G-1. Award of Bid, $3,630,000 General Obligation Water Revenue Bonds, Series 2016BY I
QTz CITY Of ClIANIIASSEN
Chanhassen is a Community for Life-Providing for Today and Planning for Tomorrow
NH A
MEMORANDUM
TO: Mayor& City Council Members
FROM: Greg Sticha, Finance Director
DATE: December 12, 2016
SUBJ: Award of Bid, General Obligation Bonds, Series 2016B
PROPOSED MOTION
Staff recommends that the City Council award the bid for the General Obligation Bonds
Series 2016B, to the low bidder, (to be announced at the meeting)."
Approval of this resolution requires a simple majority vote of the City Council.
BACKGROUND
The issuance of this bond will be the first issuance of debt for the anticipated construction of the
West Water Treatment Plant. Total anticipated cost will most likely be just under$17 million.
This issuance will account for$3,630,000 of the debt needed for the new facility; however, there
will be two additional issuances, one in January of 2017 and the last will probably take place in
early 2018.
During the past week, Standard &Poor's conducted a review process to determine the city's
bond rating. The results of that rating and the recommended low bidder will be announced at the
council meeting. Representatives from Ehlers &Associates will be available to discuss the sale
of the bonds at the meeting. Staff will bring all documentation, including the resolution to award
the bid,to the meeting that evening.
RECOMMENDATION
Staff recommends that the City Council award the bid for the General Obligation Water Revenue
Bonds, Series 2016B to the lowest bidder.
f:\gregs\bonding\2016 bonding\2016b award of bid bonds 12-12.docx
PH 952.227.1100• www.ci.chanhassen.mn.us • FX 952.227.1110
7700 MARKET BOULEVARD • PO BOX 147 • CHANHASSEN • MINNESOTA 55317
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EXTRACT OF MINUTES OF A MEETING
CITY COUNCIL OF THE
CITY OF CHANHASSEN, MINNESOTA
HELD: DECEMBER 12, 2016
Pursuant to due call and notice thereof, a regular or special meeting of the City Council
of the City of Chanhassen, Carver and Hennepin Counties, Minnesota, was duly held at the City
Hall on December 12, 2016, at 7:00 P.M., for the purpose, in part, of authorizing the issuance
and awarding the sale of $3,630,000 General Obligation Water Revenue Bonds, Series 2016B.
The following members were present:
and the following were absent:
Member ________________ introduced the following resolution and moved its adoption:
RESOLUTION NO. _____________
RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF $3,630,000 GENERAL
OBLIGATION WATER REVENUE BONDS, SERIES 2016B, AND PLEDGING NET
REVENUES FOR THE SECURITY AND PAYMENT THEREOF
A. WHEREAS, the City Council of the City of Chanhassen, Minnesota (the "City")
has heretofore determined and declared that it is necessary and expedient to issue $3,630,000
General Obligation Water Revenue Bonds, Series 2016B (the "Bonds" or individually, a
"Bond"), pursuant to Minnesota Statutes, Chapter 475 and Section 444.075, to finance various
water utility system improvements (the "Project"); and
B. WHEREAS, the City owns and operates a municipal water utility system (the
"System") and a municipal sanitary sewer utility system (the "Sewer System"), as separate
revenue producing public utilities; and
C. WHEREAS, the net revenues of the System are pledged to the payment of the
City's outstanding (i) $5,920,000 original principal amount of General Obligation Bonds, Series
2011A, dated October 6, 2011; and (ii) $3,720,000 original principal amount of General
Obligation Water Revenue Refunding Bonds, Series 2011B, dated October 6, 2011 (together, the
"Outstanding Water Bonds"); and
D. WHEREAS, the net revenues of the System and the Sewer System are pledged to
the payment of the City's outstanding (i) $1,245,000 original principal amount of General
Obligation Water and Sewer Revenue Bonds, Series 2012A, dated November 15, 2012; and (ii)
$6,370,000 original principal amount, of which a portion was designated the "System Portion" of
the General Obligation Bonds, Series 2016A, dated March 3, 2016 (together, the "Outstanding
Water and Sewer Bonds"); and
E. WHEREAS, the City has retained Ehlers & Associates, Inc., in Roseville,
Minnesota ("Ehlers"), as its independent financial advisor for the sale of the Bonds and was
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therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota
Statutes, Section 475.60, Subdivision 2(9) and proposals to purchase the Bonds have been
solicited by Ehlers; and
F. WHEREAS, the proposals set forth on Exhibit A attached hereto were received
by the City Finance Director, or designee, at the offices of Ehlers at 12:00 Noon on the date
hereof, pursuant to the Preliminary Official Statement, dated December 1, 2016, established for
the Bonds; and; and
G. WHEREAS, it is in the best interests of the City that the Bonds be issued in book-
entry form as hereinafter provided; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Chanhassen, Minnesota, as follows:
1. Acceptance of Offer. The proposal of _____________________________
_______________________ (the "Purchaser"), to purchase the Bonds in accordance with the
Preliminary Official Statement, at the rates of interest hereinafter set forth, and to pay therefor
the sum of $______________, plus interest accrued to settlement, is hereby found, determined
and declared to be the most favorable proposal received and is hereby accepted, and the Bonds
are hereby awarded to the Purchaser. The Finance Director is directed to retain the deposit of the
Purchaser and to forthwith return to the unsuccessful bidders any good faith checks or drafts.
