligations and to contract indebtedness. Such legislative limitations include the following, in summary form and as generally applicable to the City. Purpose. The City may borrow money or issue bonds for, among other things, the financing of betterments and improvements for and to municipal water and sewer systems. This is the purpose for which the obligations are being issued. Payment and Maturity. Obligations must mature in annual or semiannual installments. The first installment must mature not later than three years from the date of the obligations and the last installment shall mature not more than thirty years from such date. No amount of principal of any obligations payable in any calendar year shall exceed five times the amount of the smallest amounts payable in any preceding calendar year ending three years or more after the date of issue. The City is required, prior to delivery of any particular obligations, to levy an irrevocable, direct general ad valorem tax upon all taxable property within the City, except to the extent that the debt service on the obligations is expected to be paid from special assessments or other revenues (see the caption "THE BONDS --Security for the Bonds"). Certificates of Indebtedness. In addition to being authorized to issue bonds, the City is authorized to borrow money using certificates of indebtedness in anticipation of the collection of taxes levied for any fund named in the tax levy for the purpose of raising money for such fund, or to issue certificates of indebtedness to borrow money for certain equipment purchases. Generally, such certificates may not be issued prior to the beginning of the fiscal year for which the taxes so anticipated were intended, may not at any time exceed fifty percent of the amount of taxes previously levied for such fund remaining uncollected and shall be issued to become due and payable not later than March 31 of the year succeeding the year in which the certificates were issued. In the case of certificates of indebtedness issued to borrow money for equipment purchases, such certificates mist mature in annual or semi-annual installments with the last installment maturing not later than five years from the date of issue of the certificates. The certificates may not be sold for less than par and accrued interest and may not bear a rate of interest greater than twelve percent per annum. Such certificates constitute general obligations of the City. The City has no certificates of indebtedness currently outstanding. Debt Limit. The City has the power to contract indebtedness for purposes specified by statute, but, subject to certain exceptions, may not incur or be subject to net debt in excess of six and two-thirds percent of the assessed value of all taxable property within the City. Certain indebtedness, both special and general obligation, is excluded from the net debt of the City. For information with respect to the percentage of the City's legal debt incurred, see the caption "INDEBTEDNESS OF THE CITY --Debt Limit." -3- Issuance of Bonds. In addition to the statutory limitations referred to above, the City must comply with the procedures prescribed by the State Legislature before it may borrow money and incur indebtedness. _ All proceedings for the issuance of bonds by any city crust be initiated by a resolution stating the amount proposed to be borrowed, the purpose for which the debt is to be incurred and providing for the sale of the bonds. Such resolution may also provide for the submission of the question to a vote of the electors, but need not so provide in certain _ circumstances. In addition to the initial resolution, the governing body of a city proposing to issue bonds must enact a resolution which sets forth the details of the bonds to be issued and which levies a tax or provides other revenues to pay principal of and interest on the bonds as they become due (see the caption "THE BONDS --Security for the Bonds"). The City has or will have, prior to May 7, 1984, enacted all requisite resolutions in connection with the Bonds and the tax levy therefore. THE CITY The City, which is a suburb located west of the City of Minneapolis in Hennepin County in east -central Minnesota, was originally incorporated as a municipal corporation in 1956. In 1969, pursuant to adoption of a home rule City Charter by the qualified voters of the City, the City instituted a council-manager form of government. The City covers an area of 28 square miles and its population is currently estimated to be 40,130. For further demographic information on the City, see the caption "GENERAL INFORMATION RELATING TO THE CITY". The City Council The City Council is the legislative and policy making body of the City and is composed of seven members. Four Councilpersons are elected from each of the City's four wards for four year terms; two Councilpersons are elected at large for four year terms, and the mayor, who presides over council meetings, is elected at large for a two year term. The responsibilities of the City Council include; (i) enacting ordinances, resolutions and orders necessary for the proper governing of the City's affairs; (ii) reviewing and adopting the annual budget; (iii) reviewing and deciding on recommendations from various boards and commissions; (iv) appointing a City Manager and citizens to various boards and commissions; (v) establishing policies and measures to promote the general welfare of the City and safety and health of its citizens; and (vi) representing the City at official functions with other organizations and governmental agencies. The present members of the City Council and the expiration of their respective terms of office are as follows: -4- City Administration The City Manager, Mr. James F. Miller, employed by the City on December 2, 1979, is Chief Executive Officer of the City, responsible for planning, organizing and directing the activities coo Rhein g muni departmental cipality by implementing City Council -determined policy, the efforts, handling citizens inquiries and complaints and representing nate City in its relations with the public and other governmental and ler was ri agencies. Prior to his appointment to City Manager, 1971 Assistant City Manager for the City of Des Moines, Iowa from June, to December, 1979. Other experience includes assistant administrative positions with Janesville and Brown Deer, Wisconsin. Mr. Miller received his B.A. Degree from the Univerrations fromity othe lUniversityaofCPittsburgh; andlaire; a , a Degree in Public Ad minist Center for Doctor of Public Administration Degree from Nova Un Floridaty� Public Affairs and Administration, Fort Lauderdale, The Finance Director/Clerk-Treasurer, Mr. Dale L. Eggenberger, is responsible for the financial management of the City. Specifically, the Finance Director/Clerk-Treasurer prepares and administers annual operating budgets, provides periodic financial reports to the City Council, the City Manager, City departments, therforyernmthe ental agencmainnance es, of investors and the general public, and p public funds. public records and receipt, disbursement, and custody of p Prior to his appointment as Finance Director/Clerk-Treasurer in 1981, Mr. Eggenberger served the City a3-197 ectando asF1AssistantasFinanceurer lgDirecctor as Director of Finance (197 (1972-1973). Mr. Eggenberger received his B.A. from Winona State University in 1966. Principal Governmental Services Performed by the City Various departments of the City provide the following services for the residents of the City: operations and Maintenance. The Operations and Maintenance Department is responsible for the maintenance of public roadways within includin patching, resurfacing, snow and ice removal, the City, g sweeping, tree removal, as well as the maintenance and repair on al of the city -owned vehicles and motorized equ p e tpublzc(except the lands andlpment recreat oral i Fire Department), and the ice and hockey facilities within the City including grass maintenance, facilities, general parks maintenance, ballfield preparation, garbage and litter pickup and weed abatement. -5- Title Expiration of Term Name Larry A. Donlin Mayor December December 31, 31, 1985 1987 Robert J. DeGhetto Councilperson Councilperson December 31, 1985 Peter Cotton Councilperson December 31, 1987 Mark Renneke Councilperson December 31, 1987 Jane G. Gordon Councilperson December 31, 1985 Fred E. Hanus Councilperson December 31, 1985 William P. Hise City Administration The City Manager, Mr. James F. Miller, employed by the City on December 2, 1979, is Chief Executive Officer of the City, responsible for planning, organizing and directing the activities coo Rhein g muni departmental cipality by implementing City Council -determined policy, the efforts, handling citizens inquiries and complaints and representing nate City in its relations with the public and other governmental and ler was ri agencies. Prior to his appointment to City Manager, 1971 Assistant City Manager for the City of Des Moines, Iowa from June, to December, 1979. Other experience includes assistant administrative positions with Janesville and Brown Deer, Wisconsin. Mr. Miller received his B.A. Degree from the Univerrations fromity othe lUniversityaofCPittsburgh; andlaire; a , a Degree in Public Ad minist Center for Doctor of Public Administration Degree from Nova Un Floridaty� Public Affairs and Administration, Fort Lauderdale, The Finance Director/Clerk-Treasurer, Mr. Dale L. Eggenberger, is responsible for the financial management of the City. Specifically, the Finance Director/Clerk-Treasurer prepares and administers annual operating budgets, provides periodic financial reports to the City Council, the City Manager, City departments, therforyernmthe ental agencmainnance es, of investors and the general public, and p public funds. public records and receipt, disbursement, and custody of p Prior to his appointment as Finance Director/Clerk-Treasurer in 1981, Mr. Eggenberger served the City a3-197 ectando asF1AssistantasFinanceurer lgDirecctor as Director of Finance (197 (1972-1973). Mr. Eggenberger received his B.A. from Winona State University in 1966. Principal Governmental Services Performed by the City Various departments of the City provide the following services for the residents of the City: operations and Maintenance. The Operations and Maintenance Department is responsible for the maintenance of public roadways within includin patching, resurfacing, snow and ice removal, the City, g sweeping, tree removal, as well as the maintenance and repair on al of the city -owned vehicles and motorized equ p e tpublzc(except the lands andlpment recreat oral i Fire Department), and the ice and hockey facilities within the City including grass maintenance, facilities, general parks maintenance, ballfield preparation, garbage and litter pickup and weed abatement. -5- Police. The Police Department includes 52 full time po1ic e officers and is responsible for the preservation of life and property, maintenance of public peace and order, and prevention of crime. Fire. The City provides fire protection to residents within the City through trained and equipped volunteers and through a program of fire inspection and fire prevention education. The Fire Department includes four full time employees and approximately 53 part-time volunteer firefighters. Engineering Department. The Engineering Department provides for the preparation of plans, specifications and estimates for the design, construction, maintenance and operation of physical facilities including sanitary sewers, storm sewers and water mains. Assessing. The City is the public agency responsible for establishing estimated market value on all residential, vacant, commercial and industrial property within the City in accordance with the applicable laws of the State. For information with respect to assessed and market valuations of the City see the caption "FINANCIAL INFORMATION --Assessed and Market Valuations." Recreation. The City provides various recreational programs to all areas of the City including recreation classes for all ages, youth sport acitivites, senior citizen activities, public ice skating facilities, public swimming beaches, playgrounds, day camps, handicapped adult programs and community theatre and symphony programs. Planning. The City's Planning Department, primarily responsible for the coordination of physical, social and economic changes in the City, is designed to develop and refine ordinances which implement plans for City growth. Regional Governmental Agencies Affecting the City The following regional governmental agencies are involved in the governance of the metropolitan area in which the City is located. Metropolitan Council. The Metropolitan Council, created by the 1967 State Legislature, is empowered to coordinate and ensure the orderly planning and economic development of the Minneapolis -St. Paul metropolitan area. The Metropolitan Council has jurisdiction over a seven -county area (Anoka, Carver, Dakota, Hennepin, Ramsey, Washington Counties). The Scott and Council is appointed, with 16 district representatives serving four-year terms, and a chairman appointed by the Governor of the State. The Council has standing committees for personnel and work programs, human resources, and physical development. In addition, the Council appoints advisory committees on aging, arts criminal justice, health, housing and redevelopment, communications, transportations, parks, land use, modest cost private housing and solid waste. -6- The Metropolitan Council has adopted a budget of $10.9 million for 1984. Approximately 30% of the funds, to operate the Council, are expected to come from federal sources; 4% from state sources and the balance approximately 66%, from local sources, in the form of a property tax levy on the seven -county area of 8/30ths of one mill, on the seven -county property tax base and charges of regional commissions for services provided by the Council. The funds are used to carry out the Council's responsibilities as the Twin Cities area's long-range planning and coordinating agency. Metropolitan Airports Commission. The Metropolitan Airports Commission plans, constructs and operates regional airports in the Minneapolis -St. Paul metropolitan area. The Commission has the power to levy a tax upon taxable property over a seven -county area (Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington Counties), but has not currently levied such a tax. Metropolitan Transit Commission. The Metropolitan Transit Commission operates a public ground transportation system in Minneapolis -St. Paul metropolitan area. See the caption "INDEBTEDNESS OF THE CITY --Overlapping Debt" for a description of the City's share of the general obligation debt of the Commission. Metropolitan Waste Control Commission. The Metropolitan Waste Control Commission operates sewage treatment and disposal facilities servicing a seven -county metropolitan area, including the City. City Employees The City presently has approximately 174 full time employees, as follows: Administration 29 Planning 7 - Engineering 13 Inspection & licenses 15 Operations & maintenance 46 Police 52 Fire (1) 4 Recreation 8 174 (1) Approximately 53 part-time volunteers comprise balance of fire department. Certain groups of employees of the City are organized into employee associations or labor unions for purposes of conducting collective bargaining with the City. The City considers its present relations with its employees to be satisfactory. Substantially all City employees, except volunteer firefighters, participate in the State of Minnesota Public Employee's Retirement Association. Eligible employees (except)police officers) currently contribute 4.0% of their monthly _ -7- earnings to the retirement plan. The City currently, pursuant to State Law, contributes 5.5% of the eligible employees (except police officers) monthly earnings to the retirement plan. The City currently contributes 12.0% of the eligible police officers' monthly earnings to the retirement plan. The City's total contribution to the retirement plan was approximately $157,000 for the year ended December 31, 1983. The City levies annually for its contribution to the Firemen's Relief Fund on behalf of the volunteer firefighters in the City. The amount of the City's contribution to such fund in 1983 was $36,436 (unaudited). There are no unfunded past service costs applicable to the above listed pension funds. INDEBTEDNESS OF THE CITY General Obligation Bonded Indebtedness Set forth in the following table is the general obligation bonded indebtedness of the City as of December 31, 1983, December 31, 1982, December 31, 1981 and as of April 1, 1984 assuming the issuance of the Bonds. The term "general obligation bonded indebtedness" as used in this Official Statement means the principal amount outstanding of the City's general obligation bonds, including such obligations of the City for which the general credit of the City is obligated, but with respect to which special assessments or revenues collected are anticipated to be sufficient to retire such indebtedness. The table shows the general obligation indebtedness of the City which is subject to debt limits under State law as well as the general obligation indebtedness of the City which is not subject to debt limits under State law. See the caption "INDEBTEDNESS OF THE CITY --Debt Limit" for a discussion of the general obligation indebtedness of the City which is subject to legal debt limits and general obligation indebtedness of the City which is not subject to debt limits. Certain indebtedness not constituting general obligation indebtedness of the City, including certain revenue bonds of the City relating to the City's ice arena facilities, have been excluded from this table. The total amount of revenue bonds outstanding as of December 31, 1983 was $715,000. General Obligation Bonded Indebtedness of the City Amount Amount Amount Amount Outstanding Outstanding Outstanding Outstanding as of as of as of as of April 1, 1984 December 31, 1983 December 31, 1982 December 31, 1981 Category of Debt General Obligation Bonds Subject to Debt Limitation Municipal Building Bonds Series 1969 $ 40,000 $ 80,000 $ 120,000 160,000 Park Land Acquisition and Development Bonds, Series 1973 1,700,000 1,825,000 1,925,000 2,025,000 Fire Hall Construction and Equipment Bonds, Series 1974 550,000 600,000 650,000 700,000 Total General Obligation Bonds Subject to Debt Limitation $ 2,290,000 $ 2,505,000 $ 2,695,000 $ 2,885,000 General Obligation Bonds Not Subject to Debt Limitation Improvement Bonds, Series 1964 $ 135,000 $ 135,000 $ 180,000 $ 225,000 Improvement Bonds, Series 1966 -0- -0- -0- 15,000 Improvement Bonds, Series 1969 55,000 85,000 115,000 145,000 Improvement Bonds, Series 1970-I 365,000 480,000 595,000 710,000 Improvement Bonds, Series 1971-I A 5 B 1,830,000 2,080,000 2,330,000 2,595,000 Improvement Bonds, Series 1972 4,575,000 5,025,000 5,475,000 5,925,000 Improvement Bonds, Series 1974-1 3,850,000 4,200,000 4,550,000 4,900,000 Improvement Bonds, Series 1974 -II 2,400,000 2,800,000 3,200,000 3,600,000 Improvement Bonds, Series 1975-I 2,450,000 2,800,000 3,150,000 3,500,000 Refunding Improvement Bonds, Series 1976 5,735,000 6,460,000 7,185,000 7,910,000 Improvement Bonds, Series 1976-I 7,000,000 7,800,000 8,600,000 9,400,000 Improvement Bonds, Series 1976 -II B b C 2,895,000 3,080,000 3,190,000 3,350,000 Water Revenue Bonds, Series 1976 1,625,000 1,700,000 1,775,000 1,850,000 Improvement Bonds, Series 1977 4,500,000 4,950,000 5,400,000 5,850,000 Refunding Bonds, Series 1978 6,005,000 6,830,000 7,655,000 8,480,000 Refunding Improvement Bonds, Series 1978 5,800,000 6,450,000 7,100,000 7,750,000 Improvement Bonds, Series 1980 6,985,000 7,620,000 8,250,000 9,500,000 Glenn Lake Station Tax Increment Bonds, Series 1981 2,200,000 29200,000 2,200,000 2,200,000 Improvement Bonds, Series 1982 2,750,000 3,000,000 3,000,000 -0- Improvement Bonds, Series 1984 "The Bonds" 11,000,000 -0- -0- -0- Total General Obligation Bonds Not Subject to Debt Limitations $72,155,000 $67,695,000 $73,950,000 $77,905,000 Total General Obligation Bonds $74,445,000 $70,200,000 $76,645,000 $80,790,000 Debt Service Schedule Set forth in the table below is a schedule of the debt service on the total outstanding general obligation bonded indebtedness of the City as of April 1, 1984. The table assumes that the Bonds will be issued on May 7, 1984. Interest on the Bonds has been calculated at 8.80%. Debt Service Schedule -10- General Obligation Bonds General Obligation Bonds Subject to Not Subject to Legal Debt Limit Legal Debt Limit Year _ Principal Interest Principal Interest Total _ 1984 $ -0- $ 62,848 $ 95,000 $ 1,919,823 $ 2,077,671 1985 215,000 114,615 6,855,000 4,932,488 12,117,103 1986 175,000 104,650 7,205,000 4,052,286 11,536,936 1987 225,000 95,175 7,365,000 3,623,471 11,308,646 1988 225,000 83,775 7,365,000 3,180,738 10,854,513 1989 225,000 72,338 7,390,000 2,728,725 10,416,063 1990 225,000 60,825 7,380,000 2,269,815 9,935,640 1991 225,000 49,256 7,025,000 1,815,276 9,114,532 1992 250,000 37,669 6,245,000 1,386,366 7,919,035 1993 175,000 26,775 5,055,000 1,009,106 6,265,881 1994 175,000 17,850 3,740,000 701,956 4,634,806 1995 175,000 8,925 2,650,000 452,936 3,286,861 1996 -0- -0- 1,060,000 272,944 1,332,944 1997 -0- -0- 1,075,000 187,925 1,262,925 1998 -0- -0- 775,000 111,100 886,100 1999 -0- -0- 875,000 38,500 913$00 $2,290,000 $734,701 $72,155,000 $28,683,455 $103,863,156 -10- Five Year Summary of General Obligation Bonded Indebtedness Set forth below are the amounts of general obligation bonded indebtedness outstanding, of the City, as of December 31 for the years 1975 through 1983, respectively. Summary of General Obligation Bonded Indebtedness -11- General General Obligation Bonds Obligation Bonds Not Subject to Subject to December 31, Legal Debt Limit 1983 $2,505,000 1982 2,695,000 1981 2,885,000 1980 3,075,000 1979 3,245,000 1978 3,415,000 1977 3,565,000 1976 3,700,000 1975 3,820,000 -11- General Obligation Bonds Not Subject to Legal Debt Limit Total $67,695,000 $70,200,000 73,950,000 76,645,000 77,905,000 80,790,000 81,335,000 84,410,000 82, 335, 000 85, 580, 000 82,220,000 85,635,000 81,260,000 84,825,000 77,735,000 81,435,000 62,035,000 65,855,000 Overlapping Indebtedness of the City Set forth in the table below is information relating to the outstanding overlapping indebtedness of the City. Total amounts outstanding represent all debt which is in whole or in part payable from ad valorem property taxes levied with respect to the real estate within the City. These amounts are reduced to the extent that amounts are otherwise available to pay such obligations and by amounts financed other than by the levy of a property tax. Overlapping Indebtedness of the City -12- city's Percentage Share Total Net Applicable of Net Entity Outstanding Outstanding As of to the City Outstanding Hennepin County $ 47,925,000 $39,503,571 12-31-83 5.56% $ 2,196,399 Metropolitan Council 31,940,000 9,223,393 12-31-83 3.01 277,624 Metropolitan Transit Commission 18,200,000 14,557,000 12-31-83 3.26 474,558 School District No. 270 (Hopkins) 6,275,000 5,102,612 06-30-83 57.58 2,938,084 School District No. 276 (Minnetonka) 2,535,000 1,935,000 06-30-83 25.63 495,941 School District No. 284 (Wayzata) 8,210,000 6,621,900 06-30-83 16.79 1,111,817 Vocational Technical School No. 287 11,100,000 7,434,945 06-30-83 8.89 659,480 Total $126,185,000 $84,378,421 9.666 $ 8,153,903 -12- Statistical Summary Relating to Indebtedness of the City Set forth below is a statistical summary of certain information T relating to the 83 debdness of the handl as asof oApDile December 31 fassum ng or the years 1981 through 19respectively, issuance of the Bonds. Statistical Summary Relating to Indebtedness of the City April 1, 1984 647,363,666 Market Valuation $1,012 920 Taxable Assessed Valuation $ 425,012,920 Indebtedness Subject to $ 1,959,882 Debt Limitation Indebtedness Not Subject to $ 48,363,585 Debt Limitation City's Share of Overlapping $ Debt Population Indebtedness Subject to Debt Limitation As a Percent of: Market Valuation Assessed Valuation $ Per Capita Indebtedness Not Subject to Debt Limitation As a Percent of: Market Valuation Assessed Valuation $ Per Capita City's Share of Overlapping Debt As a Percent of: Market Valuation Assessed Valuation $ Per Capita Market Valuation Per Capita $ Assessed Valuation Per Capita $ Debt Limit 8,153,903 40,130 .12% .46% 48 2.94% 11.38% 1,205 December 31, 1983 $1,647,363,666 $ 425,012,920 $ 1,923,553 $ 36,939,603 $ 8,153,903 40,130 .12% .45% $ 48 2.24% 8.69% $ 920 December 31, 1982 $1,472,269,790 $ 395,475,195 $ 2,158,927 $ 41,954,614 $ 8,266,195 39,270 .15% .55% $ 55 2.85% 10.61% $ 1,068 .50% .50% .50% 2.09% 1.92% 1.92% $ 210 203 $ $ 203 41,050 $ 37,490 41,050 $ 10,590 $ 10,070 10,590 ons As described under the theion City's Statutory I curindebtedne strand and Limitations Concerning not Issuance of Debt --Debt Limit," the "net debt" of the City may exceed six and two-thirds percent of the assessed valuation of all within the City. Net debt is defined by State law to taxable property ross debt the following: mean the amount remaining after dedappliccablemwithin the current year to (1) the amount of current revenues app able wholly or in the payment of any debt, (2) obligations which are pay no proceeds of special assessments, (3) warrants having part from the p g Payable wholly from income of revenue definite maturity, (4) obligations p y permanent producing conveniences, (5 ) obligations issued to create a revolving fund, (6) obligations issued for public works from which a -13- revenue is or may be derived, (7) all amounts of money and the face value of all securities held as a sinking fund for the extinguishment of obligations other than those which are deductible, and (8) all other obligations which under the provisions of the law authorizing their issuance are not to be included in computing the net debt of the municipality. Set forth below is a comparison 'of the net debt of the City as a percentage of the applicable debt limit as of April 1, 1984, to the net debt of the City as a percentage of the applicable debt limit as of, December 31, 1983, and as of December 31, 1982. Percent of Legal Debt Incurred Assessed Valuation Legal Debt Percentage Allowed Legal Debt Limit Amount of Debt Applicable to Debt Limit Unused Margin of Indebtedness Percent of Legal Debt Incurred April 1, December 31 December 31, 1984 1983 1982 $425,012,920 $425,012,920 $395,475,195 6.667% 6.667'/, 6.667% $ 28,335,611 1,959,882 $ 28,335,611 $ 26,366,331 __1,923,553 $ 26,375,729 $ 26,412,058 6.92% 6.79% FINANCIAL INFORMATION 2,158,927 _ $ 24,207,404 8.19% The financial operations of the City are, pursuant to State law, conducted primarily through its General Fund, its Special Revenue Funds, its Debt Service Funds, its Capital Project Funds, its Enterprise Funds, its Special Assessment Funds and its Trust and Agency Funds. All revenues not attributable to any other fund are accounted for in the General Fund and recorded therein, and any lawful expenditure of the City may be made from the General Fund. The revenues from tax levies collected for the purpose of paying debt service on the City's outstanding tax supported bonded indebtedness are recorded in the Debt Service Fund; revenues from tax levies are held in trust for the purpose of paying debt service of the bonded indebtedness for which such revenue was collected. The revenues from special assessments and enterprise revenues collected for the purpose of paying debt service on the City's outstanding improvement bonds and water revenue bonds and ice arena bonds are recorded in the Special Assessment Funds and Enterprise Funds, respectively; revenues from each separate source of revenues are held in separate trusts for the purpose of paying the debt service of the bonded indebtedness for which such revenue was collected. -14- Financial Records The City maintains its financial records on a calendar year basis. All funds except for minor variances are maintained on a modified accrual basis and in conformity with Generally Accepted Accounting Principles (GAAP) applicable to governmental entities. Appendix A hereto sets forth the financial statements of the City for the year ending December 31, 1982 which have been examined by Laventhol & Horwath, independent certified public accountants, Minneapolis, Minnesota, for that period and to the extent set forth in their report. Such audited statements have been included herein in reliance upon such firm as experts in auditing and accounting. Appendix B, presents a Balance Sheet for year ending December 31, 1983, (unaudited) as prepared by the City. Tax Levies, Rates and Collections In October of each year, the City Council adopts the City budget for the ensuing year, and levies on real and personal property in the City are set, which if collected in the ensuing year will be sufficient to cover budgeted operating expenses, debt service and other expenditures of the City. Taxes on personal property become due on January 1 of each year and become delinquent after the first day of March of each year, and after the sixteenth day of May and the sixteenth day of October, respectfully, for the first and second halves in the case of real property taxes. Set forth below are purposes and the the tax rates established by the City for City tax - overlapping upon City rates of residents. other governmental units within or against the assessed valuation of Tax rates shown residential are those levied property and the major portion of the assessed valuation of within commercial -industrial the City property in the City INFORMATION --Metropolitan Fiscal (see the caption "FINANCIAL Disparities Act," herein). City and Other Governmental unit Tax Rates (in Mills) Per $1,000 of Assessed Value(1) _ Entit 1983 1982 1981 1980 1979 City of Minnetonka Hennepin County 16.184 15.095 15.463 17.746 18.637 Metropolitan Council 28.451 29.183 29.271 31.195 32.184 Metropolitan Transit .419 .399 .454 •4+ .408 Commission Metropolitan Mosquito 3.036 3.062 2.938 2.187 2.107 Control District .600 .438 .211 Watershed District .449 .346 -0 .213 -0- .183 Suburban Parks District .108 .129 -0- Park Museum Vocational School .350 .350 .149 .350 .181 .350 .225 .350 District No. 287 1.119 1.469 1.510 1.681 2.227 `50.716 50.471 50.346 54.007 56.321 -15- (1) In addition to the tax rates listed, residents of the City living within one of the school districts (numbers 270, 276, or to 284), whose boundaries overlap upon the City,subject taxes levied to support such school districts. The following are tax rates payable by residents of the City living within such school district boundaries. Set forth below are the City's tax levies for collecti983. ons for the amounts years 1979 through 1982, and the tax levy f represent only the taxes collected for the City for City purposes. City Tax Levies and Collections School District Tax Rates (in mills) Per $1,000 of Assessed Value School District 1983 1982 1981 1980 1979 Number 270 45.475 44.861 40.934 42.390 44.755 46.483 48.166 49.570 Number 276 55.931 42.982 49.847 40.675 35.745 38.850 44.293 Number 284 Percent of Levy to December 31, December 31, Uncol- Uncol- Set forth below are the City's tax levies for collecti983. ons for the amounts years 1979 through 1982, and the tax levy f represent only the taxes collected for the City for City purposes. City Tax Levies and Collections Property taxes for the City are collected for the City (and for the other political subdivisions within the County of Hennepin) by the County Treasurer of Hennepin County. Th-- County Treasurer settles accounts with the appropriate political subdivisions, including the City, based upon their respective tax rates and assessed valuations. Taxes levied on both real and personal property which are delinquent constitute, pursuant to State law, first and perpetual liens thereon (with certain exceptions for personal property). -16- Percent Total of Total Collected Collected Percent Total to Total of Total Collected Percent of Levy to December 31, December 31, Uncol- Uncol- Levy Tax in Follow Collected 1983 1983 lected Lected Year Levy ing Year 1983 $6,400,306 I N 97.63X P R O C E S S $6,347,850 99.36% 44,272 :87X 1982 6,189,062 X6,237,850 5,022,924 97.30 5,117,947 99.14 1981 5,162,219 4,619,843 4,504,382 97.50 4,600,639 .58 99.60 19,204 17,437 .42 .40 1980 1979 4,351,389 4,269,138 98.11 4,333,952 Source - County Auditor - Hennepin County Property taxes for the City are collected for the City (and for the other political subdivisions within the County of Hennepin) by the County Treasurer of Hennepin County. Th-- County Treasurer settles accounts with the appropriate political subdivisions, including the City, based upon their respective tax rates and assessed valuations. Taxes levied on both real and personal property which are delinquent constitute, pursuant to State law, first and perpetual liens thereon (with certain exceptions for personal property). -16- Special Assessment Levies and Collections Special assessments, which are paid by property owners, involve the funding of such projects as streets, curbs, sidewalks, ditches and storm sewers. When any of these improvements are made to a property owner, that property owner is considered to have benefited directly by them. Improvements of this nature have no relationship to the value of the owner's property. The determination of the mill rate and the taxes on each property excludes the amounts needed for various special assessments. Any amounts for special assessments are added, but enumerated separately, on the property tax statement and are not considered a tax on property. Special assessments for the City are collected by the County in the manner of property taxes. Set forth in the following table are the City's Special Assessment Levies and Collections for the years 1973 through 1983. Source - Comprehensive Annual Financial Report, City of Minnetonka, Minnesota for year ending December 31, 1982 and City records, Limitation on City Tax Levy State law limits the amount by which the City (as well as other political subdivisions) may increase its tax levy from one year to the ext. The levy limit base may be increased each year by formula pursuant next made to allow the limitations to be to State law. Provisions increased or decreased based on a number of circumstances, including population or boundary changes, transfer of a governmental function or of in is service or by way of a direct referendum. The amount increase of generally limited to 8% per capita per year. Levies for the pay direct bonded indebtedness are not included in this limit- -17- Total Current special Amount Ratio of current and assessment installments collected current delinquent Current becoming due currently during the collections to amount assessments uncollected Percentage balance Fiscal during the fiscal period fisc a_ 1 P®rim due at year end collected uncollected Year $ 325,270 1973 $2,333,222 $2,9226:1 236,060 . 