HomeMy WebLinkAbout2016-01-06 PACKET 08.A. REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA
MEETING ITEM #
DATE 01/06/16 .
.
PREPARED BY: Finance Robin Roland
ORIGINATING DEPARTMENT DEPARTMENT HEAD
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COUNCIL ACTION REQUEST:
Bond Sale: Consider issuance and sale of$4,940,000 General Obligation (G.O.) Refunding
bonds, series 2016A.
STAFF RECOMMENDATION:
Adopt resolution providing for the issuance and sale of$4,940,000 G.O. Refunding bonds,
series 2016A, and pledging Tax Abatements and levying a tax for their security and payment.
BUDGET IMPLICATION:
BUDGETED AMOUNT ACTUAL AMOUNT
ADVISORY COMMISSION ACTION:
DATE REVIEWED APPROVED DENIED
❑ PLANNING ❑ ❑ ❑
❑ PUBLIC SAFETY ❑ ❑ ❑
❑ PUBLIC WORKS ❑ ❑ ❑
❑ PARKS AND RECREATION ❑ ❑ ❑
❑ HUMAN SERVICES/RIGHTS ❑ ❑ ❑
❑ ECONOMIC DEV. AUTHORITY ❑ ❑ ❑
❑ ❑ ❑ ❑
SUPPORTING DOCUMENTS:
� MEMO/LETTER:
� RESOLUTION: draft
❑ ORDINANCE:
❑ ENGINEERING RECOMMENDATION:
❑ LEGAL RECOMMENDATION:
❑ OTHER:
ADMINISTRATORS COMMENTS:
�°°� r.�'' �r"�
�f F ,� �,,,..� �� � '�(��_-.-
� r
���'` City Administrator Date
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H:\Council items\council-action template.docx
Cottage
� Grove
�here Pride ana QrOSPerity Meet
To: Mayor and City Council Members
Charlene Stevens, City Administrator
From: Robin Roland, Finance Director�
Date: December 30, 2015
Subject: Consider resolution: Sale of$4,940,000 General Obligation (G.O.) Refunding
Bonds of 2016A
Introduction
At the November 18, 2015 City Council meeting, the Council called for a public hearing on
proposed property tax abatements for the purpose of issuing tax abatement bonds to refund the
EDA's lease purchase revenue bonds series 2008B on December 16, 2015 and called for the
sale of $4,940,000 General Obligation (G.O.) Refunding bonds, Series 2016A on January 6,
2016. The public hearing was held on December 16t" and resolution 2015-133 was approved
for the property tax abatements.
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 January 6th. 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 resolution providing for the issuance and sale of$4,940,000 G. O. Refunding Bonds,
Series 2016A 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: January 6, 2016
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 January 6,
2016, at 7:00 P.M., for the purpose in part of considering proposals and awarding the sale of
$4,940,000 General Obligation Refunding Bonds, Series 2016A.
The following members were present:
and the following were absent:
Member introduced the following resolution and moved its adoption:
RESOLUTION PROVIDING FOR THE ISSUANCE AND THE SALE OF
$4,940,000 GENERAL OBLIGATION REFLTNDING BONDS, SERIES 2016A,
AND PLEDGING TAX ABATEMENTS AND LEVYING A TAX FOR THE
SECURITY AND PAYMENT THEREOF
A. WHEREAS,the City Council of the City of Cottage Grove, Minnesota(the
"City"),held on December 16, 2015, following duly published notice thereof and at which all
persons who wished to speak or provide written information relative thereto were afforded an
opportunity to do so, a public hearing on the adoption of tax abatements to be pledged to the
payment of proposed issuance of general obligation tax abatement bonds pursuant to Minnesota
Statutes, Chapters 475 and Sections 469.1812 through and including 469.1815,to acquire the
Cottage Grove Ice Area(the "Facility") from the Economic Development Authority of the City
of Cottage Grove, Minnesota(the "EDA") and in connection therewith refund the outstanding
EDA Lease Purchase Revenue Bonds (Ice Arena Project), Series 2008B, dated June 11, 2008
(the "2008B Prior Bonds"); and
B. WHEREAS,the City owns and operates a municipal sanitary sewer system(the
"System") as a separate revenue producing public utility and the 2008A Prior Bonds, as
hereinafter defined, are the only outstanding issue payable from the net revenues of the System;
and
C. WHEREAS,the City Council has heretofore determined that it is necessary and
expedient to issue $4,940,000 General Obligation Refunding Bonds, Series 2016A(the "Bonds"
or individuaily a "Bond"),pursuant to Minnesota Statutes, Section 469.1814 and Chapter 475 to
provide funds to (i) current refund the City's outstanding$3,370,000 original principal amount of
General Obligation Sewer System Revenue and Improvement Bonds, Series 2008A, dated June
1 l, 2008 (the "2008A Prior Bonds"), which mature on and after February 1, 2017; and(ii)to
acquire the Facility pursuant to a current refunding of the 2008B Prior Bonds; and
D. WHEREAS,the City,pursuant to the provisions of Minnesota Statutes, Sections
469.1812 through 469.1815,has provided for the abatement of property taxes (the "Tax
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Abatements") for a period of eleven(11) years on properties in the City, as described in the
Resolution adopted by the City Council on December 16, 2015, approving the Tax Abatements
to be pledged to the Bonds (the "Abatement Resolution"); and
E. WHEREAS, the amount of the property taxes abated are estimated to be at least
equal to the principal of the Bonds and pursuant to the provisions of the Abatement Resolution, a
portion of the Bond proceeds are to be expended to refund the 2008B Prior Bonds and acquire
the Facility; and
F. WHEREAS, $835,000 aggregate principal amount of the 2008A Prior Bonds
which mature on and after February 1, 2017 (the "2008A Refunded Bonds"), are callable on
February 1, 2016 (the "2008A Call Date"), as provided in a resolution of the City Council,
adopted on May 21, 2008 (the "2008A Prior Resolution"), and the refunding of the 2008A Prior
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, $4,515,000 aggregate principal amount of the 2008B Prior Bonds
which mature on and after April 1, 2017 (the "2008B Refunded Bonds", and together with the
2008A Refunded Bonds, the "Refunded Bonds"), are callable on April l, 2016 (the "2008B Call
Date", and together with the 2008A Call Date, the "Call Dates"), as provided in a resolution of
the EDA, adopted on May 21, 2008 (the "2008B Prior Resolution", and together with the 2008A
Prior Resolution, the "Prior Resolutions"), and the refunding of the 2008B Prior Bonds is
consistent with covenants made with the holders thereof, and is necessary and desirable for the
reduction of debt service cost to the City; and
H. WHEREAS,the City has retained Ehlers &Associates, Inc., in Roseville,
Minnesota("Ehlers"), as its independent financial advisor for the sale of the Bonds and was
therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota
Statutes, Section 475.60, Subdivision 2(9) and proposals to purchase the Bonds have been
solicited by Ehlers; and
I. WHEREAS, the proposals set forth on Exhibit A attached hereto were received
by the City Administrator, or designee, at the offices of Ehlers at 10:00 A.M. on the date hereof,
pursuant to the Preliminary Official Statement, dated December 23, 2015, established for the
Bonds; and
J. WHEREAS, it is in the best interests of the City that the Bonds be issued in book-
entry form as hereafter provided.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Cottage
Grove, Minnesota, as follows:
1. Acceptance of Proposal. The proposal of
(the "Purchaser"),to purchase the Bonds in accordance with
the Preliminary Official Statement established for the Bonds, at the rates of interest hereinafter
set forth, and to pay therefor the sum of$ ,plus interest accrued to settlement, is
hereby found, determined and declared to be the most favorable proposal received and is hereby
accepted, and the Bonds are hereby awarded to the Purchaser. The City Administrator is
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directed to retain the deposit of the Purchaser and to forthwith return to the unsuccessful bidders
their good faith checks or drafts.
2. Bond Terms.
(a) Ori�inal Issue Date; Denominations; Maturities; Term Bond Option. The Bonds
shall be dated January 28, 2016, as the date of original issue, be issued forthwith on or after such
date in fully registered form,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") and
mature on February 1 in the years and amounts as follows:
Year Amount
2017 $
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
As may be requested by the Purchaser, one or more term Bonds may be issued having
mandatory sinlcing 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) Allocation of Bonds to Prior 2008A Bonds and Prior 2008B Bonds• Allocation of
Pre�ayments to Portions of Debt Service. The aggregate principal amount of$
maturing in each of the years and amounts hereinafter set forth are issued to refund the Prior
2008A Bonds (the "2008A Refunding Portion"). The aggregate principal amount of
$ maturing in each of the years and amounts hereinafter set forth are issued to refund
the Prior 2008B Bonds (the "2008B Refunding Portion"):
Year 2008A Refunding Portion 2008B Refundin�Portion
2017
2018
2019
2020
2021
2022
2023
2024
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Year 2008A Refunding Portion 2008B Refunding Portion
2025
2026
2027
If Bonds are prepaid, the prepayments shall be allocated to the portions of debt service
(and hence allocated to the payment of Bonds treated as relating to a particular portion of debt
service) as provided in this paragraph. If the source of prepayment is the general fund of the
City, or other generally available source, the prepayment may be allocated to any of the portions
of debt service in such amounts as the City shall determine. If the source of a prepayment is net
revenues of the System pledged to the Prior 2008A Bonds,the prepayment shall be allocated to
the Prior 2008A Bonds debt service.
