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1. Award of Bids oJ. CITY OF CHANHASSEN , 690 City Center Drive, PO Box 147 Chanhassell, Minnesota 55317 Phone 612.937.1900 Celleral h< 612.937.5739 Enginming Fax 612.937.9152 Mite Safety Fax 612.9342524 iYfeb wlVU'.ci.chtll1bassCIl.lnn.l/s !~ ;4 '~ ;"\ MEMORANDUM TO: Mayor and City Council .1.. FROM: Don Ashworth, City Manager ÞAI~ Tht City ofChnnhassen. A growing community with clean lakes, quality schook, a charming downtown, thriving businesses, and beautijùl parks. A great place to live, work, and play. DATE: July I, 1998 SUBJ: Award of Bids, 1998 Bonds, Series D, E, F & G Attached please find the Official Statement for the above bond sales as prepared by Springsted. Bids will be opened at 10:00 a.m. on Monday, July 6 and Dave MacGillivrary will be present on Monday afternoon to present the results. OFFICIAL STATEMENT DATED JUNE 25,1998 Rating: Requested from NEW ISSUE . Standard and Poor's Ratings Services In If!e opiniOn of Kennedy & Grawen, C1wtet8d. Bond Counsel, under existing laws, reglhtions, rulings and decisions, aS$Uming comphnœ with ttNt co~nam set fOrth in the ResoIuI1onI. !tie intetest on the- Series '9P8D ~ Seriu 1998E Bonds. and Sarin 1998F Bonds is not inclucMbJe in the gtOSS income Of the owners theI'eoI fOr fedtn inCOme tax purpoan or in taxable net income 01 itrdividuM est... or ~ ft)r Minnesota mc:ome tax purposes, and is not. ,ottIlerence item fat purposes of the computation of tM federal aJfenMtive minimum tþ or the computation of Minnesota ~ minimum tar /mpos.¡ on IndvidwIJs, trusts andNl8tes. Inl8t8ston t~ Series 19980 Bonds. SeIieS 1998E Bonds, and Series 199BF Bonds is includable in ttMt ceJcuI.uon Ofcertaín federal and Minnesota t.axN imÞOledon oorpotaIions. (For II description of reIø/ed inuH, ... ~ax Exemption - het8in.) The interest on the Series f998G Bonds is includable in gtDU income 01 the recipient fry United States and Staht of "'nnemta income r.x - .",<t;.p~ ~',~ 't4 ,~q'\~f ~. ~;:.. ~'< ~ \: "'" '''v:;~ \ ~_" \; ~,Jj ~') , ., \1.. V·~ <";",:} ~ City of Chanhassen, Minnesota $1,225,000 General Obligation Tax Increment Bonds, Series 1998D (the "Serle. 1998D Bond.", $1,720,000 General Obligation Tax Increment Bonds, Series 1998E (the "Serie. 1998E Bond.") $3,410,000* General Obligation Tax Increment Refunding Bonds, Series 1998F (the "Serl.. 1998F Bond.") $2,185,000* Taxable General Obligation Tax increment Refunding Bonds, Series 1998G (the "Serl..1998G Bond.") (collectively referred to as the "Bonds" or the "¡ssues") (Book Entry Only) Dated Date: August 1, 1998 Interest Due: Each February 1 and August 1, commencing August 1,1999 The Series 1998D Bonds will mature February 1 a. follows; 2000 $50,000 2001 $175.000 2002 $275,000 2003 $355.000 2004 $370,000 The City may elect on February 1, 2002, and on any day thereafter. to prepay the Series 1998D Bonds due on or after February 1, 2003 at a price of par plus accrued interest. The Series 1998E Bonds will mature February 1 as follows: 2001 $430,000 2002 $430,000 2003 $430.000 2004 $430,000 The City may elect on February 1, 2002, and on any day thereafter, to prepay the Series 1998E Bonds due on or after February 1. 2003 at ~ price of par plus accrued interest. The Series 1998F Bonds will mature February 1, 2004. The City may elect on February 1, 2002, and on any day thereafter, to prepay thl Series 1998F Bonds due on February 1,2004 at a price of par plus accrued interest. The Series 1998G Bonds will mature February 1 as follows: 2002 $1.235,000 2003 $500,000 2004 $450,000 The City may elect on February 1, 2002, and on any day thereafter, to prepay the Series 1998G Bonds due on or after February 1, 2003 at ¡ price of par plus accrued interest. Common to AI/Issues A separate proposal must be submitted for each Issue, along with a good faith deposit in the form of a certified or cashier's check or Financial Surety Bond. for not less than the amount shown below, payable to the order of the City. Rates shall be specified in integ.. multiples of 5/100 or 1/8 of 1% and must be designated in ascending order. The award for each Issue will be made on a True Interest CO! basis (TICJ..-. The Series 1998D Bonds The Series 1998E Bonds The Series 1998F Bonds The Series 1998G Bonds Minimum Bid $1.215,200 $1,706.240 $3,382.720 $2,167,520 Good Faith DeDosit $12,250 $17,200 $34,100 $21,850 The Series 1998D Bonds, Series 1998E Bonds, and Series 1998F Bonds will not be bank-qualified tax-exempt obligations pursuant Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, and will not be subject to the alternative minimum tax for individuals. The Bonds will be issued as fully registered Bonds without coupons and, when issued, will be registered in the name of Cede & Co., ¡ nominee of The Depository Trust Company ("DTC"). DTC will act as securities depository of the Bonds. Individual purchases may be ma, in book entry form only, in the principal amount of $5,000 and integral multiples thereof. Purchasers will not receive certificates representir their interest in the Bonds purchased. (See "Book Entry System" herein.) The City will name the registrar and pay for registration service Certificates will be available for delivery at DTC within 40 days after award. Subject to change. PROPOSALS RECEIVED: July 6, 1998 (Monday) until 10:00 A.M., Central Time AWARD: July 6, 1998 (Monday) at 4:30 P.M., Central Time ~ SPRINGS TED Further information may be obtained from SPRINGSTED Incorporated, Financial Advisor to the Issuer, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota 5510t-2887 (612) 22J..3000 Public Finance Advisors o For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or corrected by the Issuer from time to time (collectively, the "Official Statement"), may be treated as an Official Statement with respect to the Obligations described herein that is deemed final as of the date hereof (or of any such supplement or correction) by the Issuer, except for the omission of certain information referred to in the succeeding paragraph. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Obligations, together with any other information required by law, shall constitute a "Final Official Statement" of the Issuer with respect to the Obligations, as that term is defined in Rule 15c2-12. Any such addendum shall, on and after the date thereof, be fully incorporated herein and made a part hereof by reference. By awarding the Obligations to any underwriter or underwriting syndicate submitting a Proposal therefor, the Issuer agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Obligations are awarded copies of the Official Statement and the addendum or addenda described in the preceding paragraph in the amount specified in the Terms of Proposal. The Issuer designates the senior managing underwriter of the syndicate to which the Obligations are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a Proposal with respect to the Obligations agrees thereby that if its bid is accepted by the Issuer (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Obligations for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. No dealer, broker, salesman or other person has been authorized by the Issuer to give any information or to make any representations with respect to the Obligations, other than as contained in the Official Statement or the Final Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the Issuer. Certain information contained in the Official Statement and the Final Official Statement may have been obtained from sources other than records of the Issuer and, while believed to be reliable, is not guaranteed as to completeness or accuracy. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER SINCE THE DATE THEREOF. References herein to laws, rules, regulations, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Official Statement or the Final Official Statement, they will be furnished on request. TABLE OF CONTENTS $1,225,000 General Obligation Tax Increment Bonds, Series 1998D Terms of Proposal...................................................................................................... Schedule of Bond Years ............................................................................................ $1,720,000 General Obligation Tax Increment Bonds, Series 1998E Terms of Proposal...................................................................................................... Schedule of Bond Years ................ ..................... ....................................................... $3,410,000' General Obligation Tax Increment Refunding Bonds, Series 1998F Terms of Proposal...................................................................................................... Schedule of Bond Years ............................................................................................. $2,185,000' Taxable General Obligation Tax Increment Refunding Bonds, Series 1998G Terms of Proposal.................................................................................... .................. Schedule of Bond years............................................................................................. Paae(s) i-iv v vi-ix x xi-xiv xv xvi-xix xx Introductory Statement..................................................................................................... 1 Continuing Disclosure....................................................................................................... 1 The Bonds........................................................................................................................ 2 Book Entry System........................................................................................................... 2 The Series 1998D Bonds.................................................................................................. 4 The Series 1998E Bonds.................................................................................................. 4 The Series 1998F Bonds .................................................................................................. 5 The Series 1998G Bonds................. ................................................... .............................. 5 Future Financing............................................................................................................... 6 Litigation........................................................................................................................... 6 Legality............................................................................................................................. 6 Tax Exemption - The Series 1998D Bonds, the Series 1998E Bonds, and the Series 1998F Bonds ......................................................................................... 7 Not Bank-Qualified Obligations - The Series 1998D Bonds, the Series 1998E Bonds, and the Series 1998F Bonds ................................................. 8 Taxability of Interest - The Series 1998G Bonds.............................................................. 8 Ratings .. ........................................................................................................................... 8 Financial Advisor.............................................................................................................. 8 Certification.................................................................................................................... ... 9 City Property Values ......................................................................................................... 10 City Indebtedness............................................................................................................. 11 City Tax Rates, Levies and Collections............................................................................. 17 Funds on Hand ................................................................................................................. 18 City Investments............................................................................................................... 18 General Information Concerning the City.......................................................................... 19 Governmental Organization and Services......................................................................... 23 Proposed Form of Legal Opinions ........................................................................... Continuing Disclosure Certificate ............................................................................ Summary of Tax Levies, Payment Provisions, and Minnesota Real Property Valuation ...................................................................... Annual Financial Statements .................................................................................. Proposal Forms ...................................................................................................... Appendix I Appendix II Appendix III Appendix IV Inserted TERMS OF PROPOSAL THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: $1,225,000 CITY OF CHANHASSEN, MINNESOTA GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 1998D (BOOK ENTRY ONLY) Proposals for the Bonds will be received on Monday, July 6, 1998, until 10:00 A.M., Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award of the Bonds will be by the City Council at 4:30 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Proposals may be submitted in a sealed envelope or by fax (612) 223-3002 to Springsted. Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final Proposal price and coupons, by telephone (612) 223-3000 or fax (612) 223-3002 for inclusion in the submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Bonds regardless of the manner of the Proposal submitted. DETAILS OF THE BONDS The Bonds will be dated August 1, 1998, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing August 1,1999. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Bonds will mature February 1 in the years and amounts as follows: 2000 $ 50,000 2003 $355,000 2001 $175,000 2004 $370,000 2002 $275,000 BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bonds, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, New York, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC. - i - REGISTRAR The City will name the registrar which shall be subject to applicable SEC regulations. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The City may elect on February 1, 2002, and on any day thereafter, to prepay Bonds due on or after February 1, 2003. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition the City will pledge tax increment revenues from the City's Tax Increment District No. 2-1. The proceeds will be used to finance the construction of the road servicing the City's recreation center. TYPE OF PROPOSALS Proposals shall be for not less than $1,215,200 and accrued interest on the total principal amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit ("Deposit") in the form of a certified or cashier's check or a Financial Surety Bond in the amount of $12,250, payable to the order of the City. If a check is used, it must accompany each proposal. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The City will deposit the check of the purchaser, the amount of which will be deducted at settlement and no interest will accrue to the purchaser. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 or 1/8 of 1 %. Rates must be in ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and, (iii) reject any proposal which the City determines to have failed to comply with the terms herein. - ii - BOND INSURANCE AT p'URCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the underwriter, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the City has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating agency fees shall be the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds. CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bonds nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT Within 40 days following the date of their award, the Bonds will be delivered without cost to the purchaser at a place mutually satisfactory to the City and the purchaser. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement payment for the Bonds shall be made in federal, or equivalent, funds which shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Except as compliance with the terms of payment for the Bonds shall have been made impossible by action of the City, or its agents, the purchaser shall be liable to the City for any loss suffered by the City by reason of the purchaser's non-compliance with said terms for payment. CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Bonds. OFFICIAL STATEMENT The City has authorized the preparation of an Official Statement containing pertinent information relative to the Bonds, and said Official Statement will serve as a nearly-final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55101, telephone (612) 223-3000. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any - iii - underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 50 copies of the Official Statement and the addendum or addenda described above. The City designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated June 22, 1998 BY ORDER OF THE CITY COUNCIL Isl Donald W. Ashworth City Manager ,. -;-. -.... .-.~. -. - iv- SCHEDULE OF BOND YEARS $1,225,000 CITY OF CHANHASSEN, MINNESOTA GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 1998D Cumulative Year Principal Bond Years Bond Years 2000 $50,000 75.0000 75.0000 2001 $175,000 437.5000 512.5000 2002 $275,000 962.5000 1,475.0000 2003 $355,000 c 1,597.5000 3,072.5000 2004 $370,000 c 2,035.0000 5, 107.5000 Average Maturity: 4.17 Years Bonds Dated: August 1, 1998 Interest Due: August 1, 1999 and each February 1 and August 1 to maturity. Principal Due: February 1, 2000-2004 inclusive. Optional Call: Bonds maturing on or after February 1, 2003 are callable commencing February 1, 2002 and any date thereafter at par. (See Terms of Proposal.) c: subject to optional call THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $1,720,000 CITY OF CHANHASSEN, MINNESOTA GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 1998E (BOOK ENTRY ONLY) Proposals for the Bonds will be received on Monday, July 6, 1998, until 10:00 A.M., Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award of the Bonds will be by the City Council at 4:30,P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Proposals may be submitted in a sealed envelope or by fax (612) 223-3002 to Springsted. Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final Proposal price and coupons, by telephone (612) 223-3000 or fax (612) 223-3002 for inclusion in the submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Bonds regardless of the manner of the Proposal submitted. DETAILS OF THE BONDS The Bonds will be dated August 1, 1998, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing August 1,1999. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Bonds will mature February 1 in the years and amounts as follows: 2001 $430,000 2002 $430,000 2003 $430,000 2004 $430,000 BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bonds, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company (nDTcn), New York, New York, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial - i - owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC. REGISTRAR The City will name the registrar which shall be subject to applicable SEC regulations. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The City may elect on February 1, 2002, and on any day thereafter, to prepay Bonds due on or after February 1, 2003. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less th¡m all Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition the City will pledge tax increment revenues from the City's Tax Increment District No.1, Tax Increment District No. 3-1 and other available revenues. The proceeds will be used to finance various public improvements within the City's Tax Increment District NO.1. TYPE OF PROPOSALS Proposals shall be for not less than $1,706,240 and accrued interest on the total principal amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit ("Deposit") in the form of a certified or cashier's check or a Financial Surety Bond in the amount of $17,200, payable to the order of the City. If a check is used, it must accompany each proposal. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The City will deposit the check of the purchaser, the amount of which will be deducted at settlement and no interest will accrue to the purchaser. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 or 1/8 of 1%. Rates must be in ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. r:; AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. - ii - The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and, (iii) reject any proposal which the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the underwriter, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the City has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating agency fees shall be the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds. CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bonds nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT Within 40 days following the date of their award, the Bonds will be delivered without cost to the purchaser at a place mutually satisfactory to the City and the purchaser. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement payment for the Bonds shall be made in federal, or equivalent, funds which shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Except as compliance with the terms of payment for the Bonds shall have been made impossible by action of the City, or its agents, the purchaser shall be liable to the City for any loss suffered by the City by reason of the purchaser's non-compliance with said terms for payment. CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Bonds. OFFICIAL STATEMENT The City has authorized the preparation of an Official Statement containing pertinent information relative to the Bonds, and said Official Statement will serve as a nearly-final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Official Statement or for any additional information prior to sale, any - iii - prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55101, telephone (612) 223-3000. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 70 copies of the Official Statement and the addendum or addenda described above. The City designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated June 22, 1998 BY ORDER OF THE CITY COUNCIL Isl Donald W. Ashworth City Manager - iv- SCHEDULE OF BOND YEARS $1,720,000 CITY OF CHANHASSEN, MINNESOTA qt.. J GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 1~E Cumulative Year Principal Bond Years Bond Years 2001 $430,000 1,075.0000 1,075.0000 2002 $430,000 1,505.0000 2,580.0000 2003 $430,000 c 1,935.0000 4,515.0000 2004 $430,000 c 2,365.0000 6,880.0000 Average Maturity: 4.00 Years Bonds Dated: August 1, 1998 Interest Due: August 1, 1999 and each February 1 and August 1 to maturity. Principal Due: February 1, 2001-2004 inclusive. Optional Call: Bonds maturing on or after February 1, 2003 are callable commencing February 1, 2002 and any date thereafter at par. (See Terms of Proposal.) c: Subject to optional call . . THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $3,410,000· CITY OF CHANHASSEN, MINNESOTA GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 1998F (BOOK ENTRY ONLY) Proposals for the Bonds will be received on Monday, July 6, 1998, until 10:00 A.M., Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award of the Bonds will be by the City Council at 4:30 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Proposals may be submitted in a sealed envelope or by fax (612) 223-3002 to Springsted. Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final Proposal price and coupons, by telephone (612) 223-3000 or fax (612) 223-3002 for inclusion in the submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Bonds regardless of the manner of the Proposal submitted. DETAILS OF THE BONDS The Bonds will be dated August 1, 1998, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing August 1,1999. Interest will be computed on the basis of a 36()..day year of twelve 30-day months. The Bonds will mature on February 1, 2004. * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Bonds offered for sale. Any such increase or reduction will be in a total amount not to exceed $100,000 and will be made in multiples of $5,000 in any of the maturities. In the event the principal amount of the Bonds is increased or reduced, any premium offered or any discount taken by the successful bidder will be increased or reduced by a percentage equal to the percentage by which the principal amount of the Bonds is increased or reduced. BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bonds, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, New York, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the -i- responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC. REGISTRAR The City will name the registrar which shall be subject to applicable SEC regulations. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The City may elect on February 1, 2002, and on any day thereafter to prepay Bonds due on February 1, 2004. Redemption may be in whole or in part and if in part, the City will notify DTC of the particular amount to be prepaid. DTC will determine by lot the amount of each participant's interest to be redeemed and each participant will then select by lot the beneficial ownership interests to be redeemed. All prepayments shall be at a price of par plus accrued interest. SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition the City will pledge tax increment revenues from the City's Tax Increment District No.1, Tax Increment District No. 3-1, and other available revenues. The proceeds will be used to refund in advance of maturity the City's $3,885,000 General Obligation Tax Increment Bonds, Series 1995A, dated March 1, 1995. TYPE OF PROPOSALS Proposals shall be for not less than $3,382,720 and accrued interest on the total principal amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit ("Deposit") in the form of a certified or cashier's check or a Financial Surety Bond in the amount of $34,100, payable to the order of the City. If a check is used, it must accompany each proposal. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time, on the next business day fOllowing the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The City will deposit the check of the purchaser, the amount of which will be deducted at settlement and no interest will accrue to the purchaser. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. A single rate of interest shall be specified. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. - ii - AW,I\RD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and, (iii) reject any proposal which the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the underwriter, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the City has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating agency fees shall be the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds. CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bonds nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT Within 40 days following the date of their award, the Bonds will be delivered without cost to the purchaser at a place mutually satisfactory to the City and the purchaser. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement, payment for the Bonds shall be made in federal, or equivalent, funds which shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Except as compliance with the terms of payment for the Bonds shall have been made impossible by action of the City, or its agents, the purchaser shall be liable to the City for any loss suffered by the City by reason of the purchaser's non-compliance with said terms for payment. , CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Bonds. - iii - OFFICIAL STATEMENT The City has authorized the preparation of an Official Statement containing pertinent information relative to the Bonds, and said Official Statement will serve as a nearly-final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55101, telephone (612) 223-3000. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 135 copies of the Official Statement and the addendum or addenda described above. The City designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated June 22, 1998 BY ORDER OF THE CITY COUNCIL Isl Donald W. Ashworth City Manager - iv- SCHEDULE OF BOND YEARS $3,410,000 CITY OF CHANHASSEN, MINNESOTA GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 1998F Year PrinciDal Bond Years 2004 $3,410,000 c 18,755.0000 Average Maturity: 5.50 Years Bonds Dated: August 1, 1998 Cumulative Bond Years 18,755.0000 Principal Due: February 1, 2004 Interest Due: August 1, 1999 and each February 1 and August 1 to maturity. Optional Call: Bonds maturing on pI arl~ February commencing February 1, 2002<!"d ARY (See Terms of Proposal.) c: subject to optional call 1, 2004 are callable L---- ~ate t~lre8ft&~at par. (:;,+c.!- ~ THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $2,185,000· CITY OF CHANHASSEN, MINNESOTA TAXABLE GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 1998G (BOOK ENTRY ONLY) Proposals for the Bonds will be received on Monday, July 6, 1998, until 10:00 A.M., Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award of the Bonds will be by the City Council at 4:30·P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Proposals may be submitted in a sealed envelope or by fax (612) 223-3002 to Springsted. Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final Proposal price and coupons, by telephone (612) 223-3000 or fax (612) 223-3002 for inclusion in the submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Bonds regardless of the manner of the Proposal submitted. DETAILS OF THE BONDS The Bonds will be dated August 1, 1998, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing August 1,1999. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Bonds will mature February 1 in the years and amounts as follows: ~. ,.... 2002 $1,235,000 2003 $500,000 2004 $450,000 . The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Bonds offered for sale. Any such increase or reduction will be in a total amount not to exceed $100,000 and will be made in multiples of $5,000 in any of the maturities. In the event the principal amount of the Bonds is increased or reduced, any premium offered or any discount taken by the successful bidder will be increased or reduced by a percentage equal to the percentage by which the principal amount of the Bonds is increased or reduced. BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fUlly registered form and one Bonds, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, New York, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single - i - maturity through book entries made òn the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC. REGISTRAR The City will name the registrar which shall be subject to applicable SEC regulations. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The City may elect on February 1, 2002, and on any day thereafter, to prepay Bonds due on or after February 1, 2003. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. SECURITY The Bonds will be general obligation of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition the City will pledge tax increment revenues from the City's Tax Increment District No.1, Tax Increment District NO.3-1 and other available revenues. The proceeds will be used to refund in advance of maturity all of the 1999 maturity and a portion of the 2000 maturity of the City's $5,675,000 Taxable General Obligation Tax Increment Bonds, Series 1993A, dated March 1, 1993. TAXABILITY OF INTEREST The interest to be paid on the Bonds is includable in gross income of the recipient for United States and State of Minnesota income tax purposes, and is subject to Minnesota Corporate and bank excise taxes measured by net income. TYPE OF PROPOSALS Proposals shall be for not less than $2,167,520 and accrued interest on the total principal amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit ("Deposit") in the form of a certified or cashier's check or a Financial Surety Bond in the amount of $21,850, payable to the order of the City. If a check is used, it must accompany each proposal. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The City will deposit the check of the purchaser, the amount of which will be deducted at - ii - settlement and no interest will accrue to the purchaser. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 or 1/8 of 1 %. Rates must be in ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and, (iii) reject any proposal which the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the underwriter, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the City has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating agency fees shall be the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds. CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bonds nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT Within 40 days fOllowing the date of their award, the Bonds will be delivered without cost to the purchaser at a place mutually satisfactory to the City and the purchaser. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement, payment for the Bonds shall be made in feeleral, or equivalent, funds which shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Except as compliance with the terms of payment for the Bonds shall have been made impossible by action of the City, or its agents, the purchaser shall be liable to the City for any loss suffered by the City by reason of the purchaser's non-compliance with said terms for payment. - iii - CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Bonds. OFFICIAL STATEMENT The City has authorized the preparation of an Official Statement containing pertinent information relative to the Bonds, and said Official Statement will serve as a nearly-final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55101, telephone (612) 223-3000. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 90 copies of the Official Statement and the addendum or addenda described above. The City designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated June 22, 1998 BY ORDER OF THE CITY COUNCIL /s/ Donald W. Ashworth City Manager - iv- SCHEDULE OF BOND YEARS $2,185,000 CITY OF CHANHASSEN, MINNESOTA TAXABLE GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 1998G Cumulative Year Princical Bond Years Bond Years 2002 $1,235,000 4,322.5000 4,322.5000 2003 $500,000 c 2,250.0000 6,572.5000 2004 $450,000 c 2,475.0000 9,047.5000 Average Maturity: 4.14 Years Bonds Dated: August 1, 1998 Interest Due: August 1, 1999 and each February 1 and August 1 to maturity. Principal Due: February 1, 2002-2004 inclusive. Optional Call: Bonds maturing on or after February 1, 2003 are callable commencing February 1, 2002 and any date thereafter at par. (See Terms of Proposal.) c: subject to optional call OFFICIAL STATEMENT CITY OF CHANHASSEN, MINNESOTA $1,225,000 GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 1998D $1,720,000 GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 1998E $3,410,000· GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 1998F $2,185,000· TAXABLE GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 1998G (BOOK ENTRY ONLY) INTRODUCTORY STATEMENT This Official Statement contains certain information relating to the City of Chanhassen, Minnesota (the "City") and its issuance of $1,225,000 General Obligation Tax Increment Bonds, Series 1998D (the "Series 1998D Bonds"), $1,720,000 General Obligation Tax Increment Bonds, Series 1998E (the "Series 1998E Bonds"), $3,410,000· General Obligation Tax Increment Refunding Bonds, Series 1998F (the "Series 1998F Bonds"), and $2,185,000· Taxable General Obligation Tax Increment Refunding Bonds, Series 1998G (the "Series 1998G Bonds"), cOllectively referred to as the "Bonds" or the "Issues". The Bonds are general obligations of the City for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes without limit as to rate or amount. The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475. Inquiries may be directed to Mr. Donald W. Ashworth, City Manager, City of Chanhassen, 690 Coulter Drive, Chanhassen, Minnesota 55317-0147 or by telephoning (612) 937-1900. Inquiries may also be made to Springsted Incorporated, 85 East Seventh Place, Suite 100, St. Paul, Minnesota 55101-2887, or by telephoning (612) 223-3000. CONTINUING DISCLOSURE In order to assist the Underwriters in complying with SEC Rule 15c2-12 promulgated by the Securities and Exchange Commission, pursuant to the Securities Exchange Act of 1934, as the same may be amended from time to time, and official interpretations thereof (the "Rule"), pursuant to the Award Resolutions, the City has entered into an undertaking (the "Undertaking") for the benefit of holders including beneficial owners of the Bonds to provide certain financial . The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Series 1998F Bonds and the Series 1998G Bonds offered for sale. Any such increase or reduction will be in a total amount not to exceed $100,000 and will be made in multiples of $5,000 in any of the maturities. In the event the principal amount of the Series 1998F Bonds or the Series 1998G Bonds is increased or reduced, any premium offered or any discount taken by the successful bidder will be increased or reduced by a percentage equal to the