279,680 6 92.2x 8 187,709 237,117 1974 2,423,769 2,514,316 2,277,199 .9056:1 529,197 60 90.56 89.00 286,525 1975 1976 2,604,863 2,318,338 .8900:1 766,3 703,360 87.54 335,933 1977 2,695,410 2 359,477 .8754:1 709,842 86.17 385,341 1978 2,785,957 2,400,616 2,450,077 .8617:1 .8493:1 711,946 84.93 434,749 484,157 1979 2,884,826 2,975,373 2,491,216 .8373:1 965,341 83.73 83.95 533,565 1980 1981 3,324,699 2,791,134 .8395:1 1,134,042 1,396,612 81.10 673,073 1982 3,562,121 2,889,048 .8110:1 996,764 87.56 423,489 1983 3,405,208 2,981,719 .8756:1 Source - Comprehensive Annual Financial Report, City of Minnetonka, Minnesota for year ending December 31, 1982 and City records, Limitation on City Tax Levy State law limits the amount by which the City (as well as other political subdivisions) may increase its tax levy from one year to the ext. The levy limit base may be increased each year by formula pursuant next made to allow the limitations to be to State law. Provisions increased or decreased based on a number of circumstances, including population or boundary changes, transfer of a governmental function or of in is service or by way of a direct referendum. The amount increase of generally limited to 8% per capita per year. Levies for the pay direct bonded indebtedness are not included in this limit- -17- The following table summarizes the City's compliance with the law for the years, 1981 through 1983. City Revenue Set forth below are the revenue sources and the amounts of such revenue sources of the City for the General Fund, for the year ending December 31, 1983. Percent Source (1) 1983 1982 1981 Total Tax Levy Less $6,400,306 $5,178,820 $4,636,386 Special Tax Levies 1,436,244 413,000 1,816,086 Limited Levy Levy $4,964,062 $4,765,820 $2,820,300 Limitation 4,994,824 4,794,246 2,843,058 Under Levy Limitation 30,762 28,426 22,758 City Revenue Set forth below are the revenue sources and the amounts of such revenue sources of the City for the General Fund, for the year ending December 31, 1983. Percent Source (1) Amountof Total General Property Tax $4,446,546 Licenses and Permits 630,0 5. Intergovernmental Revenue 2,016,06633 7 7 0 Transfers from other funds 386,396 23.3.3 6 6 4.47 Other 1,153,071 13.36 Total $8,632,150 100.00% (1) In addition to the revenue sources listed above, the City receives revenue from the Utility Fund. The 1983 net operating income for the Utility Department was $195,635 (unaudited). The City's ice arena had a net operating loss of $1,528 (unaudited) for the year ended December 31, 1983. Assessed and Market Valuations Set forth below are the assessed valuations and market valuations of property located within the City for the years 1976 through 1983 (assessed and market valuations of property located within the City are determined in November and December of each year). State law provides, with certain exceptions, that all taxable property is to be valued at its market value. All real property subject to taxation must be listed and at least one-fourth of the parcels listed must be appraised each year with reference to their value on the January 2 preceding the assessment, so that each parcel is reappraised at intervals of four years. The assessed value of property in the City is computed upon the basis of its full market value and its category of use. Real property is currently classified generally by the following use categories for taxes payable in -18- 1984: (i) residential homestead property, which is assessed at 17% of the first $30,000, 19% of the second $30,000 and 30% of the balance of its full market value; (ii) residential non -homestead property, which is assessed at 30% of the full market value; (iii) agricultural homestead property, which is assessed at 14% of the first $60,000 and 19% in excess of $60,000 the full market value; (iv) agricultural non -homestead property, which is assessed at 19% of its full market value; and (v) industrial/commercial/utility property, which is assessed at 34% of the first $50,000 of its full market value, (provided property owner owns one (1) parcel) and 43% in excess of $50,000. A property qualifies as a "homestead" if it is occupied by the owner on the assessment date. Owners of homestead property receive a 50% credit (up to a maximum of $650) on the taxes levied on their property; homestead credits are reimbursed by the State to the City and other taxing districts in proportion to their levies. Most personal property, with the exception of certain utility property, is exempt from taxation, along with public property and property owned by educational, religious and charitable institutions. The Minnesota Legislature has enacted amendments which, in effect, phased out the Limited Market Values over a two year period (1979-1980). Assessed and Market Valuations of Property Within the City Metropolitan Fiscal Disparities Act The Metropolitan Fiscal Disparities Act was first implemented for taxes payable in 1975. It established a new property tax system for the seven metropolitan counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington. Generally, the objective of the Metropolitan Fiscal Disparties Act is to prevent competition among the various municipalities in the seven -county metropolitan area for industrial and commercial development to improve their respective tax bases. The following discussion summarizes the operation of the Metropolitan Fiscal Disparities Act. -19- Total Total Taxable Assessed Market Assessed Valuation Valuation Valuation 1983 $459,724,703 $1,647,363,666 $425,012,920 395,475,195 1982 421,611,162 366,122,164 1,472,269,790 1,335,102,387 343,075,726 1981 1980 317,713,485 1,149,248,172 298,878$95 1979 259,341,745 945,901,983 216.%861,066,,325 1978 228,491,200 208,598,726 774,374,452 651,054,346 200,356,294 1977 1976 193,938,154 562,309,172 186,568,143 Metropolitan Fiscal Disparities Act The Metropolitan Fiscal Disparities Act was first implemented for taxes payable in 1975. It established a new property tax system for the seven metropolitan counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington. Generally, the objective of the Metropolitan Fiscal Disparties Act is to prevent competition among the various municipalities in the seven -county metropolitan area for industrial and commercial development to improve their respective tax bases. The following discussion summarizes the operation of the Metropolitan Fiscal Disparities Act. -19- Forty percent of the increase in commercial -industrial (including public utility) assessed valuation in each assessment district since 1971 is contributed to an area -wide tax base. Using the factors of population and real property market value, a per capita distribution index is calculated. This index is employed in determining what proportion of the assessed value in the area -wide tax base shall be distributed back to each assessment district. Each metropolitan county auditor certifies to the administrative auditor the area -wide portions of the levy for each district located within that county. The administrative auditor then computes an area -wide mill rate by dividing the total of the area -wide levies by the total area -wide tax base. As a result of this law, the property tax levy of a taxing district is not the tax amount paid by the taxpayers located within the geographic boundaries of that district. The amount they pay could be more or less than what is actually needed by the district in which they live, depending upon whether the area -wide mill rate was larger or smaller than the local mill rate and whether the contribution value was larger or smaller than the distribution value. Fiscal Disparities impacts the City's assessed valuation as follows: Source - Comprehensive Annual Financial Report, City of Minnetonka, Minnesota, December 31, 1982 and County Auditor, Hennepin County, Minnesota. -20- Assessed Assessed Value Value Contributed Received Net Year to "pool" from "pool" Contributed 1983 $43,903,106 $14,384,958 $(29,518,148) 1982 36,015,747 12,238,542 (23,777,205) 1981 31,079,726 9,804,145 (21,275,581) 1980 25,123, 980 7,046,980 (18, 077, 000) 1979 18,822,482 5,402,131 (13,420,351) 1978 15,915,836 4,355,099 (11,560,737) 1977 11,416,732 3,174,300 (8,242,432) 1976 10,100,137 2,730,126 (7,370,011) 1975 7,446,277 3,036,409 (4,382,868) 1974 3,669,931 2,280,270 (1,389,661) Source - Comprehensive Annual Financial Report, City of Minnetonka, Minnesota, December 31, 1982 and County Auditor, Hennepin County, Minnesota. -20- Major Taxpayers in the City The table below sets forth ten major taxpayers and their estimated 1983 market valuation within the City. Name Market Valuation of Certain Real Estate in the City Estimated Market Percent of City Valuation Market Valuation Ridgedale Shopping Center $ 50,520,000 3.10% Greenbriar Condominiums 29,232,000 1.79 Cargill, Inc. 23,778,000 1.46 Opus Center 13,345,000 .82 Stratford Wood Apartments 10,841,000 .67 DATA 100 7,209,000 .44 Shady Oak Office Center 6,724,000 .41 MAPCO Industrial Park 6,681,000 .41 Umaga 6,433,000 .39 Modern Merchandising, Inc. 5,698,000 .35 $160,461,000 9.84% GENERAL INFORMATION RELATING TO THE CITY Population of the City The population of the City for 1960, 1970 and 1980 according to the United States Census, and as estimated by the Metropolitan Council for the years 1981, 1982, 1983 and 1984 is set forth below. 1960 23,037 1970 35,776 1980 38,683 1981 38,830 1982 39,270 1983 40,130 1984 40,130 Major City Developments One of the major developments is the Carlson Center, a multi -use development, located partially within the City. The focal point of the project is the Carlson Company world headquarters. The proposal calls for commercial, industrial, office and residential uses. The commercial development plans include a 200 -room Radisson Hotel. Total development costs are estimated to be $300,000,000 with construction expected to b eg in in 19 85. -21- A significant project located at the south entrance of the City is Opus II, a multi -use office, residential and industrial park complex. A 200 -room hotel will be constructed as a later phase to the development. Total development costs, when complete, are expected to be $250,000,000. Opus II project is approximately seventy-five percent complete. Employment in the City Shown below is a list of the major industrial employers in the City and their approximate number of employees. Firm Cargill, Inc. Northern Telecom, Inc. Fingerhut Corporation Modern Merchandising Data Card Corporation Scientific Computers, Inc. Precision-Cosmet Co., Inc. Charmilles-Andrew Mfg. Drag Specialties, Inc. K -Tel International Opportunity Workshop, Inc. Coast to Coast Stores Source - Minnesota Department of Energy and Economic Development Construction Permits The schedule below shows the total value of new residential, industrial and commercial, public and other construction permits issued by the City each year for 1973 through 1983 and for the months of January and February for the year 1984. Total Value of New Construction Permits Number Product/Service Employees Agribusiness 2,000 Computer Service 1,100 Mail Order 580 Showroom - Retail 500 Credit Card Embossing Machines 325 Data Processing Service 280 Optic Goods 270 EDM Systems 237 Motorcycle Accessories 175 Leisure Time Products 150 Social Service Pack/Assembly 75 Hardware 70 Source - Minnesota Department of Energy and Economic Development Construction Permits The schedule below shows the total value of new residential, industrial and commercial, public and other construction permits issued by the City each year for 1973 through 1983 and for the months of January and February for the year 1984. Total Value of New Construction Permits -22- Industrial or Residential Total Residential Commercial Units Valuation 1984 $ 8,981,886 $ 7,504,010 98 $16,485,896 1983 49,329,578 16,714,195 546 66,043,773 1982 34,079,077 25,386,145 389 59,465,222 1981 42,939,384 46,784,449 878 89,723,833 1980 25,749,408 29,659,818 374 55,409,226 1979 36,340,976 23,987,985 797 60,328,961 1978 27,825,132 20,277,390 476 48,102,522 1977 24,914,509 21,766,617 683 46,681,126 1976 17,842,767 9,385,079 610 27,227,846 1975 8,461,191 25,004,471 352 33,465,662 1974 6,101,340 19,688,075 175 25,789,415 1973 6,741,374 17,465,993 220 24,207,367 -22- Miscellaneous The Minnesota Department of Economic Security reports the December 1983 unemployment rate for the Minneapolis - St. Paul Metropolitan Area to be 5.6% compared to the State of Minnesota rate of 7.5% and the United States rate of 8.0%. The 1982 Survey of Buying Power, Sales and Marketing Management reports the median Household Effective Buying Income for Hennepin County to be $26,557. Future Financing The City plans to build three new Fire Stations including support equipment, for a total estimated expenditure of $2.4 million, funded by the issuance of General Obligation Bonds. A bond referendum would be required for the funding and would have to be held in late 1984 to complete these projects in 1985. UNDERWRITING The Bonds have been purchased at public sale by a group of underwriters for whom is acting as managing underwriter. The underwriters intend to offer the Bonds to the public initially at the prices set forth on the cover page of this Official Statement plus accrued interest from May 1, 1984, which prices may subsequently change without any requirement of prior notice. The underwriters reserve the right to join with dealers and other underwriters in offering the Bonds to the public. The underwriters may offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) at prices lower than the public offering prices. FINANCIAL ADVISOR Miller & Schroeder Municipals, Inc., Minneapolis, Minnesota, has acted as Financial Advisor to the City in connection with the issuance of the Bonds. The fee to be paid the Financial Advisor in connection with the transaction is contingent upon the successful sale and issuance of the Bonds. Any questions regarding the facts presented in this Official Statement or any request for additional information concerning the City should be addressed to Miller & Schroeder Municipals, Inc., 2400 Northwestern Financial Center, 7900 Xerxes Avenue South, Minneapolis, Minnesota 55431 (telephone 612-831-1500). -23- TAX EXEMPTION In the opinion of Bond Counsel, the interest to be paid on the Bonds is not includable in the gross income of the recipient for United States or Minnesota income tax purposes, but is subject to Minnesota taxes on banks and corporations measured by income, according to present federal and Minnesota laws, regulations, rulings and decisions. LITIGATION There is no controversy or litigation of any nature now pending or, to the knowledge of the City, threatened, restraining or enjoining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the City taken with respect to the issuance or sale thereof. LEGAL MATTERS Legal matters incident to the authorization and issuance of the Bonds are subject to the opinion of LeFevere, Lefler, Kennedy, O'Brien and Drawz, Bond Counsel, as to validity and tax exemption. A copy of such opinion will be printed on the reverse side of the Bonds and will be available at the time of the delivery of the Bonds. RATINGS M oody's Investors Service, Inc. has given the Bonds the rating of If it Such rating reflects only the view of such organization and explanations of the significance of such rating may be obtained from the rating agency furnishing the same. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by such rating agency, if in the judgment of such rating agency circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds. MISCELLANEOUS Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. -24- I - lop I- .. The execution and delivery of the Official Statement, by its Mayor and its Director of Finance/Clerk-Treasurer, has been duly authorized by the City. CITY OF MINNETONKA, MINNESOTA By _ /s/ LARRY A. DONLIN Larry A. Donlin Mayor By _ /s/ DALE L. EGGENBERGER Dale L. Eggenberger Director of Finance/Clerk-Treasurer -25- (This Page Has Been Left Blank Intentionally.) APPENDIX A GENERAL PURPOSE FINANCIAL STATEMENTS CITY OF MINNETONKA, MINNESOTA for the Year Ended December 31, 1982 (This Page Has Been Left Blank Intentionally.) PRLaventhol & Horwath Certified Public Accountants Honorable Mayor and Members of the City Council City of Minnetonka, Minnesota 100 Washington Square Minneapolis, Minn. 55401 (612) 332-5500 We have examined the combined financial statements of the City of Minnetonka, Minnesota, as of and for the year ended December 31, 1982, as listed in Section II -A of the table of con- tents. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the combined financial statements referred to above present fairly the financial position of the City of Minne- tonka, Minnesota, at December 31, 1982, and the results of its operations and the changes in financial position of its proprietary fund types for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year after giving retroactive effect to the changes, with which we concur, in the methods of accounting for revenues in the special assessment fund and for the cost of certain employee benefits as described in Note 2 to the financial statements. Our examination was made for the purpose of forming an opinion on the combined financial statements taken as a whole. The combining, individual fund, and account group financial statements and schedules as listed in Section II -B of the table of contents are presented for purposes of additional analysis and are not a required part of the combined financial statements of the City of Minnetonka, Minnesota. The information has been subjected to the auditing pro- cedures applied in the examination of the combined financial state- ments and, in our opinion, is fairly stated in all material respects in relation to the combined financial statements taken as a whole. The accompanying statistical tables on pages 94 to 115 were not audited by us and, accordingly, we do not express an opinion on them. April 18, 1983 A member of Horwatah & Horwath International with affiliated offices worldwide. CITY OF MINNEI'ONKA, MINNESOTA COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS DECEMBER 31, 1982 ASSETS Cash Cash with paying agent Certificates of deposit and government securities Receivables: Taxes, net of allowance for uncollectibles Special assessments Customer and other Due from other funds (Note 4) Accrued interest on investments inventory and prepaid expenses Property and equipment, net (Notes 5 and 6) Unamortized bond discounts and other assets Amount available in debt service funds Amount to be provided from future tax levies Amount to be provided from future tax increments GO�E TAL FUND TYPES SPECIAL DEBT CAPITAL SYt;C:IAL GENERAL REVENUE SERVICE PRWECT ASSESSMENT $ 3,334 $ (151,654) $ 7,121 $ 642 $ 232,533 4,065,000 1,010,000 740,000 1,200,000 31,551,805 45,864 37,194 17,577 49,806 967,662 56,583 995,508 120,970 37,357 24,077 89,110 48,127,926 555,384 1,354 150,420 - 46,258 1,137,175 373,230 $4,430,667 $2,896,067 $788,775 $1,248,254 $82,128,473 LIABILITIES AND FUND EQUITY Liabilities: Accounts and contracts payable $ 206,934 $ 25,451 $ 37,527 $ 149,394 - Interest and other payables 385,850 33,748 85,806 21,529 505,000 Due to other funds (Note 4) 490,508 108,801 69,975,000 Bonds payable (Note 7) Other debt payable 54,517 47,983,514 Deferred revenue 1,137,809 134,252 157,081 118,634,437 Contingency (Note 11) Fund equity (deficit) (Note 2): Contributions Investment in general fixed assets Retained earnings: Reserved (Note 8) Unreserved Bund balance: Reserved (Note 8) 89,110 27,761 364,570 Unreserved (Note 10) 3,203,748 2,761,815 $788,775 1,063,412 (36,870,534) 3,292,858 2,761,815 788,775 1,091,173 (36,505,964) $4,430,667 $2,896,067 $788,775 $1,248,254 $82,128,473 See notes to financial statements. -12- Exhibit 1 PROPRIETARY FIDUCIARY ACCOUNT GROUPS $ 523,896 89,427 FUND TYPE FUND 'TYPE 344,778 GENERAL TOTAL _ TRUST AND GENERAL LONG-TERM (MEMORANDUM ONLY) ENTERPRISE AGENCY FIXED ASSETS DEBT 1982 1981 48,038,031 $ 233,482 $29,512 29,512 4,995,000 127,978,974 $ 354,970 $ 273,079 85,484,771 85,484,771 85,157,347 1,114,308 _ 2,490,000 25,611,397 _ 228,312 41,056,805 37,070,341 62,968 1,339 2,666,156 2,196,559 164,942 570,141 481,441 281,292 1,339 48,127,926 49,646,751 443,989 1,339 27,592,916 87,402,151 79,097,512 2,016,841 2,520,831 _ $27,592,916 $4,995,000 $215,381,125 $212,402,279 1,203,865 920,808 93,391 1,459,228 1,361,387 128,466 217,576 203,588 87,543,450 $27,592,916 115,136,366 112,933,408 274,376 647,606 702,637 $ 788,775 788,775 645,867 2,225,007 2,225,007 2,510,265 1,981,218 1,981,218 1,928,868 $91,270,122 $30,851 $27,592,916 $4,995,000 $215,381,125 $212,402,279 _ $ 57,758 $ 5,459 $ 482,523 $ 523,896 89,427 21,465 552,019 344,778 11,162 2,588 1,203,865 920,808 2,545,000 $4,995,000 77,515,000 81,605,000 187,536 187,536 391,787 48,038,031 49,518,498 2,890,883 29,512 4,995,000 127,978,974 133,304,767 85,484,771 85,484,771 85,157,347 $27,592,916 27,592,916 25,611,397 _ 228,312 228,312 205,709 2,666,156 2,666,156 2,196,559 481,441 281,292 1,339 (29,051,445) (34,354,792) _ 88,379,239 1,339 27,592,916 87,402,151 79,097,512 $91,270,122 $30,851 $27,592,916 $4,995,000 $215,381,125 $212,402,279 -13- CITY OF MINNE'10M11 MINNESOTA COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS YEAR ENDED DECEMBER 31, 1982 —GOVERNMENTAL FUND TYPES SPECIAL DEBT CAPITAL SPECIAL GENERAL REVENUE SERVICE PROTECT ASSESSMENT Revenues: Property taxes, net $3,847,662 $ 648,747 $338,354 Special assessments $ 3,871,833 Licenses and permits 478,202 Intergovernmental 1,650,880 1,412,203 Interest and other revenues 906,558 151,404 211,482 $ 277,467 7,450,904 6,883,302 2,212,354 549,836 277,467 11,322,737 Other financing sources: Transfers from other funds 597,074 1,067 917,005 Total revenues and other sources 7,480,376 2,213,421 549,836 277,467 12,239,742 Expenditures: General government Community development Operations and maintenance Public safety Capital outlay Sundry Debt service: Principal retirement Interest and paying agent charges Other financing uses: 1,690,185 1,209,419 1,097,020 1,759,627 2,341,986 205,897 90,000 1,430,927 1,875,673 25,799 316,928 3,973,839 7,207,114 1,097,020 406,928 1,430,927 5,875,311 Transfers to other funds 73,300 1,168,217 1,489 1_,)tal expenditures and other uses 7,280,414 2,265,237 406,928 1,432,416 5,875,311 Excess (deficiency) of revenues and other sources over expendi- tures and other uses 199,962 (51,816) 142,908 (1,154,949) 6,364,431 Fund balance (deficit), January 1 3,088,160 2,813,631 645,867 2,246,122 (42,870,395) Increase in reserve for inventories 4,736 Fund balance (deficit), December 31 $3,292,858 $2,761,815 $788,775 $1,091,173 $(36,505,964) See notes to financial statements. -14- Exhibit 2 _ FIDUCIARY 1,690,185 1,561,362 FUND TYPE TOTAL EXP NDABLE (MEMORANDUM ONLY) TRUST 1982 1981 _ $33,043 $ 4,867,806 $ 4,372,776 1,875,673 3,871,833 4,027,049 266,515 478,202 545,407 90,000 3,063,083 2,959,601 4,290,767 8,997,815 11,120,422 33,043 21,278,739 23,025,255 1,515,146 1,437,336 33,043 22,793,8852 4,462,591 _ 1,690,185 1,561,362 3,737,366 2,681,686 1,759,627 1,569,104 2,341,986 2040,146 1,875,673 2,956,358 34,819 266,515 222,489 90,000 190,000 4,290,767 4,424,422 34,819 16,052,119 15,745,567 1,243,006 1,000,599 34,819 17,295,1251 6,746,166 (1,776) 5,498,760 7,716,425 3,115 (34,073,500) (41,874,299) 4,736 64,374 $ 1,339 $(28,570,004) $(34,073,500) -15- CITY OF MINNETONKA, MINNESOTA - COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL AND SPECIAL REVENUE FUND TYPES Revenues: Property taxes, net Licenses and permits Intergovernmental Interest and other revenues other financing sources: Transfer from other funds YEAR ENDED DECEMBER 3.1, 1982 '_rotal revenues and other 7,560,000 7,480,376 (79,624) 2,181►3�0 213►421 sources 2, — 32,1 Expenditures: General government 1,704,500 1,209,700 1,690,185 1,209,419 SPECIAL REVENUE Community develognent GENERAL Operations and maintenance 1,856,400 OVER (96,773) Public safety OVER 2,341,986 205,897 (75,314) (76,903) (252,980) (UNDER) BUDGET AC __ (UNDER) BUDGET BUDGET ACTUAL BUDGET $4,050,000 $3,847,662 $(202,338) $ 662,200 $ 648►747 $ (13,453) - 450,000 1,691,000 478,202 1,650,880 28►202 (40,120) 1,391,100 1,412,203 21,103 780,000 906,558 126,558 (87 128,000 2.181►300 151,404 2,212,354 23,404 31,054 6,9 17 ,000 6,8 ►698) 589,000 597,074 8,074 1,067 1,067 s '_rotal revenues and other 7,560,000 7,480,376 (79,624) 2,181►3�0 213►421 sources 2, — 32,1 Expenditures: General government 1,704,500 1,209,700 1,690,185 1,209,419 (14,315) (281) 1,350,000 1,097,020 (252,98 Community develognent Operations and maintenance 1,856,400 1,759,627 (96,773) Public safety 2,417,300 282,800 2,341,986 205,897 (75,314) (76,903) (252,980) Sundry 7,470,700 7,207,114 (263,586) 13501000 00 1'097'020 Other financing uses: 1,137,067 1,168►217 31,150 Transfer to other funds 73,300 73,300 Total expenditures and 586) 2,487,067 2,265,237 (221,830) other uses 7,544,000 7,280,414 (263, Excess (deficiency) of revenues and other sources over expendi- tures and other uses $ 16,000 Fund balance, January 1 increase in reserve nor inventories Fund balance, December 31 199,962 $ 183,962 $ (305,767) 3,088,160 4,736 $3,292,858 See notes to financial statements. Q[i :s (51,816) $ 253,951 2,813,631 $2,761,815 Exhibit 3 _ TOrAL (14,315) (MEMORANDUM ONLY) 2,306,439 (253,261) OVER 1,759,627 (96,773) ( BUDGET ACTUAL RUDER) BUDGET $4,712,200 - $4,496,409 $(215,791) 450,000 478,202 28,202 3,082,100 3,063,083 (19,017) 908,000 1,057,962 149,962 9,152,300 9,095,656 (56,644) 5— 89000 598,141 9,141 9,741►300 __9,693,797 (47,503) 1,704,500 1,690,185 (14,315) 2,559,700 2,306,439 (253,261) 1,856,400 1,759,627 (96,773) 2,417,300 2,341,986 (75,314) - 282,800 205,897 (76,903) 8,8 0702 0 8,304,134 (516,566) 112101367 1,241,517 31,150 10,031,067 9,545,651L 485,416) $ (289,767) 148,146 $ 437,913 5,901,791 4,736 $6,054,673 -17- Exhibit 4 CITY OF MINNETONKA, MINNESOTA AND COMBINED ARNINGSENT OF REVALLEPROPRIETARY/FUND TYPES IN RETAINEDINED EARNINGS E YEAR ENDED DECEMBER 31, 1982 Operating revenues: Water sales and sewer charges Ice rental charges Other Operating expenses: Sewer service charges Personal services Other services and charges Water meters and supplies Operating income before depreciation Depreciation Operating loss Nonoperating revenues, net Loss before operating transfers Operating transfers from other funds, net Net loss Retained earnings, January 1 Redistribute current year contribution in aid of operations Redistribute depreciation on customer contributed property and equipment Retained earnings, December 31 TOTAL MEMORANDUM ONLY 1982 1981 $2,461,784 $1,882,611 294,169 275,315 71,861 93,796 2,827,814 2,251,722 1,261,568 971,499 405,453 361,896 485,006 480,539 144,540 143,986 2,296,567 1,957,920 531,247 293,802 1,489,458 1,423,432 (958,21 1 ) ( 1 ,129,630) 161,234 258,608 (796,977) (871,022) _ 16,196 41,978 (780,781) (829,044) _ 2,402,268 2,030,566 (116,196) (116,978) 1,389,177 1,317,724 $2,894,468 $2,402,268 See notes to financial statements. CITY OF MINNETONKA, MINNESOTA COMBINED STATEMENT OF CHANGES IN FINANCIAL POSITION - ALL PROPRIETARY FUND TYPES YEAR ENDED DECEMBER 31, 1982 Source of funds: Operations: Net loss Add items not affecting working capital: Depreciation and amortization Working capital provided from operations Contributions in aid Other Application of funds: Additions to property and equipment Reduction of long-term debt Increase in working capital Summary of increase (decrease) in working capital: Cash Certificates of deposit and government securities Receivables Water meter inventory Prepaid expenses and other Current portion of long-term debt Accounts payable Accrued interest Accrued vacation Accrued salaries Other Increase in working capital Exhibit 5 TOTAL MEMORANDUM ONLY 1982 1981 $ (780,781) $ (829,044) 1,492,792 1,426,891 712,011 597,847 1,600,405 1,864,485 10,824 17,401 $2,323,240 $2,479,733 $1,710,897 $1,975,245 160,748 149,077 451,595 355,411 $2,323,240 $2,479,733 $ (20,773) $ 37,598 435,000 74,118 5,660 3,592 (1 1 , 672) (11,898) 3,059 (64 1 ) (14,422) ( 10,428) $ 451,595 See notes to financial statements. -19- 210,000 76,857 442 24,172 (26,581) 20,867 2,433 (2,165) $ 355,411 Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1982 1. Summary of significant accounting policies: The accounting policies of the City of Minnetonka, Minnesota conform to generally accepted accounting principles as appli- cable to governments. The following is a summary of the more significant policies: A. Fund accounting: The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accoun- ted for with a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, rev- enues, and expenditures, or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped, in the financial statements in this report, into seven _ generic fund types and three broad fund categories as follows: GOVERNMENTAL FUNDS: General Fund - The general fund is the general operating fund of the City. It is used to account for all financial re- sources except those required to be accounted for in another fund. Special Revenue Funds - Special revenue funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified pur- poses. Debt Service Funds - Debt service funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs. Capital