(c) Book Entry Only S s�tem. 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
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 lirr�ited 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 taken
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
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rights to certain Participants to whose accounts the Bonds 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 boolc-
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
15 calendar days in advance of such special record date to the extent possible.
(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
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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.
(d) Termination of Book-Entrv Only System. 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 Bonds 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 designa.te 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(c) shall limit or restrict the provisions of
paragraph 10.
(e) Letter of Re�resentations. 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.
3. Purpose; Refundin Fg indings. The 2008A Refunding Portion of the Bonds shall
provide funds for a current refunding of the Refunded 2008A Bonds and the 2008B Refunding
Portion of the Bonds shall provide funds to acquire the Facility and in connection therewith
current refund of the 2008B Refunded Bonds (collectively,the "Refunding"). It is hereby found,
determined and declared that the Refunding is pursuant to Minnesota Statutes, Section 475.67,
and shall 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 August 1, 2016,
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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:
Maturitv Year Interest Rate
2017 %
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
5. Redemption. All Bonds maturing on February 1, 2025, and thereafter, are subject
to redemption on February l, 2024, and on any date thereafter at the option of the City at a price
of par plus accrued interest. Redemption may be in whole or in part of the Bonds subject to
prepayment. If redemption is in part,the maturities and the principal amounts within each
maturity to be redeemed shall be determined by the City; and if only part of the Bonds having a
common maturity date are called for prepayment, the specific Bonds to be prepaid shall be
chosen by lot by the Bond Registrar. Bonds or portions thereof called for redemption shall be
due and payable on the redemption date, and interest thereon shall cease to accrue from and after
the redemption date. Mailed notice of redemption shall be given to the paying agent and to each
affected registered holder of the Bonds not more than sixty(60) days and not fewer than thirty
(30) days prior to the date fixed for redemption.
To effect a partial redemption of Bonds having a common maturity date,the Bond
Registrar prior to giving notice of redemption shall assign to each Bond having a common
maturity date a distinctive number for each$5,000 of the principal amount of such Bond. The
Bond Registrar shall then select by lot, using such method of selection as it shall deem proper in
its discretion, from the numbers so assigned to such Bonds, as many numbers as, at$5,000 for
each number, shall equal the principal amount of such Bonds to be redeemed. The Bonds to be
redeemed shall be the Bonds to which were assigned numbers so selected; provided, however,
that only so much of the principal amount of each such Bond of a denomination of more than
$5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. If
a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar(with, if the
City or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the
City and Bond Registrar duly executed by the Holder thereof or the Holder's attorney duly
authorized in writing) and the City shall execute (if necessary) and the Bond Registrar shall
authenticate and deliver to the Holder of the Bond, without service charge, a new Bond or Bonds
having the same stated maturity and interest rate and of any Authorized Denomination or
Denominations, as requested by the Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Bond so surrendered.
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6. Bond Re is�. 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 in paragraph 12.
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:
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UNITED STATES OF AMERICA
STATE OF MINNESOTA
WASHINGTON COUNTY
CITY OF COTTAGE GROVE
R- $
GENERAL OBLIGATION REFUNDING BOND, SERIES 2016A
Interest Rate Maturitv Date Date of Original Issue CUSIP
February l,_ January 28, 2016
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,unless called for earlier redemption, and to pay interest
thereon semiannually on February 1 and August 1 of each year(each, an "Interest Payment
Date"), commencing August l, 2016, 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
Bond. Until termination of the boolc-entry only system pursuant to the Resolution,Bonds may
only be registered in the name of the Depository or its Nominee.
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Optional Redemption. The Bonds of this issue (the "Bonds")maturing on February 1,
2025, and thereafter, are subject to redemption and prepayment at the option of the Issuer on
February 1, 2024, and on any date thereafter at a price of par plus accrued interest. Redemption
may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the
maturities and the principal amounts within each maturity to be redeemed shall be determined by
the Issuer; and if only part of the Bonds having a common maturity date are called for
prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar.
Bonds or portions thereof called for redemption shall be due and payable on the redemption date,
and interest thereon shall cease to accrue from and after the redemption date. Mailed notice of
redemption shall be given to the paying agent and to each affected registered holder of the Bonds
not more than sixty(60) days and not fewer than thirty(30) days prior to the date fixed for
redemption.
Prior to the date on which any Bond or Bonds are directed by the Issuer to be redeemed
in advance of maturity, the Issuer will cause notice of the call thereof for redemption identifying
the Bonds to be redeemed to be mailed to the Bond Registrar and all Bondholders, at the
addresses shown on the Bond Register. All Bonds so called for redemption will cease to bear
interest on the specified redemption date, provided funds for their redemption have been duly
deposited.
Selection of Bonds for Redemption; Partial Redemption. To effect a partial redemption
of Bonds having a common maturity date,the Bond Registrar shall assign to each Bond having a
common maturity date a distinctive number for each$5,000 of the principal amount of such
Bond. The Bond Registrar shall then select by lot, using such method of selection as it shall
deem proper in its discretion, from the numbers assigned to the Bonds, as many numbers as, at
$5,000 for each number, shall equal the principal amount of the Bonds to be redeemed. The
Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided,
however,that only so much of the principal amount of such Bond of a denomination of more
than$5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so
selected. If a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar
(with, if the Issuer or Bond Registrar so requires, a written instrument of transfer in form
satisfactory to the Issuer and Bond Registrar duly executed by the Holder thereof or the Holder's
attorney duly authorized in writing) and the Issuer shall execute (if necessary) and the Bond
Registrar shall authenticate and deliver to the Holder of the Bond,without service charge, a new
Bond or Bonds having the same stated maturity and interest rate and of any Authorized
Denomination or Denominations, as requested by the Holder, in aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered.
Issuance; Pur�ose; General Obli ag tion. This Bond is one of an issue in the total principal
amount of$4,940,000, 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 on January 6, 2016 (the "Resolution"), for the purpose of providing funds to (i)
current refund certain outstanding general obligation bonds of the Issuer; and (ii) finance the
acquisition of the Cottage Grove Ice Area and in connection therewith refund the outstanding
Lease Purchase Revenue Bonds (Ice Arena Project), Series 2008B of the Economic
Development Authority of the City of Cottage Grove, Minnesota, dated June 11, 2008; each
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pursuant to and in full conformity with the Constitution and laws of the State of Minnesota,
including Minnesota Statutes, Chapter 475. This Bond is payable out of the General Obligation
Refunding Bonds, Series 2016A 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 by 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 goverrunental 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 puiposes,whether or not this Bond shall be overdue, and neither the Issuer nor the Bond
Registrar shall be affected by notice to the contrary.
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.
Qualified Tax-Exempt Obli ag tion. This Bond has been designated by the Issuer as a
"qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue
Code of 1986, as amended.
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
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7357993v1
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 City Administrator, the corporate seal of the Issuer having been intentionally
omitted as permitted by law.
Date of Registration: Registrable by: BOND TRUST SERVICES
CORPORATION
Payable at: BOND TRUST SERVICES
CORPORATION
BOND REGISTRAR'S CERTIFICATE CITY OF COTTAGE GROVE,
OF AUTHENTICATION WASHINGTON COUNTY, MINNESOTA
This Bond is one of the Bonds described
in the Resolution mentioned within.
BOND TRUST SERVICES /s/Facsimile
CORPORATION Mayor
Roseville, Minnesota,
Bond Registrar
/s/Facsimile
City Administrator
BY=
Authorized Signature
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7357993v1
ABBREVIATIONS
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 joint tenants with right of survivorship and not as tenants in common
UTMA- as custodian for
(Cust) (Minor)
under the Uniform Transfers to Minors Act
(State)
Additional abbreviations may also be used though not in the above list
AS SIGNMENT
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 lcept 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 brolcerage firm
having a membership in one of the major stocic 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.)
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PREPAYMENT SCHEDULE
This Bond has been prepaid in part on the date(s) and in the amount(s) as follows:
AUTHORIZED
SIGNATURE
DATE AMOUNT OF HOLDER
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7357993v1
8. Execution. The Bonds shall be in typewritten form, shall be executed on behalf of
the City by the signatures of its Mayor and City Administrator and be sealed with the seal of the
City;provided, as permitted by law, both signatures may be photocopied facsimiles and the
corporate 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 purposes of delivering the original Bonds to the
Purchaser,the Bond Registrar shall insert as a date of registration the date of original issue of
January 28, 2016. The Certificate of Authentication so executed on each Bond shall be
conclusive evidence that it has been authenticated and delivered under this resolution.