percentage by which the principal amoqnt of the Series 1998F Bonds or the Series 1998G Bonds is increased or reduced. - 1 - information and operating data relating to the City to certain information repositories annually, and to provide notices of the occurrence of certain events enumerated in the Rule to certain information repositories or the Municipal Securities Rulemaking Board and to any state information depository. The specific nature of the Undertaking, as well as the information to be contained in the annual report or the notices of material events is set forth in the Continuing Disclosure Certificate to be executed and delivered by the City at the time the Bonds are delivered in substantially the form attached hereto as Appendix Ii. The City has never failed to comply in all material respects with any previous undertakings under the Rule to provide annual reports or notices of material events. A failure by the City to comply with the Undertaking will not constitute an event of default on the Bonds (although holders will have any available remedy at law or in equity). Nevertheless, such a failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquiditY of the Bonds and their market price. THE BONDS General Description The Bonds are dated as of August 1, 1998 and will mature annually on February 1, as set forth on the cover of this Official Statement. The Bonds are issued in book entry form. Interest on the Bonds is payable August 1, 1999 and semiannually thereafter on February 1 and August 1. Interest will be payable to the holder (initially Cede & Co.) registered on the books of the registrar to be named by the City (the "Registrar") on the fifteenth day of the calendar month next preceding such interest payment date. Principal of and interest on the Bonds will be paid as described in the section herein entitled "Book Entry System." The City will name the Registrar and pay for registration services. Optional Redemption The City may elect on February 1, 2002, and on any day thereafter, to prepay the Series 1998D Bonds, the Series 1998E Bonds, and the Series 1998G Bonds due on or after February 1, 2003. The City may elect on February 1, 2002 and on any day thereafter, to prepay the Series 1998F Bonds due on February 1,2004. Redemption may be in whole or in . '.' part, and if in part, at the option of the City and in such order as the City shall determine. '. 'Redemption of the Bonds shall be at a price of par plus accrued interest. BOOK ENTRY SYSTEM The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Bond certificate per maturity will be issued in the principal amount of the Bonds maturing in such year, and will be deposited with DTC. - 2- DTC is a limited-purpose trust company org!!,nized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges in deposited securities through electronic computerized book entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants ("Direct Participants") include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interest in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest in the Bonds, except in the event that use of the book entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds. DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which mayor may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Neither DTC nor Cede & Co. will consent or vote with respect to Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the Bond Registrar as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the City, subject to any statutory or regulatory requirements as may - 3- be in effect from time to time. Payment of principal or interest to DTC is the responsibility of the Registrar, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Bond Registrar. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC's book entry has been obtained from sources that the City believes to be reliable, but the City take no responsibility for the accuracy thereof. THE SERIES 1998D BONDS Purpose The proceeds of the Series 1998D Bonds will be used to reimburse the City for the costs of construction of a road servicing the City's recreation center, located in Tax Increment District No. 2-1. The composition of the Series 1998D Bonds is as follows: Project Costs $1,200,000 Costs of Issuance 15,200 Allowance for Discount Bidding 9.800 Total Series 1998D Bonds $1,225.000 Security and Financing In addition to the City's general obligation pledge, tax increment revenues from the City's Tax Increment District No. 2-1 will be pledged to the repayment of the Series 1998D Bonds. Tax increment revenues cOllected each year are expected to be sufficient to pay 105% of each August 1 interest payment due in the year of collection and each subsequent February 1 principal and interest payment. THE SERIES 1998E BONDS Purpose The proceeds of the Series 1998E Bonds are being used to reimburse the City for the costs of various public improvements within the City's Tax Increment District NO.1. The composition of the Series 1998E Bonds is as follows: Project Costs Costs of Issuance Allowance for Discount Bidding Total Series 1998E Bonds $1,690,000 16,240 13.760 $1.720.000 -4- Security and Financing In addition to the City's general obligation pledge, tax increment revenues from the City's Tax Increment District NO.1 and Tax Increment District No. 3-1 and other available revenues will be pledged to the repayment of the Series 1998E Bonds. To the extent tax increment revenues are not available, the City will use other available funds or levy a general ad valorem tax levy to make the required debt service payments on the Series 1998E Bonds. THE SERIES 1998F BONDS Purpose The proceeds of the Series 1998F Bonds will be used to refund in advance of maturity the 1999 through 2001 maturities of the City's $3,885,000 General Obligation Tax Increment Bonds, Series 1995A, dated March 1, 1995 (the "1995A Bonds"). The refunding will be accomplished by means of a "full net advance" refunding. The purpose of the refunding is to enhance the cash flow of the City's Tax Increment District NO.1. Proceeds of the Series 1998F Bonds will be used to establish an escrow account to be held by an escrow agent who is to be named by the City. Funds in the escrow account will be used to purchase special obligations of the United States Treasury or other obligations of the United States government and its agencies. These securities and their earnings are structured to pay the principal of and interest on the 1995A Bonds as such payments become due, until the 1995A Bonds can be called for early redemption on February 1, 1999 at a price of par. Actuarial services necessary to ensure the adequacy of the escrow account to provide timely payment of principal of and interest on the 1995A Bonds will be performed by a certified public accounting firm. Security and Financing In addition to the City's general obligation pledge, tax increment revenues from the City's Tax Increment District NO.1 and Tax Increment District No. 3-1 and other available revenues will be pledged to the repayment of the Series 1998F Bonds. To the extent tax increment revenues are not available, the City will use other available funds or levy a general ad valorem tax levy to make the required debt service payments on the Series 1998F Bonds. THE SERIES 1998G BONDS Purpose The proceeds of the Series 1998G Bonds will be used to refund in advance of maturity the 1999 maturity and $950,000 of the total $1,225,000, 2000 maturity of the City's $5,675,000 Taxable General Obligation Tax Increment Bonds, Series 1993A, dated March 1, 1993 (the "1993A Bonds"). The refunding will be accomplished by means of an advance refunding. The purpose of the refunding is to enhance the cash flow of the City's Tax Increment District NO.1. Proceeds of the Series 1998G Bonds will be used to establish an escrow account to be held by an escrow agent who is to be named by the City. Funds in the escrow account will be used to -5- purchase special obligations of the United States Treasury or other obligations of the United States government and its agencies. These securities and their earnings are structured to pay the February 1, 1999 principal and interest payment and a portion of the August 1, 1999 interest payment and the February 1 principal and interest payment on the 1993A Bonds, until the respective payments on the 1993A Bonds can be called for early redemption on February 1, 1999 at a price of par. Actuarial services necessary to ensure the adequacy of the escrow account to provide timely payment of principal of and interest on the 1999 maturity and a portion of the 2000 maturity of the 1993A Bonds will be performed by a certified public accounting firm. Security and Financing In addition to the City's general obligation pledge, tax increment revenues from the City's Tax Increment District No.1 and Tax Increment District No. 3-1 and other available revenues will be pledged to the repayment of the Series 1998G Bonds. To the extent tax increment revenues are not available, the City will use other available funds or levy a general ad valorem tax levy to make the required debt service payment$ on the Series 1998G Bonds. FUTURE FINANCING The City does not anticipate any additional borrowing within the next 90 days. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City's ability to meet its financial obligations. LEGALITY The Bonds are subject to approval as to certain matters by Kennedy & Graven, Chartered, of Minneapolis, Minnesota as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor attempted to examine or verify, any of the financial or statistical statements, or data contained in this Official Statement and will express no opinion with respect thereto. Legal opinions in substantially the form set out as Appendix I to this Official Statement, will be delivered at closing. -6- TAX EXEMPTION - THE SERIES 1998D BONDS, THE SERIES 1998E BONDS, AND THE SERIES 1998F BONDS In the opinion of Bond Counsel, under existing statutes, regulations, rulings and decisions, interest on the Series 1998D Bonds, the Series 1998E Bonds, and the Series 1998F Bonds (collectively referred to as the "Tax-Exempt Bonds") is not includable in the "gross income" of the owners thereof for purposes of federal income taxation and is not includable in net taxable income of individuals, estates or trusts for purposes of State of Minnesota income taxation, but is subject to State of Minnesota franchise taxes measured by income that are imposed upon corporations and financial institutions. Noncompliance following the issuance of the Tax-Exempt Bonds with certain requirements of the Internal Revenue Code of 1986, as amended, (the "Code") and covenants of the bond resolution may result in the inclusion of interest on the Tax-Exempt Bonds in gross income (for federal tax purposes) and net taxable income for State of Minnesota tax purposes of the owners thereof. No provision has been made for redemption of the Tax-Exempt Bonds, or for an increase in the interest rate on the Tax-Exempt Bonds, in the event that interest on the Tax-Exempt Bonds becomes subject to United States or State of Minnesota income taxation. The Code imposes an alternative minimum tax with respect to individuals and corporations on alternative minimum taxable income. Interest on the Tax-Exempt Bonds will not be treated as a preference item in calculating alternative minimum taxable income. The Code provides, however, that for taxable years beginning after 1989, a portion of the adjusted current earnings of- a corporation not otherwise included in the minimum tax base would be included for purposes of calculating the alternative minimum tax that may be imposed with respect to corporations. Adjusted current earnings includes income received that is otherwise exempt from taxation such as interest on the Tax-Exempt Bonds. The Code provides that in the case of an insurance company subject to the tax imposed by Section 831 of the Code, for taxable years beginning after December 31, 1986 the amount which otherwise would be taken into account as "losses incurred" under Section 832(b)(5) shall be reduced by an amount equal to 15% of the interest on the Tax-Exempt Bonds that is received or accrued during the taxable year. Interest on the Tax-Exempt Bonds may be included in the income of a foreign corporation for purposes of the branch profits tax imposed by Section 884 of the Code. Under certain circumstances, interest on the Tax-Exempt Bonds may be subject to the tax on "excess net passive income" of S corporations imposed by Section 1375 of the Code. The above is not a comprehensive list of all federal