Project Funds - Capital project funds are used to account for financial resources to be used for the acquisi- tion or construction of major capital facilities, other than those financed by proprietary funds, the special assessment fund, and trust funds. -20- Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 1. Summary of significant accounting policies (continued): GOVERNMENTAL FUNDS (CONTINUED): Special Assessment Fund - The special assessment fund is used to account for the financing of public improvements or services deemed to benefit the properties against which special assessments are levied. PROPRIETARY FUNDS: Enterprise Funds - Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises - where the in- tent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. FIDUCIARY FUNDS: Trust and Agency Funds - Trust and agency funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organiza- tions, other governments, and/or other funds. These in- clude expendable trust, nonexpendable trust, pension trust, and agency funds. The firemen's relief fund and MHFA grant fund are classified as expendable trust funds and are accounted for in essentially the same manner as govern- mental funds. The escrow accounts are classified as agency funds. They are custodial in nature (assets equal liabilities) and do not involve measurement of operations. B. Property and equipment and long-term liabilities: The accounting and reporting treatment applied to the prop- erty and equipment and long-term liabilities associated with a fund are determined by its measurement focus. All governmental funds and expendable trust funds are accounted for on a spending or "financial flow" measurement focus. This means that only current assets and current liabilities are generally included in their balance sheets. Their re- ported fund balance is considered a measure of "available spendable resources." Governmental fund operating state- ments present increases (revenues and other financing -21- Exhibit 6 CITY OF MINNETONKA, MINNESOTA _ NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 1. Summary of significant accounting policies (continued): B. Property and equipment and long-term liabilities (continued): sources) and decreases (expenditures and other financing ncaid uses) in net current assets. Accordingly, Y are to present a summary of sources and uses of "available spendable resources" during a period. Property and equipment used in governmental fund type opera- tions (general fixed assets) are accounted for in the general fixed assets account group, rather than in govern- mental funds. Public domain ("infrastructure") general fixed assets consisting of roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems, are excluded from general fixed assets as such items are immovable and of value only to the City. No depreciation has been provided on general fixed assets. All property and equipment are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated property and equipment are valued at their estimated fair value on the date received. Long-term liabilities expected to be financed from govern- mental funds are accounted for in the general long-term debt account group, not in the governmental funds. The single exception to this general rule is for special assessment bonds, which are accounted for in the special assessment fund. The two account groups are not "funds." They are con- cerned only with the measurement of financial position. They are not involved with measurement of results of op- erations. Noncurrent portions of long-term receivables due to govern- mental funds are reported on their balance sheets, in spite of their spending measurement focus. Special reporting treatments are used to indicate, however, that they should not be considered "available spendable resources," since they do not represent net current assets. Recognition of governmental fund type revenues represented by non- current receivables is deferred until they become current receivables. Noncurrent portions of long-term loans re- ceivable are offset by fund balance reserve accounts. -22- Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 1. Summary of significant accounting policies (continued): B. Property and equipment and long-term liabilities (continued): Special reporting treatments are also applied to govern- mental fund inventories to indicate that they do not represent "available spendable resources," even though they are a component of net current assets. Such amounts are generally offset by fund balance reserve accounts. Because of their spending measurement focus, expenditure recognition for governmental fund types is limited to exclude amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long- term amounts are not recognized as governmental fund type expenditures or fund liabilities. They are instead re- ported as liabilities in the general long-term debt account group. All proprietary funds are accounted for on a cost of services or "capital maintenance" measurement focus. This means that all assets, including property and equipment, and all liabilities, including long-term liabilities, associated with their activities are included on their balance sheets. Their reported fund equity is segregated into contributed capital and retained earnings components. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net total assets. Depreciation of all exhaustible property and equipment used by proprietary funds, including contributed property and equipment, is charged as an expense against their opera- tions. Accumulated depreciation is reported on proprietary fund balance sheets. Depreciation has been provided over the estimated useful lives using the straight-line method. The estimated useful lives are as follows: Buildings and structures 40- 50 years Distribution system 50-100 years Iron removal system 40 years Machinery and equipment 7- 15 years -23- Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 1. Summary of significant accounting policies (continued): C. Basis of accounting: Basis of accounting refers to when revenues and expendi- tures or expenses are recognized in the accounts and re- ported in the financial statements. Basis of accounting relates to the timing of the measurements made regardless of the measurement focus applied. All governmental funds and expendable trust funds are accounted for using the modified accrual basis of account- ing. Their revenues are recognized at the time cash is, or normally should be, received or when susceptible to accrual (measurable and available as net current assets). Substantially all sources of revenues are accrued except interest on special assessments receivable, which is recog- nized when due. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. An exception to this general rule is principal and interest on special assessment and general long-term debt, which is recognized when due. All proprietary funds are accounted for using the accrual basis of accounting. Their revenues are recognized when earned, and their expenses are recognized when incurred. Unbilled utility service receivables are recorded at year end. D. Property taxes: Property taxes are set by the City Council with the levy certified to the County (collection agent) in October _ prior to the year collectible. Property taxes attach as an enforceable lien on property as of January 1 of the year collectible. Cities in Minnesota operate under a levy limitation law which generally permits an 8% in- crease in taxes levied per capita each year within the taxing district. Levies for bonded indebtedness are not limited by this law. -24- Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 1. Summary of significant accounting policies (continued)• D. Property taxes (continued): Property tax revenues are considered measurable when in the hands of the County (collection agent) and are con- - sidered available when received in cash or are likely to be received in cash within a short period after year end (generally 60 days). Thus, the amounts recognized as 1982 property tax revenues are collections of taxes during 1982 or the early part of 1983 which pertained to the 1981 levy. Taxes receivable have been reduced by an allowance for uncollectible taxes of $249,165 for 1982. E. Budgets and budgetary accounting: The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. At the first Council meeting in September, the City Manager submits to the City Council a proposed oper- ating budget for the fiscal year commencing the follow- ing January 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer com- ments. 3. At the first Council meeting in October, the budget is legally enacted through passage of a resolution. 4. The City Council may authorize transfers of budgeted amounts between departments within a fund. 5. Budget information shown for the general fund and special revenue funds is on a basis consistent with generally accepted accounting principles (GAAP). -25- Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER.31, 1982 Summary of significant accounting policies (continued): E. Budgets and budgetary accounting (continued): 6. The budget for 1982 was originally adopted in 1981 in accordance with the above procedures. On October 4, 1982, the City Council passed a resolution adopting the City Manager's 1983 budget, and a 1982 revised budget. All budget figures contained in the 1982 annual financial report are taken from the 1982 re- vised budget. The differences between the 1982 or- iginal budget and the 1982 revised budget for the gen- eral fund and special revenue funds are as follows: Excess (deficiency) of revenues and other sources over expenditures and other uses $ (799,609) $ (289,767) $509,842 F. Certificates of deposit and government securities: Excess cash balances from all funds are combined and in- vested to the extent available in certificates of deposit and government securities. Investment income from such investments is allocated to the various funds on the basis of applicable investment balance participation by each fund. Certificates of deposit and government secur- ities are stated at cost, which approximates market. IW41:fl 1982 1982 original revised Increase budget budget (decrease) Revenues and other sources $ 9,807,638 $ 9,741,300 $(66,338) Expenditures and other uses 10,607,247 10,031,067 (576,180) Excess (deficiency) of revenues and other sources over expenditures and other uses $ (799,609) $ (289,767) $509,842 F. Certificates of deposit and government securities: Excess cash balances from all funds are combined and in- vested to the extent available in certificates of deposit and government securities. Investment income from such investments is allocated to the various funds on the basis of applicable investment balance participation by each fund. Certificates of deposit and government secur- ities are stated at cost, which approximates market. IW41:fl Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 1. Summary of significant accounting policies (continued): G. Inventory: Inventory is valued at the lower of cost (first -in, first - out method) or market. Inventory in the general fund con- sists of expendable supplies held for consumption. The cost of such supplies is recorded as expenditures at the time the inventory is purchased (purchase method). General fund inventories are equally offset by a fund balance appropriation which indicates that they do not constitute "available spendable resources" even though they are a com- ponent of net current assets. The cost of inventory in the utility fund is recognized as an expense at the time the items are used (consumption method). H. Total columns on combined statements: Total columns on the combined statements are captioned "Mem- orandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. 2. Accounting changes: Effective January 1, 1982, the City changed its method of account- ing for revenues in the special assessment fund in order to strictly conform with the treatment prescribed by National Council on Governmental Accounting (NCGA) Statement No. 1. In prior years, revenues from special assessments were recog- nized based on the amounts to be received in the following year plus any prepayments received in the current year. This prac- tice resulted in revenues being recorded before they were susceptible to accrual (measurable and available as net current assets). Under the new method, special assessments revenues are recognized when received in cash or are likely to be received in cash within a short period after year end (generally 60 days) . -27- Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 2. Accounting changes (continued): Prior to 1982, the City followed the common practice of account- ing for the costs of employees' vacation and compensation time pay benefits in the period they were paid. Effective January 1, 1982, as a result of Financial Accounting Standards Board Statement No. 43 and National Council on Governmental Accounting Statement No. 4, the City began accruing such benefits as they were earned. The 1981 financial statements and fund balance at the beginning of that year have been restated. The effects on the 1981 fi- nancial statements of such restatements are as follows: 3. Financial reporting entity of the City: The funds included in this annual financial report are controlled by the City's Mayor and Council. Control by or dependence on the City was determined on the basis of budget adoption, taxing authority, outstanding debt secured by revenues or general obligations of the City, or the City's obligation to fund any deficits that may occur. own Special Ice General assessments Utility Arena fund fund fund fund Decrease January 1, 1981 fund balance or retained earnings $149,559 $4,034,284 $ 8,326 $2,242 Increase deferred revenue 4,415,297 Increase current liabilities 176,743 10,080 2,653 Decrease in special assess- ment revenue 381,013 Increase expenditures for personal services 27,184 1,754 411 Decrease excess of revenues over expenditures or net income (loss) 27,184 381,013 1,754 411 3. Financial reporting entity of the City: The funds included in this annual financial report are controlled by the City's Mayor and Council. Control by or dependence on the City was determined on the basis of budget adoption, taxing authority, outstanding debt secured by revenues or general obligations of the City, or the City's obligation to fund any deficits that may occur. own Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 3. Financial reporting entity of the City (continued): The activities of the Minnetonka Housing and Redevelopment Authority (HRA) are excluded from the City's annual financial report since the HRA is a separate legal entity. The HRA's operating and capital expenditures, including debt service, will be financed from HRA tax levies and tax -increment bonds issued by the City. Since the bonds were issued by the City, the HRA remits to the City the funds needed by the City to meet its debt service obligations on the bonds. Remittances from the HRA to the City during 1982 totalled $131,769. The HRA's commissioners are appointed by the Mayor, with the consent of the City Council, and an employee of the City is the executive director of the HRA. Financial transactions be- tween the City and the HRA, reported in the accompanying financial statements, reflect an operating loan to the HRA in the amount of $555,384 as of December 31, 1982. 4. Interfund receivables and payables: Interfund Interfund Fund receivables payables General fund $ 56,583 $ 490,508 Special revenue funds: Civil defense fund 40,930 Federal revenue sharing trust fund 1,354 State street aid fund 505,000 37,386 Public benefit fund 27,228 Forestry fund 1,903 Capital improvement fund 490,508 Capital project funds: Park land acquisition fund 1,354 Glen lake station fund 85,806 Special'assessment fund 150,420 505,000 Enterprise funds: Utility fund 8,758 Ice arena fund 2,404 Trust and agency funds: MHFA grant fund 2,588 $1,203,865 $1,203,865 -29- Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 5. Changes in enterprise fund property and equipment: A summary of changes in enterprise fund property and equipment follows: Utility fund: Land Buildings and structures Distribution system Iron removal system Wells Tanks Lift stations Machinery and equipment Construction in progress Ice arena fund: Buildings and structures Machinery and equipment Balance Balance January 1, December 31, 1982 Additions Deletions 1982 $ 7,650 293,277 87,871,654 $1,217,907 2,751,252 553,688 1,202,966 1 ,405,408 500,747 46,045 795,942 1,600,405 $1,217,907 769,707 47,418 64,447 96,199,709 2,928,804 $ 7,650 293,277 89,089,561 2,751,252 553,688 1,202,966 1 ,405,408 546,792 1,178,440 769,707 111,865 1 ,217,907 97,910,606 Less accumulated 10,367,156 depreciation 8,877,698 1,489,458 $87,322,011 $1,439,346 $1,217,907 $87,543,450 -30- CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 6. Changes in general fixed assets: A summary of changes in general fixed assets follows: Land Buildings and structures Improvements other than buildings and structures Machinery and equipment Construction in progress Balance January 1, 1982 Additions Deletions $ 4,092,620 $ 395,000 2,705,890 66,729 15,562,080 1,564,521 2,685,491 294,341 565,316 $25,611,397 $2,320,591 Exhibit 6 Balance December 31, $ 4,487,620 2,772,619 17,126,601 $ 85,402 2,894,430 253,670 311,646 $339,072 $27,592,916 7. Bonds payable: - Bonds payable at December 31, 1982 are summarized as follows: Interest Type of bonds Maturities rate Total Special assessment bonds 1983-1997 3.4-10.0% $69,975,000 Ice arena revenue bonds 1983-1993 7.0- 8.0 770,000 General obligation water revenue bonds 1983-1995 5.4- 5.8 1,775,000 General obligation bonds 1983-1996 5.0-11.7 4,995,000 $77,515,000 -31- 7. Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 Bonds payable (continued): The following is a summary of bond transactions of the City for the year ended December 31, 1982: Special General assessment Revenue obligation Total Bonds payable at January 1, 1982 $73,855,000 $2,665,000 $5,085,000 $81,605,000 New bonds issued: Improvement bonds Series 1982 3,000,000 3,000,000 Bonds retired (6,880,000) (120,000) (90,000) (7,090,000) Bonds payable at December 31, 1982 $69,975,000 $2,545,000 $4,995,000 $77,515,000 The annual debt service requirements of all debt outstanding as of December 31, 1982, including interest payments of $27,636,723, are as follows: Year ending Special General December 31, assessment Revenue obligation Total 1983 $10,013,153 $ 281,231 $ 572,201 $ 10,866,585 1984 10,005,590 273,444 612,572 10,891,606 1985 9,610,862 270,462 636,931 10,518,255 1986 9,207,123 286,625 635,139 10,128,887 1987 8,800,358 286,650 653,066 9,740,074 1988 and thereafter 45,683,709 2,259,588 5,063,019 53,006,316 $93,320,795 $3,658,000 $8,172,928 $105,151,723 -32- Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 7. Bonds payable (continued): General obligation water revenue bonds are serviced by the util- ity fund and are carried as debt of that fund. Special assess- ment bonds are backed by the full faith, credit, and taxing power of the City, and are carried as debt of the special assessment fund. The legal debt limit for Minnesota municipalities is 6.67% of assessed value. This limit applies only to general obligation tax levy bonds and excludes special assessment, revenue and tax increment bonds. The total general obligation debt at December 31, 1982, net of $788,775 available in the debt ser- vice funds to service general obligation bonds, was $2,242,584 as compared to the legal debt limit of $22,883,151. The re- sulting legal debt margin is $20,640,567. There are a number of limitations and restrictions contained in the various bond indentures. The City is in compliance with all significant limitations and restrictions. There are no authorized bonds which have not been issued. 8. Reserved fund equity: Fund equity in the various funds has been reserved for the fol- lowing purposes: General fund: Inventory Capital project funds: Contract commitments Special assessment fund: Contract commitments Enterprise funds: Ice arena fund: Bond reserve escrow accounts -33- $ 89,110 $ 27,761 $364,570 $228,312 Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER -31, 1982 9. Retirement plans: The City levies annually for pension contributions to the Minne- tonka Firemen's Relief Association in accordance with State statutes. The Association has approximately 63 members to which the annual levy applies. The pension levy for the year ended December 31, 1982 was $33,373. In addition, the Association received state aid of $74,574 during 1982. The total contribution to the Association includes amortization of unfunded liabilities over twenty years. Accumulated plan benefit information and plan assets as of January 17, 1979, the most recent actuarial valuation, are presented below: Actuarial present value of accumulated plan benefits $745,307 Net assets (deficit) available for benefits $(39,000) The weighted average assumed rate of return used in determining _ the actuarial present value of accumulated plan benefits was 5%. The vested and non -vested portions of accumulated plan benefits are not available. The City participates in a state-wide contributory retire- ment plan (PERA), which covers substantially all other City employees. The contribution determined by PERA and paid by the City for the year ended December 31, 1982 was $312,141 and included an amount required to retire prior years' un- funded liabilities with full funding required by the year .. 2009. An individual City's portion of the unfunded liability of PERA is not available, because no city is directly liable for any unfunded liability under Minnesota law. -34- Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 1982 10. Fund deficiencies/deficits: Expenditures (expenses) exceeded revenues in certain individual funds for the year ended December 31, 1982 as follows: Special revenue funds: Civil defense fund $ 28,933 Police town aid fund 25,687 Public benefit fund 26,547 Forestry fund 149,530 Capital improvement fund 210,000 Storm water fund 131,026 Debt service funds: Glen lake station bond fund 52,350 Capital project funds: Park land acquisition fund 7,148 Glen lake station fund 1,147,801 Enterprise funds: Utility fund 844,132 Trust and agency funds: Firemen's relief fund 1,776 A fund balance deficit of $36,505,964 exists in the special assesment fund for the year ended December 31, 1982. This deficit arises because of the application of generally accepted accounting principles to the financial reporting for this fund (see Note 2). Bond proceeds used to finance construction of special assessment projects are not recognized as an "other financing source." Liabilities for special assessment bonds payable are accounted for in the special assessment fund. Special assessments are recognized as revenues only to the extent that individual installments are considered current assets. The deficit will be reduced and eliminated in future years as deferred special assessment installments become current assets. -35- Exhibit 6 CITY OF MINNETONKA, MINNESOTA NOTES TO FINANCIAL STATEMENTS {CONTINUED) YEAR ENDED DECEMBER 31, 1982 11. Litigation: Bren vs. City of Minnetonka: This suit requests $867,100 in damages arising out of the sale by the City of land purchased from Bren. The plaintiff alleges the City purchased land from him for $101,000 for park purposes and then proceeded to sell the land for $450,000. The City Attorney is of the opinion that the maximum exposure appears to be $350,000. This suit was commenced in 1978 and is in the discovery stage. The City feels it will prevail in this matter and no provision has been made for any possible loss. There are several other pending lawsuits, claims and disputes in which the City is involved. The City Attorney estimates that the potential claims against the City not covered by insurance resulting from such litigation, claims and disputes would not _ materially affect the financial statements of the City. 12. Reclassifications: Certain amounts in the 1981 financial statements have been re- classified to conform with the 1982 presentation. -36- APPENDIX B UNAUDITED COMBINED BALANCE SHEET UNAUDITED COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE for the Year Ended December 31, 1983 UNAUDITED CITY OF MINNET NO KA, MINNESOTA COMBINED BALANCE SHEET3D1, TYPES AND ACCOUNT GROUPS DECEMBER ASSETS Cash Certificates of deposit and government securities Receivables: Taxes, net of allowance for uncollectibles Special assessments Customer and other Due from other funds Accrued interest on investments Inventory and prepaid expenses Property and equipment, net Unamortized bond discounts and other assets Amount available in debt service funds Amount to be provided from future tax levies Amount to be provided from 4 -increments future ax $5,530,933 LIABILITIES AND FUND EQUITY Liabilities: Accounts and contracts payable $ 327,254 Interest and other payables 399,310 Dut to other funds 450,000 Bonds payable Other debt payable 75 101 Deferred revenue $1,251,665 Fund equity (deficit) Contributions Investment in general fixed assets Retained earnings Reserved Unreserved Fund balance: Reserved Unreserved $4,336,058 $1,031,517 $855,792 $ 194,496 $ $ 6,166 1,750 $ 1g4,496 $ $ 7,916 85,334 4,193,934 4,141,562 1,031,517 847,876 4,279,268 4,141,562 1,031,517 847,876 $5,530,933 $4,336,058 $1,031,517 $855,792 SPECIAL ASSESSMEN' $ 202,97 30,260,21` 16,85 43,720,06', 594,15. 1,003,77( 312,-'( 7&_111.06: $ 361,314 578,97! 63,795,00( 43,485,27( $108,220,56: 332,73, (32,442,23`: (3Z, 102, $ 76,111,06: GOVERNMENTAL FUND TYPES SPECIAL DEBT CAPITAL GENERAL REVENUE SERVICE PROJECT $ 8,276 $ (37,215) $ 8,651 $ 1,115 5,165,000 1,735,000 865,000 825,000 101,844 15,678 5,364 29,880 1,670,596 7,190 900,000 128,975 133,409 51,999 23,527 29,677 85,334 future ax $5,530,933 LIABILITIES AND FUND EQUITY Liabilities: Accounts and contracts payable $ 327,254 Interest and other payables 399,310 Dut to other funds 450,000 Bonds payable Other debt payable 75 101 Deferred revenue $1,251,665 Fund equity (deficit) Contributions Investment in general fixed assets Retained earnings Reserved Unreserved Fund balance: Reserved Unreserved $4,336,058 $1,031,517 $855,792 $ 194,496 $ $ 6,166 1,750 $ 1g4,496 $ $ 7,916 85,334 4,193,934 4,141,562 1,031,517 847,876 4,279,268 4,141,562 1,031,517 847,876 $5,530,933 $4,336,058 $1,031,517 $855,792 SPECIAL ASSESSMEN' $ 202,97 30,260,21` 16,85 43,720,06', 594,15. 1,003,77( 312,-'( 7&_111.06: $ 361,314 578,97! 63,795,00( 43,485,27( $108,220,56: 332,73, (32,442,23`: (3Z, 102, $ 76,111,06: PROPRIETARY FIDUCIARY ACCOUNT GROUPS 202,280 164,942 FUND TYPE FUND TYPE GENERAL 43,720,062 TOTAL 101,092,569 TRUST AND GENERAL LONG-TERM (MEMORANDUM ONLY) ENTERPRISE AGENCY FIXED ASSETS DEBT 1983 1982 $ 240,317 $11,897 $ 436,016 $ 354,970 2,810,000 41,660,219 41,056,805 62,038 469,691 94,376 16,701 91,543,452 268,291 $95,504,866 $ 24,550 92,914 7,190 2,415,000 156,787 $ 2,696,441 89,557,497 245,575 3,005,353 505 228,312 202,280 164,942 418,068 481,441 43,720,062 48,127,926 101,092,569 87,402,151 2,764,428 2,016,841 1,036,165 1,203,865 1,336,767 1,459,228 102,035 217,576 30,092,916 121,636,368 115,136,366 581,207 647,606 1,031,517 1,031,517 788,775 2,001,747 2,001,747 2,225,007 1,771,736 1,771,736 1,981,218 $12,402 $30,092,916 $4,805,000 $218,280,547 $215,381,125 $ $ $ $ 913,778 $ 482,523 11,897 505,871 552,019 1,036,165 1,203,865 4,805,000 71,015,000 77,515,000 156,787 187,536 43,560,377 48,038,031 $11,897 $ $4,805,000 $117,187,978 $127,978,974 30,092,916 505 92,808,425 505 30,092,916 $95,504,866 $12,402 $30,092,916 $4,805,000 89,557,497 85,484,771 30,092,916 27,592,916 245,575 228,312 3,005,353 2,666,156 418,068 481,441 (22,226,840) (29,051,445) 101,092,569 87,402,151 $218,280,547 $215,381,125 �DMNMu'1 m \D tr���r, �D M� O r,�m SDI O O \ OM000 .-•M -.I 00 N O 00 t\ d •• 00 00 o0 �DN00 rl, •-. 