2. Bond Terms.
(a) Original Issue Date; Denominations; Maturities; Term Bond Option. The Bonds
shall be dated December 29, 2016, as the date of original issue, shall be issued forthwith on or
after such date in fully registered form, shall be numbered from R-1 upward in the denomination
of $5,000 each or in any integral multiple thereof of a single maturity (the "Authorized
Denominations") and shall mature on February 1 in the years and amounts as follows:
Year Amount
2038
2039
2040
2041
2042
All dates are inclusive. As may be requested by the Purchaser, one or more term Bonds
may be issued having mandatory sinking fund redemption and final maturity amounts
conforming to the foregoing principal repayment schedule, and corresponding additions may be
made to the provisions of the applicable Bonds.
The maturity schedule for the Bonds complies with Minnesota Statutes, Section 475.54,
subdivision 17 in that the Bonds are payable primarily from a source other than ad valorem taxes
and the City Council hereby estimates that the net revenues from the System, which is the
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primary source of payment for the Bonds, will be sufficient to pay, and by this Resolution is
irrevocably appropriated to, the payment of the Bonds.
(b) Book Entry Only System. The Depository Trust Company, a limited purpose
trust company organized under the laws of the State of New York or any of its successors or its
successors to its functions hereunder (the "Depository") will act as securities depository for the
Bonds, and to this end:
(i) The Bonds shall be initially issued and, so long as they remain in book
entry form only (the "Book Entry Only Period"), shall at all times be in the form of a
separate single fully registered Bond for each maturity of the Bonds; and for purposes of
complying with this requirement under paragraphs 5 and 10 Authorized Denominations
for any Bond shall be deemed to be limited during the Book Entry Only Period to the
outstanding principal amount of that Bond.
(ii) Upon initial issuance, ownership of the Bonds shall be registered in a bond
register maintained by the Bond Registrar (as hereinafter defined) in the name of CEDE
& CO., as the nominee (it or any nominee of the existing or a successor Depository, the
"Nominee").
(iii) With respect to the Bonds neither the City nor the Bond Registrar shall
have any responsibility or obligation to any broker, dealer, bank, or any other financial
institution for which the Depository holds Bonds as securities depository (the
"Participant") or the person for which a Participant holds an interest in the Bonds shown
on the books and records of the Participant (the "Beneficial Owner"). Without limiting
the immediately preceding sentence, neither the City, nor the Bond Registrar, shall have
any such responsibility or obligation with respect to (A) the accuracy of the records of the
Depository, the Nominee or any Participant with respect to any ownership interest in the
Bonds, or (B) the delivery to any Participant, any Owner or any other person, other than
the Depository, of any notice with respect to the Bonds, including any notice of
redemption, or (C) the payment to any Participant, any Beneficial Owner or any other
person, other than the Depository, of any amount with respect to the principal of or
premium, if any, or interest on the Bonds, or (D) the consent given or other action taken
by the Depository as the Registered Holder of any Bonds (the "Holder"). For purposes of
securing the vote or consent of any Holder under this Resolution, the City may, however,
rely upon an omnibus proxy under which the Depository assigns its consenting or voting
rights to certain Participants to whose accounts the Bonds are credited on the record date
identified in a listing attached to the omnibus proxy.
(iv) The City and the Bond Registrar may treat as and deem the Depository to
be the absolute owner of the Bonds for the purpose of payment of the principal of and
premium, if any, and interest on the Bonds, for the purpose of giving notices of
redemption and other matters with respect to the Bonds, for the purpose of obtaining any
consent or other action to be taken by Holders for the purpose of registering transfers
with respect to such Bonds, and for all purpose whatsoever. The Bond Registrar, as
paying agent hereunder, shall pay all principal of and premium, if any, and interest on the
Bonds only to the Holder or the Holders of the Bonds as shown on the bond register, and
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all such payments shall be valid and effective to fully satisfy and discharge the City's
obligations with respect to the principal of and premium, if any, and interest on the Bonds
to the extent of the sum or sums so paid.
(v) Upon delivery by the Depository to the Bond Registrar of written notice to
the effect that the Depository has determined to substitute a new Nominee in place of the
existing Nominee, and subject to the transfer provisions in paragraph 10, references to the
Nominee hereunder shall refer to such new Nominee.