tax consequences which may arise from the receipt of interest on the Tax-Exempt Bonds. The receipt of interest on the Tax-Exempt Bonds may otherwise affect the federal or State income tax liability of the recipient based on the particular taxes to which the recipient is subject and the particular tax status of other items or deductions. Bond Counsel expresses no opinion regarding any such consequences. All prospective purchasers of the Tax-Exempt Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax considerations for, purchasing or holding the Tax-ExempttBonds. -7- NOT BANK-QUALIFIED OBLIGATIONS - THE SERIES 1998D BONDS, THE SERIES 1998E BONDS, AÑD THE SERIES 1998F BONDS The City will not designate the Tax-Exempt Bonds as bank-qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. TAXABILITY OF INTEREST - THE SERIES 1998G BONDS The interest to be paid on the Series 1998G Bonds is includable in the income of the recipient for purposes of the United States and State of Minnesota income taxation and is includable in taxable income for purposes of the Minnesota corporate and bank franchise tax. RATINGS Application for ratings of the Bonds has been made to Standard & Poor's Ratings Services ("S&P"), 25 Broadway, New York, New York. If ratings are assigned, they will reflect only the opinion of S&P. Any explanation of the significance of a rating may be obtained only from S&P. There is no assurance that a rating, if assigned, will continue for any given period of time, or that such rating will not be revised or withdrawn, if in the judgment of S&P, circumstances so warrant. A revision or withdrawal of the rating may have an adverse effect on the market price of the Bonds. In August 1995, Standard and Poor's rated the City of Chanhassen "A-". In June 1995, Moody's Investors Service downgraded the City's credit rating from "Baa" to "Ba1". Moody's subsequently revised the City's general obligation bond rating to Baa in November 1995. The City is not applying to Moody's for a rating on these Issues. 1. ..~ ,.-. FINANCIAL ADVISOR The City has retained Springsted Incorporated, Public Finance Advisors, of St. Paul, Minnesota, as financial advisor (the "Financial Advisor") in connection with the issuance of the Bonds. In preparing the Official Statement, the Financial Advisor has relied upon governmental officials, and other sources, who have access to relevant data to provide accurate information for the Official Statement, and the Financial Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. The Financial Advisor is not a public accounting firm and has not been engaged by the City to compile, review, examine or audit any information in the Official Statement in accordance with accounting standards. The Financial Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities and therefore will not participate in the underwriting of the Bonds. - 8- CERTIFICATION The City has authorized the distribution of this Official Statement for use in connection with the initial sale of the Bonds. As of the date of the settlement of the Bonds, the Purchaser(s) will be furnished with a certificate signed by the appropriate officers of the City. The certificate will state that as of the date of the Official Statement, it did not and does not as of the date of the certificate contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (The Balance of This Page Has Been Intentionally Left Blank) - 9- CITY PROPERTY VALUES 1997 Indicated Market Value of Taxable Property: $1.237.529,669" Calculated by dividing the county assessors' 1997 estimated market value by the 1996 sales ratio as determined by the Minnesota Department of Revenue. The sales ratios are 93.8% and 90.1%, respectively, for those portions of Chanhessen in Hennepin and Carver Counties. The estimated market values are $34,446,900 and $1,159,565,300, respectively. (1997 sales ratios are not available.) 1997 Net Tax Capacity: $22.666,448 Real Estate Personal Property Total Total $20,765,177 1.351.159 $22,117,136 $543,324 5.988 $549,312 $21,309,301 1.357.147 $22,666,448 Carver County Hennepin County 1997 Taxable Net Tax Capacity: $17,030,904 1997 Net Tax Capacity Less: Captured Tax Increment Tax Capacity Contribution to Fiscal Disparities Plus: Distribution from Fiscal Disparities 1997 Taxable Net Tax Capacity $22,666,448 (5,484,774) (1,169,300) 1.018.530 $17,030,904 1997 Taxable Net Tax Capacity by Property Class Residential Homestead $14,015,914 82.3% Commercial/Industrial, Public Utility and Personal Property" 1,810,835 10.6 Residential Non-Homestead 1,009,483 6.0 Agricultural 194.672 --1J. Total $19,127,828 100.0% " Reflects adjustments for fiscal disparities and captured tax increment tax capacity. - 10- Trend of Values Indicated Market Valuela) 1997 1996 1995 1994 1993 $1,237,529,669 1,130,417,377 1,074,034,624 874,400,317 815,162,639 Assessor's Estimated Market Value Taxable Net Tax Cacacitvlb) $1,194,012,200 1,060,331,500 948,119,400 826,308,300 735,276,700 $17,030,904 16,466,587 14,734,948 12,642,922 11,170,949 la) Calculated by dividing the county assessors' combined estimated market value by the aggregate sales ratio for the City as provided by the State Department of Revenue. Ib) See Appendix 1/ for a discussion of tax capacity and other elements of Minnesota property tax law. Ten Largest Taxpayers TaxDaver Rosemount, Inc. McGlynn Bakeries Beddor Enterprises TF James MN/Chanhassen RPFIIILLC (Wang) Northern States Power Market Square Assoc. The Press Incorporated PRN Music Corp. Dayton Hudson Corporation Total " TVDe of Business 1997 Net Tax CaDacitv Precision Instrument Bakery Goods Printing/Direct Mail Commercial/Industrial Computer Manufacturing Utility Shopping Mall Printing/Direct Mail Music Recording Retail Store $ 674,398 667,286 496,804 344,150 330,050 328,400 243,500 218,050 208,050 170.254 $3,680,942" Represents 21.6% of the City's 1997 taxable net tax capacity. CITY INDEBTEDNESS Legal Debt Limit Legal Debt Limit (2% of Estimated Market Value) Less: Outstanding Net Debt Subject to Limit Debt Margin as of April 2, 1998 $23,880,244 16.695.000} $17,185,244 - 11 - General Obligation Debt Supported by Taxes' Date of Issue Original Amount PurDose Final Maturitv Principal Outstanding As of 4-2-98 9-1-88 12-1-89 11-1-91 6-1-98 $1,200,000 835,000 1,165,000 4,970,000 Fire Station, Equipment Corporate Purpose Municipal Building Refunding Park Bonds 11-1-2003 2-1-2004 8-1-2000 2-1-2010 $ 750,000 465,000 510,000 4.970.000 $6,695,000 Total . These issues are subject to the statutory debt limit. General Obligation Debt Supported Primarily by Special Assessments Principal Date Original Final Outstanding of Issue Amount PurDose Maturitv As of 4-2-98 12-1-90 $1,335,000 Local Improvements 2-1-2000 $ 335,000 11-1-91 1,700,000 Local Improvements 2-1-2002 675,000 11-1-91 1,415,000 Improvement Refunding 1-1-2003 1,180,000 11-1-92 3,630,000 Local Improvements 2-1-2005 2,425,000 10-1-93 1,635,000 Local Improvements 2-1-2004 975,000 3-1-94 5,550,000 Improvement Refunding 2-1-2002 3,275,000 3-1-94 1,660,000 Improvement Refunding 11-1-2004 630,000 3-1-95 1,510,000 Local Improvements 2-1-2005 1,140,000 12-1-95 4,500,000 Local Improvements 2-1-2005 3,990,000 5-1-96 900,000 Improvement Refunding 2-1-2000 450,000 8-1-96 4,880,000 Local Improvement 2-1-2006 4,660,000 8-1-96 4,367,501 Local Improvement 2-1-2004 4,367,501 6-1-98 1,325,000 Local Improvements 2-1-2007 1.720.000 Total $25,427,501 - 12 - General Obligation Debt Supported by Tax In.crements(a) Principal Date Original Final Outstanding of Issue Amount Purpose Maturitv As of 4-2-98 3-1-90 $2,685,000 Tax Increment Refunding 2-1-2003 $ 2,685,000 11-1-91 1,685,000 Taxable Tax Increment 2-1-2001 755,000 11-1-92 1,350,000 Tax Increment 2-1-2000 600,000 3-1-93 5,675,000 Taxable Tax Increment 2-1-2001 1,750,000(b) 10-1-93 5,630,000 Tax Increment 2-1-2003 2,300,000 10-1-93 680,000 Tax Increment 2-1-1999 145,000 10-1-93 2,015,000 Tax Increment Refunding 8-1-2002 1,625,000 3-1-94 1,165,000 Taxable Tax Increment Refunding 11-1-2003 680,000 3-1-94 525,000 Tax Increment Refunding 11-1-2003 290,000 10-1-94 2,240,000 Tax Increment 2-1-2000 1,110,000 8-1-98 1,225,000 Tax Increment (Series 1998D) 2-1-2004 1,225,000 8-1-98 1,720,000 Tax Increment (Series 1998E) 2-1-2004 1,720,000 8-1-98 3,410,000 Tax Increment Refunding (Series 1998F) 2-1-2004 3,410,000 8-1-98 2,185,000 Taxable Tax Increment Refunding (Series 1998G) 2-1-2004 2,185.000 Total $20,480,000 (a) Excludes the 1995A Bonds which are being refunded with the proceeds of the Series 1998F Bonds. (b) Excludes the 1999 maturity and a portion of the 2000 maturity being refunded by the Series 1998G Bonds. General Obligation Debt Supported by Revenues Principal Date Original Final Outstanding of Issue Amount Purcose Maturitv As of 4-2-98 12-1-90 $ 830,000 Water Revenue 2-1-1999 $ 145,000 8-1-95 4,130,000 Housing and Development Revenue 2-1-2010 4,065,000 . 8-1-95 705,000 Housing and Development Gross Revenue 1-1-2025 705,000 . 8-1-96 720,000 Water Revenue 2-1-2002 600,000 6-1-98 820,000 Water Revenue 2-1-2009 820.000· Total $6,335,000 . These bonds were issued by the Carver County Housing and Redevelopment Authority but are a general obligation of the City for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes without limit as to rate or amount. Revenues derived from the operation of these housing projects are anticipated to support the repayment of these issues. - 13- Annual Debt Service Payments Including These Issues and Excluding the Refunded Bonds G.O. Debt Supported bv Taxes Principal Year PrinciDal & Interest 1998 (at 4-2) $ 255,000 $ 336,722.50 1999 335,000 687,058.76 2000 380,000 674,617.50 2001 200,000 470,750.00 2002 455,000 707,050.00 2003 490,000 715,435.00 2004 405,000 601,275.00 2005 615,000 787,800.00 2006 680,000 824,310.00 2007 755,000 867,740.00 2008 835,000 912,551.25 2009 920,000 958,042.50 2010 370.000 378.556.25 Total $6,695,000' $8,921,908.76 . 68.3% of this debt will be retired in ten years. G.O. Debt Supported Primarily by SDecial Assessments Principal PrinciDal & Interest $ 425,000 3,395,000 3,550,000 3,180,000 3,520,000 5,111,242 3,901,259 . 1,495,000 700,000 150,000 $25,427,501 $ 925,450.00 4,336,796.25 4,319,156.25 3,788,530.00 3,965,314.50 6,321,172.50 5,117,798.75 1,576,623.75 724,527.50 153,337.50 $31,228,707.00 !,.. .~..,.... (The Balance of This Page Has Been Intentionally Left Blank) - 14- Annual Debt Service Payments Including These Issues and Excluding the Refunded Bonds (Continued) G.O. Debt Supported bv Tax Increments Principal Princical & Interest(a) Year 1998 (at 4-2) 1999 2000 2001 2002 2003 2004 2005 2006' 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total $ 710,000 2,565,000 2,675,000 3,320,000 3,695,000 2,855,000 4,660,000 $ 1,126,900.00 3,364,267,50 3,535,947.50 4,022,843.75 4,198,046.25 3,159,471.25 4,768,700.00 G.O. Debt Supported bv Revenues Principal Princical & Interest (Paid) $ 163,932.50 $ 355,000 714,517.92 255,000 593,330.00 285,000 610,988.75 315,000 627,047.50 170,000 470,823.75 170,000 463,067.50 180,000 464,905.00 185,000 461,178.75 195,000 461,891.25 210,000 466,827.50 215,000 461,108.75 120,000 357,220.00 125,000 354,925.00 135,000 356,865.00 140,000 353,340.00 150,000 354,350.00 865,000 1,035,065.00 170,000 305,160.00 180,000 304,310.00 190,000 302,840.00 205,000 305,595.00 215,000 302,575.00 230,000 303,780.00 245,000 304,055.00 260,000 303,400.00 275,000 301,815.00 295.000 304,145.00 $6,335,000(b) $11,809,059.17 (a) Includes the Series 1998D Bonds, the Series 1998E Bonds, the Series 1998F Bonds, and the Series 1998G Bonds at assumed average annual interest rates of 4.45%, 4.45%, 4.50%, and 6.25%, respectively. Excludes the Series 1995A Bonds being refunded by the Series 1998F Bonds and portions of the Series 1993A Bonds being refunded by the Series 1998G Bonds. (b) 33.3% of this debt will be retired in ten years. $20,480,000 $24,176,176.25 - 15 - Summary of General Obligation Direct Debt G.O. Debt Supported by Taxes G.O. Debt Supported Primarily by Special Assessments G.O. Debt Supported by Tax Increments G.O. Debt Supported by Revenues (a) Debt service funds are as of March 31, 1998 and include money to pay both principal and interest. (b) Tax increment revenues are deposited into the City's Capital Projects Fund and later transferred into the Tax Increment Debt Service Fund as required. (c) Paid directly from revenues of the City's enterprise fund or Carver County HRA. Gross Less: Debt Net Debt Service Funds(a) Direct Debt $ 6,695,000 $ 337,641 $ 6,357,359 25,427,501 2,221,096 23,206,405 20,480,000 (b) 20,480,000 6,335,000 (c) 6,335,000 Indirect Debt Debt Applicable to 1997 Taxable G.O. Debt Tax Cacacitv in City Taxino Unit Net Tax Cacacitv As of 4-2-98(a) Percent Amount Hennepin County $1,041,418,995 $106,385,000 0.05% $ 53,192 Hennepin County Suburban Regional Park District 763,031,572 12,870,000 0.07 9,009 Carver County 46,587,008 14,655,000(b) 35.46 5,196,663 ISD 112 (Chaska) 23,551,573 58,530,000(c) 40.86 23,915,358 ISD 272 (Eden Prairie) 69,549,096 112,305,000 0.74 831,059 ISD 276 (Minnetonka) 49,185,909 58,455,000(d) 14.02 8,195,391 Metropolitan Council 2,161,233,611(e)(1) 30,790,000 0.79 243,241 Metropolitan Transit 1,812,682,235(1) District 70,315,000 0.94 660.961 Total $39,104,873 (a) Excludes general obligation State-Aid road bonds and tax anticipation certificates. (b) Includes $6,880,000 outstanding Jail Facility Revenue Bonds, Series 1992A issued by the Carver County HRA and payable solely from lease payments made by the County to the HRA pursuant to a Lease Agreement. The lease payments are absolute and unconditional and are unlimited tax obligations of the County. (c) Includes $1.235,000 School Facilities Lease Revenue Bonds, Series 1993, issued by the City of Chaska and payable solely from lease payments made by the District to the City pursuant to a Lease Agreement. The lease payments are subject to annual appropriation. (d) Includes $2,315,000 outstanding Administrative Building Bonds, Series 1995, issued by the EDA in and for the City of Minnetonka for construction of a new administration building. Pursuant to the lease agreement, the District will make semiannual lease payments in an amount sufficient to repay this issue. The lease payments are subject to annual appropriation. (e) Metropolitan Council also has outstanding $412,905,000 general obligation sanitary sewer bonds and loans which are supported by sewer system revenues. (I) Represents 1996 Taxable Net Tax Capacity. 