10. Re�istration; Transfer; Exchan�e. The City will cause to be lcept 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 malcing 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.
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7357993v1
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 the Holder's 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 subject 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 Finance Director is hereby
authorized to negotiate and execute the terms of said agreement.
11. Ri h�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 Payment; 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. Delivery; Application of Proceeds. The Bonds when so prepared and executed
shall be delivered by the Finance Director 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 to be designated the
"General Obligation Refunding Bonds, Series 2016A 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. The Fund shall be maintained in
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7357993v1
the manner herein specified until all of the Bonds and the interest thereon have been fully paid.
The Operation and Maintenance Account heretofore established by the City for the System shall
continue to be maintained in the manner heretofore provided by the City. All moneys remaining
after paying or providing for the items set forth in the resolution establishing the Operation and
Maintenance Account shall constitute or are referred to as "net revenues". There shall be
maintained in the Fund the following separate accounts to which shall be credited and debited all
income and disbursements of the System as hereinafter set forth. The Finance Director and all
officials and employees of the City concerned therewith shall establish and maintain financial
records of the receipts and disbursements of the System in accordance with this resolution. In
such records tl�ere shall be established accounts or accounts shall continue to be maintained as
the case may be, of the Fund for the puiposes and in the amounts as follows:
(a) Pavment Account. The proceeds of the Bonds, less any amount paid for the
Bonds in excess of the minimum bid, shall be deposited in the Payment Account. On or prior to
the 2008A Call Date,the Finance Director shall transfer$ of the proceeds of the
Bonds from the Payment Account to the paying agent for the 2008A Refunded Bonds, which
sum is sufficient;together with other funds on deposit in the System Improvements Project Debt
Service Subaccount for the 2008A Refunded Bonds,to pay the principal and interest due on the
2008A Refunded Bonds on the 2008A Call Date, including the principal of the 2008A Refunded
Bonds called for redemption on that date. On or prior to the 2008B Call Date,the Finance
Director shall transfer$ of the proceeds of the 2008B Refunding Portion of the
Bonds from the Payment Account to the paying agent for the 2008B Refunded Bonds, which
sum is sufficient,together with other funds on deposit in the Debt Service Fund for the 2008B
Refunded Bonds, and proceeds of the Debt Service Reserve Fund (the "Reserve Fund")
established for the 2008B Prior Bonds under the 2008B Prior Resolution,to pay the principal and
interest due on the 2008B Refunded Bonds on the 2008B Call Date, including the principal of
the 2008B Refunded Bonds called for redemption on that 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 payment of all costs of issuance and payment of the
Refunded Bonds shall be transferred to the Debt Service Account.
(b) Debt Service Account. There shall be maintained the following separate
subaccounts in the Debt Service Account to be designated the "Facility Debt Service
Subaccount" and the "Sewer Revenue Debt Service Subaccount". There are hereby irrevocably
appropriated and pledged to, and there shall be credited to the separate subaccounts of the Debt
Service Account:
(i) Sewer Revenue Debt Service Subaccount. To the Sewer Revenue Debt
Service Subaccount there is hereby pledged and irrevocably appropriated and there shall
be credited: (A)the net revenues of the System not otherwise pledged and applied to the
payment of other obligations of the City, in an amount,together with other funds which
may herein or hereafter from time to time be irrevocably appropriated to the account
sufficient to meet the requirements of Minnesota Statutes, Section 475.61 for the payment
of the principal and interest of the 2008A Refunding Portion of the Bonds; (B) a
proportionate share of all funds paid for the Bonds in excess of the minimum bid; (C) any
collections of all taxes which may hereafter be levied in the event the net revenues of the
System and other funds herein pledged to the payment of the principal and interest on the
17
7357993v1
2008A Refunding Portion of the Bonds are insufficient therefor; (D) any balance
remaining after the 2008A Call Date in the Debt Service Account of the General
Obligation System Improvements Project Debt Service Subaccount created by the Prior
2008A Resolution; (E) all investment earnings on funds in the Sewer Revenue Debt
Service Subaccount; and (F) any and all other moneys which are properly available and
are appropriated by the governing body of the City to the Sewer Revenue Debt Service
Subaccount. The amount of any surplus remaining in the Sewer Revenue Debt Service
Subaccount when the 2008A Refunding Portion of the Bonds are paid shall be used
consistent with Minnesota Statutes, Section 475.61, Subdivision 4.
(ii) Facilitv Debt Service Subaccount. To the Facility Debt Service Subaccount
there shall be credited: (A)Tax Abatements in an amount sufficient to pay the annual
principal payments on the Bonds; (B) a proportionate share of all funds paid for the
Bonds in excess of the minimum bid; (C) collections of all taxes herein levied for the
payment of the interest on the Bonds; (D) on and after the 2008B Call Date, any
unexpended moneys in the Series 2008B Bond Fund created by the 2008B Prior
Resolution; (E) all investment earnings on funds held in the Facility Debt Service
Subaccount; and(F) any and all other moneys which are properly available and are
appropriated by the governing body of the City to the Facility Debt Service Subaccount.
The Facility Debt Service Subaccount shall be used solely to pay the principal and
interest and any premiums for redemption of the Bonds and any other general obligation
bonds of the City hereafter issued by the City and made payable from said account as
provided by law.
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 said 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. Covenants Relatin�to the 2008A Refunding Portion of the Bonds.
(a) Sufficiency of Net Revenues; Covera�e Test. It is hereby found, determined and
declared that the net revenues of the System are sufficient in amount to pay when due the
principal of and interest on the 2008A Refunding Portion of the Bonds and a sum at least five
percent in excess thereof, and the net revenues of the System are hereby pledged and shall be
18
7357993v1
applied for that purpose, but solely to the extent required to meet,together with other pledged
sums,the principal and interest requirements of the 2008A Refunding Portion of the Bonds.
Nothing contained herein shall be deemed to preclude the City from malcing further pledges and
appropriations of the net revenues of the System for the payment of other or additional
obligations of the City,provided that it has first been determined by the City Council that the
estimated net revenues of the System will be sufficient in addition to all other sources, for the
payment of the 2008A Refunding Portion of the Bonds and such additional obligations and any
such pledge and appropriation of the net revenues may be made superior or subordinate to, or on
a parity with the pledge and appropriation herein.
(b) Covenant to Maintain Rates and Charges. In accordance with Minnesota Statutes,
Section 444.075,the City hereby covenants and agrees with the Holders of the 2008A Refunding
Portion of the Bonds that it will impose and collect charges for the service, use, availability and
connection to the System at the times and in the amounts required to produce net revenues
adequate to pay all principal and interest when due on the 2008A Refunding Portion of the
Bonds. Minnesota Statutes, Section 444.075, Subdivision 2,provides as follows: "Real estate
tax revenues should be used only, and then on a temporary basis,to pay general or special
obligations when the other revenues are insufficient to meet the obligations"; however,nothing
shall preclude the City from levying taxes for the payment of the Bonds as permitted by
Minnesota Statutes, Section 115.46.
(c) Excess Net Revenues. Net revenues in excess of those required for the foregoing
may be used for any proper purpose.
(d) General Obligation Pled�e. For the prompt and full payment of the principal of
and interest on the 2008A Refunding Portion of the Bonds as the same respectively become due,
the full faith, credit and taxing powers of the City shall be and are hereby irrevocably pledged. If
the balance in the Sewer Revenue Debt Service Subaccount is ever insufficient to pay all
principal and interest then due on the 2008A Refunding Portion of the Bonds payable therefrom,
the deficiency shall be promptly paid out of any other accounts of the City which are available
for such purpose, and such other funds may be reimbursed without interest from the Sewer
Revenue Debt Service Subaccount when a sufficient balance is available therein.
17. Covenants Relatin�to the 2008B Refunding Portion of the Bonds.
(a) Tax Levv; Covera e� Test. To provide moneys for payment of the interest on the
2008B Refunding Portion of the Bonds,there is hereby levied upon all of the taxable property in
the City a direct annual ad valorem tax which shall be spread upon the tax rolls and collected
with and as part of other general property taxes in the City for the years and in the amounts as
follows:
Year of Tax Levv Year of Tax Collection Amount
20 -20 20 -20 See attached Exhibit B
The tax levies are such that if collected in full they, together with estimated collections of
Tax Abatements, will produce at least five percent in excess of the amount needed to meet when
19
7357993v1
due the principal and interest payments on 2008B Refunding Portion of the Bonds. The tax
levies shall be irrepealable so long as any of 2008B Refunding Portion of the Bonds are
outstanding and unpaid, provided that the City reserves the right and power to reduce the levies
in the manner and to the extent permitted by Minnesota Statutes, Section 475.61, Subdivision 3.
