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HomeMy WebLinkAbout2014-05-07 PACKET 08.A.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # DATE 5/7/14 . • PREPARED BY Finance Robin Roland ORIGINATING DEPARTMENT DEPARTMENT NEAD **********��**�***********�**�**********�******* COUNCIL ACTION REQUEST Consider resolution - Sale of $1,435,000 Taxable General Obligation Tax Increment Refunding bonds of 2014A STAFF RECOMMENDATION After review of bid information, approve Sale of $1,435,000 Taxable General Obligation Tax Increment Refunding bonds of 2014A. BUDGET IMPLICATION BUDGETED AMOUNT ACTUAL AMOUNT ADVISORY COMMISSION ACTION ❑ PLANNING ❑ PUBLIC SAFETY ❑ PUBLIC WORKS ❑ PARKS AND RECREATION ❑ HUMAN SERVICES/RIGHTS ❑ ECONOMIC DEV. AUTHORITY ❑ SUPPORTING DOCUMENTS DATE REVIEWED ❑ ❑ ❑ ❑ ❑ ❑ ❑ APPROVED ❑ ❑ ❑ ❑ ❑ ❑ ❑ DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ � MEMO/LETTER: � RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ��11 l '� �G •1111_► \.1 % City Administrator Date *************************�:�*�****�**********��:�* H:\Council items\council-action template.docx � ,•'. . • ' � Pride and Q Meet To: From: Date: Subject: Introduction Mayor and City Council Members Ryan Schroeder, City Administrator Robin Roland, Finance Director May 1, 2014 Consider resolution: Sale of $1,435,000 Taxable General Obligation (G.O.) Tax Increment Refunding Bonds of 2014A At the April 2, 2014 City Council meeting, the Council called for the sale of $1,435,000 Taxable General Obligation (G.O.) Tax Increment Refunding Bonds, Series 2014A to refund the 2015- 2021 maturities of the City's $1,775,000 Taxable G.O. Tax Increment Bonds Series 2004B. The bond sale was set for May 7, 2014. Discussion Ehlers, the City's Financial Advising firm will accept and open bids on the City's behalf at 10:00 AM Central Time on Wednesday May 7th. The bids will be tabulated and shared with the City Council at the meeting that evening. Requested Action Review the information presented by Ehlers representative at the City Council meeting and adopt the sale resolution $1,435,000 Taxable G. O. Tax Increment Bonds, Series 2014A to the appropriate bidder. A generic copy of the resolution is provided with this item. EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL CITY OF COTTAGE GROVE, MINNESOTA HELD: May 7, 2014 Pursuant to due call, a regular or special meeting of the City Council of the City of Cottage Grove, Washington County, Minnesota, was duly held at the City Hall on May 7, 2014, at 7:30 P.M, for the purpose, in part, of providing for the issuance and awarding the sale of $1,435,000 Taxable General Obligation Tax Increment Refunding Bonds, Series 2014A. The following members were present: and the following were absent: Member introduced the following resolution and moved its adoption: RESOLUTION NO. RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF $1,435,000 TAXABLE GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2014A AND PLEDGING TAX 1NCREMENTS AND LEVYING A TAX FOR THE SECURITY AND PAYMENT THEREOF A. WHEREAS, the City Council of the City of Cottage Grove, Minnesota (the "City") has heretofore created Municipal Development District No. 1(the "Development District") pursuant to the provisions of Minnesota Statutes, Sections 469.124 through 469.134, and approved a development program, as amended (the "Program") with respect to the Development District; and B. WHEREAS, the Council has also heretofore created Tax Increment Financing District No. 1-12 as a redevelopment district within the Development District (the "Tax Increment District") under the provisions of Minnesota Statutes, Sections 469.174 through 469.1794, as amended, and approved an amended tax increment financing plan (the "Plan") with respect to the Tax Increment District; and C. WHEREAS, pursuant to the provisions of the Program and Plan, funds were expended within the Development District to finance land acquisition costs in the Development District; and D. WHEREAS, the City has heretofore issued $1,775,000 original principal amount of Taxable General Obligation Tax Increment Bonds, Series 2004B, dated July l, 2004 (the "Prior Bond"), pursuant to the resolution of the City Council duly adopted on July 7, 2004 (the "Prior Resolution"), issued for the purpose to provide money to finance land acquisition and site improvement costs within the Development District, as set forth in the Plan (the "Project"); and E. WHEREAS, the City hereby determines and declares that it is necessary and expedient to provide moneys for a current refunding, on July l, 2014 (the "Redemption Date") of 6186380v1 $1,355,000 aggregate principal amount of the Prior Bonds, which mature on and after February 1, 2015 (the "Refunded Bonds"), at a price of par plus accrued interest, as provided in the Prior Resolution of the City Council authorizing the issuance of the Prior Bonds; and F. WHEREAS, the refunding on the Redemption Date of the Refunded Bonds is consistent with covenants made with the holders thereof; and is necessary and desirable for the reduction of debt service cost to the City; and G. WHEREAS, the City Council hereby determines and declares that it is necessary and expedient to issue $1,435,000 Taxable General Obligation Tax Increment Refunding Bonds, Series 2014A (the "Bonds") or individually the "Bond"), pursuant to Minnesota Statutes, Chapters 469 and 475, to provide moneys for a current refunding of the Refunded Bond; and H. WHEREAS, the City has retained Ehlers & Associates, Inc., in Roseville, Minnesota ("Ehlers"), as its independent financial advisor for the sale of the Bonds and was therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9) and proposals to purchase the Bonds have been solicited by Ehlers; and I. WHEREAS, the proposals set forth on Exhibit A attached hereto were received by the City Administrator, or designee, at the offices of Ehlers at 10:00 a.m., this same day pursuant to the Preliminary Official Statement, dated Apri124, 2014; and J. WHEREAS, it is in the best interests of the City that the Bonds be issued in book- entry form as hereinafter provided; and NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Cottage Grove, Minnesota, as follows: 1. Acceptance of Proposal. The proposal of (the "Purchaser"), to purchase the Bonds, in accordance with the Preliminary Official Statement established for the Bonds, at the rates of interest hereinafter set forth, and to pay therefor the sum of $ , plus interest accrued to settlement, is hereby found, determined and declared to be the most favorable proposal received, is hereby accepted and the Bonds are hereby awarded to the Purchaser. The Clerk is directed to retain the deposit of the Purchaser and to forthwith return to the unsuccessful bidders their good faith checks or drafts. 