1997 values are not yet available. - 16 - Debt Ratios G.O. Net Direct Debt * G.O. Indirect & Net Direct Debt To 1997 Indicated Market Value ($1,237,529,669) Per Capita (18,331 - 1998 City Estimate) 4.04% $2,730 7.20% $4,863 Excludes general obligation debt supported by revenues. CITY TAX RATES, LEVIES AND COLLECTIONS Tax Capacity Rates for a Chanhassen Resident in ISD 112 1997/98 For 1993/94 1994/95 1995/96 1996/97 Total Debt Onlv Carver County 44.470% 47.033% 47.321% 46.606% 47.335% 3.504% City of Chanhassen 25.536 25.834 25.018 25.164 27.404 4.529 (Urban) ISD 112 (Chaska) 62.883 71.221 71.201 69.138 63.791 9.470 Watershed District 0.707 0.762 0.864 0.860 0.843 Special Districts * 3.714 3.998 4.287 3.821 1.950 1.083 Total 137.310% 148.848% 148.691% 145.589% 141.323% 18.586% * Special Districts include Metropolitan Council, Regional Transit District and Metropolitan Mosquito Control. 1997/98 1996/97 1995/96 1994/95 1993/94 Gross ~ $6,487,202 5,594,723 4,625,000 4,226,300 3,815,400 Net ~* $5,548,938 4,531,513 3,681,254 3,253,795 2,834,255 Collected During Collection Year Amount Percent Collected As of 12-31-97 Amount Percent NOTE: Taxes are determined by multiplying the gross tax capacity by the tax capacity rate, expressed as a percentage. (See Appendix II). Tax Levies and Collections Levv/Collect $4,488,022 3,674,882 3,212,324 2,797,912 (In Process of Collection) 99.0% $4,488,022 99.8 3,739,522 98.7 3,247,169 98.7 2,830,712 99.0% 100.7 98.8 99.9 * The net levy excludes Homestead and Agricultural Credit Aid (*HACA"). The net levy is the basis for computing the 1993/94 to cUmlnt tax capacity rates. The gross levy is the basis for computing tax capacity rates in prior years. -17 - FUNDS ON HAND As of Marc'h 31,1998 Fund General Special Revenue Debt Service: G.O. Debt Supported by Taxes G.O. Debt Supported by Special Assessments G.O. Debt Supported by Tax Increment Capital Projects/Construction Fund Tax Increment Districts Enterprise Trust and Agency I nternal Service Cash and Investments Total $1,843,770 904,225 337,641 2,221,096 (2,834,521) (396,300) (174,308) 3,930,842 2,033,549 110.378 $7,976,372 Tax increment revenues are transferred into the Tax Increment Debt Service Fund from the Tax Increment Districts Fund as required. CITY INVESTMENTS As of March 31, 1998 the City's total investments had a cost basis of $7,784,516. As of March 31, 1998 the City had a cost basis of $3,250,000 (42%) invested in time savings certificates at the local bank, $286,000 (4%) invested in certificates of deposits and the remaining $4,248,516 (54%) invested in U.S. Government or Agency securities. In December 1994 the City adopted comprehensive financial management policies which include specific guidelines for the investment of City funds, the City's investment policy is as follows: 1. The City will make cashflow analyses of all funds on a regular basis. Disbursement, collection and deposit of all funds will be scheduled to ensure maximum cash availability for investment. 2. When permitted by law, the City will pool cash from all funds for investment purposes. 3. The City will have at least 97% of its cash funds earning interest. 4. Investment maturities should be matched to operating cash needs and debt service requirements. No more than 50% of cash and investments shall have average maturities exceeding 5 years. 5. The preservation of principal shall be the paramount objective of the investment program. Management of the portfolio will consider safety, liquidity and yield, in that order, to ensure the preservation of principal. 6. It is the intent of this policy to substantially reduce the interest rate risk and duration of the current investment portfolio. As current investments mature or are liquidated, - 18- reinvestment of these funds will only be in accordance with these adopted financial management policies. 7. Compliance with these policies shall be through the finance director. The finance director shall report to the city council at least quarterly the condition of the city's investment portfolio, including stated value, current market value, current yield and conformance to city policies. In addition, city administration shall establish a check and balance system with each broker handling city investments whereby a control number must be received and confirmed by them before any investment is purchased, sold, or traded per an ordered issue by the finance director. Each broker shall sign an affidavit stating that they have read the city's financial policies and that the investment being requested to be made by the finance director and their firm conforms to the adopted financial policies. 8. The city shall have no investments in Risk Category Three as defined by Governmental Standard Board Station NO.3. GENERAL INFORMATION CONCERNING THE CITY The City of Chanhassen, located in the southwestern portion of the Twin Cities metropolitan area, is situated primarily in Carver County with a small portion within Hennepin County. The City encompasses an area of 15,117 acres or 23.6 square miles. The City's 1980 federal census population was 6,351; the 1990 census count of 11,732 represents an 85% increase over the 1980 census figure. In 1998 the City estimated the population to be 18,331, a 56% increase over the 1990 census. U.S. Highways 169 and 212, as well as State Highways 5, 7, 52 and 101, provide access for commuters coming into the City from the Twin Cities metropolitan area as well as for City residents traveling to work outside the City. The upgrading of Highway 5, which enters the City from the east, and the realignment of Highway 101 were completed in 1993. Additional reconstruction and widening of Highway 5 to the west is expected to be done within the next three to five years and, combined with the scheduled rerouting and reconstruction of U.S. Highway 212, will provide expansion of traffic capacity, thereby easing the increased flow of traffic in the Chanhassen area. - 19 - Major Employers in the City EmDlover Rosemount, Inc. McGlynn Bakeries Dataserv The Press United Mailing Empak Instant Web Bloomberg Companies Redmond Products Ver-Sa-Til Victory Envelope ABC/Lyman Lumber M A Gedney Company Product/Service Aerospace/Electrical Engineering Mfg. Baked Goods/Corporate Headquarters Computer Software Printing Mailing/Pre-Sort Plastics/Molding Commercial Printing Chanhassen Dinner Theaters Hair Care Products Contract Mach. Shop Manufacturing/Print Envelopes Millwork/Distribution Pickles & Dressings Source: City of Chanhassen Planning Department, January, 1996. Labor Force Data Approximate Number of EmDlovees 1,200 450 355 350 350 340 275 250 250 180 150 65 70 Januarv 1998 Civilian Unemployment Labor Force Rate Januarv 1997 Civilian Unemployment Labor Force Rate Carver County Minneapolis/St. Paul MSA State of Minnesota 37,123 1,652,474 2,635,965 2.5% 2.4 3.4 35,730 1,549,319 2,560,026 Source: Minnesota Department of Economic Security. 1998 data is preliminary. Effective Buying Income !.- .~, ,.... Effective Buying Income for Carver Countv Total Median ($000)" Household Year 1996 1995 1994 1993 1992 $1,043,194 967,845 1,077,855 943,863 869,768 $41,638 39,870 47,336" 43,848 41,852 1996 State median household EBI: $34,346 3.0% 3.1 4.4 Market Statistics, who provide statistical data for Sales and Marketing Management, redefined EBI, beginning with the 1995 data. Certain sources of income are no longer included in the calculation of EBI, which results in a lower 1995 EBI than previous years. Source: Sales and Marketina Manaaement "SuNey of Buying Power, . 1993 through 1997 editions. " - 20- Summary of Building Permits Issued by the City Commercial/Industrial Residential Total Year Permits Value Permits Units Value Permits Value 1997 55 $19,133,100 844 274 $45,280,400 1,011 $65,315,600 1996 65 13,339,700 748 201 43,311,300 908 57,168,300 1995 93 6,503,100 531 349 39,752,000 1,071 52,983,400 1994 58 16,431,800 882 391 62,723,500 940 79,155,300 1993 45 5,221,000 844 267 44,553,500 889 49,774,500 1992 54 5,737,400 678 229 34,468,400 732 40,205,800 1991 30 4,056,000 593 293 26,619,900 623 30,675,900 1990 8 9,350,000 491 162 25,619,200 604 42,804,600 1989 8 31,985,000 . 314 387 35,663,800 794 73,833,081 1988 18 7,821,800 372 416 38,428,900 673 48,074,881 1987 6 1,951,000 301 337 31,192,500 604 38,101,850 Includes $11,711,000 for the new Rosemount, Inc. facility and $9,000,000 for the McGlynn Bakeries facility. Recent and Proposed Development Chanhassen continues to experience strong residential and commercial/industrial growth, with major projects currently underway in the Chanhassen Lakes Business Park and in downtown Chanhassen, as well as continued building activity in a number of large residential developments in the City. Projects recently proposed, under construction or recently completed are the following: Waytek Corporation, located south of the Twin Cities Railroad and west of Dell Road, is planning to double the size of their current facility by adding 24,638 sq. ft. of additional office/warehouse space. Waytek sells electrical wiring supplies. Famous Dave's Restaurant has received site plan approval to build a 5,300 sq. ft. restaurant located in the northeast corner of the Villages on the Pond development. The Chanhassen Cinema opened their doors May 1998 providing eight new theaters. Four of the theaters have the new stadium seating concept. The cinema plans to complete the renovation by July 1998. K & S Investments is planning to construct a 9,582 sq. ft. office building for a material testing and evaluation facility in the Chanhassen Business Center, across the street from the National Weather Service. Welsh Construction Corporation is proposing three 75,000 sq. ft. multi-tenant office/warehouse buildings at the corner of Dell Road and Lake Drive East. CSM Corporation will start construction this spring on their third phase, consisting of two multi-tenant officelwarehouse buildings located south of Highway 5, west of Dell Road and north of Lake Drive. Paws, Claws & Hooves has opened their doors and provides commercial kennel space and a stable. They are located north of and adjacent to Highway 212 and east of Highway 101. - 21 - Villages on the Ponds received site plan approval for a 14,850 sq. ft. multi-tenant retail building at the southwest corner of Highway 5 and Great Plains Blvd. The developer is currently negotiating with tenants for this space, but expect construction to start before fall 1998. Peripheral Technology received site plan approval for construction of a 22,500 sq. ft. officelwarehouse facility located on Quattro Drive, west of Dell Road and north of Highway 5. Peripheral Technology sells computer support software. Paulstarr 11 will start construction on a 35,000 sq. ft. expansion on their