(b) General Obli�ation Pled�e. For the prompt and full payment of the principal of
and interest on 2008B Refunding Portion of the Bonds as the same respectively become due, the
full faith, credit and taxing powers of the City shall be and are hereby irrevocably pledged. If the
balance in the Debt Service Account is ever insufficient to pay all principal and interest then due
on 2008B Refunding Portion of the Bonds payable therefrom, the deficiency shall be promptly
paid out of any other accounts of the City which are available for such purpose, and such other
funds may be reimbursed without interest from the Debt Service Account when a sufficient
balance is available therein.
18. Tax Abatements; Use of Tax Abatements. The Council has adopted the
Abatement Resolution and has thereby approved the Tax Abatements, including the pledge
thereof to the payment of principal of the Bonds. As provided in the Abatement Resolution,the
estimated total amount of Tax Abatements, if received as estimated for the full maximum term
thereof, is $4,284,000, and therefore the principal amount of the 2008B Refunding Portion of the
Bonds does not exceed the maximum projected amount of the Tax Abatements. The Council
hereby confirms the Abatement Resolution, which is hereby incorporated as though set forth
herein.
19. 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 discharge its obligations with respect to any prepayable Bonds 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 a sum sufficient for the payment thereof in full,
provided that notice of redemption thereof has been duly given. 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.
20. Continuinu 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
20
7357993v1
Securities Exchange Act of 1934, as amended, and a Continuing Disclosure Undertaking (the
"Undertaking")hereinafter described to:
(a) Provide or cause to be provided to the Municipal Securities Rulemaking 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 Undertaking. The City reserves
the right to modify from time to time the terms of the Undertaking 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 Undertaking.
(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 occurrence.
(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 City Administrator 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 Undertaking 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.
21. Certificate of Registration. A certified copy of this resolution is hereby directed
to be filed with the County Auditor of Washington County,together with such other information
as the County Auditor shall require, and there shall be obtained from the County Director a
certificate that the Bonds have been entered in the Bond Register and that the tax levy required
by law has been made.
22. 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 same appear from the books and records under their custody and control or as
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.
23. Negative Covenant as to Use of Bond Proceeds and Project. The City hereby
covenants not to use the proceeds of the Bonds or to use the Project, or to cause or permit it to be
used, or to enter into any deferred payment arrangements for the cost of the Project, in such a
manner as to cause the Bonds to be "private activity bonds" within the meaning of Sections 103
and 141 through 150 of the Code.
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7357993v1
24. Tax Covenants—2008B Refunding Portion of the Bonds. In order to ensure that
the interest on the 2008B Refunding Portion of the Bonds shall at all times be excluded from
federal gross income,the City specifically represents, warrants and covenants with all holders of
the 2008B Refunding Portion of the Bonds, as follows:
(a) It will fulfill all conditions specified in Sections 103 and 141 through 150 of the
Code and applicable Treasury Regulations as necessary to maintain the tax exempt status of the
interest borne by 2008B Refunding Portion of the Bonds.
(b) All of the property financed or otherwise provided by the net proceeds of 2008B
Refunding Portion of the Bonds will be owned by the City and used by the general public or
organizations described in Section 501(c)(3) of the Code.
(c) Less than five percent of the net proceeds of 2008B Refunding Portion of the
Bonds will be used to provide property used either(i)by an organization described in Section
501(c)(3) of the Code in an activity that constitutes an unrelated trade or business, or(ii) in a
trade or business by a person other than an organization described in Section 501(c)(3) of the
Code or a governmental unit(within the meaning of Section 141 of the Code).
(d) It shall make no use of the Facility, including but not limited to entering into any
lease or any agreement for the management of the Facility or any similar agreement, the effect of
which would cause 2008B Refunding Portion of the Bonds not to constitute "qualified 501(c)(3)
bonds," within the meaning of Section 145 and related Sections of the Code, and any service
contract to be entered into with respect to the Facility(unless entered into with an organization
described in Section 501(c)(3) of the Code) shall constitute a"qualified management agreement"
within the meaning of all pertinent provisions of law, including all relevant provisions of the
Code and regulations, rulings and revenue procedures thereunder, including Revenue Procedure
97-13.
(e) Not more than two percent of the proceeds of 2008B Refunding Portion of the
Bonds will be applied to the payment of costs of issuance of 2008B Refunding Portion of the
Bonds and all costs of issuance in excess of that amount will be paid by the City from funds
other than proceeds of 2008B Refunding Portion of the Bonds.
(� It has not leased, sold, assigned, granted or conveyed and will not lease, sell,
assign, grant or convey all or any portion of the facilities financed by 2008B Refunding Portion
of the Bonds or any interest therein to the United States or any agency or instrumentality thereof
within the meaning of Section 149(b) of the Code.
(g) No portion of the proceeds of 2008B Refunding Portion of the Bonds will be used
to provide any of the following facilities or facilities related or incidental thereto: any airplane,
skybox or other private luxury box, facility used primarily for gambling, or store the principal
business of which is the sale of alcoholic beverages for consumption off premises.
(h) The City will not permit any person to become a "principal user" of the Facility if
such action would cause the interest on 2008B Refunding Portion of the Bonds to become
includable in federal gross income in the hands of the holders thereof.
22
7357993v1
(i) The average maturity of 2008B Refunding Portion of the Bonds does not exceed
one hundred twenty percent of the average reasonably expected economic life of the facilities
financed by 2008B Refunding Portion of the Bonds as determined in accordance with Section
147(b) of the Code.
(j) No obligations have been or will be issued which are described in Section 141,
142, 143, 144 or 145 of the Code and that are sold at substantially the same time as 2008B
Refunding Portion of the Bonds,pursuant to a common plan of marketing or otherwise have any
common or pooled security for the payment of debt service thereon with 2008B Refunding
Portion of the Bonds.
(k) It will not use the proceeds of 2008B Refunding Portion of the Bonds in such a
manner as to cause 2008B Refunding Portion of the Bonds to be "arbitrage bonds" within the
meaning of Section 148 of the Code and applicable Treasury Regulations.
(1) It will comply with and fulfill all other requirements and conditions of the Code
and Treasury Regulations and rulings issued pursuant thereto relating to the acquisition,
construction and operation of the facilities financed by 2008B Refunding Portion of the Bonds to
the end that interest on 2008B Refunding Portion of the Bonds shall at all times be excludable
from federal gross income.
(m) It will not use the proceeds of 2008B Refunding Portion of the Bonds in such a
manner as to cause 2008B Refunding Portion of the Bonds to be "arbitrage bonds" within the
meaning of Section 148 of the Code and applicable Treasury Regulations; and to this end,the
City shall pay to the United States, as a rebate, an amount equal to the sum of(i)the excess of(I)
the aggregate amount earned on all nonpurpose obligations (other than investments attributable
to an excess described in this clause), over (II)the amount which would have been earned if all
nonpurpose obligations were invested at a rate equal to the yield on 2008B Refunding Portion of
the Bonds plus (ii) any income attributable to the excess described in clause (i), at the times and
in the amounts required by Section 148 of the Code, all within the meaning of Section 148 of the
Code. The City shall maintain records of the interest rate borne by 2008B Refunding Portion of
the Bonds and the investments of the Facility Debt Service Subaccount and earnings thereon in
adequate detail to enable the City to calculate the amount of any rebate required to be made to
the United States. The City shall pay the rebate to the United States at times and in installments
which satisfy Section 148 of the Code and the regulations, at least once every five years and
within sixty days after the day on which the last of 2008B Refunding Portion of the Bonds is
redeemed. Calculations of the amount to be rebated shall be made at least every five years, by
bond counsel or an independent accountant selected by the City. Such calculations shall be
retained until six years after the retirement of 2008B Refunding Portion of the Bonds. The
rebate shall be calculated as provided in the applicable Treasury Regulations, including taking
into account the gain or loss on the disposition of nonpurpose investments.
25. Tax-Exempt Status of the Bonds; Rebate. The City shall comply with
requirements necessary under the Code to establish and maintain the exclusion from gross
income under Section 103 of the Code of the interest on the Bonds, including without limitation
(i)requirements relating to temporary periods for investments, (ii) limitations on amounts
invested at a yield greater than the yield on the Bonds, and (iii)the rebate of excess investment
23
7357993v1
earnings to the United States. The City expects to satisfy the six month expenditure exemption
from gross proceeds of the Bonds as provided in Section 1.148-7(c) of the Regulations. The
Mayor and/or City Administrator are hereby authorized and directed to make such elections as to
arbitrage and rebate matters relating to the Bonds as they deem necessary, appropriate or
desirable in connection with the Bonds, and all such elections shall be, and shall be deemed and
treated as, elections of the City.