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N.n•y Y N V �, C y y,,, w d Q) L C O ++ r0 E O yyL C G. U C L L L C L C O �- ' y '� *' •C 00 L C H O y ro C L u > d,V w a�+ L Y G O O d j ro� W C C r0 tL0 Y U C C L C C O a C, Ln x000nUV) 0 rd *' 1 OI- �0 ��-- F— [x U..U�. Lip OFFICIAL NOTICE OF SALE $11,000,000 General Obligation Improvement Bonds, Series 1984 City of Minnetonka, Hennepin County, Minnesota NOTICE IS HEREBY GIVEN that the City Council of the City of Minnetonka, Minnesota, will receive and open bids at the City Hall in the _ City of Minnetonka on Monday, May 7, 1984, at 10:00 o'clock a.m., C.D.T., and consider bids at 6:30 p.mon the $11,000,000 general obligation. impro ementmebondse of r thee Citychone thof e following terms: Purpose and Security The purpose of the bonds is to provide funds for the financing of various assessable public improvements in the City. The bonds will be general obligations of the issuer, for which its full faith, credit and taxing powers are pledged. Dates and Maturities The bonds will be issued in fully registered form, will be dated May 1, 1984, will be in integral multiples of $5,000 each and will mature on May 1 in the following years and amounts: Year Amount Year Amount 1985 $ 250,000 1992 $ 775,000 1986 575,000 1993 775,000 1987 775,000 1994 775,000 1988 775,000 1995 775,000 1989 775,000 1996 775,000 1990 775,000 1997 775,000 1991 775,000 1998 775,000 1999 875,000 Redemption Feature All bonds of this issue maturing after May 1, 1996 will be subject to prior redemption at the option of the City in inverse order of bond maturities on said date and any interest payment date thereafter at a price of par plus accrued interest to date of redemption. Interest Interest on the bonds will be payable on May 1, 1985, and rig semiannually thereafter on eac l November and l from date issueuntil u lpaid atna on the same date must bear interest single, uniform rate, not exceeding the rate specified for bonds of any subsequent maturity. Each rate must be in an integral multiple of 5/100 fective of 1%, and no rate of interest rate of interest permitted vbyai awraof the on the day issue may exceed the maximum of sale. Paying Agent The City will name the Registrar which shall be subject ri ci al applicable SEC regulations. Principal will be payable able b the che k or draft of the the Registrar and intereof st will be pay YCity will Registrar mailed oregistered chargeshforetheer fser icesond• ofTthe Registrar.paY the reasonable andcustomary CUSIP Numbers The City will assume no obligation for the assignment or printing of CUSIP numbers on the bonds or for the correctness of any numbers printed thereon, but will permit such numbers to be assigned and printed at the expense of the purchaser, if the purchaser waives any extension of the .. time of delivery caused thereby. Delivery Within 40 days after sale, the City will furnish and deliver to the _ office of the purchaser or, at his option, will deposit with a bank in the United States selected by him and approved by the City as its agent to permit examination by and to deliver to the purchaser, the printed and executed bonds, the unqualified opinion thereon of bond counsel, and a certificate stating that no litigation in any manner questioning their validity is then threatened or pending. The charge of the delivery agent must be paid by the purchaser, but all other costs will be paid by the City. The purchase price must be paid upon delivery of the bonds in funds available for expenditure by the City on the day of payment. Legal Opinion An unqualified legal opinion on the bonds will be furnished by LeFevere, Lefler, Kennedy, O'Brien & Drawz, a Professional Association of Minneapolis, Minnesota. The legal opinion will be printed on the bonds the at the request of the purchaser. The legal opinion will state that able _ bonds are valid and binding general obligations of the City,and payable primarily from special assessments against benefited property, the City is obligated dthe and samerequired be omen due without for limit the as rto Irate al aor i interest t thereon as amount. Type of Bid - Amount Sealed bids must be mailed or delivered to the undersigned and must be received prior to the time of said meeting. Each bid must be unconditional and must be accompanied by a cashier's or certified check or bank draft in the amount of $220,000, payable to the City Clerk, to be retained by the City as liquidated damages if the bid is accepted and the bidder fails to comply therewith. The bid authorizing the lowest net interest cost (total interest from date of bonds to stated maturities, L less any cash premium or plus any amount less than $11,000,000 bid for principal) will be deemed the most favorable. No oral bid and no bid of less than $10,900,000 for principal plus accrued interest on all of the bonds will be considered, and the City reserves the right to reject any and all bids and to waive any informality in any bid. BY ORDER OF THE CITY COUNCIL /s/ Dale Eggenberger City Clerk Dated: March 19, 1984. - Call Feature - All Bonds of this issue maturing after May 1, 1996 will be subject to prior redemption at the option of the City in inverse order of maturity and by lot within a maturity on said date and any interest payment date thereafter at a price of par plus accrued interest to date of redemption. WORKSHEET $11,000,000 CITY OF MINNETONKA, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 1984 Dated - May 1, 1984 Due - May I .. First Interest Date - May 1, 1985 Year Amount Run Bond Years Cumulative Bond Years �- 1985 $250,000 1986 575,000 2 250 250 1987 775,000 1150 1400 1988 775,000 4 2325 3725 1989 775,000 5 3100 6825 1990 775,000 6 3875 10700 1991 775,000 46507 15350 1992 775,000 g 5425 20775 1993 775,000 9 6200 26975 1994 775,000 10 6975 33950 1995 775,000 11 7750 41700 1996 775,000 12 8525 50225 •• 1997 775,000 13 9300 59525 1998 775,000 14 10075 69600 1999 875,000 15 10850 80450 13125 93575 •- Average Maturity - 8.507 Years Call Feature - All Bonds of this issue maturing after May 1, 1996 will be subject to prior redemption at the option of the City in inverse order of maturity and by lot within a maturity on said date and any interest payment date thereafter at a price of par plus accrued interest to date of redemption. BID FORM MEMBERS OF THE CITY COUNCIL CITY OF MINNETONKA, MINNESOTA May 7, 1984 We offer to purchase the $11,000,000 General Obligation Improvement Bonds of 1984, of the City of Minnetonka, Minnesota to be dated April 1, 1984 and offered for sale on the above date, on the terms and conditions stated in the Official Notice of Sale and the Official Statement therefor, for a price of $10,900,000), and accrued interest to date of delivery. ( not less The bonds ofttae various maturities to bear interest at the following annual rate: _ % for bonds due May 1, 19 through May 1, 19 for for bonds bonds due May 1, 19 through May 1, 19 for bonds due due May May 1, 1, 19 19 through May 1, 19 for bonds due May 1, 19 through through May May 1, 1, 19 19_ for bonds due May 1, 19through May 1, 19 for bonds due May 1, 19 through May 1, 19 for bonds due May 1, 19 through May 13 19 for bonds due May 13 19_ through May 1, 19 for bonds due May 1, 19` through May 1, 19 Our computation of the maturity represented by the total amount of interest interest from date of issue to net interest cost of this rates specified bid, while above, and of the forth below. not a part of this bid, are set This bid is made for prompt acceptance and subject to the conditions of the Official Notice of Sale. We enclose, herewith, our cashier's or certified check or bank draft, in the amount of $220,000, which is to be held by the City pending compliance with the conditions of this bid. Respectfully submitted, Syndicate Manager By Interest Computation We compute the total amount of interest from date of issue to maturity, represented by the interest rates specified in the bid, to be for a Net Rate of The foregoing bid is hereby accepted by and on behalf of the City of Minnetonka, Minnesota this 7th day of May, 1984. Mayor Director of Finance/Clerk-Treasurer BID FORM MEMBERS OF THE CITY COUNCIL CITY OF MINNETONKA, MINNESOTA May 7, 1984 We offer to purchase the $11,000,000 General Obligation Improvement Bonds of 1984, of the City of Minnetonka, Minnesota to be dated April 1, 1984 and offered for sale on the above date, on the terms and conditions stated in the Official Notice of Sale and the Official Statement therefor, for a price of _ (not less than $10,900,000), and accrued interest to date of delivery. The bonds of the various maturities to bear interest at the following annual rate: _ % for bonds due May 1, 19 through May 1, 19 for bonds due May 1, 19 through May 1, 19 _ % for bonds due May 1, 19 through May 1, 19 for bonds due May 1, 19 through May 1, 19 _ % for bonds due May 1, 19 through May 1, 19 •- % for bonds due May 1, 19 through May 1, 19 _ % for bonds due May 1, 19 through May 1, 19 for bonds due May 1, 19 through May 1, 19 _ % for bonds due May 1, 19 through May 1, 19 for bonds due May 1, 19 through May 1, 19 Our computation maturity represented of the by total amount of interest from date of issue to the interest rates specified above, and of the net interest cost of forth below. this bid, while not a part of this bid, are set This bid is made for prompt acceptance and subject to the conditions of the Official Notice of Sale. We enclose, herewith, our cashier's or certified check or bank draft, in the amount of $220,000, which is to be held by the City pending compliance with the conditions of this bid. Respectfully submitted, Syndicate Manager ,.. By _ Interest Computation We compute the total amount of interest from date of issue to maturity, represented by the interest rates specified in the bid, to be for a Net Rate of %. The foregoing bid is hereby accepted by and on behalf of the City of Minnetonka, Minnesota this 7th day of May, 1984. Mayor Director of Finance/Clerk-Treasurer BID FORM MEMBERS OF THE CITY COUNCIL CITY OF MINNETONKA, MINNESOTA May 7, 1984 We offer to purchase the $11,000,000 General Obligation Improvement •- Bonds of 1984, of the City of Minnetonka, Minnesota to be dated April 1, 1984 and offered for sale on the above date, on the terms and conditions stated in the Official Notice of Sale and the Official Statement therefor, for a price of $10,900,000), and accrued interest to date of deliver (not less than various maturities to bear interest at the following nnualh rate:bonof the for bonds due May 1, 19 through May 1, 19 for bonds due May 1, 19_ through May 1, 19 for bonds due May 1, 19 through May 1, 19 for bonds due May 1, 19 through May 1, 19 for bonds due May 1, 19— through May 1, 19_ for bonds due May 1, 19 through May 1, 19 for bonds due May 1, 19 through May 1, 19� for bonds due May 1, 19 through May 1, 19 for bonds due May 1, 19 through May 1, 19 for bonds due May 1, 19` through May 1, 19 Our computation of the total amount of interest from date of issue to maturity represented by the interest rates specified above, and of the net interest cost of this bid, while not a part of this bid, are set forth below. This bid is made for prompt acceptance and subject to the conditions of the Official Notice of Sale. We enclose, herewith, our cashier's or certified check or bank draft, in the amount of $220,000, which is to be held by the City pending compliance with the conditions of this bid. Respectfully submitted, Syndicate Manager By Interest Computation We compute the total amount of interest from date of issue to maturity, represented by the interest rates specified in the bid, to be for a Net Rate of The foregoing bid is hereby accepted by and on behalf of the City of Minnetonka, Minnesota this 7th day of May, 1984. Mayor Director of Finance/Clerk-Treasurer 41. .. .. .. SPRINGSTED INCORPORATED PUBLIC FINANCE ADVISORS SPRINGSTED INCORPORATED. PROPOSAL TO SERVE AS FINANCIAL ADVISOR TO THE CITY OF SHAKOPEE, MINNESOTA TABLE OF CONTENTS Page(s) A. Letter of Transmittal ..................................... 1-3 B. Prof i le of the Proposer History................................................. 4 Experience .............................................. 4-5 Staff................................................... 5-6 Computer Capability ...................................... 7-8 C. Summary of SPRINGSTED Incorporated Qualifications Project Team ............................................ 9 Resumes ................................................ 10-13 Representative References ................................ 14-17 Shakopee Past Sales Information ............................ 18 D. Scope of Services Including Ratings ......................... 19-23 E. Compensation ............................................ 24 SPRINGSTED Incorporated Standard Contract .................. Exhibit I SPRINGSTED Incorporated Bond Issues 1982 to Date ............. Exhibit II Sample Official Statement - City of Willmar, Minnesota Municipal Utility Revenue Bonds ............................ Exhibit III - SPRINGSTED INCORPORATED PUBLIC FINANCE ADVISORS A. LETTER OF TRANSMITTAL 20 April 1984 Mr. Eldon Reinke, Mayor Mr. Dean Colligan, Councilmember Mrs. Dolores Lebens, Councilmember Mr. John Leroux, Councilmember Ms. Gloria Vierling, Councilmember Mr. Jerry Wampach, Councilmember Mr. John Anderson, Administrator City of Shakopee, Minnesota We are pleased to provide you the attached material in response to your invitation to submit a proposal to serve the City of Shakopee as financial advisor. We believe this material answers the specific questions you raised in your request for proposals, and provides additional information about certain matters which we feel are critical to your consideration of a financial advisor. We believe there are six primary reasons why more units of government in Minnesota select SPRINGSTED Incorporated than any other firm as their financial advisor. These reasons include: Quality and Stability of Staff We believe our staff of 26 persons represents a depth of knowledge and experience which is unparalleled in the Upper Midwest. The three staff members proposed for assignment to your account collectively have 50 years of public finance experience and have 29 years of experience with SPRINGSTED Incorporated. This stability provides a strong indication that personnel assigned to your account will not become a "cast of characters," and that the some staff is likely to be available after the _ sale of any obligations should post sale consultation be necessary in future years, or additional services be necessary. We invite your close comparison of our staff's stability with that of our competitors. 2. Independence Our sole activity is providing independent financial advisory services to tax-exempt bond issuers. Our sole source of income is from fees paid by our issuer clients. We do not, directly or indirectly, participate in underwriting commissions or profits. Our sole responsibility is to you, the issuer. In this way we are able to maintain complete objectivity in our work assignments. 3. General Experience During the period 1980-1983 SPRINGSTED Incorporated has been 800 Osborn Building, Saint Pau(, Minnesota 55102 (612) 222-4241 250 North Sunnyslope Road, Brookfield, Wisconsin 53005 (414) 782-8222 Letter of Transmittal 20 April 1984 Page 2 involved as advisor in the sale of 725 issues totaling more than $2.5 billion. That activity has provided us with a depth of experience unparalleled in this area, and is an indicator that there are few public finance problems or needs we have not encountered. Tax Increment Experience Since 1981 there have been a total of 84 tax increment bond issues sold by Minnesota's units of government. SPRINGSTED Incorporated has been the financial advisor on 41 of these issues, or 49% of all such issues marketed. Not included in these totals is the City of Shakopee's $5,300,000 Special Obligation Tax Increment Issue, sold in 1979. Shakopee Experience Since 1972 SPRINGSTED Incorporated has been privileged to serve as advisor to the Citof Shakopee in the issuance of 18 separate bond programs totaling 16,895,000. A listing of those issues, with pertinent sales data is included in this proposal. This 12 years of experience has provided us a significant knowledge of the community. Perhaps more importantly, it has provided the City an extended exposure to our professional competence and level of service. During those 12 years and 18 issues, the City has never had a major problem with its financing. Sale results have been within estimates, funds have been received on time and to our knowledge each issue has been self -supported with revenues forecast at the time of sale. That represents a significant track record of effectiveness. 4. Effectiveness With Rating Agencies We have shared with Shakopee officials for several years their concern for a higher bond rating. It is easy for someone on the outside to promise improved ratings. However, a look at the record of recent years of Minnesota rating downgradings and upgradings might serve to keep promises of others within reasonable bounds. During 1982-83 there were a total of 656 known issues sold in Minnesota. SPRINGSTED Incorporated served as financial advisor on 288 of those issues, or 44%. It would seern reasonable then, that 44% of all rating changes might involve SPRINGSTED Incorporated clients. However, actual experience is dramatically different. During this time there were 35 separate rating downgradings. Of those only 2, or 5% were SPRINGSTED Incorporated clients. During the saane period there were 7 upgradings, 4 or 57% of which were SPRINGSTED Incorporated clients. No one can guarantee rating results. However, due to our frequency of contacts with the rating agencies we understand their requirements, and we have gained and retained their respect for our credibility. Letter of Transmittal 20 April 1984 Page 3 5. Innovation Over the past several decades SPRINGSTED Incorporated has been in the forefront of change in the tax-exempt bond industry. We were the first in Minnesota to propose dramatic changes which have now become standard in the industry. These include unlimited early redemption, par calls, limits in interest rate spreads, negotiated small general obligation issues to reduce cost, marketing of tax and grant anticipation obliga- tions, advance refunding of debt, and settlement in wire transferred federal funds. Shakopee has been the beneficiary of our innovation. It was SPRINGSTED Incorporated's idea to include the new water tower in the K -Mart tax increment project, which provided a relatively painless financing source for that facility. That was the first such project in the State to be financed in that manner. That bond issue also included what we believe to be the State's first tax assessment agreement, required by Shakopee even before such agreements were authorized under Minnesota law. 6. Competitive Fee Schedule Our current fee schedule is included in the proposed contract found elsewhere in this proposal. That fee schedule is not always the lowest available but it is competitive and is set at a level which we believe is necessary to permit us to keep our highly skilled and experienced staff, and to maintain an awareness of those changing legal and market conditions which confront our clients. We prefer to have our record of performance, depth of service and consistency serve as the major incentive to prospective clients retaining our services, rather than to be known as the least expensive advisor. We look forward to discussing this proposal in detail with you at your April 24th meeting. We have enjoyed our Shakopee experience and we feel it has been mutually rewarding. We want to continue that relationship through the next several years of difficult financing responsibilities for the City. We believe the City's best interests will be served by our retention. Respectfully submitted, Robert D. Putscher President /gf B. PROFILE OF THE PROPOSER History SPRINGSTED Incorporated traces its beginning over more than half a century, _ which makes it one of the oldest continuing financial advisory firms in the nation. During that time it has had several corporate designations and has been directed since 1955 by Osmon R. Springsted. SPRINGSTED Incorporated is a private corporation and has no ownership or contractual affiliations with any other firm, business or persons and has no indebtedness other than current billings. Our sole source of income is from fees received for services rendered. SPRINGSTED Incorporated does not share fees, nor accept payment except directly from its clients. SPRINGSTED Incorporated is solely engaged in the activity of providing financial advisory services to issuers of tax-exempt obligations. SPRINGSTED Incorporated does not, directly or indirectly, participate in underwriting profits or commissions of offerings of its clients and has no affiliation with, or commitment to, any organization which may purchase obligations of its clients or may otherwise be involved in an offering. Experience SPRINGSTED Incorporated is one of the largest public finance advisory firms in the nation. In addition to the planning and implementation of capital financing, SPRINGSTED Incorporated's staff is called on frequently for management services such as: economic feasibility studies of redevelopment projects, tax increment financing, long range capital improvement financing plans, idle cash investments, utility rate studies, alternative cost ,recovery methods, and consolidation and coordination of services. While a major share of our work experience has been gained in work with local units of government located in the Upper Midwest, our qualifications and expertise are being increasingly recognized by major issuers including: -4- City of Billings, Montana City of Saint Paul, Minnesota City of Wausau, Wisconsin Consortium of Universities, Washington, D.C. Georgetown University The George Washington University Louisiana Association of Independent Colleges and Universities Minnesota Higher Education Coordinating Board Minnesota Higher Education Facilities Authority Washington State Student Loan Guaranty Association Staff SPRINGSTED Incorporated has a current staff of 26 - 16 of whom are finance professionals having an average tenure of ten years with 5rrcuvc 5 i Cu Incorporated. The five Senior Officers of the firm collectively have over 130 years experience in municipal finance and all have been with SPRINGSTED Incorporated for more than 13 years. Our staff and their areas of responsibility are listed on the following page. -5- SPRINGSTED Incorporated Staff Osman R. Springsted Robert D. Pulscher Chairman & Chief Executive Officer Project Management President Ronald W. Langness Senior Vice President Gerard B. Shannon Vice President Richard L. Treptow Vice President J. Luther Anderson Assistant Vice President, Computer & Statistical Services Jason C. Willett Financial & Systems Analyst Kingsley D. Forness David L. Goblirsch Dr. David B. Laird, Jr. Luther Fjelstad Diane M. Allan Carolyn J. Ganz Corliss J. Weeks Allen E. Hoppe Nancy L. Langness Cristine E. Pasch Elizabeth G. Aby Patricia A. Walters Verle E. Polglase Kim U. Poirier Gloria A. Fudenberg Rhonda T. Mott Dena L. Rabe Patricia L. Heroff Teresa L. Lowen Project Development Research and Analysis Legal Liaison Services Support Services M Senior Vice President Senior Vice President Vice President Vice President Administrative Assistant Assistant Vice President Assistant Vice President Analyst Assistant Vice President Assistant Vice President & Treasurer Office Manager Librarian Supervisor Word Processing Word Processor Word Processor Word Processor Receptionist General Office Assistant Computer Capability SPRINGSTED Incorporated's computer capability permits us to accommodate an ever increasing work responsibility and represents an important supplement to our 26 -member staff. We apply state-of-the-art computer technology which enables us to provide our clients rapid, optional in-depth studies of, and solutions to, complex problems. Six computer terminals in our office provide access to the speed and power of large-scale computers of two major time sharing services, with results instanta- neously transmitted for printout on SPRINGSTED Incorporated terminals. Time sharing hardware includes two DEC 11 /70 computers and a CDC Cyber 835. SPRINGSTED Incorporated has supplemented its mainframe processing capabilities with seven microcomputers, and is evaluating the feasibility of purchase of additional units. _ SPRINGSTED Incorporated has developed its own computer programs for advance refundings which enables us to rapidly adjust to changes in federal and state regulations. This in-house programming capability also permits us to fine tune a refunding to the specific issue in a much more efficient manner than can a program which is marketed nationally and therefore is designed to cover the broadest spectrum of issues. Two full-time computer professionals are on staff and are responsible for developing that software programing considered necessary for a continued expansion of our service. We have a data base implemented which permits SPRINGSTED Incorporated to enter and recall all debt service payments for major issuers, on a levy year, revenue year, fiscal year or payment year basis. _ Other programs developed in recent years include: Even Debt Service Structuring Grant Anticipation Structuring Average Annual Debt Service w/Current Debt Tax Increment Analysis Average Annual Debt Service/Net of Income Advance Refunding Calculations -7- Even Annual Principal Structuring Defeasance Programs Revenue Cash Flow Modeling Tax Impact Analysis Leasing Programs Special Assessment Models Scale Coupon Rate Calculations True Interest Cost Calculations Our in-house programming staff is also accustomed to developing cash flow and other models for specific projects, permitting our analytical staff to develop as many options, variations and sensitivity studies as are required for complex revenue -based financings. The large-scale computers accessible through our time sharing arrangements permit the scope of these analyses to be as broad as is required by the complexity of the financing. C. SUMMARY OF SPRINGSTED INCORPORATED'S QUALIFICATIONS Project Team Although many members of the SPRINGSTED Incorporated staff will be involved with your projects to varying degrees, a Project Team will be assigned which will collectively be responsible for all phases of SPRINGSTED Incorporated involvement with your project and will be the staff members working directly with you throughout the project. The City of Shakopee Project Team will consist of the three individuals whose resumes follow hereafter. The percentage of time each member of the Project Team will devote to your projects will vary dependent on the work to be accomplished at any given time and the timetable agreed on. We are proud of our ability and reputation for getting the job done right and on time. Mr. Robert Pulscher will serve as Project Manager and retain full responsibility for the conduct of required work. M Education: Experience: RESUME Robert D. Pulscher University of South Dakota, Vermillion, South Dakota Received B.A. degree in Government and Business Administration, 1956 University of Kansas, Lawrence, Kansas Received MPA degree in Public Administration, 1959 University of Chicago, Illinois Completed Advanced Management Training Program for Municipal Administrators, 1962 After discharge from active duty with the U.S. Army Adjutant General's Corps, Mr. Pulscher enrolled in graduate school at the University of Kansas and subsequently began employment as an intern in the City Manager's office at Sioux City, Iowa. In 1959 he was appointed Administrative Assistant and placed in charge of implementing the city's first Minimum Housing Code Inspection program and for development of initial financing projections for the city's first urban renewal program. 1960- 1967 Mr. Pulscher was appointed City Manager of Coon Rapids, Minnesota in early 1960. During his tenure the city's population grew from approximately 10,000 to 24,500. Major work efforts involved development of comprehensive zoning and land use plans; construction and financing of multiple public improvements, including utilities, public buildings and recreational facilities; organization and implementation of the North Suburban Sanitary Sewer District; and the provision of public services to an expanding community with budgets consistently representing one of the lowest per capita spending totals in the State. Mr. Pulscher's innovative financing of public improvements drew wide attention and were copied by many suburban communities in the metropolitan area during this time frame. 1967 - 1970 Assuming the position of City Manager of .Muskegon, Michigan provided Mr. Pulscher an opportunity to deal with extensive redevelopment problems. During his tenure the city completed the State's largest residential urban renewal housing project, completed HUD's first scattered site public housing program in Michigan and started a $24 million Central Business District redevelopment project involving major clearance, relocation and new construction. That project was completed successfully in 1974. From 1970 through 1973 Mr. Pulscher served as special consultant for financial matters on this and other development projects for the City of Muskegon. S1m 1970 - Present Mr. Pulscher joined SPRINGSTED Incorporated as Executive Vice President in 1970 and began working with local units of government in the Upper Midwest in areas of management and financial related problems. In 1974 he began to concentrate on financial advisory service primarily to cities, counties and special districts. In that capacity he was the primary advisor on the first sanitary district financing done outside the metropolitan area; on several of the State's early general obligation tax increment bond issues; on the State's first two tax increment revenue bond programs involving industrial uses; and has been instrumental in the development of numerous innovative financings of recreational facilities, housing projects, hospitals, transit facilities and public utilities. In 1979 Mr. Pulscher became President of SPRINGSTED Incorporated and has the responsibility of supervising all municipal consulting activities of the firm. He continues to work as the primary Project Manager for many of the firm's major municipal accounts. Shakopee Experience Mr. Pulscher has served as Project Manager on all Shakopee bond issues since 1972. He has been SPRINGSTED Incorporated's direct representative to the City on 16 separate issues totaling $16,545,000. Affiliations: Municipal Finance Officers Association of the United States and Canada Minnesota Municipal Finance Officers Association International City Management Association Citizens League, Twin Cities Minnesota Association of School Business Officials RESUME Richard L. Treptow Education: Drake University, Des Moines, Iowa Received B.S. degree in Accounting, 1968 Course in Governmental Fund Accounting, 1969 Municipal Finance Officers Association Intermediate Governmental Fund Accounting, 1977 Experience: As an Accounting and Finance Officer in the U.S. Air Force, Mr. Treptow was in charge of all base level fund accounting systems for Grand Forks Air Force Base. Responsibilities included the setting of policy for and the administration of the seven departments reporting to his office. From 1972 to 1976 Mr. Treptow held four different positions of increasing responsibility with a large Fortune 500 company. His areas of responsibility included financial analysis, annual and five-year planning for both capital and operating budgets, business analysis for product decisions and financial reporting to government, management and investors. Mr. Treptow developed creative financial tools still in use for the computer assisted measurement of inventory cost and runout positions, product discontinuance decisions and price - volume analysis. Mr. Treptow joined SPRINGSTED Incorporated as Assistant Vice President in 1976. Although he has been involved in nearly every type of tax-exempt financing, he has specialized in the more complex, highly technical debt issues of advance refundings, utility mortgage revenue bonds, special assessment and tax increment projects. His involvement has included utility rate studies, statistical and computer applications for data analysis. He also has a high level of experience and expertise for data analysis. He also has a high level of experience and expertise in cash flow and investment of municipal funds, and has been requested to address the Minnesota Association of County Treasurers on this topic on several occasions. In recent year, Mr. Treptow has specialized in assisting school districts in cash flow management and in the issuance of Tax and Aid Anticipation Certificates. In 1980, Mr. Treptow was elected Vice President, Project Management of SPRINGSTED Incorporated and serves as Project Team Manager for many of the firm's major accounts. Shakopee Experience Mr. Treptow has served as Assistant Project Manager on eight Shakopee issues since 1977, including the City's $5,300,000 Tax Increment Revenue Bonds of 1979. Affiliations: Minnesota Municipal Finance Officers Association Wisconsin Municipal Finance Officers Association Minnesota Economics Club -12- RESUME Carolyn J. Ganz Education: University of Minnesota, Received B.A. degree Sequence Experience: Minneapolis, Minnesota n Journalism, News/Editorial Ms. Ganz joined SPRINGSTED Incorporated as an Analyst in 1976 and was elected an Assistant Vice President in 1980. Her studies at the University of Minnesota concentrated on local government and American social policy. Prior to becoming a part of the SPRINGSTED Incorporated staff she did research in the area of banking and insurance for a published guide to public records, and as a member of the staff of a metropolitan area newspaper published a series of articles on land use. Ms. Ganz's area of expertise at SPRINGSTED Incorporated is the compilation and analysis of statistical, economic, financial and demographic data necessary for the sale of a bond or note issue. She is also responsible for writing the official statment for the issue. In her role as Analyst, she is involved in the presentation of both the issue and the issuer to the New York credit agencies and to bond underwriters across the country. She is a member of our internal Rating Committee, which was organized to review client ratings and to monitor policy changes of the rating agencies. Her special areas of study have included extensive course work in governmental accounting and the analysis of financial statements; pre-election assistance for school districts, including the preparation and presentation of voter information and discussion of tax impact at public meetings; health care facilities issues; and, student loan programs. Ms. Ganz is a member of the Minnesota Municipal Officers Association and was a "Project Business" consultant for Junior Achievement, a program bringing business people into junior and senior high school classrooms on a weekly basis. She will complete work in June, 1984 on a masters degree in public administration at the College of St. Thomas in Saint Paul, Minnesota. Ms. Ganz has been the primary analyst on eight issues in Shakopee since 1977 and is intimately familiar with the City's finances, its economy and bond rating history. -13- Representative Client References for Robert D. Pulscher City of Alexandria, Minnesota Population 7,608. Central city, S-1 client since 1960. Responsibility of Robert Pulscher since 1970. Fifteen bond issues sold since 1970 including two electric revenue and one tax increment issue. References Paul Nelson, Mayor Arlan Johnson, Administrator (612/763-6678) City of Anoka, Minnesota Population 15,634. S-1 client since 1981. Older suburban city with downtown retail area. Six bond issues since 1981 including improvements, golf course, and advance refunding issues. References Jerry Dulgar, City Manager H. James Otto, Finance Director (612/421-6630) City of Billings, Montana Montana's largest city. Population 65,000. Client since 1982. Three bond issues since 1982 including $9,500,000 Public Utility Revenue Bonds and $6,000,000 Tax Increment Revenue Bonds. References Alan Thelen, City Administrator Thomas McKerlick, Community Development Director (406/657-8201) City of Brooklyn Center, Minnesota Population 31,230. First tier suburb, primarily fully developed. Client since 1972. Five bond issues including one tax increment issue for housing purposes. References Gerald Splinter, City Manager Paul Holmlund, Finance Director (612/561-5440) -14- City of Champlin, Minnesota Population 9,006. Suburban community with downtown retail area with large amounts of undeveloped property. Client since 1971. Twenty-three issues sold including general obligation, utility revenue and recreation facility revenue bonds. References Dale Winch, Mayor Daniel Hartman, City Administrator (612/421-8064) City of Coon Rapids, Minnesota Population 35,826. Client since 1962. Rapidly growing suburb with large amounts of undeveloped property. Twenty-three bond issues sold since 1970, including two tax increment issues for industrial and housing purposes. References Robert Lewis, Mayor Robert Thistle, City Manager (612) 755-2880 City of Inver Grove Heights, Minnesota Population 17,171. Second tier suburb with large amounts of undeveloped property. Client since 1974. Since that time seventeen issues have been placed including $2,900,000 Tax Increment Revenue Bonds for the Cenex project. References William Soed, Mayor Robert Schaefer, City Administrator (612/457-2111) City of Lakeville, Minnesota Population 14,790. Second tier suburb with central retail area with large amounts of undeveloped property. Client since 1958. Since 1970 S-1 has served as advisor on thirty-four issues, including two tax increment issues. References Duane Zoun, Mayor Patrick McGarvey, City Administrator (612/469-4431) -15- City of Maple Grove, Minnesota Population 20,525. Metropolitan area's most rapidly growing suburb. Client since 1971. Since then S-1 has been advisor to the City on forty-two issues including two tax increment issues. References James Deane, Mayor Douglas Reeder, City Administrator (612/420-4000) City of Marshall, Minnesota Population 11,161. Outstate central city with rapidly growing agri- business economy. S-1 client since 1960. Twenty-four bond issues have been sold since 1970 including four tax increment issues. References Robert Schlagel, Mayor James Heller, City Administrator (507/537-6763) City of Minnetonka, Minnesota Population 38,683. Regular financial advisor is Miller -Schroeder. S-1 retained as special consultant on tax increment projects including $7,750,000 Carlson Center tax increment revenue issue and $3,000,000 Cliff Housing Project tax increment revenue issue. References James Miller, City Manager .