second building in Chanhassen Business Center next to the National Weather Service. The expansion includes office, manufacturing, and distribution space for this distributor of CDs and cassettes. Villages on the Ponds received site plan approval for a 30,000 sq. ft. two story office building at the northeast corner of Main Street and Highway 101. Construction is anticipated to start in the summer of 1998. West Village Heights received site plan approval for three buildings totaling 26,786 sq. ft. of new commercial/retail. This site is located directly west of TCF Bank, in the northeastern corner of West 78'" Street and Powers Boulevard. Chanhassen Bank is nearing completion of a 14,610 sq. ft. addition to their existing facility in downtown Chanhassen. Arboretum Business Park is a 150 acre planned unit development at the southeast corner of Highways 5 & 41. Their development will contain a mix of office, industrial, commercial, park and open space. Heartland America is the first building in this development and they moved into a 10 1,600 sq. ft. facility on January 1,1998. Heartland America distributes liquidated and discontinued merchandise. lotus Garden Center received site plan approval for an addition to their existing facility located on the north side of Highway 5 along West 78'" Street. Education Three independent school districts serve the City: Independent School District 112 (Chaska), Independent School District 276 (Minnetonka) and a small portion of Independent School District 272 (Eden Prairie). Independent School District 112 has an estimated 1997/98 enrollment of approximately 6,250 students. Independent School District 272 has a 1997/98 enrollment of approximately 9,791 students. Independent School District 276 has a 1997/98 enrollment of approximately 7,672 students. - 22- GOVERNMENTAL ORGANIZATION AND SERVICES The City of Chanhassen was organized as a municipality in 1967 and became a statutory City in 1974. The City's governing body is the City Council, comprised of the Mayor and four Council members. The Mayor serves a two-year term of office; Council members are elected at large to serve overlapping four-year terms. The present Mayor and Council Members are: EXDiration of Term Nancy Mancino Steven E. Berquist Mark Engel Michael C. Mason Mark O. Senn Mayor Council Member Council Member Council Member Council Member December 31, 1998 December 31, 1998 December 31,2000 December 31, 1998 December 31,2000 The daily management and administration of the City is under the direction of the City Manager, Mr. Donald W. Ashworth. Mr. Ashworth has served in this capacity for the City since 1976. The City Finance Director, Ms. Pam Snell, administers the financial affairs of the City, reporting directly to the City Manager. The City has 57 full-time employees and 34 part-time employees serving in various departments. The City contracts with Carver County for sheriff and police services. The Chanhassen Fire Department is a 40-member volunteer force with two fully equipped fire stations. The City provides water, sanitary sewer and storm sewer service to all its developed areas. The water system includes five wells with an approximate pumping capacity of 4,400 gallons per minute and 3.8 million gallons of storage capacity. Average daily water demand is approximately 3 million gallons. Although the City maintains over 80 miles of its own lateral and trunk sewer lines, the core facilities and the treatment and disposal systems are owned and operated by the Metropolitan Council's Office of Wastewater Services ("OWS"), an agency of the Environmental Council Metropolitan Council. Wastewater treatment and disposal is also the responsibility of OWS. The City is billed for its usage of OWS facilities. In May 1991 the Metropolitan Council approved inclusion of approximately 2,600 acres of City land within the Metropolitan Urban Service Area which is leading to the development of the land with assurance of being provided with sanitary sewer service. Various developments of much of this property is currently underway. Employee Pensions All full-time and certain part-time employees of the City of Chanhassen are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund and the Public Employees Police and Fire Fund which are cost-sharing multiple-employer public employee retirement systems. Public Employees Retirement Fund members belong to either the Coordinated Fund or the Basic Fund. Coordinated members are covered by Social Security and Basic members are not. All police officers, fire fighters and peace officers who qualify for membership by statute are covered by the Police and Fire Fund. The PERA plans provide pension benefits, deferred annuity, and death and disability benefits. Benefits are established - 23- by State statute. The City's contribution for employees covered by PERA plans for the year ended December 31,1996 was $130,499. The City levies taxes on behalf of a single-employer public employee retirement plan operated by the Chanhassen Fire Relief Association for volunteer firefighters of the City. The City levies property taxes at the direction of and for the benefit of the Association and passes through State aids allocated to the plan, all in accordance with enabling State statutes. Total contributions to the Association's plan in 1996 amounted to $73,876. General Fund Budget The following is a summary of the City's 1998 Adopted Budget: Total Revenue Adopted 1998 $4,120,386 54,300 637,800 31,500 41,800 480,300 117.800 $5,483,886 Revenue: Taxes Licenses Permits Fines and Penalties Intergovernmental Charges for Current Services Interest/Other Revenue EXDenditures: Personnel Services Materials and Supplies Contractual Services Capital Outlay Miscellaneous Expense Total Expenditures Revenues over (under) Expenditures $3,199,633 504,567 2,043,798 19,000 /405.911 ) $5,361,087 $ 122,779 - 24- APPENDIX I PROPOSED FORM OF LEGAL OPINIONS (forthcoming) 1-1 APPENDIX II CONTINUING DISCLOSURE CERTIFICATE !, ',." 11-1 APPENDIX III SUMMARY OF TAX LEVIES, PAYMENT PROVISIONS, AND MINNESOTA REAL PROPERTY VALUATION Following is a summary of certain statutory provisions effective through 1998 relative to tax levy procedures, tax payment and credit procedures, and the mechanics of real property valuation. The summary does not purport to be inclusive of all such provisions or of the specific provisions discussed, and is qualified by reference to the complete text of applicable statutes, rules and regulations of the State of Minnesota. Property Valuations (Chapter 273, Minnesota Statutes) Assessor's Estimated Market Value. Each parcel of real property subject to taxation must, by statute, be appraised at least once every four years as of Jam¡ary 2 of the year of appraisal. With certain exceptions, all property is valued at its market value which is the value the assessor determines to be the price the property to be fairly worth, and which is referred to as the "Estimated Market Value." Limitation of Market Value Increases. Effective through assessment year 2001, the amount of increase in market value for all property classified as agricultural homestead or non-homestead, residential homestead or non-homestead, or non-commercial seasonable recreational residential, which is entered by the assessor in the current assessment year, may not exceed the greater of (i) 10% of the preceding year's market value or (ii) 1/4 of the difference between the current assessment and the preceding assessment. Indicated Market Value. Because the Estimated Market Value as determined by an assessor may not represent the price of real property in the marketplace, the "Indicated Market Value" is generally regarded as more representative of full value. The Indicated Market Value is determined by dividing the Estimated Market Value of a given year by the same year's sales ratio determined by the State Department of Revenue. The sales ratio represents the overall relationship between the Estimated Market Value of property within the taxing unit and actual selling price. Net Tax Cacacitv. The Net Tax Capacity is the value upon which net taxes are levied, extended and collected. The Net Tax Capacity is computed by applying the class rate percentages specific to each type of property classification against the Estimated Market Value. Class rate percentages vary depending on the type of property as shown on the last page of this Appendix. The formulas and class rates for converting Estimated Market Value to Net Tax Capacity represent a basic element of the State's property tax relief system and are subject to annual revisions by the State Legislature. Property taxes are determined by multiplying the Net Tax Capacity by the tax capacity rate, expressed as a percentage. Property Tax Payments and Delinquencies (Chapters 275, 276, 277, 279-282 and 549, Minnesota Statutes) Ad valorem property taxes levied by local governments in Minnesota are extended and collected by the various counties within the State. Each taxing jurisdiction is required to certify the annual tax levy to the county auditor within five (5) working days after December 20 of the year preceding the collection year. A listing of property taxes due is prepared by the county auditor and turned over to the county treasurer on or before the first business day in March. The county treasurer is responsible for collecting all property taxes within the county. Real estate and personal property tax statements are mailed out by March 31. One-half (1/2) of the taxes on real property is due on or before May 15. The remainder is due on or before October 15. Real property taxes not paid by their due date are assessed a penalty which, depending on the type of property, increases from 2% to 4% on the day after the due date. In 111-1 the case of the first installment of real property taxes due May 15, the penalty increases to 4% or 8% on June 1. Thereafter, an additional 1 % penalty shall accrue each month through October 1 of the collection year for unpaid real property taxes. In the case of the second installment of real property taxes due October 15, the penalty increases to 6% or 8% on November 1 and increases again to 8% or 12% on December 1. Personal property taxes remaining unpaid on May 16 are deemed to be delinquent and a penalty of 8% attaches to the unpaid tax. However, personal property owned by a tax-exempt entity, but which is treated as taxable by virtue of a lease agreement, is subject to the same delinquent property tax penalties as real property. On the first business day of January of the year following collection all delinquencies are subject to an additional 2% penalty, and those delinquencies outstanding as of February 15 are filed for a tax lien judgment with the district court. By March 20 the clerk of court files a publication of legal action and a mailing of notice of action to delinquent parties. Those property interests not responding to this notice have judgment entered for the amount of the delinquency and associated penalties. The amount of the judgment is subject to a variable interest determined annually by the Department of Revenue, and equal to the adjusted prime rate charged by banks, but in no event is the rate less than 10% or more than 14%. Property owners subject to a tax lien judgment generally have five years (5) in the case of all property located outside of cities or in the case of residential homestead, agricultural homestead and seasonal residential recreational property located within cities or three (3) years with respect to other types of property to redeem the property. After expiration of the redemption period, unredeemed properties are declared tax forfeit with title held in trust by the State of Minnesota for the respective taxing districts. The county auditor, or equivalent thereof, then sells those properties not claimed for a public purpose at auction. The net proceeds of the sale are first dedicated to the satisfaction of outstanding special assessments on the parcel, with any remaining balance in most cases being divided on the fOllowing basis: county - 40%; town or city - 20%; and school district - 40%. Property Tax Credits (Chapter 273, Minnesota Statutes) In addition to adjusting the taxable value for various property types, primary elements of Minnesota's property tax relief system are: property tax levy reduction aids; the circuit breaker credit, which relates property taxes to income and provides relief on a sliding income scale; and targeted tax relief, which is aimed primarily at easing the effect of significant tax increases. The circuit breaker credit and targeted credits are