26. Desi�nation of Qualified Tax-Exempt Obli atg ions. In order to qualify the Bonds
as "qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Code,the
City hereby makes the following factual statements and representations:
(a) the Bonds are issued after August 7, 1986;
(b) the Bonds are not "private activity bonds" as defined in Section 141 of the Code;
(c) the City hereby designates the Bonds as "qualified tax exempt obligations" for
purposes of Section 265(b)(3) of the Code;
(d) the reasonably anticipated amount of tax exempt obligations (other than private
activity bonds, treating qualified 501(c)(3) bonds as not being private activity bonds)which will
be issued by the City (and all entities treated as one issuer with the City, and all subordinate
entities whose obligations are treated as issued by the City) during this calendar year 2016 will
not exceed $10,000,000;
(e) not more than $10,000,000 of obligations issued by the City during this calendar
year 2016 have been designated for purposes of Section 265(b)(3) of the Code;
(� the aggregate face amount of the Bonds does not exceed $10,000,000;
Futhermore, with respect to the Refunded Bonds:
(g) each of the 2008A Refunded Bonds or the 2008B Refunded Bonds was
designated as a "qualified tax exempt obligation" for purposes of Section 265(b)(3) of the Code;
(h) the average maturity of the 2008A Refunding Portion of the Bonds does not
exceed the remaining average maturity of the 2008A Refunded Bonds;
(i) the average maturity of the 2008B Refunding Portion of the Bonds does not
exceed the remaining average maturity of the 2008B Refunded Bonds;
(j) no part of the 2008A Refunding Portion of the Bonds has a maturity date which is
later than the date which is thirty years after the date the 2008A Refunded Bonds were issued;
and
(k) no part of the 2008B Refunding Portion of the Bonds has a maturity date which is
later than the date which is thirty years after the date the 2008B Refunded Bonds were issued;
and
24
7357993v1
(1) the 2008A Refunding Portion of the Bonds and the 2008B Refiznding Portion of
the Bonds are issued to refund, and not to "advance refund" the 2008A Prior Bonds and the
2008B Prior Bonds within the meaning of Section 149(d)(5) of the Code, and shall not be taken
into account under the $10,000,000 issuance limit to the extent the 2008A Refunding Portion of
the Bonds and the 2008B Refunding Portion of the Bonds does not exceed the outstanding
amount of the Prior 2008A Bonds and the Prior 2008B Bonds.
The City shall use its best efforts to comply with any federal procedural requirements
which may apply in order to effectuate the designation made by this paragraph.
27. Supplemental Resolution. The Prior Resolutions authorizing the issuance of the
Prior Bonds are hereby supplemented to the extent necessary to give effect to the provisions
hereof.
28. Prior Bonds; Security and Pre�a_�. 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 Dates in accordance with the
terms and conditions set forth in the Notice of Call for Redemption attached hereto as E�ibit C
and as attached as Exhibit A to the Resolution of the Economic Development Authority of the
City of Cottage Grove, whose resolution is attached hereto as Exhibit D, which terms and
conditions are hereby approved and incorporated herein by reference.
29. 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.
30. Payment of Issuance Expenses. The City authorizes the Purchaser to forward the
amount of Bond proceeds allocable to the payment of issuance expenses to KleinBanlc, Chaska,
Minnesota, on the closing date for further distribution as directed by the City's municipal
advisor, Ehlers.
31. 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.
32. 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 talcen thereon,the
following voted in favor thereof:
and the following voted against the same:
whereupon the resolution was declared duly passed and adopted.
25
7357993v1
STATE OF MINNESOTA
COUNTY OF WASHINGTON
CITY OF COTTAGE GROVE
I, the undersigned, being the duly qualified and acting City Administrator 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 the minutes relate to considering proposals and
awarding the sale of$4,940,000 General Obligation Refunding Bonds, Series 2016A.
WITNESS my hand on January 6, 2016.
City Administrator
26
7357993v1
EXHIBIT A
Proposals
[To be supplied by Ehlers &Associates, Inc.]
D-1
7357993v1
EXHIBIT B
Tax Levy Schedule
D-1
7357993v1
EXHIBIT C
NOTICE OF CALL FOR REDEMPTION
$3,370,000 GENERAL OBLIGATION SEWER SYSTEM REVENUE AND IMPROVEMENT
BONDS, SERIES 2008A
CITY OF COTTAGE GROVE, MINNESOTA,
WASHINGTON COUNTY, MINNESOTA
NOTICE IS HEREBY GIVEN that by order of the City Council of the City of Cottage Grove,
Minnesota, Washington County, Minnesota(the "City"),there have been called for redemption
and prepayment on:
February 1, 2016
those outstanding bonds of the City designated$3,370,000 General Obligation Sewer System
Revenue and Improvement Bonds, Series 2008A, dated as of June 11, 2008,having stated
maturity dates in the years 2017 through 2019, inclusive, and totaling $835,000 in principal
amount and having CUSIP numbers listed below:
Year CUSIP Number*
2017 221651 R95
2018 221651 S29
2019 221561 S37
The bonds are being called at a price of par plus accrued interest to February 1, 2016, on which
date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for
redemption are requested to present their bonds for payment, at the office of the Bond Trust
Services Corporation, 3060 Centre Pointe Drive, Roseville, Minnesota 55113.
Dated: January 6, 2016. CITY OF COTTAGE GROVE, MINNESOTA
/s/
Clerk
*The City shall not be responsible for the selection of or use of the CUSIP numbers, nor is any
representation made as to their correctness indicated in the notice. They are included solely for
the convenience of the holders.
D-1
7357993v1
EXHIBIT D
EXTRACT OF MINUTES OF A MEETING OF THE BOARD OF
COMMISSIONERS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF
THE CITY OF COTTAGE GROVE, MINNESOTA
HELD: , 2015
Pursuant to due call, a regular meeting of the Board of Commissioners of the Economic
Development Authority of the City of Cottage Grove, Minnesota, was duly held at the City Hall
on , 2015, at P.M.
The following members were present:
and the following were absent:
Member introduced the following resolution and moved its adoption:
RESOLUTION AUTHORIZING CALLING 2008B PRIOR BONDS
WHEREAS,the City of Cottage Grove, Minnesota(the "City")proposes to issue its
$4,940,000 General Obligation Refunding Bonds, Series 2016A (the "Bonds")to acquire the
Cottage Grove Ice Area(the "Facility") from the Economic Development Authority of the City
of Cottage Grove, Minnesota(the "Authority") and in connection therewith refund the
Authority's outstanding Lease Purchase Revenue Bonds (Ice Arena Project), Series 2008B, dated
June 1 l, 2008 (the "2008B Prior Bonds").
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the
Economic Development Authority of the City of Cottage Grove, Minnesota:
That the 2008B Prior Bonds which mature on and after April l, 2017, shall be redeemed
and prepaid on April 1, 2016 (the "2008B Call Date"), in accordance with the terms and
conditions set forth in the Notice of Call for Redemption attached as Exhibit A hereto,which
terms and conditions are hereby approved and incorporated herein by reference.
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 thereo£
and the following voted against the same:
whereupon the resolution was declared duly passed and adopted.
D-1
7357993v1
STATE OF MINNESOTA
WASHINGTON COUNTY,MINNESOTA
I,the undersigned,being the duly qualified and acting Secretary of the Economic
Development Authority 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 Board of Commissioners, duly called and held on the date therein indicated insofar as such
minutes relate to the Resolution Calling 2008B Prior Bonds.
WITNESS my hand on , 2015.
Secretary
D-2
7357993v1
EXHIBIT A
NOTICE OF CALL FOR REDEMPTION
$2,965,000 LEASE PURCHASE REVENUE BONDS (ICE ARENA PROJECT) SERIES
2008B
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF COTTAGE GROVE,
MINNESOTA,
WASHINGTON COUNTY, MINNESOTA
NOTICE IS HEREBY GIVEN that by order of the Board of Commissioners of the Economic
Development Authority of the City of Cottage Grove, Minnesota, Washington County,
Minnesota(the "EDA"), there have been called for redemption and prepayment on
April 1, 2016
those outstanding bonds of the EDA designated$2,965,000 Lease Purchase Revenue Bonds (Ice
Arena Project), Series 2008B, dated as of June 11, 2008,having stated maturity dates or subject
to mandatory redemption in the years 2017 through 2028, inclusive, and totaling $4,515,000 in
principal amount and having CUSIP numbers listed below:
Year CUSIP Number* Year CUSIP
2017 221651 AJ8 2024 221651 ARO
2,020 221651 AM1 2025 221651 AS8
2021 221651 AN9 2026 221651 AT6
2022 221651 AP4 2027 221651 AU3
2023 221651 AQ2 2028 221651 AV 1
The bonds are being called at a price of par plus accrued interest to April 1, 2016, on which date
all interest on said bonds will cease to accrue. Holders of the bonds hereby called for redemption
are requested to present their bonds for payment, at the office of the Bond Trust Services
Corporation, 3060 Centre Pointe Drive, Roseville, Minnesota 55113.
Dated: January 6, 2016. BY ORDER OF THE BOARD OF
COMMISSIONERS, ECONOMIC
DEVELOPMENT AUTHORITY OF THE CITY
OF COTTAGE GROVE, MINNESOTA
/S/
Secretary
*The EDA shall not be responsible for the selection of or use of the CUSIP numbers, nor is any
representation made as to their correctness indicated in the notice. They are included solely for
the convenience of the holders.