- Barry Johnson, HRA Director (612/933-2511) City of Moorhead, Minnesota Population 29,998. Outstate central city with large central business district redevelopment project. S-1 client since 1958. Forty-two bond issues have been sold since 1970, including six tax increment and two electric revenue issues. References Morris Lanning, Mayor Everett Lecy, Administrative Director (218/299-5301) M City of White Bear Lake, Minnesota Population 25,380. First tier suburb with large central business district now undergoing redevelopment. S-1 client since 1962. Sixteen bond issues sold since 1970 including one tax increment issue. References Brad Stanius, Mayor David MacGillivray, Finance Director (612/429-8526) City of Willmar, Minnesota Population 15,895. Outstate central city with sound and diversified T economic base. Recently completed total downtown redevelopment project. S-1 client since 1971. Thirty-two bond issues sold since then, including hospital and electric utility revenue bonds and four tax increment issues. References F. J. Reynolds, Mayor Richard Hoglund, City Clerk C. Ted Nelson, Public Utilities Manager (612/235-4913) Shakopee Area References Scott County Anthony Worm, Chairman Joseph Ries, Administrator Thomas Hennen, Auditor City of Burnsville Connie Morrison, Mayor James Spore, City Manager City of Savage Rod Hopp, Mayor Mark McNeill, Administrator -17- Sale Date CITY OF SHAKOPEE, MINNESOTA PAST SALES INFORMATION FINANCIAL ADVISOR: SPRINGSTED INCORPORATED Issue (1) (2) Net Interest General Obligation Cost Bond Buyer's Index 8/29/72 $ 605,000 G.O. Improvement 4.87 5.32 4/17/73 495,000 G.O. Improvement 4.60 5.07 6/12/73 295,000 G.O. Improvement, Series B 4.80 5.13 8/27/74 600,000 G.O. Improvement 6.51 6.73 2/25/74 600,000 G.O. Temporary Improvement 4.68 6.40 7/29/75 850,000 G.O. Public Service Building 6.15 7.22 7/29/75 175,000 G.O. Improvement 5.88 7.22 8/24/76 845,000 G.O. Improvement, Series A 5.20 6.60 1/18/77 135,000 G.O. Improvement, Series A 4.51 5.89 8/09/77 1,200,000 G.O. Improvement, Series B 4.58 5.63 11/09/77 995,000 G.O. Improvement, Series C 4,71 5.55 1/16/79 240,000 G.O. Improvement, Series A 5.65 6.50 11/20/79 5,300,000 Special Obligation Tax Increment 8.28 N. A. 11/27/79 370,000 G.O. Tax Increment Bonds 6.64 7.38 5/20/80 2,900,000 G.O. Improvement, Series A 6.86 7.44 7/07/81 940,000 G.O. Improvement, Series A 9.83 10.85 12/01/81 165,000 G.O. Judgement 8.89 11.98 7/20/82 185,000 G.O. Improvement Bonds 10.48 12.36 111 (1) Represents net interest rate received on issue. (2) Represents General Obligation 20 -Bond long-term of Shakopee issues. Bond Buyer's Index of the week of sale D. SCOPE OF SERVICES SPRINGSTED Incorporated prides itself upon its innovativeness and ability for problem solving. We never assume that a project may be cast in the mold of previous experience. We believe this is why we have been chosen so often as the advisor for difficult and unusual projects requiring ingenuity and patience, especially with respect to tax supported offerings, an area in which we believe we are preeminent. Although the ultimate goal of an advisor is the successful marketing of the obligations of a client, we believe that paramount to that goal is the sound structuring of the project to best serve the client not only to satisfy the immediate marketing problem, but more importantly, for the life of the obligation. It is easy to gain a better interest rate and marketing advantage by "giving away the store" but this probably does not serve the clients' real best interest. Therefore, our service emphasizes feasibility review and issue - structuring which takes into careful consideration debt supporting ability and _. equities of debt service production. In short, we do not approach a project as "bond peddlers," but as full-service advisors. Throughout a project we maintain a program of review and re -review, analysis and re -analysis. Prior to the client's decision to bring an issue to market, SPRINGSTED Incorporated presents written recommendations containing our appraisal of feasibility, cash flow projections, estimated debt service require- ments and rateability as well as callability, term and other provisions of the obligations. In all instances it is our practice to state our reasoning in order that the client may be fully informed of why we have made a recommendation and may judge the soundness and logic of our premises. Our overriding policy at all times is to "get the job done right." We believe major services which would be required include those shown hereafter. SIM I. Selection of Proper Authorization SPRINGSTED Incorporated would review the authorization available to the City of Shakopee and would examine that authorization process to fully acquaint ourselves with the required process for issuance of bonds for the project. II. Design of an Appropriate Debt Service Program A successful sale of bonds can be assured through careful planning, design and analysis. SPRINGSTED Incorporated will prepare alternative programs for review by the City Council and staff which will take into consideration: A. Revenues and/or tax base available for debt service. B. The Issuer's resources, taking into account current and future needs. C. Marketability factors, including: I. Current and forecasted market conditions. 2. Rating. 3. Discount requirements and rate limitations. 4. Length of maturities and redemption options. 5. Market acceptability of the purpose and amount. 6. Security covenants. SPRINGSTED Incorporated personnel will attend whatever meetings are necessary to assist the City in arriving at a decision on the final program to be marketed. III. Preparation of Offering Statement SPRINGSTED Incorporated personnel, in cooperation with City staff will develop all data required to obtain a rating and will assume responsibility for preparation of the initial draft of the offering statement, will arrange for printing of the statement and will distribute it to all potential bond purchasers. -20- Required information for the offering statement will include: A. Nature and purpose of the project. B. History of the City's population growth, total revenues, taxable values, budgets, land use and tax collections. C. Forecast of future tax base, if possible. D. Future financing plans. E. Financial audit information. IV. Ratings SPRINGSTED Incorporated will assemble all data required for the credit evaluation by the rating agencies. The rating of an issue is primarily dependent upon the credit being rated. However, the manner in which data is presented to a rating agency is critical and a fundamental responsibility of a financial advisor. We believe our experience uniquely qualifies SPRINGSTED Incorporated in this area of expertise. Our staff constantly monitors ratings not only of the offering of our clients but of other sales also. Within our staff we have a "Rating Committee" whose task is to evaluate the probable rating of each issue for which we are the advisor and to identify the areas of strengths and weaknesses of an issue before preparation of a rating presentation. In the last four years eight of our clients were awarded a rating above that previously assigned. In addition more than 16 clients received ratings for the first time. We are reluctant to "push" the rating agencies for a higher rating unless we feel a rating upgrading is warranted. We have felt for several years Shakopee's rating should be raised from "A" to "A I." Moody's Investors Service repeatedly has rejected an increase, citing Shakopee's large undeveloped land area, lack of a comprehensive land use plan and lack of a formal capital improvement program budget. We have had a Moody's analyst visit Shakopee to tour the community in an effort to impress upon them the quality of new development. We had planned in 1982 and 1983 a personal rating presentation in New York, but the City issued only $185,000 of improvement bonds in 1982, and had no bond issue in 1983, and we felt the expense of a trip, estimated at $3,000-$4,000 was not justified. -21- We do not feel a rating request normally should be made until the City has a specific issue to be marketed, since a better rating has no benefit to the City except through lower interest rates on a new issue. We would recommend a personal presentation to Moody's in advance of your current financings. Circumstances have changed in Shakopee since _ your last rating was obtained in 1981. These changed circumstances include the following: I. Lower debt ratios since 1981. 2. Additional sustained population and economic growth. 3. Adoption of a comprehensive land use plan with designated municipal service boundaries. 4. Designation of Shakopee as the site for the race track, with a projected growth in ancillary development. SPRINGSTED Incorporated makes no additional charge for services involved with rating presentations, but does request reimbursement for travel expenses. The key -stone of an advisor's ability to influence a rating agency must be a reputation for accuracy and integrity. We strive to never cause the _ raters concern as to the reliability of information we present. We would welcome your verification of this with either, or both, Moody's Investors Service, Inc. and Standard & Poor's Corporation. V. Other Services A. SPRINGSTED Incorporated shall arrange for all required publica- tions of the official notice of sale. We will also serve as liaison with local counsel and bond counsel. B. If the issue is sold by public, competitive bidding SPRINGSTED Incorporated shall attend the opening of bids for the issue, compute the accuracy of the bids and make a recommendation as to the acceptability of the best offer. If the sale is by private negotiation, SPRINGSTED Incorporated shall assist the client as -22- to the acceptability of the underwriting offer. The final decision of acceptance or rejection of an offer either received by public bidding or negotiation will be solely that of the client. C. SPRINGSTED Incorporated shall arrange for the printing, signing, security and settlement of the issue. D. At the client's request, SPRINGSTED Incorporated shall make suggestions for the initial investment of the proceeds of the issue. E. SPRINGSTED Incorporated shall compile a Bond Record contain- ing information pertinent to the issue, to which the client may need to make reference during the life of the issue. The Record will include a schedule of debt service payments. VI. Additional Services SPRINGSTED Incorporated for negotiated fees can provide additional services unrelated to a specific bond issue. Those additional services have included: A. Economic analyses of requests for tax-exempt development subsidies. B. Tax and revenue projections for revenue supported programs. C. Utility rate analyses. D. Special assessment policies. E. Special counsel on bond defeasance programs. -23- E. COMPENSATION Our fee schedule for various type issues is contained in our standard contract, a copy of which is included in this proposal as Exhibit I. For purposes of summarizing the schedule we have provided the following specific fees for certain illustrative issues. Issue Fee $1,000,000 General Obligation Improvement $ 9,100 $2,000,000 General Obligation Improvement $12,100 $2,000,000 General Obligation Tax Increment $18,150 $4,000,000 General Obligation Tax Increment $25,350 Advance Refundings - General Obligation or Revenue Fee to be Negotiated These illustrative fees represent total compensation for standard services and include payment for the following items: I. All SPRINGSTED Incorporated staff time. 2. Overhead expenses, including travel costs within the metropolitan area. 3. Preparation of the Official Statement. 4. Delivery and settlement costs for Twin City settlements. In addition, SPRINGSTED Incorporated would request reimbursement for actual out-of-pocket expenses incurred, or payment required for the following items: I. Printing and publication of Official Statement. 2. Printing of the obligations. 3. Registration expenses. 4. Rating fees and travel for rating presentations. 5. Bond counsel fees. 6. Legal publication costs. -24- SPRINGSTED INCORPORATED PUBLIC FINANCE ADVISORS EXHIBIT I WHEREAS, the City of Shakopee, Minnesota, ("Client"), wishes to retain SPRINGSTED Incorporated ("S-111) as its Financial Advisor, S-1 is pleased to make this Proposal which shall constitute the "Contract" between Client and S-1 upon Client's (i) execution of an acceptance of the proposal, or (ii) upon S -I's performance of a Service or Additional Service, each hereinafter described, at Client's request, whichever event occurs first. Section I. Services For each debt offering (an "Issue") undertaken by Client during the term of the Contract, as appropriate, S-1 shall: A. Prepare: (i) a fiscal feasibility report; (ii) an estimate of principal and interest requirements ("Debt Service"); (iii) an opinion of the adequacy of Client's current or proposed cost -recovery policies to provide Debt Service; (iv) alternative methods for the provision of Debt Service; (v) an opinion of the fiscal impact upon Client's: (a) constituents, (b) resources, (c) rating, and (d) future financing capabilities; (vi) an opinion of marketability; (vii) a debt retire- ment plan acceptable to Client which shall consider: (a) revenues available for Debt Service, (b) correlation of Debt Service with outstanding and projected indebtedness, (c) current and projected fiscal policies, (d) adequacy of the anticipated cash flow to meet Debt Service, (e) Client's resources, (f) marketability factors, and (g) arbitrage regulations; (viii) Client's Official Statement which S-1 will distribute to prospective bidders on behalf of Client; B. Sample market interest and encourage offers; C. Arrange publications of the Official Notice of Sale; D. Submit a recommendation as to whether the Issue should be rated, and, if Client elects to apply for a rating, prepare information for presentation to the rating agency; E. If the Issue is sold by public, competitive bidding, compute the accuracy of the bids and submit a recommendation as to the acceptability of the best offer, or, if the sale is by private negotiation, assist Client with the negotiation and advise Client as to the acceptability of the offer; F. Arrange for the printing, signing, delivery and settlement of the Issue; 800 Osborn Building, Saint Paul, Minnesota 55102 (612) 222-4241 250 North Sunnyslope Road, Brookfield, Wisconsin 53005 (414) 782-8222 G. At Client's request, make suggestions for the initial investment of the proceeds of the Issue; H. Compile a Bond Record containing information pertinent to the Issue, including a Debt Service payment schedule, to which Client will need to make reference during the life of the Issue; and, I. Act as Client's liaison with legal counsel. Each of the foregoing, A. through I., shall be referred to herein as a "Service," or, collectively, the "Services." Section II. Fees for Services A. When an Issue has been settled, or S-1 has performed all of the appropriate Services for settlement, S-1 shall be compensated pursuant to whichever of the following Fee Schedules of this Section is appropriate, subject however to the provisions of subsection B. 3 of this Section: I. Fee Schedule I - For issues primarily supported by a general tax levy or special assessments. Amount of - 2000 Issue 2001 - 2500 (000 Omitted) Fee $ to 100 $ 4,900 101 - 300 5,500 301 - 500 6,400 501 - 700 7,300 701 - 900 8,200 901 - 1100 9,100 1101 - 1300 10,000 1301 - 1500 10,900 Amount of Issue (000 Omitted) Fee $1501 - 2000 $12,100 2001 - 2500 13,300 2501 - 3000 14,500 3001 - 3500 15,700 3501 - 4000 16,900 4001 - 4500 17,900 4501 - 5000 - upwards 18,900, plus $800 per $.5 million or any part there- of in excess of $5.5 million 2. Fee Schedule 2 - For issues primarily supported by project revenues or tax increments. When the Debt Service of an Issue will be primarily supported by revenues of the project to be financed from the proceeds of the Issue, or from tax increments, S -I's fee shall be 1.5 x the foregoing Fee Schedule I for an Issue of like principal amount. B. The following shall be a part of each of the foregoing Fee Schedules: I. Expenses S-1 shall not be responsible for issuance expenses of: (i) printing and distributing the Official Statement, (ii) publication of notices, (iii) legal fees, (iv) printing the -2- obligations, (v) delivery and settlement, (vi) travel, except S -I's travel between Client's and S -I's offices, (vii) rating fees, (viii) other direct expenses specifically incurred for the Issue, including S -I's in -office duplication costs for copies in excess of 200, (ix) telephonic toll charges, and, (x) delivery charges other than by regular mail. S-1 may bill Client for expenses advanced by S -I as those expenses are incurred; and payment shall be due upon Client's receipt of such billings. 2. Fee Payment a. When Due S -I's fee shall be due upon Client's receipt of Issue proceeds, except that in the event (i) no offer for the Issue is received, or none is accepted, or (ii) an award is made of the Issue but, by no fault of S -I, it becomes impossible to make delivery within the time specified, in each instance S-1 shall be deemed to have fully discharged its responsibilities pursuant to the Contract and S -I's full fee for the Issue shall be due. If thereafter a delivery of the Issue is completed S -I shall be entitled to no additional fee for performance of a Service necessary therefor, unless such Service is an Additional Service pursuant to Section III hereinafter. b. Abandonment In the event an Issue is abandoned, S-1 shall be compensated forthwith for any Service performed by S -I to the point of abandonment as if that Service was an Additional Service hereinafter described. An Issue shall be deemed to have been abandoned whenever no action has been taken by Client relative to the Issue for a period of one year from the date of S -I's initial performance of a Service, or there has been an overt act of abandonment by Client. 3. Effective Period of Fee Schedules The Fee Schedules set forth in the Contract shall be guaranteed by S-1 for 12 months following the date on which S-1 submitted the Contract to Client (the "Date"); thereafter S-1 shall be compensated at the rates of the appropriate S-1 Fee Schedules in effect at the time of S -I's completion of a Service or an Additional Service, except, if an Issue is both commenced within the initial 12 -month period following the Date and is completed within 24 months of the Date the effective Fee Schedule shall be the appropriate Fee Schedule initially set out in the Contract. Section III. Additional Services In the event Client requests and S-1 performs a service other than one of the Services described in Section I herein, or if S-1 repeats any of the said Services, which repetition is not the fault of S -I, such service shall be an "Additional Service" for which S-1 shall be compensated pursuant to the following Fee Schedule, subject however to the provisions of Section 11. B. 3 herein: -3- 0 Section IV. Fee Schedule 3 I. Hourly Rates Senior Officer $125 Data Processing $50 Officer $ 85 Word Processing 525 2. Expenses In addition to the foregoing hourly charges S-1 shall be reimbursed for the expenses described in Section II. B. I herein, plus travel expenses between Client's and S -I's offices. 3. When Due Fees for an Additional Service shall be due upon completion of the Additional Service. None of the fees herein stated shall be applicable to an advance refunding issue, the fee for which shall be negotiated between Client and S -I. Section V. S-1 shall not participate directly or indirectly in the purchase or resale of any Issue. Section VI. The Contract shall not prohibit Client and S-1 from entering into a separate contract relative to a specific Issue or project. Section VII. S-1 agrees to abide by the requirements of Title VI of the Civil Rights Act of 1964. Section VIII. Reports, information, data, etc. given by Client to S -I, or prepared or assembled by S-1 pursuant to the Contract shall be kept confidential by S-1, except as its release is necessary to the performance of a Service or Additional Service pursuant to the Contract. Section IX. All finished or unfinished documents, data, studies, surveys, drawings, maps, models, photographs, reports and memorandums, prepared by S -I, except T internal records of S -I, shall be Client's property. Section X. S -I shall perform its duties pursuant to the Contract as an independent contractor and S-1 employees shall not be deemed to be Client's employees. Claims that may or might arise under any workmen's compensation act on behalf of S -I's employees while engaged in the performance of duties pursuant -4- to the Contract and any claims made by any third party as a consequence of any act or omission on the part of S -I's employees or other persons while so engaged by S-1 in the performance of duties pursuant to the Contract shall not be Client's obligation or responsibility. t Section XI. S-1 shall disclose to Client any contract, agreement or understanding S-1 has as of the date of submission of the Contract, or in the future may have, with any entity or individual which in S -I's opinion may represent a conflict of interest in the performance of S -I's performance of its duties for Client and if Client determines that there is in fact a conflict, then S -I shall forthwith resign from such conflicting contract, agreement or understanding, in which event the Contract shall remain in full force and effect. In the event S -I does not so resign, then Client shall have the option of terminating the Contract forthwith by written notice to S -I and Client shall be liable to S -I for only those amounts due S -I by the terms of the Contract to the date of such termination. Section XII. Indemnification The Client and S -I shall each indemnify and hold harmless the other from and against any and all losses, claims, damages, expenses, including legal fees for _ defense, or liabilities, collectively, "Damages," to which either may be subject- ed by reason of the other's acts, errors or omissions, except however, neither will indemnify the other from or against Damages by reason of changed events and conditions beyond the control of either or errors of judgment reasonably made. Section XIII. Other Agreements -5- Section XIV. Contract Term The Contract between Client and S-1 shall continue until such time as either party terminates it by not less than 60 days written notice to the other party except that the Contract shall continue in full force and effect with respect to an Issue commenced during the time the Contract is in effect until completion of such Issue. The Contract may be amended in whole or in part from time to time by mutual consent of the parties. Submitted this 20th day of April, 1984 SPRINGSTED Incorporated C Robert D. Pulscher President The foregoing proposal by SPRINGSTED Incorporated is accepted this day of , 19 on behalf of the City of Shakopee, Minnesota. M. 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The following is presented for informational purposes only. A SUMMARY OF CITY PROPERTY VALUES, OUTSTANDING DEBT AND DEBT COLLECTIONS 1983 Indicated Market Value of Taxable Property: $368,259,844 1983 Taxable Assessed Value: $69,608,233 Trend of Values Ten of the Largest Taxpayers Taxpayer First Union Real Estate Investments Medical Park of Willmar, Inc. Minnesota Gas Company First National Bank of Willmar Jennie -0 -Foods, Inc. Torgerson-Forstrom Willow Run Partners Burlington Northern, Inc. First American Bank & Trust Meadowbrook Apartments of Wi I Imar Type of Business Shopping Center Medical Clinic Utility Bank Turkey Processing Holiday Inn Motel Apartments Railroad Bank Apartments Tota I * Represents 11.3% of the total assessed value. -13- 1983 Taxable Assessed Value $1,823,000 1,122,972 870,969 828,367 804,900 625,450 502,436 480,998 421,200 410,720 $7,891,012* Indicated Taxable Market Value Assessed Value - 1983 $368,259,844 $69,608,233 1982 354,100,913 68,479,455 1981 335,990,793 64,276,838 1980 313,178,098 56,839,512 1979 237,766,724 47,677,927 Ten of the Largest Taxpayers Taxpayer First Union Real Estate Investments Medical Park of Willmar, Inc. Minnesota Gas Company First National Bank of Willmar Jennie -0 -Foods, Inc. Torgerson-Forstrom Willow Run Partners Burlington Northern, Inc. First American Bank & Trust Meadowbrook Apartments of Wi I Imar Type of Business Shopping Center Medical Clinic Utility Bank Turkey Processing Holiday Inn Motel Apartments Railroad Bank Apartments Tota I * Represents 11.3% of the total assessed value. -13- 1983 Taxable Assessed Value $1,823,000 1,122,972 870,969 828,367 804,900 625,450 502,436 480,998 421,200 410,720 $7,891,012* Summary of Direct Debt as of 3-2-84* Gross Debt G.O. Bonds Supported by Taxes $ 1,375,000 G.O. Bonds Supported Primarily by Special Assessments 9,370,000 G.O. Bonds Supported by Revenue 14,695,000 Revenue Bonded Debt 6,830,000 Less: Debt Net Service Funds** Direct Debt $ 51,404 4,964,716 1,852,337 774,007 $ 1,323,596 4,405,284 12,842,663 6,055,993 * Includes these Issues but excludes Refunded Bonds. ** Debt service funds are as of February 29, 1984 and include money to pay both principal and interest. Indirect Debt Total $2,983,814 * Only $730,000 of County debt is being supported by taxes. The balance consists of bonds for drainage or sewer and water improvements, which will be paid from special assessments against benefited properties lying outside the City of Willmar. ** The District has a total of $700,000 outstanding for vo-tech purposes, for which it receives 84.4% in State aids for debt service. Therefore, only 15.6% ($109,200) of this debt has been shown here. Debt Ratios Net Direct Net Direct G.O. Debt and G.O. Debt* Indirect Debt* To 1983 Indicated Market Value 1.56% 2.37% Per Capita (16,987 - Current Estimate) $337 $513 * Excluding general obligation debt supported by revenue. Tax Collections - Three Year Average: 97.7% -14- Debt Applicable to Valuation in City 1983 Taxable G.O. Debt Taxing Unit Assessed Value As of 3-2-84 Percent Amount Kandiyohi County $254,989,082 $5,293,000* 27.3% $1,444,989 ISD 347 (Willmar) 122, 620, 984 2,709,200** 56.8% 1,538,825 Total $2,983,814 * Only $730,000 of County debt is being supported by taxes. The balance consists of bonds for drainage or sewer and water improvements, which will be paid from special assessments against benefited properties lying outside the City of Willmar. ** The District has a total of $700,000 outstanding for vo-tech purposes, for which it receives 84.4% in State aids for debt service. Therefore, only 15.6% ($109,200) of this debt has been shown here. Debt Ratios Net Direct Net Direct G.O. Debt and G.O. Debt* Indirect Debt* To 1983 Indicated Market Value 1.56% 2.37% Per Capita (16,987 - Current Estimate) $337 $513 * Excluding general obligation debt supported by revenue. Tax Collections - Three Year Average: 97.7% -14- GENERAL INFORMATION CONCERNING THE CITY The City of Willmar, the County Seat of Kandiyohi County, is in west central Minnesota, approximately 100 miles west of the Minneapolis/Saint Paul metropoli- tan area. Encompassing an area of 6,748 acres, the City had a 1980 federal Census population of 15,895, a 23.5% increase over the 1970 Census of 12,869. The current population is estimated to be 16,987. January 1984 .+s Employment Retail Trade 2,453 2,340 Wholesale Trade Approximate Employer Business/Product Employment Jennie -0 Foods Turkey Processing 720 Independent School District 347 Education 600 Willmar State Hospital Psychiatric Care 600 Rice Memorial Hospital Medical Services 570 Burlington Northern, Inc. Railroad Switching Yard 350 Willmar Medical Center Medical Clinic 200 i Willmar Poultry Company Turkey Hatchery 165 City of Willmar Government 139 Northwestern Bell Telephone Co. Communications 130 Willmar Manufacturing Co. Fertilizer Application Equip. 