2. Terms of Bonds. (a) Original Issue Date; Denominations; Maturities. The Bonds shall be dated May 29, 2014, as the date of original issue and shall be issued forthwith on or after such date in fully registered form. The Bonds shall be numbered from R-1 upward in the denomination of $5,000 each or in any integral multiple thereof of a single maturity (the "Authorized Denominations"). The Bonds shall mature on February 1 in the years and amounts as follows: 2 6186380v1 Year Amount Year Amount 2015 2019 2016 2020 2017 2021 2018 All dates are inclusive. As may be requested by the Purchaser, one or more term Bonds may be issued having mandatory sinking fund redemption and final maturity amounts conforming to the foregoing principal repayment schedule, and corresponding additions may be made to the provisions of the applicable Bond(s). (b) Book Entrv Onl� s�. The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York or any of its successors or its successors to its functions hereunder (the "Depository") will act as securities depository for the Bonds, and to this end: (i) The Bonds shall be initially issued and, so long as they remain in book entry form only (the "Book Entry Only Period"), shall at all times be in the form of a separate single fully registered Bond for each maturity of the Bonds; and for purposes of complying with this requirement under paragraphs 5 and 10 Authorized Denominations for any Bond shall be deemed to be limited during the Book Entry Only Period to the outstanding principal amount of that Bond. (ii) Upon initial issuance, ownership of the Bonds shall be registered in a bond register maintained by the Bond Registrar (as hereinafter defined) in the name of CEDE & CO, as the nominee (it or any nominee of the existing or a successor Depository, the "Nominee"). (iii) With respect to the Bonds neither the City nor the Bond Registrar shall have any responsibility or obligation to any broker, dealer, bank, or any other financial institution for which the Depository holds Bonds as securities depository (the "Participant") or the person for which a Participant holds an interest in the Bonds shown on the books and records of the Participant (the "Beneficial Owner"). Without limiting the immediately preceding sentence, neither the City, nor the Bond Registrar, shall have any such responsibility or obligation with respect to (A) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in the Bonds, or (B) the delivery to any Participant, any Owner or any other person, other than the Depository, of any notice with respect to the Bonds, including any notice of redemption, or (C) the payment to any Participant, any Beneficial Owner or any other person, other than the Depository, of any amount with respect to the principal of or premium, if any, or interest on the Bonds, or (D) the consent given or other action talcen by the Depository as the Registered Holder of any Bonds (the "Holder"). For purposes of securing the vote or consent of any Holder under this Resolution, the City may, however, rely upon an omnibus proxy under which the Depository assigns its consenting or voting rights to certain Participants to whose accounts the Bonds 6186380v1 are credited on the record date identified in a listing attached to the omnibus proxy. (iv) The City and the Bond Registrar may treat as and deem the Depository to be the absolute owner of the Bonds for the purpose of payment of the principal of and premium, if any, and interest on the Bonds, for the purpose of giving notices of redemption and other matters with respect to the Bonds, for the purpose of obtaining any consent or other action to be taken by Holders for the purpose of registering transfers with respect to such Bonds, and for all purpose whatsoever. The Bond Registrar, as paying agent hereunder, shall pay all principal of and premium, if any, and interest on the Bonds only to the Holder or the Holders of the Bonds as shown on the bond register, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. (v) Upon delivery by the Depository to the Bond Registrar of written notice to the effect that the Depository has determined to substitute a new Nominee in place of the existing Nominee, and subject to the transfer provisions in paragraph 10, references to the Nominee hereunder shall refer to such new Nominee. (vi) So long as any Bond is registered in the name of a Nominee, all payments with respect to the principal of and premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, by the Bond Registrar or City, as the case may be, to the Depository as provided in the Letter of Representations to the Depository required by the Depository as a condition to its acting as book-entry Depository for the Bonds (said Letter of Representations, together with any replacement thereof or amendment or substitute thereto, including any standard procedures or policies referenced therein or applicable thereto respecting the procedures and other matters relating to the Depository's role as book-entry Depository for the Bonds, collectively hereinafter referred to as the "Letter of Representations"). (vii) All