A-1
7357993v1
EHLERS
LEADERS IN PUBLIC FINANCE
January 6, 2016
Sale Day Report for
City of Cottage Grove, Minnesota
$4,660,000 General Obligation Refunding Bonds,
Series 2016A
�
�
6
Prepared by:
Shelly Eldridge
Senior Municipal Advisor
Sean Lentz
Senior Municipal Advisor
and
Stacie Kvilvang
Senior Municipal Advisor
�_ --�.�__
� -1-800-552-1171 I www.ehlers-inc.com
Sale Day Report — January 6, 2016
City of Cottage Grove, Minnesota
$4,660,000 General Obligation Refunding Bonds, Series 2016A
Purpose: Provide funds to 1) currcnt refund thc outstanding G.O. Sewer System
Bonds, Series 2008A and 2) acquire the Ice Arena fi-om the Economic
Development Authority
Rating: Standard & Poor's Credit Markets "AA+"
Number of Bids: l3
Low Bldder: Wells Fargo Bank, Nationa] Association, Charlotte, North Carolina
Comparison from Low Bid High Bid
Lowest to Highest Bid: 1.5b54% 1.8173%
(TIC as bid)
Summar oy f Results: Results of Sale
Principal Amount*: $4,660,000
Underwriter's Discount: $21,203
Reoffering Premium: $259,765
True Interest Cost: � 1.5702�Ia
Costs of Issuance: $59,669
Yield: 0.600% - 1.900%
Future Value Savings: $],068,360
Present Vaiue Savings: $970,967
Savings Percentage: � 15.363°I,
Total Net P&I $5,310,233
NO#es: *The size of the bond issue was reduced from the projected amount
due to a reduction in underwriter's discount and a premium bid.
Closing Date: Janua�•y 28, 2016
City Council Action: Resolution authorizing issuance, awai-ding the sale, prescl-ibing the
form and details and providing for the payment of$4,660,000 General
Obligation Refunding Bonds, Series 2016A.
Attachments: A. Rating Report
B. Bid Tabulation
C. Sources and Uses of Funds
D. Updated Debt Service Schedules and Savings Analysis
E. Bond Resolution (Distributed in City Council Packets)
� Sale Day Report
City of Cottage Grove, Minnesota
$4,660,000 General Obligation Refunding Bonds, Series 2016A January 6, 2016
,� STANDARD&POOR'S
� RATINGS SERVICES
McGRAW HILL FINANGIAL
Ratin �Qirect°
g
.............................................................................................................
Summary:
Cottage Grove, Minnesota; General
Obligation
Primary Credit Analyst:
Anna Uboytseva,Chicago(1)312-233-7067;anna.uboytseva@standardandpoors.com
Secondary Contact:
Katelyn A Batesel,Centennial(303)721-4683;katelyn.batesel@standardandpoors.com
Table Of Contents
.............................................................................................................
Rationale
Outlook
Related Criteria And Research
iNiiVW.STANDARDANDPOORS.COMIRATINGSDIRECT DECEMBER 30,2015 1
1557379 � 3D0125218
Summary:
Cottage Grove, Minnesota; General Obligation
-. .
US$4.94 mil GO rfdg bnds ser 2016A due 02/O1/2027
Long Term Rating AA+/Stable New
Rationale
Standard& Poor's Ratings Services assigned its'AA+'long-term rating to Cottage Grove, Minn.'s series 2016A general
obligation (GO)refunding bonds. At the same time, Standard& Poor's affirmed its'AA+'rating on the city's existing
GO debt. The outlook is stable.
The series 2016A bonds are secured by the city's unlimited-tax ad valorem GO pledge.The city is also pledging tax
abatement revenues and net revenues of its sewer system,however,we rate the bonds based on the GO pledge.
Proceeds from the bonds will be used to refund the series 2008A GO sewer system revenue and improvement bonds
and the 2017 through 2028 maturities of the series 2008B lease purchase revenue bonds,which will allow the city to
acquire the Ice Arena from the Economic Development Authority of the city of Cottage Grove.
We further note that the city has pledged special assessment revenues to its series 2012A go improvement bonds and
tax increment revenues to its series 2014A GO tax increment refunding bonds. However,we rate both series based on
the GO pledge.
The rating reflects our view of the city's:
• Strong economy in the broad and diverse Minneapolis-St. Paul-Bloomington metropolitan statistical economy
(MSA);
• Very strong management,with"strong"financial policies and practices under our Financial Management
Assessment methodology;
• Adequate budgetary performance,with operating results that we expect could deteriorate in the near term relative
to fiscal 2014,which closed with operating surpluses in the general fund and at the total governmental fund level;
• Very strong budgetary flexibility,with an available fund balance in fiscal 2014 of 67%of operating expenditures;
• Very strong liquidity,with total government available cash at 1.9x total governmental fund expenditures and 20.6x
governmental debt service, and access to external liquidity we consider strong;
• Adequate debt and contingent liability position,with debt service carrying charges at 9.1%of expenditures and net
direct debt that is 87.4%of total governmental fund revenue, as well as rapid amortization,with 74.6%of debt
scheduled to be retired in 10 years; and
• Strong institutional framework score.
Strong economy
We consider Cottage Grove's economy strong. The city,with an estimated population of 35,675,is located in
Washington County in the Minneapolis-St. Paul-Bloomington MSA,which we consider to be broad and diverse. The
city has a projected per capita effective buying income of 112%of the national level and per capita market value of
WWW.STANDARDANDPOORS.COM/RATINGSDIRECT DECEMBEEt 30, 2015 2
1557379� 300125'L18
Suminary: Cottage Grove, Minnesota; General Obligati.on
$84,603. Overall, the city's market value grew by 6.5%over the past year to $3 billion in 2015. The county
unemployment rate was 3.6%in 2014.
Over the last few years,the city has enjoyed increasing assessed and market values. Assessed value rose 10.8%in
2015. It is likely that this upward trend will continue as the city's business park is continuing to expand, a number of
empty buildings are being redeveloped, and the number of applications for commercial building permits is rising. We
further note that local employment conditions are extremely favorable,with residents having access to a broad range
of opportunities in Minneapolis (located just 15 miles away) and with a number of businesses, such as Renewal by
Anderson,American Ag Corp., and American Logistic Services, continuing to expand. Given the city's continued
growth and the stabilizing influence of the Minneapolis-St. Paul economy,we do not believe that the city's economic
score will change in the next few years.
Very strong management
We view the city's management as very strong,with"strong" financial policies and practices under our Financial
Management Assessment methodology,indicating financial practices are strong,wel] embedded, and likely
sustainable.
The city updates a formal five-year capital improvement plan annually and uses this document for planning and
budgeting purposes. Management maintains a comprehensive long-term financial management plan. In addition to the
reserve policy of distributing the annual general fund surplus, the council also mandates that at least 55%of
expenditures be retained for cash purposes in the general fund balance. Management reports on both the city's
investments and budget-to-actual performance to the council on a quarterly basis and maintains formal debt
management and investment policies. Finally,we note that city both consults outside sources and analyzes historical
trends in its budget development process.
Adequate budgetary performance
Cottage Grove's budgetary performance is adequate in our opinion. The city had operating surpluses of 2%of
expenditures in the general fund and of 12.2%across all governmental funds in fiscal 2014. Our assessment accounts
for the fact that we expect budgetary results could deteriorate somewhat from 2014 results in the near term. General
fund operating results of the city have been stable over the last three years,with a result of 0.6%in 2013 and a result of
2.5%in 2012.
It should be noted that we have made a number of adjustments to the city's financial data in order to better analyze its
typical operations. For instance,we have moved recurring transfers into and out of the general fund above the line so
that they appear as revenues and expenditures,respectively, and we have accounted for one-time surges in
expenditures stemming from the use of bond proceeds. Additionally,we have adjusted total governmental funds
revenues to account for recurring transfers into the general fund from the city's various enterprise funds.
We note that management currently estimates that it will finish the 2015 fiscal year with a larger-than-anticipated
surplus of$500,000-$700,000. For fiscal years 2016 and 2017,however, the city is budgeting for deficits of
approximately$516,000 and$985,000,respectively. As the city postponed a number of capital expenditures during the
recession and subsequent recovery period, it will likely be obliged to increase its expenditures on equipment in the
coming years. Consequently,budgetary performance could weaken in future years.
WWW.STANDARDANDPOORS.COM/RATINGSDIRECT DECEMBER 30, 2015 3
1557379 � 300125218
Summary: Cottage Grove, Minnesota; General Obligation
Very strong budgetary flexibility
Cottage Grove's budgetary f7exibility is very strong,in our view,with an available fund balance in fiscal 2014 of 67%of
operating expenditures, or$9.5 million. We expect the available fiznd balance to remain above 30%of expenditures for
the current and next fiscal years,which we view as a positive credit factor.