reimbursed to the taxpayer upon application by the taxpayer. Property tax levy reduction aid includes educational aids, local governmental aid, equalization aid, homestead and agricultural credit aid (HACA) and disparity reduction aid. Levy Limitations for Counties and Cities (M.S. 275.70 to 275.74 (Laws 1997, Chapter 231, Article 3)) Prior limitations restricting the ability of local governments in Minnesota to levy property taxes expired in 1993. New overall levy limitations are in effect for taxes levied in 1997 and 1998 for all counties and cities with populations exceeding 2,500. Levy increases are limited generally to 2.2% over the payable 1997 tax levy plus any increase due to growth in population. Certain property tax levies are authorized outside of the new overall levy limitation ("special levies"). Special levies include debt service levies for bonded indebtedness, excluding installment payments on conditional sales contracts, debt service on state-aid road bonds, payments on contracts for deed, any levies to pay debt service on tax increment revenue bonds, and lease payments under certificates of participation. In order to receive approval for any special levy claims outside of the overall levy limitation, requests for such special levies must be submitted to the Property Tax Division of the Department of Revenue on or before September 15th in the year in which the levy is to be made for collection in the fOllowing year. The Department of Revenue has the authority to approve, reduce or deny a special levy 111-2 request. Final adjustments to all levies must be made by the Department of Revenue on or before December 10th. Debt Limitations All Minnesota municipalities (counties, cities, towns and school districts) are subject to statutory "net debt" limitations under the provisions of Minnesota Statutes, Section 475.53. Net debt is defined as the amount remaining after deducting from gross debt the amount of current revenues which are applicable within the current fiscal year to the payment of any debt and the aggregate of the principal of the following: 1. Obligations issued for improvements which are payable wholly or partially from the proceeds of special assessments levied upon benefited property. 2. Warrants or orders having no definite or fixed maturity. 3. Obligations payable wholly from the income from revenue producing conveniences. 4. Obligations issued to create or maintain a permanent improvement revolving fund. 5. Obligations issued for the acquisition and betterment of public waterworks systems, and public lighting, heating or power systems, and any combination thereof, or for any other public convenience from which revenue is or may be derived. 6. Certain debt service loans and capital loans made to school districts. 7. Certain obligations to repay loans. 8. Obligations specifically excluded under the provisions of law authorizing their issuance. 9. Certain obligations to pay pension fund liabilities. 10. Debt service funds for the payment of principal and interest on obligations other than those described above. Levies for General Obligation Debt (Sections 475.61 and 475.74, Minnesota Statutes) Any municipality which issues general obligation debt must, at the time of issuance, certify levies to the county auditor of the county(ies) within which the municipality is situated. Such levies shall be in an amount that if collected in full will, together with estimates of other revenues pledged for payment of the obligations, produce at least five percent in excess of the amount needed to pay principal and interest when due. Notwithstanding any other limitations upon the ability of a taxing unit to levy taxes, its ability to levy taxes for a deficiency in prior levies for payment of general obligation indebtedness is without limitation as to rate or amount. Metropolitan Revenue Distribution (Chapter 473F. Minnesota Statutes) "Fiscal Disparities Law" The Charles R. Weaver Metropolitan Revenue Distribution Act, more commonly known as "Fiscal Disparities," was first implemented for taxes payable in 1975. Forty percent of the increase in commercial-industrial (including public utility and railroad) net tax capacity valuation since 1971 in each assessment district in the Minneapolis/St. Paul seven-county metropolitan area (Anoka, Carver, Dakota, excluding the City of Northfield, Hennepin, Ramsey, Scott, excluding the City of New Prague, and Washington Counties) is contributed to an area-wide tax base. A distribution index, based on the factors of population and real property market value per capita, is employed in determining what proportion of the net tax capacity value in the area- wide tax base shall be distributed back to each assessment district. 111-3 Ii; :~- '" ;/. õ -;/. " 1; 0> -.. 0 " ~ g '" 3:g o~ &;/.8;/.8 Sic! '2 8 8 €f" .!!llð 'S 15'; " . 8.. .e . 8" "'3:0> 0- -- .. D .,; = .5 ;:1ã 0 >~~~~ °ñi.ö- g ~ . 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" E .. ~ "" ë " ~o " " 0·- G> :!! " " E .... f " .. ..... ~ .¡: :gæ " " ~ 0> 0 ~ C) a:: « u '" APPENDIX IV ,~ I ~ ~. ANNUAL FINANCIAL STATEMENTS The City is audited annually by an independent certified public accounting firm. Data on the following pages was extracted from the annual audits for the fiscal years ended December 31, 1996, 1995 and 1994. For all years shown, financial statements for governmental funds were prepared on the modified accrual basis of accounting; the accrual basis if followed for proprietary funds. The reader should be aware that the complete audits may contain additional information which may interpret, explain or modify the data presented herein. The City's comprehensive annual financial report for the year ended December 31, 1996 has been awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association of the United States and Canada (GFOA). The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City will submit its 1997 comprehensive annual financial report for review. IV-1 ~U.UUfi~g H~~U.gi ~~~I~ ~ I~~ Iõ 'f I U!iì!H!fI¡P¡!U ~Uj!~~§~ .~~ ~ h ¡ . !II . ¡¡ .. (OJuiÑ":Ñ Ñ..:g -....... 1ft ~'"- M ~ ~!CD 1& rs ~ ij w · " U'~U;¡1 ..~~'~.i ..~~ I --~ i Ii! ' ~ u- . ... I U¡¡tliiljRU im~i~Wi! ~~ æ § § ~ ~ ... c<i vi Pi..:,,: ..: 'Ii ...:..:..: ...:. .Ñ": ~ . a ...~2· a :: '!i . · ~ ····~U 1ft' . , . . '0 . . , '~ r! r! ~ .. 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I/I'C ~ CI3:!! o ~~~ >- aI:Ja: t: !C~ (,) UaI> ~jl~ ~ ~ i l ~ ! ;~~ ~ ~ ~ j ~ ~ ~ H'J š ~ ~ . ~ j , ~ ~ ~ J ~ ~ i ~ ~ ~ ~ ~ I ~ ~ I ~~~ i ª ¡ ï I 11: J ~ i r h~ b3 i ~ B ~ a III I If 1'1 i~i J il ~il ¡ I Så~ ~ ~ ~ .IIHt~;p !..{hi~ìfþtl¡ ! i ~!!t! h! ~ª ~ ~ ¡)~IJj!~jj ~~)~i~~!u!~~IIIM ~~ ~li] ~~I ~~ ~ ~ U!~U~~l¡ S2 ~~~t§·~~= :: 5 ::r~::}""N- ~ ~ - - 1... :N."'O"''''Ni. ..,-"",...,t>i...a Ø\ ;¡.....'C!.q,~~r-;.r<'1 ~ g:r---r--CIOCIOCIO V'I :I g..;~8;;N~ ; It c-l"¡Ñ__ ...:.¿ - - ., IOJ : 1! !:jZ:¡!:!$!: ¡;¡;::t ..~~I":.~ "'l III U ~~:¡¡~~ ~ ~ !l"'¡ r: ., ~l~ ;! ~ ~ ., §. :I! ::t 11 - NN O,~ ..- - "'''' .., .~ iõ! Iii ., ¡; ::::~:I!~~'Z:¡ j ~ ~gi~a 5 .. :!!:;:;!;~.:;:..!:: §-8:i~ ""-...."":""3.. ~,.... r:ti8r:S~=~ gl"Í$~ ..-:~N-""""\1Il "'l~f"!,1CI --- -2 fO\N_ N~""'."''';!; -"-Ni~ ~....j);g~SÑf"'I ;¡~~r.:; ...""""'" .""" ~~!~~~~~ ~ar;H; --... Ñ. ..¡~...:,,; ill i Ip ~~1~ ! ~;~, ~ ~ ~~, ~ :! i~ 'i .. ~ ... !! ~ . ~ ~ ....- 1'--. f"\"".1":. ~...~ ~;~ "'.. ;s:¡ -~ I"':.~ tõ.. 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IV-6 If ::I i c:J ~ 5 ~ a ~ 1/1 « w ... ... o ~ II) a W z Z ~ ~ ~ z ~ ~ ~ « w i !i!i « j-: x: c~ (,) GI" II. alii o II i; Glw (,) §~ ¡'J j I J þ u ¡ ~t~a ;~ .¡~. ~.š.. s ~~~~ ;~ ~~~~ ~g~~ ~ s~ ~ __ ~_.~ N~~ ~ Ó _!: ~ a ~a..~ ~~ ~~~~~~~~~~ ~ i-~i~ ;~ ~~ft~~ft~ii~ ~ ~. __ ~N.~~~~ ~_ ::! ~ ....- ~ ~ ; '" ~ ~ i. !.~ ~ i ¡g ~~ - i """~ ~ ." ~i = i . ~ ~ ~~ ~ ~~ ~ ~~ ~ ~ ~ ~ j ~ ~ ~ ,~ ~ l~ 5 ~" ;~ ~ ! lJ I,~ ~~ \~ ~1~ ~~ i ~j ~~ ~ ,~ ;¡ 5 ~m~¡¡~ä~~ ~~ S::H::t;l;$~I2~;¡~"" ~ :!i=4~ ...............$ .... -' - 11 ~ ~~~~·~~~¡¡~~~~i ~Ul<-~,.~~-i" "!.'"\~ .......ð. ~ . .-- - . : ~ ! ! . . ~ :ö ~ !. ~I!. ~ !! ~ ì~ i ~- ~ ,. - :a · ..... i ::1 ~ ¡¡¡ ~~~~ - ~ §l~ e. a -:.~"\ ::t ""'I. . f"). ~ i~· ~ Ñ g ~ R = - .., ~ ~;¡ ~ ~!i~,,~ ~.:;¡.- "too:.. .- ~ -- -~ .,., -- ~ ~¡¡! ~ U ¡¡ ~ ; \~~ ~~~. ~ ~1~~ "~;iæ !:II ;¡: "'1-';"1 ~ '"'!. ~...... ~ - ~ . ; '" ~ ~ i~ 1 I . I lit I 1 i 1 t I jl I I ~I 4 4 4 ~ 11 i i I JIll I !d1 ~ Ii it J ë!]~ ! 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J ~~-~~~;- =~~!:i!= ~ 'fit':<i~¡!j!i :! -o;:~,", _ f'o Ñ _ ..¡ ~ ~~~~Ui~ J ~¡:~~~1! ~ 1-- . ~ J ~ §s ~,~ § ;~ !!;:8 é :;¡~ ~ ~ ~ J ! ~ ~~I I ~¡:!~~g~,~ ,. ~~a;:; á ¡ ~ J !~~U5i! I ~~~Uii¡ !!~;E!;~ :¡ ~ !;¡;:¡ ~:í8''':'': <i ., ~ ~::::::¡:¡!! Ii: ~ ~ ª!~§;" ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ " ~ j ª 'i ã ~ ~ ? 'i ! j ~!~§;;i ~ ~ ~ ~~~~~i~ i ~ ~ ~_. I ~ ¡5!H Î ~ ì -" l j ~n~~i~ ~ ~ J ~ $!;i"~Ii!I;~ <1'...1'1:..... :sf!ii!ig .~~P'I_ I~~~~l~ j !~ I ~! ~ 8 :a~ i!; ~ ~ ~I Ii ~ ~ ~ i: § i!; o ~ i!; ~ ~ a ii-I -,' I ~ al ~ ~ i ~ -dlh !J" ihI~f!; U i~ ~ ~ ~ !H Ui§ I J!i.U l. ~ U ~i i ~ i PROPOSAL SALE DATE: July 6,1998 I I J I ¡ ¡ ¡ ¡ , , TO: Mr. Donald W. Ashworth, City Manager City of Chanhassen, Minnesota c/o Springsted Incorporated 85 East Seventh Place, Suite 100 SI. Paul, MN 55101-2887 (612) 223-3000 RE: $1,225,000 General Obligation Tax Increment Bonds, Series 19980 For the Bonds of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offer a price of $ (Note: This amount may not be less than $1,215,200) and accrued interest to the date of delivery. % 2000 % 2001 % 2002 % 2003 % 2004 -~ i ¡ , lj ,; In making this offer we accept all of the terms and conditions of the Terms of Proposal published in the Official Statement dated June 25, 1998. In the event of failure to deliver these Bonds in accordance with the Terms of Proposal as printed in the Official Statement and made a part hereof, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. :~ Subject to any applicable exemption in the Rule, this offer to purchase/bid is subject to the City's covenant and agreement to take all steps necessary to assist us in complying with SEC Rule 15c2-12, as amended. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $ TRUE INTEREST RATE: % Account Members Account Manager BY: Phone: ..................................................................................................................................................... The foregoing offer is hereby accepted by the Issuer on the date of the offer by its following officers duly authorized and empowered to make such acceptance. City Manager SURE-BID Mayor Good Faith Check Submitted PROPOSAL SALE DATE: July 6,1998 TO: Mr. Donald W. Ashworth, City Manager City of Chanhassen, Minnesota c/o Springsted Incorporated 85 East Seventh Place, Suite 100 SI. Paul, MN 55101-2887 (612) 223-3000 RE: $2,185,000· Taxable General Obligation Tax Increment Refunding Bonds, Series 1998G For the Bonds of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offer a price of $ (Note: This amount may not be less than $2,167,520) and accrued interest to the date of delivery. % 2002 % 2003 % 2004 . The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Series 1998G Bonds offered for sale. Any such increase or reduction will be in a total amount not to exceed $100,000 and will be made in multiples of $5, 000 in any of the maturities. In the event the principal amount of the Series 1998G Bonds is increased or reduced, any premium offered or any discount taken by the successful bidder will be increased or reduced by a percentage equal to the percentage by which the principal amount of the Series 1998G Bonds is increased or reduced. In making this offer we accept all of the terms and conditions of the Terms of Proposal published in the Official Statement dated June 25, 1998. In the event of failure to deliver these Bonds in accordance with the Terms of Proposal as printed in the Official Statement and made a part hereof, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Subject to any applicable exemption in the Rule, this offer to purchaselbid is subject to the City's covenant and agreement to take all steps necessary to assist us in complying with SEC Rule 15c2-12, as amended. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $ ,. ".JRUE INTEREST RATE: % Account Members Account Manager BY: Phone: ..................................................................................................................................................... The foregoing offer is hereby accepted by the Issuer on the date of the offer by its following officers duly authorized and empowered to make such acceptance. City Manager SURE-BID Mayor Good Faith Check Submitted