118 Source: "City of Willmar, Minnesota, Community Profile." Willmar Employment By Industry The January, 1984, preliminary unemployment rate for Kandiyohi County was 8.8% compared to a State average of 7.8% and a national average of 8.8%. -15- January 1984 January 1983 Retail Trade 2,453 2,340 Wholesale Trade 590 595 Services 1,875 1,841 Transportation and Utility 619 641 Government* 2,787 2,758 Manufacturing 1,249 1,209 -�- Construction 560 440 Finance 409 405 Agricultural Service 371 345 Total 10,913 10,574 Includes the Willmar State Hospital, City government, Rice Memorial Hospital and the public schools. Source: Minnesota Department of Economic Security. The January, 1984, preliminary unemployment rate for Kandiyohi County was 8.8% compared to a State average of 7.8% and a national average of 8.8%. -15- Building Permit Summary Financial Institutions Banks located within the City are: Deposits As of 12-31-83 Bank of Willmar and Trust Company $ 63,495,532 Citizens National Bank 20,654,707 First Bank Willmar 68,7692000 $152,919,239 The First Federal Savings and Loan Association also serves the community. GOVERNMENTAL ORGANIZATION AND SERVICES Organization Willmar has been a municipal corporation since 1901 and is governed in accordance with a Home Rule Charter which was adopted in 1968. The City has a Mayor - Council form of government, in which the Mayor is elected to a two-year term of office and the eight Council mernbers are elected, two from each of the City's four wards, to overlapping four year terms. The following persons comprise the present City Council: F. J. Reynolds Stephen N. Enockson Richard Halterman David Lien Wilkie Norsten Irma Peterson Wayne Roelofs Robert Tinklenberg Clarence Welch Mayor Council Member Council Member Council Member Council Member Council Member Council Member Council Member Council Member S[. Expiration of Term January I, 1985 January I, 1987 January 1, 1985 January I, 1985 January 1, 1987 January I, 1987 January I, 1985 January I, 1987 January I, 1985 Total Total Housing Unit Year Permits Valuation Housing Units Valuation Only 1983 250 $ 9,943,476 126 $4,644,400 1982 219 8,125,000 139 4,725,000 1981 282 18,346,300 161 6,699,539 1980 255 12,999,027 140 3,833,060 1979 183 19,504,687 117 4,066,336 1978 273 11,689,189 201 4,296,729 1977 322 9,724,026 330 5,228,000 Financial Institutions Banks located within the City are: Deposits As of 12-31-83 Bank of Willmar and Trust Company $ 63,495,532 Citizens National Bank 20,654,707 First Bank Willmar 68,7692000 $152,919,239 The First Federal Savings and Loan Association also serves the community. GOVERNMENTAL ORGANIZATION AND SERVICES Organization Willmar has been a municipal corporation since 1901 and is governed in accordance with a Home Rule Charter which was adopted in 1968. The City has a Mayor - Council form of government, in which the Mayor is elected to a two-year term of office and the eight Council mernbers are elected, two from each of the City's four wards, to overlapping four year terms. The following persons comprise the present City Council: F. J. Reynolds Stephen N. Enockson Richard Halterman David Lien Wilkie Norsten Irma Peterson Wayne Roelofs Robert Tinklenberg Clarence Welch Mayor Council Member Council Member Council Member Council Member Council Member Council Member Council Member Council Member S[. Expiration of Term January I, 1985 January I, 1987 January 1, 1985 January I, 1985 January 1, 1987 January I, 1987 January I, 1985 January I, 1987 January I, 1985 The City Clerk -Treasurer, Mr. Richard C. Hoglund, is responsible for all record- keeping functions of the City and for directing the administration of Council policy. The Clerk -Treasurer is appointed by the Council and serves at the Council's discretion. Other key staff personnel are Mr. Lawrence Haats, the City Finance Director; Mr. Verne E. Carlson, the City Engineer; and Mr. Richard Ronning, the City Attorney. All three positions are Council -appointed. The City has 709 permanent employees on its payroll, including 570 Rice Memorial Hospital employees and 59 Municipal Utilities employees. Employee Pensions City employees are part of the Public Employees Retirement Association ("PERA") which is administered by the State of Minnesota. The City therefore has no responsibility for management of the pension plan. The City pays the employer's share of PERA costs. Contribution rates are determined on a Statewide basis and include provisions for prior service costs. The amount of unfunded liability attributable to an individual governmental unit is not determinable. During 1982, the City contributed $146,670 to PERA and $55,788 to Social Security. -17- L�. (This page was intentionally left blank.) APPENDIX I LAW OFFICES MATTHEW J. LEvITT RONALD E. ORCHARD BRIGGS A N D MORGAN JEFFREY F. SHAW MATTHEW L LEVITI GoLE OEHLER JOHN TROYER PROFESSIONAL ASSOCIATION DAVID G. GREENING Rom= M. BOWEN STEPHEN WINNICE DAVID R SAND A. LADRENGE DAVIS AvRoN L. GORDON JOSEPH P NOACE FRANE HAMMOND JOHN R. HENErIcE CHARLES R. HATNOR LEONARD J. KEYES JOHN R. FRIEDMAN 2200 FIRST NATIONAL BANK BUILDING ANDREA M. BOND ROBERr G. SHARE JOHN M. SULUVAN DAVID J. SPENCER DANIEL J. COLE, JR. MARTIN H. FisE JoNN BITLTENA BERNARD P. FRIEL PETER W. SIPEINS SAINT PAUL, MINNESOTA 55101 JAMES G. HAY BURT E. SWANsoN DOUGLAS L. SEoR RICHARD H MARTIN M. J. GALVIN. JR. MICHAEL H. JEHONIMUS TRUDY J. HALL DAVID G. Fonmmzo R. SCOTT DAvizs MARY L. IPPEL JOHN J. MCNEELY J. PATRIcE MCDAvITT TELEPHONE (012) 291-1215 RoaaaT E. WOODS McNEIL V. SEYMOUR, JR. JOHN B. VAN DE NORTH, JR. ROBYN L. HANSEN JERRY F.HOTMAN RICHARD G. MARE TELEGOPIER (612) 222-4071 WILLIAM J. TERETcE N. DoYLE ANDREW G. BECHEH K. R.JOANIS MeaosRar SAVAGE RICHARD H. KYLE JAMES E. NELSON BRIAN G. BELISLE JOHN L. DEvNEY R. L. SORE soN JEROME A.GEIS STEVE A. BRAND INCLUDING THE FORMER FIRM OF TONY STEMBERGER MARY SCRAFFNER Evrima PETER H. SEED SAMUEL L. BAN SON JOEL H. GOTTESXLN ALAN H. MAcLD: LEVITT, PALMER, BOWEN, ROTMAN & SHARE MICHAEL H. S77iBATEH PROPOSED FORM $3,830,000 MUNICIPAL UTILITY REFUNDING REVENUE BONDS, SERIES 1984A CITY OF WILLMAR KANDIYOHI COUNTY MINNESOTA JOHN H. LINDSTROM RICHARD D.ANDRasoN SALLY A. SO000IP DAVID G. MCDOMALD BRUCE W. Moan VIRGINIA A. DWTEB ERIC NILSSON ANDREW R.KINrcD+GER FREDERIGY P. ANGST ROBERT L. LEE TRUDY R.GAsTEAzoao ELIzABETH J. ANDREWS GREOONY J. STENMOE GHARI.Es B. ROGERS TERaY L. SITE MARY M. DTasETa HEvrN A. SERO OF COUNSEL J. NEIL MORTON RICHARD E. KYLE JOHN M.PALMER SAMUEL H. MORGAN FRANE N. GRAHAM WE IiEREBY CERTIFY that we have examined the law and certified copies of the proceedings and other certificates of public officials furnished to us in connection with the issuance by the City of Willmar, Kandiyohi County, Minnesota of its Municipal Utility Refunding Revenue Bonds, Series 1984A, in the aggregate principal amount of $3,830,000 bearing a date of original issue of May 1, 1984. As to questions of fact material to our opinion we have relied upon the certified proceedings and other certifica- tions of public officials furnished to us without undertaking to verify such facts by independent investigation. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds (except to the extent, if any, stated in the Official Statement) and we express no opinion relating thereto (excepting only the matters set forth as our opinion in the Official Statement). Based upon such examinations, and assuming the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such documents, and the accuracy of the statements of fact contained in such documents, and based upon present Minnesota and federal laws, regulations, rulings and decisions, it is our opinion that: (1) the proceedings show lawful authority for the issuance of the Bonds according to their terms under the Constitution and laws of the State of Minnesota now in force; (2) subject to the exercise of judicial discretion in accordance with general principles of equity, to the constitutional powers of the United States of America and to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted, the Bonds are valid and binding special obligations of the City of Willmar; and (3) at the time of their issuance and delivery to the original purchaser the Bonds are not arbitrage bonds and each Bond is exempt from all taxation by the State of Minnesota and its subdivision's and municipalities and bears interest not includable in gross income of the owner of the Bond for the purposes of United States income tax or the State of Minnesota income tax (other than Minnesota corporate and bank excise taxes measured by income). Dated at St. Paul, Minnesota, this Professional Association SM LAW OFFICES MrrraEw J. LEVITT RONALD E. ORCHARD B I? I G G S A N D M O R G A' -N- JEFFREY F. SHAW JOHN H. LwDsraox COLE OEBLER JOHN TROYEB MAITRE- L. LEVITT RD RICHARD D. ANDERSON ROBERT M. Bow -EN STEPHEN WINNIOs PROFESSIONAL ASSOCIATION DAVID G. GRKENwo SALLY A. SOOOOrN A.LAVREwcE DAVIS AvaoN L. GORDON DAvrC B.SAhD DAVID G.McDoNALD FRANK HAMMOND JOHN R. KENEFICK JOSEPH P. NOAOK BRUCE W MOOTY LEONARD J. KEYES JOHN R. FRIEDMAN GRARLES R. RAYNOR VIRowIA A. DwYEa ROBERT G. SRAHE DAVID J. SPENCER 2200 FIRST NATIONAL BANS BUILDING ANDREA M. BOND ERIC NILSSON JOHN M. SULLIVAN DANIEL J. GOLF, JR. MARTIN H. FISK ANDREW R. Rn=rxOER BERNARD P. FRIEL PETER W. SIPKINs SAINT MINNESOTA 56101 JOHN BULTENA FREDERICK P. ANGST BcaT E. SWANsON DovoLAs L. SKoa PAUL, JAMES G. RAY ROBERT L. LEE M. J. GALVIN, JR. MICHAEL B. JERONIM US RICHARD H. MARTIN TRUDY R. GASTEAzoao DAVID G. FORSBERG R. Soorr DAVIES TaUDY J. HALL ELIZABETH J. ANDREws JOHN J. MCNEELY J. PATRICK MCDAVirT TELEPHONE (612) 291-1216 MARY L. IPPEL GREoORY J. STENIIOE MONEIL V. SEYMOUR, JR. JOHN B. VAN DE NORTH. -JR. ROBERT E. WOODS GHABI.Es B. ROGERS JERRY F. ROTMdN RICHARD G. MAKE ROBIN L. HANSEN TERRY L. SLYE TERENcE N. DOYLE ANDREW G. BECHEa TELECOPIER (612) 222-4071 WILU&M J. JOANIS MARY M. DTRSETR RICHARD R. KYLE JAMES E. NELSON MARGARET K. SAVAGE KEvnr A.BERG JOHN L, DEVNEY JEROME A.GEIs BRIAN G. BELISLE R. L. SORENSON STEVE A. BRAND INCLUDING THE FORMER FIRM OF ToxY STEMHEaoER OF COUNSEL PETER H.SEED JOEL H.GOTTESMAN MARY SCHAFFNER EVINGER J. NEIL MORTON SAMUEL L. HANSON ALAN H. MAcLIN LEVITT, PALMER, BOW EN, ROTMAN & SH ARE MICHAEL H. STREATER RICHARD E. KYLE -JOHN M.PALMER SAMUEL H. MORGAN FRANK N.GRARAM PROPOSED FORM $3,000,000 MUNICIPAL UTILITY REVENUE BONDS, SERIES 1984B CITY OF WILLMAR KANDIYOHI COUNTY MINNESOTA WE HEREBY CERTIFY that we have examined the law and certified copies of the proceedings and other certificates of public officials furnished to us in connection with the issuance by the City of Willmar, Kandiyohi County, Minnesota of its Municipal Utility Revenue Bonds, Series 1984B in the aggregate principal amount of $3,000,000, bearing a date of original issue of May 1, 1984. As to questions of fact material to our opinion we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify such facts by independent investigation. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds (except to the extent, if any, stated in the Official Statement) and we express no opinion relating thereto (excepting only the matters set forth as our opinion in the Official Statement). -20- Based upon such examinations, and assuming the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such documents, and the accuracy of the statements of fact contained in such documents, and based upon present Minnesota and federal laws, regulations, rulings and decisions, it is our opinion that: (1) the proceedings show lawful authority for the issuance of the Bonds according to their terms under the Constitution and laws of the State of Minnesota now in force; (2) subject to the exercise of judicial discretion in accordance with general principles of equity, to the constitutional powers of the United States of America and to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted, the Bonds are valid and binding special obligations of the City of Willmar; and (3) at the time of their issuance and delivery to the original purchaser the Bonds are not arbitrage bonds and each Bond is exempt from all taxation by the State of Minnesota and its subdivision's and municipalities and bears interest not includable in gross income of the owner of the Bond for the purposes of United States income tax or the State of Minnesota income tax (other than Minnesota corporate and bank excise taxes measured by income). Dated at St. Paul, Minnesota, this Professional Association -21- APPENDIX II WATER RATE SCHEDULE Effective January I, 1982 First 300 cu. ft. @ 1.08 per 100 cu. ft. per mo. Next 700 cu. ft. @ .77 per 100 cu. ft. per mo. Next 2,500 cu. ft. @ .50 per 100 cu. ft. per mo. Next 46,500 cu. ft. @ .35 per 100 cu. ft. per mo. Excess over 50,000 cu. ft. @ .29 per 100 cu. ft. per mo. Minimum monthly bill - based on meter size Meter Size Charge 5/8" ...................... $ 3.25 3/4" ...................... 5.05 1" ...................... 8.40 11/2" ...................... 16.80 2" ...................... 26.65 3" ...................... 53.25 ....... 84.00 6" ...................... 168.00 DISTRICT HEATING RATE SCHEDULE Effective January 1, 1984 Steam Heat Steam for heat (condensate return) Code 11 $7.50 per 1000 lbs. Steam for process (live steam) Code 20 $7.75 per 1000 lbs. Hot Water Heat Heating season (Billing months Oct. - April) Code 14 2.60¢ per KWH _ Non -heating season (Billing months May - Sept.) (Industrial customers only) 2.00¢ per KWH Minimum bill $12.40 per month -22- W J N w a U LJ W 7 4 - LU •p w .0 L L L .0 L L L 3 L L LOU .� .Ov. •; G C G C G Y Y Y Y G = U> N G 0 0 0 0 E E E E E a o a U a E E" U o v o 0 L N O O K 6J ti tf d v tf a EO T Vl vt 00 r 00 E 6 Q a a a p O w W O T y L Vi Vi V% V) V) d Q Q Q Q Q o > > > > > L N Y Y t Y Y U¢ w u s W A a o a a a ui E c 0 c V E o z 0 r -w E Q it v9 F Q v Q s�gwe9 w Ca W V) Sr0 V t u C L W ° u JW vim°' E E C7 � o � ro E F. Z a u E c c H 0 O:O0 0 ,�, f- U U U U o 0 W_: ° E EE E ^ o o o Q U o .E oC V) V) ul a W o v v v .c W E G E c E c_ W °:; c A E a n a S N a A w oo m w Q u cd u a u - = r E L a 3 V A 3 = d Du �wo N >`a >T> U U QO GO c cDO a E a E ° 'fl uVp O O v m :n „ a mm U 7 E r E 0 0 � `a G 0. uL u .Le -U LO -U e s3333gtoaa°o° 2 m = uCcd?L 'U v x O L V y y y y h U L w L .... L .... E m a E L L .. ... ow) o w) u m g o 0 0 o a O L a u w c ;� > y C V C Y E 0. v E p 0 0 �"' L L �•• L U Y yw.'^ N > 7 ` L V r v1 Q r vt C� zzZ u N Q W. aZ aO a� 3 Qi v,GVR ..� -NR.-N be .0 � � r� 3 3 3 3❑ 3 3 3 3 3 3❑ 3 3 3 's s G 0 y y y y y O S Y O y y y y y O fi 3 0 ac a is �taaabta�ta�E 06 aaaaaE u� v pwL -� grgg a grOOO a m d a gv d d d G F. .2- d C ai G 11 N oo N O O M N oo 'n O p %O vl N en N O N r O W i0 u E E A W C r a T Z O r 7 v V O V 0C r v, <! O v E m u v 3 W S z Q Ix lu W' u _ x 0 t � S .. . . . . . . Q . . . . . . in w J� `°v yaCx ai p'L �W : ZaW W W VW . . . . CM m Q a o 3 v p W Q Q p S G > O .. V Z -0 r. c a x! o E m 0 L L t C a W 0 c s t c r ac 0 W O L C C L Q a o v y v � V e e c c U U c c e c c W V U H F 9 ,, E a H v Q O O O O F- i o 0 0 0 0 F' N o 0 0 0 0 VtA �+'_ H°v� E- EEEE Zac EEEEE a Q EEEEE J .n •_ E cOi .0 L'' v Z Y L u a �_ fWA u u v u u � L+ Q u u u u a W 0 Q p m H E a W 0. 0. 0. 0. a 0. C6 0.a J c W 0. 0. 0. 0.L 5 '2 ca � C d t0 O L 0 L L L L N L L L L t Q o Z L t L L Q 0 T c > W i Y Y x 3 3 3 3 3 Z E D w 3 3 5 3 x o y y y y .K •^ y y y y Q H w.° c.0 QaO ¢ $� $ E E W C6 ���5$Z5 E a,c,.��ru�a E —E y 3E a—E L = m v 7 ; v u i E x x x u 'c 2 n0 E tiZz >i c� ZZZ0 Q u.ZZZOi o c L�0 c^ c o c u c`oa v is u c r L Ir gggg °° a06 = CE a y- E L = v h O 7 ti = L j -O °J 3 aCO o co c w T a `° m L C .0 v m c O' 'C .0 w t A c? o 0-0 pEL l7 oO �' C O G i V° T a C y u OCCH 2 W N u vd u gm,. QE. . M"y "DO M" E a O _ y , 'C O o 0 u O O L a } O U .L.. v C� O v c 3 u LL _� t N w G —ca o •= A c Z O A O J E h Z Z W O 0 v .y Ca L v ,° OD o °y o° a W o'� O'uj w ., •pC u .� E 00 q .G •� Z o O o EO ` CNW O y oo i vm O0 _ u a, a- v W - m:13 E ca S T c v s - D_ o C6 0 0 o `°°gm E 7 C]a � UaA �> Qww3Qr o o 'a u ° amo y .= APPENDIX III WILLMAR MUNICIPAL UTILITIES COMMISSION 1983 GENERAL PURPOSE FINANCIAL STATEMENTS -24- Q N M r N 0 0 0 O O N N V N t0 O O V P N m F 0 m m r1D O m V O O O 10 LL' 0 0 0 e V N V P N N 1'1 N C C ID m mr P 1D Nr 10 N.- N N 0 Y u Z w K PI b m n 10 m r 0 P O N N N V N 1D N r V PO O 0 v u ✓ a 10 u u r Y L IA 0 U y IE N i � O Z y u 0 D Q 0 � N C u E 0O C r m 0 0 0 0 0 0 1"1 O O P V I`•1 V m M V N 10 , Z W I O U 0 O nl P N m 1C m N r O O O r O 1 1 C N O r N N P m r N N N N O m O 1" O 1 V N 1p P . . r N P V . O w0 0 V Z m N P O N O N O P O P m 10 V V 1"1 O .- v m Tn 1C P m n �^ r V P r r r1 10 e•'1 N V O O U V e r r'1 T 10 O •- P q 6 .+ N N N r O 7 L W U U 4. 0 'O u 'O 0C It Z 'O N C Q > NW �pL�II a Q Q Cw 0 7 C G lu Y N 1 O N a)q w r U yWy U Q 0 u � m W O 'O r1 q u C p1 >> u u ✓ L D C Y 0 Z I 0 ✓ r U> O Z N 4f L A I 1 •p O q O V pG U I W U I l0. 0✓C 0 m Z ✓ � yCy W yCy U 0 •N P � I p u lfij V1 a1 M C V I N 0 D •-I •p 1 •.0+ .� U O O 0 0 L ro H It Y r m w q O� OI a1 O ✓ 10 T a N H ro F F �qq F ro U � •Y U N C ro G. L 7 •+ m H � N c y v u w w p C O O m C a Y L m .,I ~ W .1 •N 0 b .� 0 N Y a 0 Y 0 O D O L 0 V m g L 0 o w C W .-I ro d u ro D a C O 4 f1 > C CL -A Y C U Y ro W O x Y ro 0 .,1 O O Z c a) L •0 �p C T C 0 7 C C O Pm Q •N ItI., a C u 7d. 1n C 1 0 0 0 E C W m m 0 .M 0 ro .] N ro a U ❑ O T w > •U ✓ m .+ u E u L P a L: F Y 0 7 7 L 7 W F A C. ✓ 0 L y en u u ro 7 C lf' U ✓ C C d w E U 0 0 E O N L yLy a a 0>/ > -*lb 7 'O G C O. O fT O 0 I a a0 E ro D E D F L C q0 ~ O ro U q U rl Q q C T C O. •.i C O m I L 4) 4 0 ul ✓ a 3 U T •C V -.1 .1 M •N ~ -U C „ 0 0 0 0 q F •N .1 U' U 1 u I U q .O O O U M .� 71 0 •.I O •j •p N C U Y •M Y Y O 0` •M .1 L L L N C M ✓ 0 u 0 C D ✓ C L 7 C T al O Y .y rt L .-I T Y G 0 7 .-1 .-1 .V ro ro 0 0 C L O A✓ 0: T .+ w 7 q S u •N 0 7 S •O W L C '.+ D '.I a E E C Y u .-I C O U 3: 0 U- ro.+ L O u 3 0 u U u U✓ O Z O 7 C O .-+ ro -•+ .O w q q ..� 0 0 r+ .-I .-I .1 .ti S q C 4 L ro ✓ O. U T 0 0 •-I H O W O� E ro c C L ro N m W4V 0 u m •0 Y •O O u 0 F a .i .I 3 3 3 ✓ q rrpp w O O ✓ 'O a u W> q L u C VI L 0 m O. .a q 0 0 C u •N G 0 E L W O. w w w O F ..•1 •.1 0 0 0 q u✓ 0 .p .p q T W U H I'i E Q '- d N L H E W u ro u W F- U� 0 7 ✓ 0 7 A 7 7 7 7 7 L Sp F O •'I U> N u.i I T T T u GG C u u✓ ro L ✓ C L O g L L M L N 0 O L u T U OW 0 E T 7 7- ..+ u N U u U U C .0 L V U q u V U u 0✓ W W aQ. ; I• -I a s O w Z w m I •7 U U u M a !C n r'1 10 V N r 0 0 0 0 0 0 0 P r m r r � P m m m 10 m O P O O MM m m O O O O O O r .- C 10 O O O11 1 r' O O O O N O O 1'1 O r 01 n LL 3 w S W O1 r m n1 m N N N N N N r V m N N O O 0, r C N N N P1 m P 1p N r r m 1p 10 N r r 10 m V m p� O W .- O N S D E 0 N n m 0\ T m r e•f N O O N r+t O O n N N N t+1 ID N m 10 V 1p u W O n m r m r N m 10 m V N P. N V V O O r r1 O O 10 O O tD e'f O O P r m r. m r m m m rn N N V CD N m N 10 1 O 1 1 O O r M N O N N N N M V M N f+1 M 1D N P V N O N V N r ID O N O ID m r m r V 10 m 1C tD 1+1 N O N O V N r O 10 OI N 10 V N N V r N O m 10 P rn V r N ^ N N N a ro F tm V 0 0 0 Y u Z w 0 N O 0 v u ✓ a u u C 0 Y W 0 U y IE N i � O Z u O u CC Q 0 � N C u Z 7 C O C , Z W I O ro Q O y u I 1 0 Y Q V O w0 0 V Z 'O C N O U I W O U <L N > m I q 6 .+ U 0 mq 0 .'+ O 7 L W U U 4. 0 'O u 'O 0C It Z 'O N C Q > NW �pL�II a Q Q Cw 0 7 C G lu Y N 1 O N a)q w U yWy U Q j N .Oi N O C C W O 'O r1 q u C p1 >> u u ✓ L D C Y 0 Z C .1 •M M y L O C •.� 'O N 7 U> O Z N 4f L A I 1 •p O q .1 = m 0 N W fi pp NpO.� 7 .CpC pG U I W U I l0. 0✓C yCy W yCy U 0 lfij V1 a1 o.a.c.IW.% L�00 •-I •p U U O O 0 0 L ro 0 c IV M W L O U N a F F �qq F ro U U N C ro G. L 7 Y 7 7 C 7 y Y L N W .1 •N 0 b .� 0 N Y C 4 m 0 0 0 04 D, 00 L E •p w C W .-I ro d N 0 C O 4 f1 > C CL -A Y C U Y ro W O x Y ro 0 .,1 0 0> U a> U 0 L Id C U c U L L q C 0 C 0 a u 0 yyN D: U ❑ N N a ro F tm MUNICIPAL UTILITIES COMMISSION WILLMAR, MINNESOTA STATEMENT OF INCOME AND MUNICIPAL EQUITY YEARS ENDED DECEMBER 31, 1983 AND 1982 Operating Revenue Electric Energy Water Heating Penalties Other Services Total Operating Revenue Operating Expenses Production Operation Maintenance Purchased Power Distribution Operation Maintenance Customers' Accounting and Collection Administrative and General Depreciation - Note 2 Total Operating Expenses Operating Income Other Income Interest Income Merchandise, Jobbing and Contract Work - Net Gain from Disposition of Property Total Other Income Other. Deductions Interest on Liabilities Amortization of Deferred Charges Net Earnings Deduct Earnings Contributed to City of Willmar - Note 9 Earnings Retained by Municipal Utilities Commission Municipal Equity - Beginning of Year Municipal Equity - End of Year Year Ended December 31, 1983 1982 $ 6,820,756 $6,419,870 726,381 688,146 528,276 621,525 51,023 57,692 6,976 6,775 8,133,412 7,794,008 2,935,024 326,949 1,532,806 338,649 183,856 166,514 758,514 630,372 6,872,684 1,260,728 426,431 30,994 14,726 •-sn . r. 576,366 22,270 598,636 1,134,243 2,982,895 265,176 1,172,612 392,279 176,127 169,094 682,175 469,563 6,309,921 1,484,087 414,729 17,947 432,676 1,916,763 141,417 5,247 146,664 1,770,099 467,225 621,243 1,302,874 9,691,485 8,388,611 $10,312,728 $9,691,485 The Notes to Financial Statements are an integral part of this statement. -26- EXHIBIT B Increase (Decrease) $400,886 38,235 (93,249) (6,669) 201 339,404 (47,871) 61,773 360,194 (53,630) 7,729 (2,580) 76,339 160,809 562,763 (223,359) 11,702 13,047 14,726 39,475 (183,884) 434,949 17,023 451,972 ($635,856) O Vi y E F 80 W N z w z M H Ff H M qa i M a3 U M S T q 7 T ✓ M ro> V, O✓ d E 7 q U w me aro o o as ••C1 M N W U O a✓ 111 .•/ A 7 U 41 roa✓ q c U✓ 7 U 01 01 O U 01 0 ro .+ p• •p q i1 L y ✓ U L O. 0.O' Y> O 111 V Y w YC V ✓ N M O L qA m Y O O ✓ OI Y✓ q C ✓ w ✓U T T 0 c m w a cw r. F o m A c d E1'AOw 41 0 In z w Ix 0 0 w N W O ✓ m E y 0 O A O O U .A w✓ a m L> 1✓ ro Y Y U Aj ✓✓ .A A O a T . a0 a 41 ✓ O ✓Cj m O. C p w C C O .i fT w C -A Id N A pYp11 O: U 0 IdA 111 q C q .4 O F q C✓ •A U•A.9 W Cq C 10 C ✓ •.1 C X O✓ L O C C O C p Y y C C •A m C 0) 4 Y Y 0A •A •A O m F WAA ro o m✓ 3 d° 3 m O 7 41 w U N w 7 w° 41 m ro A o m m m T O ✓ n O 01 m Y m O 01 C Y 0) q Y Y✓ m 0 L L A z a U Ue .A a p u M O O O U 01 M H O 3 0) N m ✓ 7 01 ✓ G m N •Up1 q 0 M ro N N 01 pO q V M U c •.°I L Y✓ A m 7 N a m d 0 ✓ a a w 0. OOI O a° pYp11 c o o�.1 ° w a O•+ U A ✓✓ N✓ -O+ 0 O N O m U a ro Z w w c� .0w Y y C E E 7 01 0 Y Y S o> N N c Y Y✓ 7 E E 1CL m ro mwmww ww c A 0 m a1 V pq a N O✓ C+ ✓✓ C C U C EI 3 7 0 C O L m I A C �7 m d e w w J F WG w ✓CC m g 0 a a O X O 0 a g roY N m ✓ 7 ✓i g m T T✓ w .a T a4) 10. 0 C m c0 m 0..✓✓ m ✓ U Y .A ro ✓ U Op. N OAA 01 10 O.� u0a d F O g w O✓ .p �+ N v✓i C O Up N m +ro+ 4 O U w o O O p C j j C w u✓ N A F .+mqq Yqt Em pn DD.+U✓ Y c a Y N C Co O U o f N C C r7 P q C U 0°. O C F U O 'A N -A ..i .A ..1 •Upl ro 01 c c w 0) H C 7 01 Ci U w •• m O O m m 01 A m 01 O m •• ro A A 10 ro m L ..� m U T m q O✓✓ N ro Y Y 01 O C y 01 q YAAAL .1 7✓ Y Y •A .A .I a U , q 01 U U U c O a L N M a a U 1"1 a U rA O 3 N N M Q b M m N N M N Q m N 01 m °r° 10 L D• r M m b v1 m d b 01 Q m b I I II cc ` 01 Y1�b Mr Om l b�Q �r M � q � �^ M 01 M '• v M W d Y E M m r d b 10 M 1A 0 m r d m 1A M o r Y v b N M Qm1 00 M M 10 m b N N 0� �D m m y co N In O, : �O r 'O O� 10 N m r In I I ': V' m O N r — d Q 01 1n m D` Q Q d N O• N r v v 10 _ N N N .M.. .- N Q d � m O ✓ p� •A ✓ rl N ro q m N 0) Y Y % ✓ m ✓ .+ a U ++ a A .•+ '� •A C q A C •.+ a c m ✓ ro C y q 4 FI E C Ol X N EAF c > 7 C w 1xiU -i U 0 3 3 C U •� .°7 W L a w .Oi A w w O O m A m q C •+ 01 A ✓ 111 m m > m O •-m ✓ O C L✓ C 01 - •A T N 0 O✓ .•� ro C N 01 L C ro •A 01 ••+ L O✓ 3:0V m O Y U O N N✓ U 41 .i itl p• C 4O E � Uy1 m O m✓ a L L m 6 o✓ EOE• U q 7r N 41 u .+ O C •.+ M w W.. 01 m L 0. m N W> m L 7 E ✓ O q q .r✓ ✓ 01 •0 V .0 .0 41 V C C y ✓ C ✓ 01 ••� C O W C C •A OI 01 01 OI E m m A 7 7 7 7 Y ro i U OY a 0 0 > U > > m 0) mU 01 w ro Y 0 ro L Y Y Y m 0 0/ L U T U U U U C c 0 m 01 L ro c U F U L U N a M a a V 4 7 U ro 0 0 0 U O ✓ U a a a a a 6 U 0 ro 4 C C V 1"' M r 01 O O O O O M M N r N N M m T bQ O O 1l1N 01 OOO OO 1fl Nm bOQ mQ Md0 1nm m Nbr m 01 N M m 0• m N v1 O m O 010 Q O 01 M r M 0 N m r r b r 10 r b 01 r b Q 01 r 10 d O b b r M N N 10 O O b Q r N Q O M yry Q v d 10 W AO L E ro y M N O Vl M Q O N d 10 ^ O 0 O b 01m V1 m m r O O Q O N U >• 41 Q r r m M d O M Q• N M N m V1 N O r M O O d r � N N Q O O O Q Q 1 1M1 U10m 01 O N r S O 1Ql1• mN m01 QM OM NN b M Q O r N O OP QrM r; Mmm010 M ID r r b MO 0 M N T P N rvM M O O Q N N M Q N N Q d N T q 7 T ✓ M ro> V, O✓ d E 7 q U w me aro o o as ••C1 M N W U O a✓ 111 .•/ A 7 U 41 roa✓ q c U✓ 7 U 01 01 O U 01 0 ro .+ p• •p q i1 L y ✓ U L O. 0.O' Y> O 111 V Y w YC V ✓ N M O L qA m Y O O ✓ OI Y✓ q C ✓ w ✓U T T 0 c m w a cw r. 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N OAA 01 10 O.� u0a d F O g w O✓ .p �+ N v✓i C O Up N m +ro+ 4 O U w o O O p C j j C w u✓ N A F .+mqq Yqt Em pn DD.+U✓ Y c a Y N C Co O U o f N C C r7 P q C U 0°. O C F U O 'A N -A ..i .A ..1 •Upl ro 01 c c w 0) H C 7 01 Ci U w •• m O O m m 01 A m 01 O m •• ro A A 10 ro m L ..� m U T m q O✓✓ N ro Y Y 01 O C y 01 q YAAAL .1 7✓ Y Y •A .A .I a U , q 01 U U U c O a L N M a a U 1"1 a U rA O 3 MUNICIPAL UTILITIES COMMISSION WILLMAR, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1983 AND 1982 1. Summary of Significant Accounting Policies The accounting policies of the Municipal Utilities Commission conform to the requirements of the Uniform System of Accounts of the Federal Energy Regulatory Commission and are in accordance with generally accepted accounting principles. The policies outlined below include those which have a significant effect on the financial statements and are in addition to those outlined in other notes to the financial statements. Fixed Assets Additions, major renewals, replacements and improvements to the utility plant are capitalized at cost. Maintenance and repairs are charged to operations as incurred. Depreciation is calculated using the straight-line method. Inventory Valuation Inventories are stated at the lower of cost or market, with cost determined substantially on a moving average basis. Sick Leave Provision Sick leave and retirement pay are charged to operations in the period in which they occur. 2. Utility Plant Major classes of depreciable assets, at cost, are as follows: Total Utility Plant - Net $11,127,332 $10,474,868 -28- December 31, Estimated 1983 1982 Useful Life Buildings and Improvements $ 2,139,991 $ 2,021,519 50 Years Boiler Equipment 2,687,963 2,678,720 30 Years Turbo -Generator Equipment 2,452,258 2,452,180 30 Years Switchgear, Transformers and Substation 575,956 575,956 25 Years Distribution System - Electric 7,626,613 7,468,215 25 Years Wells, Pumps and Accessories 551,985 551,985 20 Years Distribution System - Water 737,824 737,824 50 Years Distribution System - Heating 1,757,748 1,736,744 20 Years Other Equipment 728,435 659,120 10 Years 19,258,773 18,882,263 Less Accumulated Depreciation 9,055,389 8,529,804 10,203,384 10,352,459 Construction in Progress 923,948 122,409 Total Utility Plant - Net $11,127,332 $10,474,868 -28- MUNICIPAL UTILITIES COMMISSION WILLMAR, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1983 AND 1982 2. Utility Plant (Cont'd) Depreciation charged to operations for the years ended December 31, 1983 and 1982 was $630,372 and $469,563, respectively. During the year ended December 31, 1982, interest expense of $235,964 was capitalized to certain fixed assets as interest incurred during construction. In addition, interest earned on construction funds was also capitalized in the amount of $118,181 to offset capitalized interest expense. This resulted in a net amount of $117,783 interest expense being capitalized. There was no interest income or expense capitalized during the current year. 3. Restricted Funds and Accounts A. Capital Expenditure Account Proceeds from the sale of the City of Willmar G. 0. Improvement Bonds and the Municipal Utilities Revenue Bonds of 1982, less $563,800 that was deposited to the Revenue Bond Sinking Fund and the Bonds and Interest Reserve Accounts were deposited in this fund. At December 31, 1983, this fund is invested as follows: F & M Marquette National Bank of Minneapolis Certificate of Deposit - 9.5% $ 400,000 F & M Marquette National Bank of Minneapolis Certificate of Deposit - 9.7% 263,643 $663,643 The following is a summary of the capital expenditure account receipts and disbursements: Face Value of Bonds Less: Discount $ 79,400 Amount Transferred to Revenue Account 563,800 Proceeds Available to Finance Capital Expenditure Capital Expenditures thru December 31, 1983 Bond Proceeds Remaining Interest Received on Funds Capital Expenditure Account Balance -29- $4,790,000 643,200 4,146,800 3,717,339 429,461 234,182 $ 663,643 MUNICIPAL UTILITIES COMMISSION WILLMAR, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1983 AND 1982 3. Restricted Funds and Accounts (Cont'd) B. Revenue Bond Sinking Fund This fund is to be used for the payment of principal and interest of the Municipal Utilities Revenue Bonds of 1973 and 1982. In accordance with the bond resolution, monthly deposits must be made to this fund in amounts not less than 1/12 of the total principal and interest payments due during the ensuing twelve months until an amount equal to the principal and interest due on the next maturity date is accumulated. The fund is invested as follows: F & M Marquette National Bank of Minneapolis Certificate of Deposit - 9.5% $250,111 First Trust Company of St. Paul - Deposit 153,031 $403,142 C. Bond and Interest Reserve Account This account is to be used only when and if money in the Revenue Bond Sinking Fund is insufficient to pay principal and interest on the Municipal Utilities Revenue Bonds of 1973 and 1982. The balance in this fund is invested as follows: F & M Marquette National Bank of Minneapolis Certificate of Deposit - 9.5% $368,474 Certificate of Deposit - 9.5% 181,526 $550,000 D. Expansion Reserve Fund This account is used by the Commission to set aside funds for future expansion and to insure against excess catastrophe. The fund is invested as follows: F & M Marquette National Bank of Minneapolis Certificate of Deposit - 9.5% Certificate of Deposit - 9.5% -30- $100,000 400,000 $500,000 MUNICIPAL UTILITIES COMMISSION WILLMAR, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1983 AND 1982 3. Restricted Funds and Accounts (Cont'd) E. Utilities Improvement Fund This account is used by the commission to set aside funds for future projects as designated by the Commission. The fund is invested as follows: F & M Marquette National Bank of Minneapolis Certificate of Deposit - 10.08% $441,462 Certificate of Deposit - 9.5% 26,213 $467,675 F. Water Assessment Fund This account is designated to pay the amounts for water improvements on the City of Willmar's Downtown Redevelopment Project. At December 31, 1983 these funds were invested in a Certificate of Deposit, at 9.6% at the F & M Marquette National Bank, Minneapolis, Minnesota. G. Consumer Deposit Fund The amount in this fund is restricted for the payment of consumer deposits and is invested in a Certificate of Deposit, at 9.5% at the F & M Marquette National Bank. H. Sick Leave Fund This fund is restricted for future sick leave and retirement of utility personnel. The corresponding reserve account may not be adequate to cover total potential liability for sick leave or retirement allowance as the actual liability is not determinable. These funds are invested in a Certificate of Deposit at 9.5%, at the F & M Marquette National Bank. 4. Investments The bond resolutions require that the Commission shall maintain an operation and maintenance account sufficient to cover the operations and maintenance costs of the Municipal Utilities Commission for the ensuing month. At December 31, 1983, current investments were sufficient to meet this requirement. R912 MUNICIPAL UTILITIES COMMISSION WILLMAR, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1983 AND 1982 5. Inventories Inventories used in the computation of cost of operations were as follows: $683,773 $761,907 $668,039 6. Unamortized Debt Expense During the current year, the City of Willmar had a General Obligation Refunding Bond Issue of which the Commission is a party. As a result of the refunding issue, the Commission was required to deposit sufficient funds with the escrow agent to provide for the payment of interest and principal and eventual retirement of the General Obligation Improvement Bonds of 1982. The Commission has elected to amortize this cost over the life of the new bond issue. 7. Long -Term Liabilities Long-term liabilities consist of the following at December 31, 1983: December 31, Due Within Due After 1983 1982 1981 Fuel Stock $430,997 $497,075 $419,943 Production 31,891 29,400 44,296 Distribution 182,403 210,459 178,984 Water Works 22,276 20,911 20,438 Heating 16,206 4,062 4,378 $683,773 $761,907 $668,039 6. Unamortized Debt Expense During the current year, the City of Willmar had a General Obligation Refunding Bond Issue of which the Commission is a party. As a result of the refunding issue, the Commission was required to deposit sufficient funds with the escrow agent to provide for the payment of interest and principal and eventual retirement of the General Obligation Improvement Bonds of 1982. The Commission has elected to amortize this cost over the life of the new bond issue. 