Despite the city's projected deficits,we anticipate that its budgetary flexibility will remain very strong for the next few
years. Further supporting this conclusion is the city's formal reserve policy that stipulates that 55%of expenditures
must be held in reserve.
Very strong liquidity
In our opinion, Cottage Grove's liquidity is very strong,with total government available cash at 1.9x tota]
governmental fund expenditures and 20.6x governmental debt service in 2014. In our view, the city has strong access
to external liquidity if necessary.
We have based our assessment of the city's access to external liquidity on its recent history of debt issuances,which
include a variety of debt vehicles. We have also confirmed that the city does not hold any privately placed debt or
direct purchase agreements that could pose a significant risk to its liquidity. Furthermore,we note that the city is not
investing its funds aggressively as it holds a combination of investments in U.S. agencies, negotiable certificates of
deposit„municipalities, and a small amount in commercial paper.
Adequate debt and contingent liability prafile
In our view, Cottage Grove's debt and contingent liability profile is adequate. Total governmental fund debt service is
9.1%of total governmental fund expenditures, and net direct debt is 87.4%of total governmental fund revenue.
Approximately 74.6%of the direct debt is scheduled to be repaid within 10 years,which is in our view a positive credit
factor.
The city is currently planning to issue approximately$6 million of debt in 2017 for capital projects;we do not
anticipate that this wil]materially affect the city's debt profile.
Cottage Grove's combined required pension and actual other postemployment benefits (OPEB) contributions totaled
4%of total governmental fund expenditures in 2014. The city made 101%of its annual required pension contribution
in 2014.
The city contributes to both defined-benefit and defined-contribution plans administered by the Public Employees
Retirement Association of Minnesota(PERA), and to the Cottage Grove Fire Relief Assn.The city contributed over
$988,000 to its defined-benefit PERA plans in 2014, and its Fire Relief Assn. plan is 178%funded. The city funds its
other postemployment benefits on a pay-as-you-go basis.
Strong institutional framework
The institutional framework score for Minnesota cities with a population greater than 2,500 is strong.
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1557379 � 300125218
Summary: Cottage Grove, Minnesota; General Obligation
Outlook
The stable outlook reflects our expectation that despite its projected deficits, the city will maintain very strong reserves
while continuing to enjoy the economic advantages of its access to the greater Minneapolis-St. Paul area.
Consequently,we do not expect the rating to change within the next two years.
Upside scenario
Barring any major deterioration in other credit factors, if the city were to see a material improvement in its market
value and income indicators,we could consider raising the rating.
Downside scenario
If the city were to reduce its reserves to a level no longer commensurate with the current rating, or if its debt profile
were to substantiaily weaken, then we could consider lowering the rating.
Related Criteria And Research
Related Criteria
• USPF Criteria: Local Government GO Ratings Methodology And Assumptions, Sept. 12, 2013
• USPF Criteria: Financial Management Assessment, June 27, 2006
• USPF Criteria: Debt Statement Analysis,Aug. 22, 2006
• USPF Criteria: Methodology: Rating Approach To Obligations With Multiple Revenue Streams, Nov. 29, 2011
• USPF Criteria: Assigning Issue Credit Ratings Of Operating Entities, May 20, 2015
+ Criteria: Use of CreditWatch And Outlooks, Sept. 14, 2009
Related Research
• S&P Public Finance Local GO Criteria: How We Adjust Data For Analytic Consistency, Sept. 12, 2013
�- • �- - � - � �
Cottage Grove GO
Long Term Rating AA+/Stable Affirmed
Cottage Grove GO
Long Term Rating AA+/Stable Affirmed
Cottage Grove GO
Long Term Rating AA+1Stable Af'firmed
Cottage Grove GO
Long Term Rating AA+/Stable Affirmed
Cottage Grove GO
Long Term Rating AA+/Stable Affirmed
Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com. All ratings
affected by this rating action can be found on Standard& Poor's public Web site at www.standardandpoors.com. Use
the Ratings search box located in the left column.
WWW.STANDAItDANDPOORS.COM/RATINGSDIRECT DECEMBER 30,2015 5
1557379� 300125218
EHLERS
BID TABULATION LEADER5IN PUBLIC FINANCE
$4,940,000'' General Obligation Refunding Bonds, Series 2016A
City of Cottage Grove, Minnesota
SALE: January 6, 2016
AWARD: WELLS FARGO BANK, NATIONAL ASSOCIATION
Rating: Standard &Poor's Credit Markets "AA+" BRI: 3.57%
NET TRUE
MATURITY REOP'FERING INTEREST INTER�ST
NAME OF BIDDER (February 1) RATE YIELD PRICE COST RATE
WELLS FARGO BANK, $5,192,827.60 $432,559.48 1.5654%
NATIONAL ASSOCIATION
Charlotte, North Carolina 2017 3.000% 0.600%
2018 3.000% 0.850%
2019 3.000% 1.000%
2020 3.000% ].]00%
2021 3.000% 1.200%
2022 3.000% 1300°/n
2023 3.000% 1.450%
2024 3.000% 1.550%
2025 2.000°Io 1.650%
2026 2.000% 1.750%
2027 2.000% 1.900%n
PNC CAP[TAL MARKETS LLC $5,095,336.00 $433,177.33 1.5883%
Philadelphia,Pennsylvania 2017 3.000%
20l 8 3.000%
2019 3.000%
2020 3.000%
2021 2.000%
2022 2.000%
2023 2.000%
2024 2.000°Io
2025 2.000%
2026 2.OQ0%
2027 2.000%
Subsequent to bid opening the issue size was decreased to $4,660,000.
Adjusted Price - $4,898,561.50 Adjusted Net Interest Cost - $414,308.50 Adjusted TIC - 1.5702%
�-� ,-� -- � - I �,.% � ��r I � �-� �;�_ ,��;;n
NET TRUE
MATURITY REOFFF,RING INTER�ST INTEKEST
NAME OF BIDDER (February 1) RATF. YIELU PRICE COST RATE
JANNEY MONTGOMERY SCOTT $5,174,801,05 `.�i444,183.12 1.6105%
LLC
Philadelphia,Pennsylvania 2017 2.000%
2018 3.00O�I�
20]9 3.000%�
2020 3.000%�
2021 3.000%�
2022 3,000°Io
2023 3.000�/�
2024 3.00O�I�
2025 2.000%
2026 2.000%,
2027 2.000%,
RAYMOND Jl�MES & $5,]73,981.45 $451,405.63 1.6380%
ASSOCIATES,INC.
St. Petersburg, Florida 2017 3,000%
2018 3.000%
2019 3.000%�
2020 3.00O�Io
2021 3.00O�I,
2022 3.000%
2023 3.000°/0
2024 3.000°I�
2Q25 2.000%
2026 2.000%
2027 2.000°l0
PIPER JAFFRAY&CO. $5,166,528.80 $458,858.28 1.6669%
Minneapolis,Minnesota 2017 3.000%
2018 3.000°l�
2019 3.000%
2020 3.000%
2021 3.000�/0
2022 3.000°l0
2023 3.000°I�
2024 3.000%�
2025 2.000%
2026 2.000%
2027 2.000%
� Bid Tabulation January 6, 2016
City of Cottage Grove, Minnesota
$4,940,000* General Obligation Refunding Bonds, Series 2016A Page 2
NET TRUE
MATURITY REOFFERING INTEREST INTEREST
NAME OF BIDDER (February 1) RATE YIELD PRICE COST RATE
BAIRU $5,050,910.85 $457,751.65 1.6816%
Milwaukee,Wisconsin 2017 2.000%
2018 2.000%
2019 2.000°/<�
2020 2.000°l�
2021 2.000%
2022 3.0OO��n
2023 2.000%
2024 2.000%
2025 2.000°l0
2026 2.000%
2027 2.250%
STIFEL NICOLAUS $5,151,369.45 $474,017.63 1.7257%
Memphis,Tennessec 2017 3.000%�
2018 3.000�%
20l 9 :�.000%
2020 3.000%
202] 3.000%
2022 3.000%
2023 3.000°/0
2024 3.000°/0
2025 2.000%0
2026 2.000�%
2027 2.000%0
UNITED BANKERS'BANK $5,033,356.90 $471,503.41 1.7344%
Bloornington,Minnesota 2017 2.0OO��o
20]8 2.000°/�
2019 2.000°�0
2020 2.00O�I�
2021 2.000%;
2022 2.000%
2023 2.000%
2024 2.000%0
2025 2.250°Io
2026 2.250�I�
2027 2.250%
� Bid Tabulation January 6, 2016
City of Cottage Grove, Minnesota
$4,940,000* General Obligation Refunding Bonds, Series 2016A Page 3
NET TRUE
MATURITY REOFFERING INTEREST INTEREST
NAMF,OF BIDDER (February 1) RATE YIELD PRICE COST RATE
HUTCHINSON, SHOCKEY, ERLEY $5,373,165.35 $507,080.07 1.7859%
&CO.