transfers of beneficial ownership interests in each Bond issued in book-entry form shall be limited in principal amount to Authorized Denominations and shall be effected by procedures by the Depository with the Participants for recording and transferring the ownership of beneficial interests in such Bonds. (viii) In connection with any notice or other communication to be provided to the Holders pursuant to this Resolution by the City or Bond Registrar with respect to any consent or other action to be taken by Holders, the Depository shall consider the date of receipt of notice requesting such consent or other action as the record date for such consent or other action; provided, that the City or the Bond Registrar may establish a special record date for such consent or other action. The City or the Bond Registrar shall, to the extent possible, give the Depository notice of such special record date not less than fifteen calendar days in advance of such special record date to the extent possible. � 6186380v1 (ix) Any successor Bond Registrar in its written acceptance of its duties under this Resolution and any paying agency/bond registrar agreement, shall agree to take any actions necessary from time to time to comply with the requirements of the Letter of Representations. (x) In the case of a partial prepayment of a Bond, the Holder may, in lieu of surrendering the Bonds for a Bond of a lesser denomination as provided in paragraph 5, make a notation of the reduction in principal amount on the panel provided on the Bond stating the amount so redeemed. (c) Termination of Boolc-Entr��Svstem. Discontinuance of a particular Depository's services and termination of the book-entry only system may be effected as follows: (i) The Depository may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the City and discharging its responsibilities with respect thereto under applicable law. The City may terminate the services of the Depository with respect to the Bond if it determines that the Depository is no longer able to carry out its functions as securities depository or the continuation of the system of book-entry transfers through the Depository is not in the best interests of the City or the Beneficial Owners. (ii) Upon termination of the services of the Depository as provided in the preceding paragraph, and if no substitute securities depository is willing to undertake the functions of the Depository hereunder can be found which, in the opinion of the City, is willing and able to assume such functions upon reasonable or customary terms, or if the City determines that it is in the best interests of the City or the Beneficial Owners of the Bond that the Beneficial Owners be able to obtain certificates for the Bonds, the Bonds shall no longer be registered as being registered in the bond register in the name of the Nominee, but may be registered in whatever name or names the Holder of the Bonds shall designate at that time, in accordance with paragraph 10. To the extent that the Beneficial Owners are designated as the transferee by the Holders, in accordance with paragraph 10, the Bonds will be delivered to the Beneficial Owners. (iii) Nothing in this subparagraph (d) shall limit or restrict the provisions of paragraph 10. (d) Letter of Representations. The provisions in the Letter of Representations are incorporated herein by reference and made a part of the resolution, and if and to the extent any such provisions are inconsistent with the other provisions of this resolution, the provisions in the Letter of Representations shall control. 5 6186380v1 3. Purpose; Refundin F�indings. The Bonds shall provide funds for a current refunding of the Refunded Bond (the "Refunding"). It is hereby found, determined and declared that the Refunding is pursuant to Minnesota Statutes, Section 475.67, and sha11 result in a reduction of debt service cost to the City. 4. Interest. The Bonds shall bear interest payable semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date"), commencing February 1, 2015, calculated on the basis of a 360-day year of twelve 30-day months, at the respective rates per annum set forth opposite the maturity years as follows: Maturi , Year Interest Rate Maturity Year Interest Rate 2015 2016 2017 2018 2019 2020 2021 5. No Optional Redemption. The Bonds shall not be subject to redemption and prepayment prior to their stated maturity dates. 6. Bond Re ig strar. Bond Trust Services Corporation, in Roseville, Minnesota, is appointed to act as bond registrar and transfer agent with respect to the Bonds (the "Bond Registrar"), and shall do so unless and until a successor Bond Registrar is duly appointed, all pursuant to any contract the City and Bond Registrar shall execute which is consistent herewith. The Bond Registrar shall also serve as paying agent unless and until a successor paying agent is duly appointed. Principal and interest on the Bonds shall be paid to the registered holders (or record holders) of the Bonds in the manner set forth in the form of Bond and paragraph 13. 7. Form of Bond. The Bonds, together with the Bond Registrar's Certificate of Authentication, the form of Assignment and the registration information thereon, shall be in substantially the following form: � 6186380v1 UNITED STATES OF AMERICA STATE OF MINNESOTA WASHINGTON COUNTY CITY OF COTTAGE GROVE I� TAXABLE GENERAL OBLIGATION TAX INCREMENT REFUNDING BOND, SERIES 2014A Interest Rate Maturitv Date Date of Original Issue CUSIP February 1, May 29, 2014 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: The City of Cottage Grove, Washington County, Minnesota (the "Issuer"), certifies that it is indebted and for value received promises to pay to the registered owner specified above, or registered assigns, in the manner hereinafter set forth, the principal amount specified above, on the maturity date specified above, without option of earlier redemption, and to pay interest thereon semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date"), commencing February 1, 2015, at the rate per annum specified above (calculated on the basis of a 360-day year of twelve 30-day months) until the principal sum is paid or has been provided for. This Bond will bear interest from the most recent Interest Payment Date to which interest has been paid or, if no interest has been paid, from the date of original issue hereof. The principal of and premium, if any, on this Bond are payable upon presentation and surrender hereof at the principal office of Bond Trust Services Corporation, in Roseville, Minnesota (the "Bond Registrar"), acting as paying agent, or any successor paying agent duly appointed by the Issuer. Interest on this Bond will be paid on each Interest Payment Date by checic or draft mailed to the person in whose name this Bond is registered (the "Holder" or "Bondholder") on the registration books of the Issuer maintained by the Bond Registrar and at the address appearing thereon at the close of business on the fifteenth day of the calendar month next preceding such Interest Payment Date (the "Regular Record Date"). Any interest not so timely paid shall cease to be payable to the person who is the Holder hereof as of the Regular Record Date, and shall be payable to the person who is the Holder hereof at the close of business on a date (the "Special Record Date") fixed by the Bond Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given to Bondholders not less than ten days prior to the Special Record Date. The principal of and premium, if any, and interest on this Bond are payable in lawful money of the United States of America. So long as this Bond is registered in the name of the Depository or its Nominee as provided in the Resolution hereinafter described, and as those terms are defined therein, payment of principal of, premium, if any, and interest on this Bond and notice with respect thereto shall be made as provided in the Letter of Representations, as defined in the Resolution, and surrender of this Bond shall not be required for payment of the redemption price upon a partial redemption of this 7 6186380v1 Bond. Until termination of the book-entry only system pursuant to the Resolution, Bonds may only be registered in the name of the Depository or its Nominee. No Optional Redemption. All Bonds of this issue (the "Bonds") are not subject to redemption and prepayment prior to their stated maturity dates. Issuance; Purpose; General Obli a� tion. This Bond is one of an issue in the total principal amount of $1,435,000, all of like date of original issue and tenor, except as to number, maturity, interest rate, denomination and redemption privilege, issued pursuant to and in full conformity with the Constitution and laws of the State of Minnesota and pursuant to a resolution adopted by the City Council of the Issuer on May 7, 2014 (the "Resolution"), for the purpose of providing funds for a current refunding on July 1, 2014 of the outstanding Taxable General Obligation Tax Increment Bond, Series 2004B, dated July 1, 2004. This Bond is payable out of the Taxable General Obligation Tax Increment Refunding Bonds, Series 2014A Fund of the Issuer. This Bond constitutes a general obligation of the Issuer, and to provide moneys for the prompt and full payment of its principal, premium, if any, and interest when the same become due, the full faith and credit and taxing powers of the Issuer have been and are hereby irrevocably pledged. Denominations; Exchange; Resolution. The Bonds are issuable solely in fully registered form in Authorized Denominations (as defined in the Resolution) and are exchangeable for fully registered Bonds of other Authorized Denominations in equal aggregate principal amounts at the principal office of the Bond Registrar, but only in the manner and subject to the limitations provided in the Resolution. Reference is hereby made to the Resolution for a description of the rights and duties of the Bond Registrar. Copies of the Resolution are on file in the principal office of the Bond Registrar. Transfer. This Bond is transferable by the Holder in person or the Holder's attorney duly authorized in writing at the principal office of the Bond Registrar upon presentation and surrender hereof to the Bond Registrar, all subject to the terms and conditions provided in the Resolution and to reasonable regulations of the Issuer contained in any agreement with the Bond Registrar. Thereupon the Issuer shall execute and the Bond Registrar shall authenticate and deliver, in exchange for this Bond, one or more new fully registered Bonds in the name of the transferee (but not registered in blank or to "bearer" or similar designation), of an Authorized Denomination or Denominations, in aggregate principal amount equal to the principal amount of this Bond, of the same maturity and bearing interest at the same rate. Fees upon Transfer or Loss. The Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange of this Bond and any legal or unusual costs regarding transfers and lost Bonds. Treatment of Registered Owners. The Issuer and Bond Registrar may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided (except as otherwise provided herein with respect to the Record Date) and for all other purposes, whether or not this Bond shall be overdue, and neither the Issuer nor the Bond Registrar shall be affected by notice to the contrary. : 6186380v1 Authentication. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security unless the Certificate of Authentication hereon shall have been executed by the Bond Registrar. Taxable Interest. The interest on this Bond is included in the gross income of the owner for purposes of United States income tax and to the same extent in both gross income and taxable net income for purposes of State of Minnesota income tax. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to happen and to be performed, precedent to and in the issuance of this Bond, have been done, have happened and have been performed, in regular and due form, time and manner as required by law, and that this Bond, together with all other debts of the Issuer outstanding on the date of original issue hereof and the date of its issuance and delivery to the original purchaser, does not exceed any constitutional or statutory limitation of indebtedness. IN WITNESS WHEREOF, the City of Cottage Grove, Washington County, Minnesota, by its City Council has caused this Bond to be executed on its behalf by the facsimile signatures of its Mayor and its Clerk, the corporate seal of the Issuer having been intentionally omitted as permitted by law. Date of Registration: BOND REGISTRAR'S CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the Resolution mentioned within. Bond Trust Services Corporation Roseville, Minnesota, Bond Registrar I: Authorized Signature Registrable by: BOND TRUST SERVICES CORPORATION Payable at: BOND TRUST SERVICES CORPORATION CITY OF COTTAGE GROVE, WASHINGTON COUNTY, MINNESOTA /s/ Facsimile Mayor /s/ Facsimile Clerlc G� 6186380v1 � • • • � • ► _. �... � The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as j oint tenants with right of survivorship and not as tenants in common UTMA - as custodian for (Cust) (Minor) under the Uniform (State) Transfers to Minors Act Additional abbreviations may also be used though not in the above list. ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and does hereby irrevocably constitute and appoint attorney to transfer the Bond on the books kept for the registration thereof, with full power of substitution in the premises. Dated: Notice: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or any change whatever. Signature Guaranteed: Signature(s) must be guaranteed by a national bank or trust company or by a brokerage firm having a membership in one of the major stock exchanges or any other "Eligible Guarantor Institution" as defined in 17 CFR 240.17 Ad-15(a)(2). The Bond Registrar will not effect transfer of this Bond unless the information concerning the transferee requested below is provided. Name and Address: (Include information for all joint owners if the Bond is held by joint account.) 10 6ia63so�i 8. Execution. The Bonds shall be in typewritten form, shall be executed on behalf of the City by the signatures of its Mayor and Clerk and be sealed with the seal of the City; provided, as permitted by law, both signatures may be photocopied facsimiles and the seal has been omitted. In the event of disability or resignation or other absence of either officer, the Bonds may be signed by the manual or facsimile signature of the officer who may act on behalf of the absent or disabled officer. In case either officer whose signature or facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of the Bonds, the signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. 9. Authentication. No Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this resolution unless a Certificate of Authentication on the Bond, substantially in the form hereinabove set forth, shall have been duly executed by an authorized representative of the Bond Registrar. Certificates of Authentication on different Bonds need not be signed by the same person. The Bond Registrar shall authenticate the signatures of officers of the City on each Bond by execution of the Certificate of Authentication on the Bond and by inserting as the date of registration in the space provided the date on which the Bond is authenticated, except that for puiposes of delivering the original Bonds to the Purchaser, the Bond Registrar shall insert as a date of registration the date of original issue of May 29, 2014. The Certi�cate of Authentication so executed on each Bond shall be conclusive evidence that it has been authenticated and delivered under this resolution. 10. Registration; Transfer; Exchange. The City will cause to be kept at the principal office of the Bond Registrar a bond register in which, subject to such reasonable regulations as the Bond Registrar may prescribe, the Bond Registrar shall provide for the registration of Bonds and the registration of transfers of Bonds entitled to be registered or transferred as herein provided. Upon surrender for transfer of any Bond at the principal office of the Bond Registrar, the City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of registration (as provided in paragraph 9) of, and deliver, in the name of the designated transferee or transferees, one or more new Bonds of any Authorized Denomination or Denominations of a like aggregate principal amount, having the same stated maturity and interest rate, as requested by the transferor; provided, however, that no Bond may be registered in blanlc or in the name of "bearer" or similar designation. At the option of the Holder, Bonds may be exchanged for Bonds of any Authorized Denomination or Denominations of a like aggregate principal amount and stated maturity, upon surrender of the Bonds to be exchanged at the principal office of the Bond Registrar. Whenever any Bonds are so surrendered for exchange, the City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of registration of, and deliver the Bonds which the Holder making the exchange is entitled to receive. All Bonds surrendered upon any exchange or transfer provided for in this resolution shall be promptly canceled by the Bond Registrar and thereafter disposed of as directed by the City. 11 6186380v1 All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general obligations of the City evidencing the same debt, and entitled to the same benefits under this resolution, as the Bonds surrendered for such exchange or transfer. Every Bond presented or surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, in form satisfactory to the Bond Registrar, duly executed by the Holder thereof or his, her or its attorney duly authorized in writing The Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange of any Bond and any legal or unusual costs regarding transfers and lost Bonds. Transfers shall also be subj ect to reasonable regulations of the City contained in any agreement with the Bond Registrar, including regulations which permit the Bond Registrar to close its transfer books between record dates and payment dates. The Administrator is hereby authorized to negotiate and execute the terms of said agreement. 