7. Long -Term Liabilities Long-term liabilities consist of the following at December 31, 1983: Agreement 160,000 160,000 $6,176,460 $231,890 $5,944,570 The 1973 revenue bonds have remaining coupon interest rates of 4.75% to 5%. The last payment is to be made July 1, 1988- -32- Due Within Due After Total One Year One Year Municipal Utilities Revenue Bonds of 1973 $1,130,000 $200,000 $ 930,000 Municipal Utilities Revenue Bonds of 1982 2,700,000 25,000 2,675,000 City of Willmar G. 0. Refunding Bonds of 1983 2,090,000 2,090,000 City of Willmar - Assessment 96,460 6,890 89,570 State of Minnesota - Purchase Agreement 160,000 160,000 $6,176,460 $231,890 $5,944,570 The 1973 revenue bonds have remaining coupon interest rates of 4.75% to 5%. The last payment is to be made July 1, 1988- -32- MUNICIPAL UTILITIES COMMISSION WILLMAR, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1983 AND 1982 7. Long -Term Liabilities (Cont'd The 1982 revenue bonds have remaining coupon interest rates of 8.5% to 12%. The last payment is to be made July 1, 1996. The 1983 City of Willmar G.O. refunding bonds of 1983 have remaining coupon interest rates of 5.75% to 8.75%. The last payment is to be made February 1, 1999. The amount payable to the City of Willmar is payable in fifteen equal annual installments of $6,890 plus interest at 11.26%. The amount payable to the State of Minnesota is a lease with an option to purchase land and building formerly used by The Department of Transportation. The agreement, in the original amount of $200,000, requires payments of $40,000 per year which are due on January 1st of each year beginning in 1984. If the Commission so elects it can purchase the property at any time by paying to the State of Minnesota the original purchase price together with interest at 9% per annum beginning January 1, 1984. All rental payments will be applied to the purchase price. It is the intent of the Commission to purchase the property. The aggregate amounts of long-term liability cash requirements in each of the five succeeding twelve-month periods and subsequent periods are as follows: $11,326,187 $6,176,460 $5,149,727 -33- Total Principal Interest Year Ending December 31, 1984 $ 810,312 $ 231,890 $ 578,422 1985 796,639 271,890 524,749 1986 808,875 296,890 511,985 1987 915,449 421,890 493,559 1988 969,098 461,890 507,208 Subsequent Periods 7,025,814 4,492,010 2,533,804 $11,326,187 $6,176,460 $5,149,727 -33- MUNICIPAL UTILITIES COMMISSION WILLMAR, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1983 AND 1982 8. Construction Contracts and Accounts Payable The Commission had the following contracts regarding construction in progress at December 31, 1983: The cash contributions to the City of Willmar for the year ended December 31, 1983 amounted to $513,000. The contribution to the City of Willmar for the year ended December 31, 1982 was made pursuant to an agreement dated December 30, 1981. In accordance with that agreement, the Commission would make a contribution in the amount of $687,225 less a credit of $220,000 for a net cash contribution of $467,225. Effective January 1, 1982 the Utilities Commission became responsible for the installation, maintenance and operation of the street lighting system from the City of Willmar. As a result of this agreement, the City agreed to a reduction in its annual contribution in the amount of $220,000. 10. Commitments During the year 1979 the Commission entered into an agreement with the City of Willmar whereby they will share the costs of data processing equipment. The costs will be shared equally for all equipment and programs that benefit both the Utilities and the City. Equipment and programs that are purchased specifically for either entity will be charged directly to that entity. -34- Remaining Total Contract Retainage Contract Contract Paid Payable Payable Work Duininck Bros. $1,814,197 $1,610,811 $203,386 MND, Inc. Lindblad Electric 284,878 54,110 42,627 _ $ 5,091 $183,050 Central Sheet Metal 37,861 45,830 1,470 192 3,505 32,886 Genesis Architecture 15,000 11,800 45,638 3,200 Pederson Construction 117,485 71,415 26,449 8,032 11,589 Holm Brothers 57,297 25,003 7,211 25,084 Ecopipe 137,024 130,172 6,852 Scantec 33,298 33,298 $2,542,870 $1,938,271 $283,178 $19,975 $301,447 9. Distribution of Earnings The cash contributions to the City of Willmar for the year ended December 31, 1983 amounted to $513,000. The contribution to the City of Willmar for the year ended December 31, 1982 was made pursuant to an agreement dated December 30, 1981. In accordance with that agreement, the Commission would make a contribution in the amount of $687,225 less a credit of $220,000 for a net cash contribution of $467,225. Effective January 1, 1982 the Utilities Commission became responsible for the installation, maintenance and operation of the street lighting system from the City of Willmar. As a result of this agreement, the City agreed to a reduction in its annual contribution in the amount of $220,000. 10. Commitments During the year 1979 the Commission entered into an agreement with the City of Willmar whereby they will share the costs of data processing equipment. The costs will be shared equally for all equipment and programs that benefit both the Utilities and the City. Equipment and programs that are purchased specifically for either entity will be charged directly to that entity. -34- MUNICIPAL UTILITIES COMMISSION WILLMAR, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1983 AND 1982 11. Contingent Liabilities The Municipal Utilities Commission was a member of United Minnesota Municipal Power Agency together with five other Minnesota Municipal Utilities. Effective July 31, 1982 the Municipal Utilities Commission withdrew from the Agency. The Agency had entered into an agreement with American National Bank and Trust Company of Chicago under which the Bank had agreed to lend $1,700,000 to pay development costs incurred by the Agency. In an agreement between the Commission and the Agency, dated September 1, 1981, the Commission was contingently obligated in the amount of 44.779% as its proportionate share of the funds borrowed. On December 5, 1983, the United Minnesota Municipal Power Agency issued $62,000,000 in long-term bonds, a portion of which was used to retire the $1,700,000 development loan. By virtue of the retirement of the $1,700,000 loan, the Commission is no longer contingently liable for any of the United Minnesota Municipal Power Agency's obligations. -35- APPENDIX IV The following is a portion of the Resolution Accepting Bid on Sale of $3,000,000 Municipal Utility Revenue Bonds, Series 19848 and Providing For Their Issuance to be adopted by the City on April 18, 1984. A Resolution in substantially the same form will be adopted by the City at the some time for the $3,830,000 Municipal Utility Refunding Bonds, Series 1984A. 13. Definitions - The following terms as used in this resolution shall have the meanings hereinafter specified, except where the context by clear implication otherwise requires: (a) "Bonds": the Bonds herein authorized; (b) "Consulting Engineer": means an engineer or firm of engineers who are not an officer or regular employee of the Commission or the City of Willmar and who are not devoting substantially all of his, hers or its time and effort to the affairs of the Public Utilities; (c) "Fiscal Year": the 12 month period beginning on January 1 of each year and ending on December 31 of the same year. Should the Commission deem it advisable at some later date to change its Fiscal Year, the same may be done by proper actions to that effect, with the -36- approval of the original Purchaser of the Bonds herein authorized, which change shall not constitute an amendment or modification of this resolution; (d) "Gross Revenues": the gross receipts from all sources which are attributable to the Public Utilities, including interest income, excluding however, revenues received from charges for sanitary sewer collection and treatment, collection of sales taxes imposed by other governmental agencies, and customer service deposits; (e) "Minimum Reserve": for any issue of Parity Bonds the Minimum Reserve shall mean the maximum annual debt service or the maximum reasonably required reserve permitted pursuant to Section 103(c) of the Internal Revenue Code of 1954, as amended; (f) "Net Revenues": the Gross Revenues less Operation and Maintenance Expenses; (g) "Operation and Maintenance Expenses": the current expenses of operating, maintaining, insuring and repairing the Public Utilities as determined in accordance with generally accepted accounting principles, including but not limited to administrative expenses, salaries, premiums for insurance, fuel and energy purchased or used, materials, supplies and labor necessary for current operation, maintenance and repair, contractural and professional services, excluding however, allowances for depreciation, interest costs, payments made by the Commission to the City in lieu of taxes or surcharges, or any charges for the accumulation of reserves for capital replacements; (h) "Parity Bonds" or "bonds": the Bonds, the $3,830,000 Municipal Utility Refunding Revenue Bonds, Series 1984, and any other bonds which may be issued after the date of this resolution on a parity of lien with the Bonds and the $3,830,000 Municipal Utility Refunding Revenue Bonds, Series 1984; (i) "Subordinate Bonds": that portion of the $3,535,000 General Obligation Refunding Bonds of 1983, Series A which refunded the $2,090,000 General Obligation Improvement Bonds of 1983, Series B, and any other obligations which are payable in whole or in part from the Net Revenues of the Public Utilities and which are not issued on a parity of lien with the Parity Bonds but which have a second and subordinate lien on the Net Revenues. -37- 14. Funds and Accounts. The General Revenue Fund heretofore created and established by the Commission shall continue to be in effect and maintained in the manner heretofore maintained subject to the following changes and modifications. All Gross Revenues derived from the Public Utilities shall continue to be deposited in the General Revenue Fund in accordance with the City Charter and the Operation and Maintenance Expenses shall continue to be paid therefrom. The following accounts shall be continued, or are hereby established as the case may be,, in the General Revenue Fund: (a) A "Capital Expenditure Account" into which there shall be paid the proceeds from the sale of the Bonds less the following amounts: (i) any accrued interest paid by the Purchaser upon delivery of the Bonds, (ii) all funds paid for the Bonds in excess of $2,942,000, (iii) capitalized interest in the amount of $ together with interest earnings thereon and subject to such other adjustments as are appropriate to provide sufficient funds to pay interest due on the Bonds on or before January 1, 1985; and (iv) the $350,000 in Bond proceeds hereinafter pledged and appropriated to the Bond and Interest Reserve Account. From the Capital Expenditure Account shall be paid all costs of the improvements to be financed by the Bonds, including legal, engineering, financing and other such expenses incidental thereto. Any balance remaining in the account after the payment of such costs shall be transferred to the Revenue Bond Sinking Fund Account hereinafter referred to. (b) A "Utility Operating Reserve Account" in which there shall at all times be maintained a reserve in an amount sufficient to cover the Operation and Maintenance Expenses of the Public Utilities for a one month period. (c) A "Parity Revenue Bond Sinking Fund Account" into which there shall be credited and into which there is hereby irrevocably pledged (i) the accrued interest and premium (if any) paid by the Purchaser upon delivery of the Bonds, (ii) all funds paid for the Bonds in excess of $2,942,000, (iii) capitalized interest in the amount of $ (together with interest earnings thereon and subject to such other adjustments as are appropriate to provide sufficient funds to pay interest due on the Bonds on or before January 1, 1985), and (iv) from the Net Revenues of the Public Utility, monthly commencing as of July 1, 1984, a sum equal to at least 1/12th of the total principal and interest to become due during the ensuing 12 months on all outstanding Parity Bonds; provided, however, so that no further payments need'be made into this account when the moneys held therein are sufficient for the payment of all principal and interest due on all Parity Bonds payable therefrom on or before the next principal or interest payment date of each issue. No money shall be paid out of the account except to pay principal and interest on all Parity Bonds made payable from the account. (d) A "Bond and Interest Reserve Account" to be used only when and if moneys in the Revenue Bond Sinking Fund Account or other moneys available therefor are insufficient to pay principal and interest on the bonds payable from the Revenue Bond Sinking Fund Account; provided, however, that the moneys in the Bond and Interest Reserve Account may be used to prepay the bonds payable therefrom when such prepayment will retire all of the bonds then outstanding. There is hereby pledged and appropriated from the proceeds of the Bonds herein authorized, the sum of $350,000, to be deposited immediately on settlement for the Bonds. Whenever any moneys in this account shall be used to pay principal and interest on any Parity Bonds, the account shall be restored from the next available Net Revenues, provided however, that this account shall terminate whenever there are sufficient funds herein to pay principal and interest on all outstanding bonds payable from the Revenue Bond Sinking Fund Account. In no event may sums in this account be used to fund the Revenue Bond Sinking Fund Account so long as there are sufficient Net Revenues therefor. Upon discharge of any issue of Parity Bonds, this account shall be adjusted to equal the lesser of either (i) the maximum annual debt service for any remaining Parity Bonds or (ii) the maximum reasonably required reserve permitted pursuant to Section 103(c) of the Internal Revenue Code of 1954, as amended and the applicable regulations promulgated thereunder, such amount hereinafter being referred to as the "Minimum Reserve. Any sums in this account in excess of the Minimum Reserve shall be treated as surplus sums and shall be credited to the General Revenue Fund and distributed in the same manner as other sums in the General Revenue Fund. The balance in this account shall be deemed to be the sum of all cash and the face amount of any securities held therein. 510 (e) A "Subordinate Bond Sinkin5 Fund Account" into which there shail be cred-TEe-d and into which ere is hereby irrevocably pledged from the Net Revenues of the Public Utility, monthly a sum equal to at least 1/12th of the total principal and interest due during the ensuing 12 months on any Subordinate Bonds; provided, however, that no further payments need be made into this account when the moneys held therein are sufficient for the payment of all principal and interest due on the Subordinate Bonds on or before the next principal or interest payment date of each issue. No money shall be paid out of the account except to pay principal and interest on any Subordinate Bonds. (f) A "Utility Improvement and Replacement Account" to be used for extraordinary maintenance, repairs and improvements and to pay the cost of renewals, replacements, extensions or additions to the Public Utilities. Sums in this account shall be maintained in such amount as the Commission determines is appropriate. In the event the moneys in the Parity Revenue Bond Sinking Fund Account, the Bond and Interest Reserve Account and the Subordinate Bond Sinking Fund Account, shall at any time be insufficient to pay principal or interest payable from those accounts, moneys in this account may be used for such purpose. 15. Order of Priority - The money in the General Revenue Fund shall be allotted and paid to the various accounts herein established in the order in which the funds are listed on a cumulative basis, and if in any month the money in the funds and accounts is insufficient to place the required amount in any fund or account, the deficiency shall be made up in the following month or months after payment into all other funds having a prior claim on the revenues have been made in full. Net Revenues of the Public Utilities in excess of those required for the foregoing purposes may be used for any proper purpose. 16. Investments - All money held in any fund or accounts set forth in paragraph 14 shall be kept separate and apart from all municipal funds and accounts and shall be deposited in any bank or banks selected by the Commission. Moneys in any fund or account, may be invested or reinvested by the Commission in such investments as are permitted by applicable laws of the State of Minnesota. The obligations purchased as an investment of moneys from any account shall be deemed at all times to be a part of the fund or account and, except as hereinafter provided, the interest accruing thereon and any profit realized therefrom shall be credited to the applicable fund or account and any loss resulting from such investment shall be charged to the applicable fund or account. As long as the amount in the Bond and Interest Reserve Account equals not less than the Minimum Reserve, any interest income or profit from the sale of investments attributable thereto may be transferred to the General Revenue Fund and distributed in the same manner as other moneys in the General Revenue Fund. The Commission shall redeem or sell any obligations purchased as an investment whenever it shall be necessary to do so in order to provide moneys to meet any required payment or transfer from any fund or account. Any sums from time to time held in the Parity Revenue Bond Sinking Fund Account and Bond and Interest Reserve Account (or any other City or Commission fund or account which is reasonably expected to be used to pay principal or interest to become due on the Bonds) in excess of amounts which under the applicable federal arbitrage regulations may be invested without regard as to yield shall not be invested at a yield in excess of the applicable yield restrictions imposed by the arbitrage regulations on such investments. 17. Issuance of Parity Bonds - The Bonds issued hereunder, together with the Public Utility Refunding Revenue Bonds, Series 1984, shall be a first charge and lien upon the Net Revenues. No additional obligations shall be hereafter issued unless the same are Subordinate Bonds, provided however, that additional obligations may be issued as Parity Bonds, provided the annual Net Revenues of the Public Utilities (with adjustments as hereafter provided for) for the last completed Fiscal Year for which an audit is available preceding the issuance of such additional obligations shall have been at least (a) one and one-quarter times the average annual principal and interest coming due thereafter on all outstanding Parity Bonds, including the additional obligations so to be issued; and (b) equal to the maximum annual principal and interest coming due thereafter on all outstanding Parity Bonds (after taking into account any mandatory redemption schedule) and Subordinate Bonds and the additional obligations to be issued. Such facts shall be shown by a certificate of the Secretary of the Commission and shall be recited in the resolution authorizing such additional Parity Bonds. For the purpose of determining the Net Revenues for the last Fiscal Year immediately preceding the date of issuance of such additional obligations, the amount of Net Revenues of the Public Utilities may be adjusted by a Consulting Engineer experienced in public power rate structures or by an -41- independent certified public accountant retained by the Commission to reflect any changes in the amount of the Net Revenues which would have resulted if (a) any revision in the schedule of rates and charges in effect at the time of issuance of such additional obligations had been in effect for the full last Fiscal Year, and (b) any new customers added to the Public Utilities on or before the date of issuance of any additional obligations had been connected to the Public Utilities for the full last Fiscal Year, provided however that if the Net Revenues are so adjusted for such additional customers, the Net Revenues shall also be adjusted by deducting from Gross Revenues the increased Operation and Maintenance Expenses which would have resulted from servicing such additional customers for that full last Fiscal Year. In addition, in computing Net Revenues, (a) the Operation and Maintenance Expenses may be adjusted to reflect: (i) any changes to contracts with a public power agency in effect at the date of issuance of any additional obligation which affects the costs of purchasing power as if such contract had been in effect for the full last Fiscal Year, and (ii) any reduction in the base load energy costs or savings in the cost of purchasing power which would have been effected if the improvements and extensions then to be constructed had been in operation during the preceeding year; and (b) Net Revenues may be increased by any additional increase in Net Revenues expected to occur during the first calendar or Fiscal Year of operation of the improvements and extensions then to be constructed from the sale of surplus power resulting from the addition to the Public Utilities of the improvements and extensions, provided, however, that such sale or sales may be considered only to the extent the same are supported by firm contracts requiring the purchaser to pay for available surplus power or capacity whether or not it is in fact accepted by the purchaser. In addition the following conditions shall be met: (a) The payments required to be made (at the time of the issuance of any additional Parity Bonds) into the various funds and accounts provided for in this resolution have been made. (b) The resolution authorizing such additional Parity Bonds provides for the pledge and payment of Net Revenues into the Bond and Interest Reserve Account either: (a) monthly commencing on the first day of the month next succeeding issuance of the additional bonds an additional sum equal to at least 1/48th of the maximum annual principal and interest coming due thereafter on the -42- bonds to be issued until an additional reserve equal to at least the Minimum Reserve for such additional bonds or (b) bond proceeds in an amount equal to the Minimum Reserve for such additional bonds. (c) The proceeds of such Parity Bonds shall be used only for the purpose of making improvements, additions, extensions, renewals or replacements to the Public Utilities. 18. Issuance of Refunding Bonds In Event of Deficiency - The Commission also reserves the right and privi- lege of issuing additional Parity Bonds payable from Net Revenues if and to the extent needed to refund bonds maturing within six months of the issuance of such additional Parity Bonds which are payable from the Parity Revenue Bond Sinking Fund Account in case the moneys in the Parity Revenue Bond Sinking Fund Account, Bond and Interest Reserve Account, and the Utility Improvement and Replacement Account are insufficient to pay the same at maturity, provided that such refunding bonds shall mature subsequent to all the obligations which are payable from the Parity Revenue Bond Sinking Fund Account and which are still outstanding upon completion of such refunding. 19. Issuance of Refunding Bonds - Except as authorized in paragraphs 17 and 18 hereof, the City covenants and agrees that it will issue or incur no obligations payable from the Net Revenues of all or a part of the Public Utilities or constituting in any manner a lien thereon, unless such obligations are expressly made second and subordinate to the lien and charge of all outstanding Parity Bonds, except that the Bonds herein authorized and any other Parity Bonds, or any part thereof, may be refunded and the refunding bonds issued shall enjoy complete equality of lien with the portion of any outstanding Parity Bonds not refunded; provided that if only a portion of all outstanding Parity Bonds shall be so refunded and if such bonds shall be refunded in such manner that the annual principal and interest to become due on the refunding bonds shall be greater than the annual principal and interest to become due on the bonds to be refunded (assuming payment at their maturity), then such bonds may not be refunded without the consent of the holders of the unrefunded portion of the outstanding Parity Bonds. 20. Priority of Payments - In the event that the moneys in the Parity Revenue Bond Sinking Fund Account, the Bond and Interest Reserve Account and the Utility Improvement and Replacement Account shall be insufficient at any time to -43- pay the principal then due and interest then accrued on all outstanding Parity Bonds, said moneys shall first be applied to the payment pro rata of the accrued interest on all such bonds, and any balance shall be applied in payment pro rata of the principal on all such bonds; provided further that if it shall ever be determined by a court of competent jurisdiction while any such Parity Bonds remain outstanding that the sums available and to become available for the payment of the principal thereof and interest thereon are insufficient whether or not then due, then the moneys in the Revenue Bond Sinking Fund Account shall be applied in payment of all then outstanding principal whether or not then due and the interest accrued thereon to the date of payment ratably according to the aggregate amount thereof without any preference or priority. 21. Rights of Holders - The holders of 20% or more in aggregate principal amount of all Parity Bonds at any time outstanding may, either at law or in equity, by suit, action, or other proceedings, protect and enforce the rights of all holders of Parity Bonds then outstanding or enforce or compel the performance of any and all of the covenants and duties specified in this resolution, to be performed by the Commission and City or their officers and agents, including the fixing and maintaining of rates and charges and the collection and proper segregation of Net Revenues and the application and use thereof; provided, however, that nothing herein shall affect or impair the right of any Parity Bondholder to enforce the payment of the principal of and interest on any Parity Bond at and after the maturity thereof, or the obligation of the City to pay the principal of and interest on each of the Parity Bonds issued hereunder to the respective holders thereof at the time and place, from the source and in the manner provided in the Parity Bonds. 22. Covenants - For the protection of the holders of the Bonds herein authorized and all other Parity Bonds, the City herein covenants and agrees to and with the holders thereof from time to time as follows: (a) Operation - It will at all times adequately main- tain and efficiently operate the electric, heating and water utilities as municipal utilities. It will from time to time make all needful and proper repairs, replacements, additions and betterments to the equipment and facilities of the Public Utilities so that they may at all times be operated properly and advantageously, and whenever any -44- equipment of the system shall have been worn out, destroyed or otherwise become insufficient for proper use, it shall be promptly replaced or repaired so that the value and efficiency of the Facilities shall be at all times fully maintained and its Net Revenues unencumbered by reason thereof. (b) Reasonable Rates - The rates for all electric, heating and water service and the charges for all electricity, heating and water supplied by the Public Utilities shall be reasonable and just, taking into account the cost and value of the Public Utilities, the cost of maintaining and operating the Public Utilities and the proper and necessary allowances for depreciation and the amounts required for the payment of principal and interest on the bonds payable from the Net Revenues of the Public Utilities. (c) Coverage - It will establish, maintain and collect such charges and rates as will produce Net Revenues sufficient to pay 125 percent of the interest on and principal of the Bonds herein authorized and any Parity Bonds and 100 percent of the interest and principal on any Subordinate Bonds, as and when they become due, as well as to provide sufficient money to make the required appropriations to the various funds and accounts established herein. The City hereby finds, determines and declares that the estimated revenues to be derived from the operation of the Public Utilities during the term of the Bonds authorized by this resolution will be more than sufficient to produce Net Revenues to pay principal and interest when due on the Bonds authorized herein, the Municipal Utility Refunding Revenue Bonds, Series 1984 and that portion of the $5,350,000 General Obligation Refunding Bonds of 1983, Series A which refunded the $2,090,000 General Obligation Improvement Bonds of 1982 and to maintain reasonable reserves therefor. (d) Sale or Other Disposition of Public Utilities - The City will not sell, lease, mortgage, or in any manner dispose of the Public Utilities or any part thereof including any and all extensions and additions that may be made thereto until all bonds payable from the Net Revenues of the Public Utilities or a part thereof have been paid in full; provided however, that the City may sell the Public Utilities or any part thereof if simultaneously with or prior to the sale all of the outstanding Parity Bonds and Subordinate Bonds are discharged in accordance with paragraph 23 of this resolution; and provided further -45- that the City may sell or lease all or any part of the electric generating facilities of the Public Utilities to a municipal power agency of which it is a member provided that the municipality shall continue to operate and maintain an electric distribution system as part of the Public Utilities. This covenant shall not be construed to prevent the sale by the municipality at fair market value of real estate, equipment or other non -revenue-producing properties which in the judgment of the Commission have become unnecessary, uneconomical or inexpedient to use in connection with the Public Utilities provided that suitable facilities are obtained in place thereof or in the judgment of the Commission the sale will not adversely affect the Public Utilities earnings or ability to meet required financial obligations. (e) Insurance - It will procure and keep in force insurance upon the Public Utilities of a kind and in an amount which would normally be carried by like businesses, including public liability insurance, with an insurer or insurers in good standing; and it will keep in full force and effect fiduciary bonds on employees in.charge of the Public Utilities. In the event of any loss, -the proceeds from such insurance (including liability insurance) or bonds shall be used to make good such loss or to repair or restore the Public Utility or to discharge all of the outstanding Bonds herein authorized in accordance with paragraph 23 of this resolution. (f) Records - The Commission shall at all times keep or cause to be kept, proper financial records relating to the Public Utilities, in accordance with generally accepted accounting principles, and will cuase an annual audit thereof to be made by an independent certified public accountant, and copies of the audit report will be furnished, if requested, to the original purchaser of Parity Bonds and the holder of any Parity Bonds. Each audit report shall be completed in such a manner as is deemed necessary by the Commission and the accountant to present fairly the financial position of the Public Utilities and the results of operation in conformity with generally accepted accounting principles. -46- (g) Billing - All customers bills for Public Utilities shall be rendered monthly, either in advance of service receipt or in the month following the service received; and in event such bills are not paid when due, said service shall be disconnected and the rates and charges, including but not limited to the cost of disconnection and reconnection shall be collected in a lawful manner. Charges for various types of service may be billed jointly, but any joint bill shall show separately the charges for. each service. (h) Performance - It will faithfully and punctually perform all duties with reference to the Public Utilities required by the Constitution and laws of the State of Minnesota and this resolution. (i) Franchise - The municipality will grant no fran- chise to any competing utility if denial of such a franchise is not in violation of any law. 23. Additional Covenants - The City herein covenants that neither it nor the Commission has heretofore and will not hereafter enter into any contract which will obligate any person or persons to purchase electric energy, heat or water from the Commission in a total aggregate amount which would cause any Parity Bonds to become industrial development bonds within the meaning of Section 103(b) of the Internal Revenue Code and the regulations promulgated thereunder, and in particular Federal Income Tax Regulations, Section 1.103-7(b)(5). 