Chicago,Illinois 2017 4.00O�I��
2018 3.000%
2019 4.000%
2020 4.000%n
2021 4.000°Io
2022 4.000%
2023 4.00O�I�
2024 4.000%n
2025 3.000%
2026 3.000%�
2027 3.000%
D.A. DAVIDSON $5,350,530.90 $513,624.52 1.7896°Io
Denver,Colorado 2017 2.000%
2018 2.000%
2019 2.000�/0
2020 2.00O�I�
2021 3.000%�
2022 3.000%
2023 4.000°In
2024 4.000°l0
2025 4.000°/n
2026 4.000°/%
2027 4.000%
UMB BANK,N.A. $5,115,123.00 $495,027.94 1.7933%
Kansas City, Missouri 20l 7 ].500%
2018 1.500%
20l 9 2.000%
2020 2.000°In
2021 2.500%
2022 2.500�/�
2023 2.500%�
2024 2.750'��
2025 2.750°Io
2026 2.750�I�
2027 2.750°Io
� Bid Tabulation January 6, 2016
City of Cottage Grove, Minnesota
$4,940,000* General Obligation Refunding Bonds, Series 2016A Page 4
NET TRUE
MATURITY REOFFERING INTEREST INTEREST
NAME OF BIDDER f I'ebruary 1) RATE YIELD PRICE COST RATE
NORTHLAND SECURITIES,INC. $4,991,069.45 $488,757.22 1.8112%
Minneapolis,Minnesota 2017 2.000%
2018 2.000°Io
2019 2.000%
2020 2.000%
2021 2.000%
2022 2.000°I�
2023 2.000%
2424 2.00O�I�
2025 2.000%
2026 2.000%
2027 2.100%
FTN FINANCIAL CAPITAL $5,031,164.92 $494,461.85 1.8173%
MARKETS
Memphis,Tennessee 2017 2A00%
2018 2.000%
2019 2.000°Io
2020 2.000%
202] 2.000°Io
2022 2.000%
2023 2.000%
2024 2.000%
2025 2250°I�
2026 2.500%
2027 2.500%
� Bid Tabulation January 6, 2016
City of Cottage Grove, Minnesota
$4,940,000* General Obligation Refunding Bonds, Series 2Q16A Page 5
City of Cottage Grove, Minnesota
$4,660,000 General Obligation Refunding Bonds, Series 2016A
Issue Summary
Total Issue Sources And Uses
Dated 01/28/2076� Delivered 01/28/2016
Current Ref Current Ref Issue
OSA 08B EDA Summary
Sources Of Funds
Par Amount of Bonds SS?ti,UUU.fHI g3.H3�,000.0U $4,660.00O.QO
Reoffering Preinitun 34,981 0� 224,783.45 259.764.50
'fransfers from Prior Issue USIL Funds 514,892.50 514,8�2.50
Total Sources $859,981.05 $4,574,675.95 $5,434,657.00
Uses Of Funds
Total Underwriter's Discount (0.�}SS�Io) 3,753.75 17,449.25 21,203.OU
Costs of Issuance I 8,772.76 40.896.24 59,669.00
l�eposit to Current Refunding Fund 836,I 47.81 4,S I�,000.00 535].147.81
Rounding(Deposi�to Debt Scrvice Fund) I,306.73 1.330.46 2.637.19
Total Uses $859,981.05 $4,574,675.95 $5,434,657.00
Series 2016A GO Rei Bds C � Issue Summary � 1/6/2016 � 10:35 AM
� EHLERS
LEADERS IN PUBLIC FINANCF
City of Cottage Grove, Minnesota
$4,660,000 General Obligation Refunding Bonds, Series 2016A
Issue Summary
Debt Service Schedule
Date Principal Coupon Interest Total P+I Fiscal Total
Ol/281201b - - .
08/O]/2016 65.270.00 fi5.270.00 -
12/31/2016 - - - - 65.270.00
0?lOV2017 575.000.00 3.000�7�. 64,200.00 63J.200.00 -
08/O]/2017 - - 55,575,00 55,575.00 -
12/3]/2017 - - - - 694,775.00
02/01/2018 595,000.00 3.000�7c 55,575.00 650.575.00 -
08/O1/2018 - - 46,650.00 46,650.00 -
12/31/2018 - • - - 697,225.00
02I01/2019 61 Q000.00 3.000�7� 46,650.00 656,650.00 -
08/01/2019 - - 37,500.00 3�,500.00 -
12/31l2019 - - - - 694,15p.00
02I01/2020 330.000.00 3.Q00�7r. 37,_500.06 367,500.00 -
08/Ol/2020 • - 32,550.00 32,550.00 -
I 2/31/2020 - - - • 400,050.00
02/01/2021 340,000.00 3.000% 32,5_50.00 372.550.00 -
08/Ol/2021 - - 27,450.00 27.450.00 -
I 2/31/202] • - - - 400,000.00
02/01/2022 350,000.00 3.000%r 27,450.00 377,450.00 -
08/O]/2022 - • 22,200.00 22,200.00 -
]2/31/2022 • - - - 399,G50.00
02/01/2023 355,000.00 3.000% 22,ZOO.QO 377,200.00 -
08/O1/2023 - - 16,875.00 16,875,00 -
12/31/2023 - - - • 394.075.00
02/Ol/2024 365.000.00 3.000% 16.875.00 381.875.00 -
08/O l/2024 - - I I,400.00 1 I,400.00 -
12/31/2024 - - - - 393,275_00
02/01/2025 375,000.00 2.000% 11,4Q0.00 386.400.00 •
08/O1/2025 - - 7,650.00 7,650.00 -
12/31/2025 - - - - 394,050.00
02/O1/2026 380,000.00 2.0009c 7,650.00 387,650.00 -
08/O1/2U26 - - 3,850.00 3,850.00 -
12/3l/2026 - - - - 391,500.00
02/01/2027 385.000.00 2.000�7c 3.850.00 38A.8�0.00 -
12/31/2027 . . - � 388,850.00
Total $4,660,000.00 - $652,870.00 $5,312,870.00 -
Yield Statistics
Bond Year pollars $25,568.83
Average Life 5.487 Years
Average Coupon 2.5533820%
Net]nterest Cost(NIC) 1.6203653%
Tiue lnterest Cos[(TIC) 1.5702166�Je
Bond Yield for Arbitrage Purposes I.47821 12%
All Inclusive Cost(AIC) 1.8020545%
IRS Form 8038
Nel Interesi Cost 1.4581257%
Weighted nverage Maturity 5.480 Years
Series 2016A GO Ref Bds C � Issue Summary � 1/6/2016 � 10:35 AM
����,p� EHLERS
'��Y��� LE1�D[RS IN PUBLIC FINANCE
City of Cottage Grove, Minnesota
$4,660,000 General Obligation Refunding Bonds, Series 2016A
Issue Summary
Debt Service Comparison -- Accrual Basis
Calendar Debt Service
Year Total P+I Fund Deposit Net New D/S Old Net D/S Savings
2016 65,270.00 (2G37.I9) 62.632.SI 117.80?.75 55.I7094
2017 694.775.00 - 694,775.00 7R9,A2Q00 95,045.00
2018 697.225.00 - 697,225,00 792,700.00 95.475.00
2019 694.150.00 - 694.)50.00 789.507.50 95.357.50
2020 400,050.00 - 400,OS0.00 495,696.25 95,646.25
2021 400.000.00 - 400.000.00 495,870.00 95.870.00
2022 399.6SO.OQ - 3?9,G50.00 494.6Q0.00 94.950.00
2023 394.075.00 - 394,075.00 492.370.00 98,295.00
2024 393,275.00 - 393.275.00 489.252.50 95.977.50
2025 394.050.00 - 394.050.00 485,232.5p 91,182._50
2026 391,500.00 - 39L500.00 485.175.00 93.675.00
2027 388.850.00 - 388,850.00 48 t,942.50 95,092.50
2028 - � - (33.377.ip) (33377.50)
- $5,312,870.00 (2,637.19) $5,310,232.81 $6,378,592.50 $1,068,359.69
PV Analysis Summary(Net to Net)
Gioss PV Debt Sen�ice Savints..................... 1398.720.6]
Effects of changes in DSR investments............. (430,371.06)
Effects of changes in Expenses.................... 2,617.52
Net PV Cashflow Savings @ 1.478%(Bond Yield)..... 970,967.07
Nel Present Value Benefit $970967.07
Net PV Benefil/$6,320.205.03 PV Refunded Debt Seivice 15.3639c
Ncl PV Bcncfit/ $5350,000 Rcfunded Principal... 18.149%
Nct PV 13cncfit/ S4.660,000 Rcfundiitg Princip�l.. 20.836�/0
Refunding Bond Information
Rcfundingl)ated Daic ]/28/2016
ILefmiding Delive�y Dnte I/28/2016
Series 2016A GO Ref Bds C � Issue Summary � 1(6l201 B � 1 D:35 AM
EHLERS
«�. LEADERS IN PUBLIC FINANCE