11. Ri ng ts Upon Transfer or Exchan�e. Each Bond delivered upon transfer of or in exchange for or in lieu of any other Bond shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond. 12. Interest Pavment; Record Date. Interest on any Bond shall be paid on each Interest Payment Date by check or draft mailed to the person in whose name the Bond is registered (the "Holder") on the registration books of the City maintained by the Bond Registrar and at the address appearing thereon at the close of business on the fifteenth day of the calendar month next preceding such Interest Payment Date (the "Regular Record Date"). Any such interest not so timely paid shall cease to be payable to the person who is the Holder thereof as of the Regular Record Date, and shall be payable to the person who is the Holder thereof at the close of business on a date (the "Special Record Date") fixed by the Bond Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given by the Bond Registrar to the Holders not less than ten days prior to the Special Record Date. 13. Treatment of Re�istered Owner. The City and Bond Registrar may treat the person in whose name any Bond is registered as the owner of such Bond for the purpose of receiving payment of principal of and premium, if any, and interest (subject to the payment provisions in paragraph 12) on, such Bond and for all other purposes whatsoever whether or not such Bond shall be overdue, and neither the City nor the Bond Registrar shall be affected by notice to the contrary. 14. Deliverv; A�plication of Proceeds. The Bonds when so prepared and executed shall be delivered by the Clerk to the Purchaser upon receipt of the purchase price, and the Purchaser shall not be obliged to see to the proper application thereof. 15. Fund and Accounts. There is hereby created a special fund designated the "Taxable General Obligation Tax Increment Refunding Bonds, Series 2014A Fund" (the "Fund") to be administered and maintained by the Finance Director as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. 12 6186380v1 (a) Payment Account. The proceeds of the Bonds and any investment earnings thereon, shall be deposited in the Payment Account. The sums are sufficient, together with other funds on deposit in debt service funds for the Refunded Bonds, to pay the principal and interest due on the Refunded Bonds on the Call Date, including the principal of the Refunded Bonds called for redemption on the Call Date. The remainder of the monies in the Payment Account shall be used to pay the costs of issuance of the Bonds. Any monies remaining in the Payment Account after the payment of all costs of issuance and payment of the Refunded Bonds shall be transferred to the Debt Service Account. From the Payment Account the Finance Director shall transfer Bond Proceeds to the paying agent for the Refunded Bonds and the paying agent for the Refunded Bonds shall transfer Bond proceeds on or prior to the Call Date to the holders of the Refunded Bonds. (b) Debt Service Account. There are hereby irrevocable appropriated and pledged to, and there shall be credited to, the Debt Service Account: (i) any uncollected Tax Increments from the Tax Increment District which were heretofore pledged for the payment of the Refunded Bond and are herein pledged to the payment of the Bonds; (ii) any collection of all taxes herein or hereafter levied for the payment of the Bonds and interest thereon; (iv) any balance remaining after July 1, 2014, in the Taxable General Obligation Tax Increment Bonds, Series 2004B Debt Service Account created by the Prior Resolution; (v) all investment earnings on funds in the Tax Increment Debt Service Account; and (vi) any and all other moneys which are properly available and are appropriated by the governing body of the City to the Debt Service Account. The amount of any surplus remaining in the Tax Increment Debt Service Account when the Bonds and interest thereon are paid shall be used consistent with Minnesota Statutes, Section 475.61, Subdivision 4. No portion of the proceeds of the Bonds shall be used directly or indirectly to acquire higher yielding investments or to replace funds which were used directly or indirectly to acquire higher yielding investments, except (1) for a reasonable temporary period until such proceeds are needed for the purpose for which the Bonds were issued and (2) in addition to the above in an amount not greater than the lesser of five percent of the proceeds of the Bonds or $100,000. To this effect, any proceeds of the Bonds and any sums from time to time held in the Debt Service Account (or any other City account which will be used to pay principal or interest to become due on the bonds payable therefrom) in excess of amounts which under then applicable federal arbitrage regulations may be invested without regard to yield shall not be invested at a yield in excess of the applicable yield restrictions imposed by the arbitrage regulations on such investments after taking into account any applicable "temporary periods" or "minor portion" made available under the federal arbitrage regulations. Money in the Fund shall not be invested in obligations or deposits issued by, guaranteed by or insured by the United States or any agency or instrumentality thereof if and to the extent that such investment would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Internal Revenue Code of 1986, as amended (the "Code"). 