24. Amendments - No change, amendment, modification or alteration shall be made in the covenants herein made without the consent of the holders of not less than 60% in principal amount of all outstanding Parity Bonds except for changes, amendments, modifications and alterations made (a) to cure any ambiguity or formal defect or omission, or (b) any other change which would not materially prejudice the holders of any outstanding Parity Bonds; provided, however, that nothing herein contained shall permit or be construed as permitting (1) an extension of the maturity of the principal of or the interest on any Parity Bonds, or (2) a reduction in the principal amount of any such Parity Bond or the rate of interest thereon, or (3) a privilege or priority of any such Parity Bond or Bonds over any other Parity Bond or Bonds except as otherwise provided herein, or (4) a reduction in the aggregate principal amount of such Parity Bonds required for -47- consent to any change, amendment, modification or alteration, or (5) permit the creation of any lien ranking prior to or on a parity with the lien of such Parity Bonds, except as hereinbefore expressly permitted, or (6) modify any of the provisions of this paragraph without the consent of the holders of one hundred percent (100%) of the principal amount of such Parity Bonds outstanding, or, in the case of any modifications described in clauses (1) through (5), the consent of the holders of all Parity Bonds adversely affected by such modification. 25. Discharge of Covenants - When any Parity Bonds and the interest due thereon, have been discharged as provided in this paragraph, all pledges, covenants and other rights granted by this resolution to the holders of such Parity Bonds shall cease. The City may discharge any Parity Bonds which are due on any date by depositing with the Bond Registrar for such Parity Bonds on or before that date a sum sufficient for the payment thereof in full; or if any Parity Bond should not be paid when due, it may nevertheless be discharged by depositing with the Bond Registrar a sum sufficient for the payment thereof in full. The City may also discharge any prepayable Parity Bonds which are called for redemption on any date when they are prepayable according to their terms, by depositing with the Bond Registrar on or before that date an amount equal to the principal, interest and redemption premium, if any, which are then due, provided that notice of such redemption has been duly given as provided in the resolution authorizing the Parity Bonds. The City may also at any time discharge any Parity Bonds of this issue by complying with the applicable pro- visions of Minnesota Statutes, Section 475.67, and any amend- ments thereto, except that the funds deposited in escrow in accordance with the provisions may but need not be in whole or part proceeds of advance refunding bonds. The City may discharge Parity Bonds as herein provided without the consent of any Parity Bondholders. 26. Unenforceability - If any section, paragraph or provision of this resolution shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this resolution. 27. Failure to Issue Municipal Utility Refunding Revenue Bonds, Series 1984 - If for any reason the $3,830,000 Municipal Utility Refunding Revenue Bonds, Series 1984, are not issued, the Commission and the City shall remain bound by the respective terms and covenants set forth in the resolutions ME authorizing the Municipal Utility Revenue Bonds of 1973 (the "1973 Bonds" and the Municipal Utility Revenue Bonds of 1982, (the "1982 Bonds") and in the event of any conflict between the terms and covenants set forth in the resolutions authorizing the 1973 Bonds and the 1982 Bonds and the terms and covenants set forth herein, the terms and covenants provided therein shall control until payment of the 1973 Bonds and the 1982 Bonds has been made or provided for. 28. Certification - The City Clerk is authorized and directed to prepare and furnish to the original Purchaser of the Bonds, and the attorneys approving the same, certified copies of all orders and resolutions of the Commission and City relating to the Public Utilities, and the issuance of the Bonds, and all other proceedings or records showing the right, power and authority of the City and Commission to issue the same and to provide funds for the payment thereof, and such certified copies and certificates shall be deemed representations of the Commission as to all statements therein. 29. Effective Date - Each and all of the terms and provisions of this resolution shall be and constitute a covenant on the part of the Commission to and with each and every holder from time to time of the Bonds issued hereunder and shall go into effect only upon issuance of the Bonds. 30. Filing - The Clerk is authorized and directed to file a certified copy of this resolution with the County Auditor of Kandiyohi County, and obtain a certificate that the Bonds herein authorized have been duly entered in his Bond Register. The motion for the adoption of the foregoing resolu- tion was duly seconded by member and upon a vote being taken thereon, the following voted in favor thereof: and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. SM OFFICIAL BID FORM TO: Mr. Richard C. Hoglund, Clerk -Treasurer SALE DATE: April 18, 1984 Willmar City Hall 333 Southwest Sixth Street Willmar, Minnesota 56201 (612/235-4913) RE: $3,830,000 Municipal Utility Refunding Revenue Bonds, Series 1984A For the Bonds of this Issue which shall mature and bear interest at the annual rate, as follows, we offer a price of $ (not less than $3,762,000) and accrued interest to the date of delivery. * 1984 % 1989 % 1993 % 1985 % 1990 % 1994 % 1986 % 1991 % 1995 % 1987 % 1992 % 1996 In making this offer we accept all of the terms and conditions of the Official Terms of Offering published in the Official Statement dated April 3, 1984. In the event of failure to deliver these Bonds in accordance with the Official Terms of Offering as printed in the Official Statement and made a part hereof, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $ NET EFFECTIVE RATE: % Account Members Account Manager Received good faith check for return to bidder as of the date of this offer. SPRINGSTED Incorporated by The foregoing offer .is •hereby accepted by the Issuer on the date of the offer •by its following officers duly authorized and empowered to make such acceptance. Clerk -Treasurer Mayor OFFICIAL BID FORM TO: Mr. Richard C. Hoglund, Clerk -Treasurer SALE DATE: April 18, 1984 Willmar City Hall 333 Southwest Sixth Street Willmar, Minnesota 56201 (612/235-4913) RE: $3,830,000 Municipal Utility Refunding Revenue Bonds, Series 1984A For the Bonds of this Issue which shall mature and bear interest at the annual rate, as follows, we offer a price of $ (not less than $3,762,000) and accrued interest to the date of delivery. In making this offer we accept all of the terms and conditions of the Official Terms of Offering published in the Official Statement dated April 3, 1984. In the event of failure to deliver these Bonds in accordance with the Official Terms of Offering as printed in the Official Statement and _ made a part hereof, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $ NET EFFECTIVE RATE: % Account Members Account Manager Received good faith check for return to bidder as of the date of this offer. SPRINGSTED Incorporated by ....................................................................... The foregoing offer is hereby accepted by the Issuer on the date of the offer by its following officers duly authorized and empowered to make such acceptance. Clerk -Treasurer Mayor 1984 % 1989 % 1993 1985 % 1990 % 1994 % 1986 % 1991 % 1995 1987 % 1992 % 1996 In making this offer we accept all of the terms and conditions of the Official Terms of Offering published in the Official Statement dated April 3, 1984. In the event of failure to deliver these Bonds in accordance with the Official Terms of Offering as printed in the Official Statement and _ made a part hereof, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $ NET EFFECTIVE RATE: % Account Members Account Manager Received good faith check for return to bidder as of the date of this offer. SPRINGSTED Incorporated by ....................................................................... The foregoing offer is hereby accepted by the Issuer on the date of the offer by its following officers duly authorized and empowered to make such acceptance. Clerk -Treasurer Mayor OFFICIAL BID FORM TO: Mr. Richard C. Hoglund, Clerk -Treasurer SALE DATE: April 18, 1984 Willmar City Hall 333 Southwest Sixth Street Willmar, Minnesota 56201 (612/235-4913) RE: $3,830,000 Municipal Utility Refunding Revenue Bonds, Series 1984A For the Bonds of this Issue which shall mature and bear interest at the annual rate, as follows, we offer a price of $ (not less than $3,762,000) and accrued interest to the date of delivery. % 1984 % 1989 % 1993 * 1985 % 1990 % 1994 % 1986 % 1991 % 1995 * 1987 % 1992 % 1996 In making this offer we accept all of the terms and conditions of the Official Terms of Offering published in the Official Statement dated April 3, 1984. In the event of failure to deliver these Bonds in accordance with the Official Terms of Offering as printed in the Official Statement and made a part hereof, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $ NET EFFECTIVE RATE: % Account Members Account Manager BY: Received good faith check for return to bidder as of the date of this offer. SPRINGSTED Incorporated by The .foregoing offer .is .hereby accepted by•the• Issuer on the date of the offer •by*its following officers duly authorized and empowered to make such acceptance. Clerk -Treasurer Mayor OFFICIAL BID FORM TO: Mr. Richard C. Hoglund, Clerk -Treasurer SALE DATE: April 18, 1984 Willmar City Hall 333 Southwest Sixth Street Willmar, Minnesota 56201 (612/235-4913) RE: $3,000,000 Municipal Utility Revenue Bonds, Series 19848 For the Bonds of this Issue which shall mature and bear interest at the annual rate, as follows, we offer a price of $ (not less than $2,942,000) and accrued interest to the date of delivery. % 1986 % 1987 % 1988 _% 1989 % 1990 % 1991 ' . )FSA % 1993 % 1994 % 1995 % 1996 % 1997 % 1998 % 1999 %2000 In making this offer we accept all of the terms and conditions of the Official Terms of Offering published in the Official Statement dated April 3, 1984. In the event of failure to deliver these Bonds in accordance with the Official Terms of Offering as printed in the Official Statement and made a part hereof, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $ NET EFFECTIVE RATE: % Account Members Account Manager BY: Received good faith check for return to bidder as of the date of this offer. SPRINGSTED Incorporated by The foregoing offer *is hereby accepted bythe•(ssuer.on the date of the offer �by� its following officers duly authorized and empowered to make such acceptance. Clerk -Treasurer Mayor OFFICIAL BID FORM TO: Mr. Richard C. Hoglund, Clerk -Treasurer SALE DATE: April 18, 1984 Willmar City Hall 333 Southwest Sixth Street Willmar, Minnesota 56201 (612/235-4913) RE: $3,000,000 Municipal Utility Revenue Bonds, Series 19848 For the Bonds of this Issue which shall mature and bear interest at the annual rate, as follows, we offer a price of $ (not less than $2,942,000) and accrued interest to the date of delivery. % 1986 % 1991 % 1996 % 1987 % 1992 % 1997 % 1988 % 1993 % 1998 % 1989 % 1994 % 1999 % 1990 % 1995 %2000 In making this offer we accept all of the terms and conditions of the Official Terms of Offering published in the Official Statement dated April 3, 1984. In the event of failure to deliver these Bonds in accordance with the Official Terms of Offering as printed in the Official Statement and made a part hereof, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $ NET EFFECTIVE RATE: % Account Members Account Manager BY: Received good faith check for return to bidder as of the date of this offer. SPRINGSTED Incorporated by The •foregoing offer •is .hereby accepted by•the' Issuer •on the date of the offer •by• its following officers duly authorized and empowered to make such acceptance. Clerk -Treasurer Mayor Certificate As of the date of the Official Statement, April 3, 1984, prepared for the issuance of the City's $3,830,000 Municipal Utility Refunding Revenue Bonds, Series 1984A and $3,000,000 Municipal Utility Revenue Bonds, Series 1984B, it did not and does not as of the date of this Certificate contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Witness our hands this day of , 1984. FOR THE CITY OF WILLMAR, MINNESOTA F. J. Reynolds, Mayor Richard C. Hoglund, Clerk -Treasurer MEMO TO: John K. Anderson/City Administrator FROM: Judi Simac/City Planner RE: Fox Run - Review of Proposed Road Alignment DATE: April 19, 1984 Background: On April 3, 1984, the City Council reconsidered the Preliminary Plat of Fox Run 1st Addition and approved a motion that gives preliminary approval of the plat for two lots (Block 1, Lots 1 and 2) subject to the eight conditions as recommended by the Planning Commission exclusive of condition V. The applicant, Fred Corrigan, has requested that Council review the proposed road alignment to serve the plat, prior to having final plat plans drawn. He wants to make certain that it will be approved by Council when the final plat is discussed. The attached design was drawn by the City Engineer with a copy given to Mr. Corrigan to indicate what type of design the City would accept. The cul-de-sac will serve the two lots. Recommendation: Staff recommends approval of the proposed road alignment for the Fox Run preliminary plat as drawn by the City Engineer. Action Requested: Motion by the City Council to approve the proposed road align- ment for Fox Run 1st Addition as drawn by the City Engineer. JS:cah Attachment Yr?O `SEA._.}� i? ►� 1 s+ Add ►� - IT j r ) r R. 15 MEMO TO: John K. Anderson, City Admin. FROM: Jeanne Andre, Community Development Dir. RE: Huber Park Trail Restroom Facility. DATE: April 19, 1984 INTRODUCTION As previously discussed by City Council, staff has attempted to provide for an existing watermain to be relocated to allow for proper siting of the new restroom facility. This memo is to update Council on their efforts and seek authorization to proceed. BACKGROUND Fulton Schleisman prepared an estimate of the proposed work which came to $5,900.00. Quotes were sought from Consolidated Plumbing and Heating and F.F. Jedlicki, Inc. The consolidated quote came in at $10,500.00 with an additional cost to SPUC of $4,900.00 for work they desire. Jedlicki's quote was $13,261.50 with $1,350.00 for SPUC's additional work. (Copies of quotes will be provided on request). Since both quotes were signifi- cantly above the estimate, a new approach was taken. Mr. Jedlicki was asked to provide a time and materials quote for the City work, excluding restoration work. This quote is attached and would cost $5,720.00 if the work takes three days as he estimates. Fulton recommends that three days is reasonable and the work could even get done in two days. Of course with a time and materials approach, the City will pay if problem areas are encountered. However, the Engineering Department is very comfortable working with Jedlicki after the success of the Levee Drive project last year, and recommends this approach as the most cost effective. Restoration has been removed from the project due to a new effort currently underway regarding all landscaping for this project. The site plan provided by Bonestroo provided landscaping but only related it to the new building, not co the whole site including the Community Services Building. Consequently, Steve Hurley has been requested to undertake this total site review, considering the existing cedar tree. With the new landscaping proposal, it is recommended that the landscaping element be removed from the existing construction contract for the building (as a change order) and the new plan, including grading, sod restoration and plantings be untaken through quotes by local landscaper contractors. REQUESTED ACTION 1] Authorize F.F. Jedlicki to undertake the relocation of the watermain under the Huber Park Trail Restroom Facility site, charging for materials and time at an hourly rate of $130.00 for a three man crew, with materials estimated to cost $2,600.00. Huber Park Trail Restroom -Facility Page 2 April 19, 1984 21 Authorize a change order to remove sod and landscaping from the current contract for the Huber Park Trail Rest- room Facility with Consolidated Mechanical Contractors, and direct staff to solicit quotes to provide these services for the revised landscape plan. Pkione: 934-7272 April 18, 1984 City Of Shakopee 129 East 1st Street Shakopee, Minnesota Engineering Dept. F. F. JEDLICKI INC. SEINER & WATFR CONTRACTOR EXCAVATING 14203 West 62nd Street Eden Prairie, Minnesota 55344 5537(-,3 RE: Huber Trail - 10" Watermain Relocate Dear Mr. Spurrier: Mobile Tel. 1-977-7247 If we relocated the 10" wa.termain and did it by the hour we could do it cheaper by the hour than by our original. bid. With a three man crew, a backhoe, and tools, we should be able to complete the job in three days. We would charge 7130.00 per hour. Ivinterial will run about $2,600.00. We are not including any blacktop or sod restoration. Sincerely, r Frank F. Jed.ki F.F. Jedlicki, Inc. FFJf llg R MEMO TO: John K. Anderson/City Administrator FROM: Stephen Hurley/Engineering Technician RE: Computer System Cost DATE: April 16, 1984 Introduction: Computer system hardware, software, networking equipment and printers are currently on order from two vendors. There are a few modifications to Council's motion of 3-19-84. Background: Office Products Tele -Terminals 3 Micro Computers & Related Computer Hardware $ 9,988.00 Computer Software 25248.00 Micronet Equipment 1,510.00 2 Printers $3,674.00 TOTAL: $13,746.00 $3,674.00 GRAND TOTAL: $17,420.00 The above tabulation reflects the specific purchases from Tele - Terminals and Office Products. It also reflects a temporary postponement of $5,475.00 in purchases from the total purchase approved by Council 3-19-84 which was $22,895.00. The postpone- ment of the purchase of certain equipment and software is to allow for a brief shakedown period. Recommendation: Staff recommends that Council's 3-19-84 motion authorizing a $22,895.00 purchase of computer equipment and hardware be amended to more accurately reflect the actual purchase orders to Tele - Terminals and Office Products. The final follow-up purchase will come before Council for future action when appropriate. Actions Requested: Pass a motion amending Council's 3-19-84 motion to purchase $22,895.00 in computer equif and Office Products to rest zing the purchase of 3 micrc hardware, computer software Products at $13,746.00 and t Tele -Terminals at $3,674.00. SH:cah ment and soft to the specif computers an and micronet o purchase tw ware from Tele -Terminals is purchase as authori- d related computer equipment from Office o printers from 0 MEMO TO: John K. Anderson, City Administrator FROM: Jeanne Andre, Community Development Director RE: Consulting Services From Westwood Planning and Engineering. DATE: April 19, 1984 INTRODUCTION City Staff has been working with MnDOT Staff to urge some action on the "mini by-pass" proposed in the Downtown Concept Plan. Although MnDOT has generally been favorable, the most recent meeting with Assistant District Engineer Duane Brown raised issues which must be resolved before further action is possible. BACKGROUND MnDOT funding level has been in question while the State Legislature has been considering whether to allow early trans- fer of excise tax revenues to the highway fund. With this uncertainty MnDOT Staff are very cautious about encouraging, or even considering, new projects. They have stated their willingness to fund bridge improvements but are reluctant to consider funding for the other two elements of the City's "mini by-pass" plan. To look at any involvement with the plan, they want more refined geometric design plans then are presented in the current concept plan. The City Engineering Department is not in a position to provide such work at this time, so a quote for services was requested from Westwood Planning and Engineering. Their response is attached. Since the desire at this point is not to proceed through the environmental assessment worksheet unless we have MnDOT support, Mr. Anderson was requested to provide a not -to - exceed figure which would provide the documentation requested by MnDOT. He recommended doing $7,340.00 in base mapping plus Engineer- ing services at an hourly rate not to exceed $4,000.00 for a total cost of $11,340. This will be charged against the improve- ment project if it does in fact occur. It is recommended that the expenditure be charged against the Downtown Tax -Increment District for planning if an improvement project does not occur. RECOMMENDED ACTION The Downtown Committee considered this issue at its April 18, 1984 meeting and passed the following motion: 7 Consulting Services From Westwood Planning and Engineering Page 2 April 19, 1984 Link/Steel moved to recommend to City Council that they authorize"Westwood Planning and Engineering to prepare the con- tour maps for the amount of $7,340.00 and to expend up to $4,000.00 on an hourly rate basis to prepare the preliminary geometric designs and information requested by the State for the "mini by-pass". REQUESTED ACTION: Concur with Downtown Committee recommendation to authorize Westwood Planning and Engineering to prepare the contour maps for the amount of $7,340.00 and to expend up to .$4,000.00 on an hourly rate basis to prepare the preliminary geometric designs and information requested by the State for the "mini by-pass". Motion carried. JA/bn Att. WESTWC}Oi� PLANNING & ENGINEERING COMPANY April 12, 1984 Mr. John Anderson City of Shakopee` , iJ�a 129 East First Avenue Shakopee, MN 55379 RE: Shakopee Traffic Study Dear Mr. Anderson: At our meeting yesterday, you asked that I summarize the current status of the downtown traffic situation in light of our recent conversations with MnDOT and the potential impact of racetrack traffic. A key element in Shakopee's Downtown Plan has been reconstruction of the TH 169-101 intersection to reduce the negative impacts of this bottleneck on Shakopee's business community. Adoption of this plan will commit the city to agres- sively seek ways and means of relocating and improving this major access into downtown. Funding and construction of state highways has undergone subtle changes over the last ten years. While it is still possible to sit back and wait for MnDOT to find a problem and correct it using their funding resources, this process can literally take forever. A much larger share of the state's budget must be spent for maintenance and repair activities. Because of mandated staff reductions, there are fewer professionals available to conduct studies, prepare preliminary planning, and to "shepard" projects through the planning/programming/design/approval phases. The state's reaction to this "do more with less" mandate has been to shift the leadership role to local communities in some instances. If the City of Shakopee is committed to reconstruction of TH 169/101 and construction of the Shakopee bypass, we recommend that you take an assertive position in advancing these projects through each stage of the process toward con- struction. This will involve a commitment of staff time, development of political support for your needs, and production of the necessary support information and documentation in a timely manner. We continue to offer our services as a consultant to the city for these projects. Up to this point, Shakopee has maintained a good level of momentum in pur- suing both of these projects. The Shakopee Bypass EIS has been approved and right-of-way funds have been requested from the Metropolitan Council. The state's 1986 - 1989 construction program acknowledges the Shakopee bypass. We have had a number of meetings with MnDOT to discuss the poten- tial of downtown improvements. Westwood has provided you proposals for advancing the Downtown Study into its implementation phase and we have proposed a process to implement the highway reconstruction in the 1st Avenue corridor. On behalf of the city, we have negotiated for the necessary base mapping and survey work to accomplish these tasks. 7415 W.AYZATA BOULEVARD, MINNEAPOLIS, MINNESOTA 55426 (612) 546.0155 rI Mr. John Anderson April 12, 1984 Page 2 MEETINGS WITH MnDOT The city staff and Westwood have met with MnDOT, District 5, to discuss their position and possible assistance in reconstruction of TH 169/101. In meeting with Bill Crawford, District Engineer, he indicated a coopera- tive and helpful attitude, acknowledging the state's desire to mitigate traffic problems at this intersection in cooperation with the city. A number of important questions were raised in our discussions, including the feasibility and costs of these improvements and possible funding sources. The city requested that MnDOT evaluate the Downtown Study Pro- posal and a meeting was held on March 20th with the assistant district engineer to develop an implementation process. A number of key issues were discussed: ® This project is contained in none of the state's present construc- tion programs. Therefore, any state or federal funding by MnDOT would require that the project be "inserted" into the program, which could delay a number of projects which are prioritized. One project which might be affected by this delay would be the Shakopee bypass. o Widening of the Minnesota River bridge is an important element of improving this access to Shakopee. Because river clearance under the existing bridge does not meet US Army Corps of Engineers stan- dards for a navigable waterway, a number of approvals are required to allow this improvement. m Depending on the design selected, improvement to the bridge and bridge approaches could also require a number of "watchdog agency" approvals for work in the floodplain, riverbottom and other environ- mentally sensitive areas. a The state felt that funding of the bridge widening is appropriately a state responsibility. Timely funding of improvements south of the bridge might not be easily attained from MnDOT sources. The assistant district engineer made a strong case for the city's finan- cial involvement in realignment of the state highway south of the river. This is a matter of delicate negotiation and almost certainly will involve some locally -generated monies. However, some of the city's state and federal aid funds might be eligible for assignment to this work (note that these are not "new" funds, but merely an assignment of entitlement revenues). a The state will make a more specific response to these items if requested by the city's engineering staff. However, they requested that specific geometries be proposed by the city for their review and feasibility evaluation. Mr. John Anderson April 12, 1984 Page 3 RACETRACK TRAFFIC As you requested, we have made a cursory review of Barton-Aschman's traffic estimates in the racetrack Environmental Impact Statement. As you know, we provided Barton-Aschman with our traffic engineering data from the Downtown Study and this information was supplemented by their estimates of racetrack -generated traffic demand. Since race schedules are carefully designed to avoid the normal morning and evening rush hour time periods, peak operation of the TH 169/101 inter- section should not be affected to any great degree. However, weekday evening races (beginning at 8 p.m.) will have some affect on peak hour movements because employees will be coming to work during the evening rush hour. The EIS does not quantify the impact of racetrack employees or movement of horsetrailers to the site under those conditions. Weekday afternoon races will disgorge patrons between 7:30 and 8:30 p.m. This traffic will represent the maximum impact of racetrack traffic on the TH 169/101 intersection. We anticipate that congestion levels will be slightly higher than those presently experienced during the peak hours. We also expect congestion during the 1:00 to 2:00 p.m. inbound peak and the 6:00 to 7:00 p.m. outbound peak for weekend races. From the data presented, it does not appear that racetrack traffic will present an insurmountable traffic problem at the intersection of TH 169/101. However, since the racetrack will be in operation by next summer, the urgency of improving this intersection to relieve congestion in downtown Shakopee is increased and we recommend that this program be advanced as rapidly as possible. WHERE ARE WE? The Downtown Committee is in its final review process of the Downtown Revitalization Program. A position has already been established in support of the TH 169/101 improvement and implementation of that proposal is a key element of the plan. The city has a proposal from Boerhave, Assoc., and Mark Hurd Aerial Surveys to provide base mapping and 1 foot contour lines for the downtown area, including the necessary contours for the highway improvement. Aerial photography has been completed. The surveyor must now provide horizontal control information and spot elevations so that Mark Hurd can prepare one foot contour maps from the photographs. The cost of these items is $7,340 and we recommend that this work be authorized as soon as possible. In our letter of January 12, the downtown study into its the following key elements: 1984, we outlined a proposal for advancing implementation stage. That proposal involved I I Mr. John Anderson April 12, 1984 Page 4 o Prepare detailed base maps to an accuracy of 0.10 feet a Select and identify the design elements for downtown area improve- ments, including street furniture, signing elements, sidewalks and walkways, roadways and parking areas, and landscape features a Preparation of implementation plans for a specific improvement (the 2nd Avenue parking lot) Concurrently with this, we proposed that Westwood Planning & Engineering prepare a FeasibiliLy Study and an Environmental Assessment Worksheet for the road improvements. A major cost element in the January 12 proposal involved survey work to provide an accurate basis for design. Because of the large commitment of manhours to provide accurate base maps, we evaluated and recommended an alternative proposal using aerial photography techniques to provide 1 foot contours for preliminary design and deferring the more accurate ground surveying until specific projects require that level of accuracy. Therefor, we recommend that the following actions be authorized by the city: o Boerhave be authorized to complete the 1 foot contour maps for a contract amount of $7,340 Westwood Planning & Engineering be authorized to continue working with the downtown committee to prepare limited preliminary design elements for development of the downtown area at a cost of $5,000 a Westwood be authorized to prepare the feasibility and scoping docu- ments and an Environmental Assessment Worksheet for relocation of TH 101 and reconstruction of the TH 169/101 intersection for an amount of $15,000 As an alternative to the second and third items, we are willing to advance this project by working on an hourly basis to prepare the preliminary geometric designs and other information requested by the state, based on the 1 foot contour maps. Yours truly, WESTWOOD PLANNING & ENGINEERING COMPANY Kenneth W. Anderson, P.E. KWA/dg