16. Tax Increments• Use of Tax Increments. The County Auditor of Washington County shall determine in each year if the then current net tax capacity of property in the Tax Increment District exceeds the original net tax capacity, and shall calculate, in the manner provided in Minnesota Statutes, Section 469.177, Subdivision 3, the captured net tax capacity (as defined therein) attributable to the Tax Increment District. The City hereby determines to retain 13 6186380v1 one hundred percent of the captured net tax capacity for purposes of tax increment financing. The County Auditor shall, in each such year, compute the local tax rate to be extended against the captured net tax capacity in the manner provided in Minnesota Statutes, Section 469.177, Subdivision 3, and the tax generated thereby shall constitute the Tax Increments for the year in which it is received. The City hereby appropriates the Tax Increments derived from the Tax Increment District to the Debt Service Account which appropriation shall continue until all of the Bonds, and any additional bonds payable from the Debt Service Account created for the Bonds, are paid or discharged. 17. Reservation of Ri h�ts. Notwithstanding any provisions herein to the contrary, the City reserves the right to terminate, reduce or apply to other lawful purpose the Tax Increments (other than tax increments derived from the Project) herein pledged to the payment of the Bonds and interest thereon to the extent and in the manner permitted by law. 18. Future Tax Levies. In the event that it is anticipated that the aggregate of Tax Increments and any other funds appropriated to and then held in the Debt Service Account and the estimated collections of Tax Increments to be received in the next succeeding year will not be sufficient to pay the principal and interest on the Bonds to become due in the first calendar year after such determination and the first six (6) months of the succeeding calendar year, the City Council shall pass a resolution requesting the County Auditor of Washington County to levy an ad valorem tax in an amount as is necessary, together with the aforementioned funds then held in the Debt Service Account and the estimated collections of Tax Increments, to pay the principal and interest on the Bonds to become due during said period. 19. Covera eg Test. The estimated collections of Tax Increments are such that if collected in fuil they, together with estimated collections of other revenues herein pledged for the payment of the Bonds, will produce at least five percent (5%) in excess of the amount needed to meet when due the principal and interest payments on the Bonds. 20. General Obli�ation Pled�e. The full faith and credit and taxing powers of the City are hereby pledged to the payment of the principal of and interest on the Bonds, and in the event of any current or anticipated deficiency of funds in the Debt Service Account of amounts needed to make any such payment, when due, the City Council shall levy ad valorem taxes on all taxable property in the City in the amount of such deficiency. If the balance in the Debt Service Account is ever insufficient to pay all principal and interest then due on the Bonds, and any other bonds payable therefrom, the deficiency shall be promptly paid out of any other funds of the City. which are available for such purpose, and such other funds may be reimbursed with or without interest from the Debt Service Account when a sufficient balance is available therein. 21. Prior Bonds; Security and Prepayment. Until retirement of the Prior Bonds, all provisions for the security thereof shall be observed by the City and all of its officers and agents. The Refunded Bonds shall be redeemed and prepaid on the Call Date in accordance with the terms and conditions set forth in the Notice of Call for Redemption attached hereto as Exhibit B, which terms and conditions are hereby approved and incorporated herein by reference. 14 :'fE:�'x�.YII�iJ 22. Su�plemental Resolution. The Prior Resolution authorizing the issuance of the Prior Bonds is hereby supplemented to the extent necessary to give effect to the provisions hereof. 23. Certificate of Re�istration. The Clerk is hereby directed to file a certified copy of this resolution with the County Auditor of Washington County, Minnesota, together with such other information as the County Auditor shall require, and to obtain the County Auditor's certificate that the Bonds have been entered in the County Auditor's Bond Register and that the tax levy required by law has been made. 24. Continuing Disclosure. The City is the sole obligated person with respect to the Bonds. The City hereby agrees, in accordance with the provisions of Rule 15c2-12 (the "Rule"), promulgated by the Securities and Exchange Commission (the "Commission") pursuant to the Securities Exchange Act of 1934, as amended, and a Continuing Disclosure Undertal�ing (the "Undertalcing") hereinafter described described: (a) Provide or cause to be provided to the Municipal Securities Rulemalcing Board (the "MSRB") by filing at www.emma.msrb.org in accordance with the Rule, certain annual financial information and operating data in accordance with the Undertalcing. The City reserves the right to modify from time to time the terms of the Undertal�ing as provided therein. (b) Provide or cause to be provided to the MSRB notice of the occurrence of certain events with respect to the Bonds in not more than ten (10) business days after the occurrence of the event, in accordance with the Undertalcing. (c) Provide or cause to be provided to the MSRB notice of a failure by the City to provide the annual financial information with respect to the City described in the Undertaking, in not more than ten (10) business days following such amendment. (d) The City agrees that its covenants pursuant to the Rule set forth in this paragraph and in the Undertaking is intended to be for the benefit of the Holders of the Bonds and shall be enforceable on behalf of such Holders; provided that the right to enforce the provisions of these covenants shall be limited to a right to obtain specific enforcement of the City's obligations under the covenants. The Mayor and Clerk of the City, or any other officer of the City authorized to act in their place (the "Officers") are hereby authorized and directed to execute on behalf of the City the Undertalcing in substantially the form presented to the City Council subject to such modifications thereof or additions thereto as are (i) consistent with the requirements under the Rule, (ii) required by the Purchaser of the Bonds, and (iii) acceptable to the Officers. 25. Records and Certificates. The officers of the City are hereby authorized and directed to prepare and furnish to the Purchaser, and to the attorneys approving the legality of the issuance of the Bonds, certified copies of all proceedings and records of the City relating to the Bonds and to the financial condition and affairs of the City, and such other affidavits, certificates and information as are required to show the facts relating to the legality and marketability of the Bonds as the sarne appear from the boalcs and record: under their custody and control or as 15 6186380v1 otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the facts recited therein. 26. Taxable Status of the Bonds. The City does not qualify the Bonds as tax-exempt under the Internal Revenue Code of 1986, as amended. It is hereby determined that the Bonds are to be issued as fully taxable obligations, and all interest received on the Bonds is to be included in the gross income of the holder of any Bond for federal income taxation purposes and, to the same extent, in both gross income and taxable net income for State of Minnesota income taxation purposes. 27. Defeasance. When all Bonds have been discharged as provided in this paragraph, all pledges, covenants and other rights granted by this resolution to the registered holders of the Bonds shall, to the extent permitted by law, cease. The City may discharge its obligations with respect to any Bonds which are due on any date by irrevocably depositing with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full; or if any 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 with interest accrued to the date of such deposit. The City may also at any time discharge its obligations with respect to any Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a suitable banking institution qualified by law as an escrow agent for this purpose, cash or securities described in Minnesota Statutes, Section 475.67, Subdivision 8, bearing interest payable at such times and at such rates and maturing on such dates as shall be required, without regard to sale and/or reinvestment, to pay all amounts to become due thereon to maturity or, if notice of redemption as herein required has been duly provided for, to such earlier redemption date. 28. Official Statement. The Official Statement relating to the Bonds prepared and distributed by Ehlers is hereby approved and the officers of the City are authorized in connection with the delivery of the Bonds to sign such certificates as may be necessary with respect to the completeness and accuracy of the Official Statement. 29. Payment of Issuance Expenses. The City authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses to K1einBank, Chaska, Minnesota, on the closing date for further distribution as directed by Ehlers. 30. Severabilitv. 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. 31. Headin�s. Headings in this resolution are included for convenience of reference only and are not a part hereof, and shall not limit or define the meaning of any provision hereof. The motion for the adoption of the foregoing resolution was duly seconded by member and, after a full discussion thereof and upon a vote being taken thereon, the following voted in favor thereof: and the following voted against the same: [C 6186380v1 Whereupon the resolution was declared duly passed and adopted. Mayor ATTEST: City Clerk 17 6186380v1 STATE OF MINNESOTA COUNTY OF WASHINGTON CITY OF COTTAGE GROVE I, the undersigned, being the duly qualified Clerk of the City of Cottage Grove, Minnesota, do hereby certify that I have compared the attached and foregoing extract of minutes with the original thereof on file in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council of the City, duly called and held on the date therein indicated, insofar as such minutes relate to providing for the issuance and awarding the sale of $1,435,000 Taxable General Obligation Tax Increment Refunding Bonds, Series 2014A. WITNESS my hand on May 7, 2014. City Clerk : 6is63so�1 EXHIBIT A Proposals A-1 6186380v1 EXHIBIT B NOTICE OF CALL FOR REDEMPTION TAXABLE GENERAL OBLIGATION TAX INCREMENT BOND, SERIES 2004B CITY OF COTTAGE GROVE, WASHINGTON COUNTY, MINNESOTA NOTICE IS HEREBY GIVEN that by order of the City Council of the City of Cottage Grove, Washington County, Minnesota, there have been called for redemption and prepayment on July l, 2014 those outstanding bond of the City designated as Taxable General Obligation Tax Increment Bond, Series 2004B, dated as of July 1, 2004, having stated maturity dates of February 1, 2015 and thereafter, and totaling $1,355,000 in principal amount and having CUSIP numbers listed below: Year CUSIP* 2015 2016 2017 2018 2019 2020 2021 The bonds are being called at a price of par plus accrued interest to July 1, 2014, on which date all interest on the bonds will cease to accrue. Holders of the bonds hereby called for redemption are requested to present their bonds for payment at the office of the Finance Director of the City of Cottage Grove, Minnesota 55016. Dated: May 7, 2014 BY ORDER OF THE CITY COIJNCIL /s/ , City Clerk *The City shall not be responsible for the selection of or use of the CUSIP number, nor is any representation made as to its correctness indicated in the notice. It is included solely for the convenience of the holders. A-1 6186380v1