(vi) So long as any Bond is registered in the name of a Nominee, all payments
with respect to the principal of and premium, if any, and interest on such Bond and all
notices with respect to such Bond shall be made and given, respectively, by the Bond
Registrar or City, as the case may be, to the Depository as provided in the Letter of
Representations to the Depository required by the Depository as a condition to its acting
as book-entry Depository for the Bonds (said Letter of Representations, together with any
replacement thereof or amendment or substitute thereto, including any standard
procedures or policies referenced therein or applicable thereto respecting the procedures
and other matters relating to the Depository's role as book-entry Depository for the
Bonds, collectively hereinafter referred to as the "Letter of Representations").
(vii) All transfers of beneficial ownership interests in each Bond issued in
book-entry form shall be limited in principal amount to Authorized Denominations and
shall be effected by procedures by the Depository with the Participants for recording and
transferring the ownership of beneficial interests in such Bonds.
(viii) In connection with any notice or other communication to be provided to
the Holders pursuant to this Resolution by the City or Bond Registrar with respect to any
consent or other action to be taken by Holders, the Depository shall consider the date of
receipt of notice requesting such consent or other action as the record date for such
consent or other action; provided, that the City or the Bond Registrar may establish a
special record date for such consent or other action. The City or the Bond Registrar shall,
to the extent possible, give the Depository notice of such special record date not less than
fifteen calendar days in advance of such special record date to the extent possible.
(ix) Any successor Bond Registrar in its written acceptance of its duties under
this Resolution and any paying agency/bond registrar agreement, shall agree to take any
actions necessary from time to time to comply with the requirements of the Letter of
Representations.
(c) Termination of Book-Entry Only System. Discontinuance of a particular
Depository's services and termination of the book-entry only system may be effected as follows:
(i) The Depository may determine to discontinue providing its services with
respect to the Bonds at any time by giving written notice to the City and discharging its
responsibilities with respect thereto under applicable law. The City may terminate the
services of the Depository with respect to the Bond if it determines that the Depository is
no longer able to carry out its functions as securities depository or the continuation of the
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system of book-entry transfers through the Depository is not in the best interests of the
City or the Beneficial Owners.
(ii) Upon termination of the services of the Depository as provided in the
preceding paragraph, and if no substitute securities depository is willing to undertake the
functions of the Depository hereunder can be found which, in the opinion of the City, is
willing and able to assume such functions upon reasonable or customary terms, or if the
City determines that it is in the best interests of the City or the Beneficial Owners of the
Bond that the Beneficial Owners be able to obtain certificates for the Bonds, the Bonds
shall no longer be registered as being registered in the bond register in the name of the
Nominee, but may be registered in whatever name or names the Holder of the Bonds
shall designate at that time, in accordance with paragraph 11. To the extent that the
Beneficial Owners are designated as the transferee by the Holders, in accordance with
paragraph 10, the Bonds will be delivered to the Beneficial Owners.
(iii) Nothing in this subparagraph (c) shall limit or restrict the provisions of
paragraph 10.
(d) Letter of Representations. The provisions in the Letter of Representations are
incorporated herein by reference and made a part of the resolution, and if and to the extent any
such provisions are inconsistent with the other provisions of this resolution, the provisions in the
Letter of Representations shall control.
3. Purpose. The Bonds shall provide funds to finance the Project. The total cost of
the Project, which shall include all costs enumerated in Minnesota Statutes, Section 475.65, is
estimated to be at least equal to the amount of the Bonds. The City covenants that it shall do all
things and perform all acts required of it to assure that work on the Project proceeds with due
diligence to completion and that any and all permits and studies required under law for the
Project are obtained.
4. Interest. The Bonds shall bear interest payable semiannually on February 1 and
August 1 of each year (each, an "Interest Payment Date"), commencing August 1, 2017,
calculated on the basis of a 360-day year of twelve 30-day months, at the respective rates per
annum set forth opposite the maturity years as follows:
Maturity Year Interest Rate
2038
2039
2040
2041
2042
5. Redemption. All Bonds maturing on February 1, 2038, and thereafter, shall be
subject to redemption and prepayment at the option of the City on February 1, 2026, and on any
date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part of
the Bonds subject to prepayment. If redemption is in part, the maturities and the principal
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amounts within each maturity to be redeemed shall be determined by the City; and if only part of
the Bonds having a common maturity date are called for prepayment, the specific Bonds to be
prepaid shall be chosen by lot by the Bond Registrar. Bonds or portions thereof called for
redemption shall be due and payable on the redemption date, and interest thereon shall cease to
accrue from and after the redemption date. Mailed notice of redemption shall be given to the
paying agent and to each affected registered holder of the Bonds not more than sixty (60) days
and not fewer than thirty (30) days prior to the date fixed for redemption.
To effect a partial redemption of Bonds having a common maturity date, the Bond
Registrar prior to giving notice of redemption shall assign to each Bond having a common
maturity date a distinctive number for each $5,000 of the principal amount of such Bond. The
Bond Registrar shall then select by lot, using such method of selection as it shall deem proper in
its discretion, from the numbers so assigned to such Bonds, as many numbers as, at $5,000 for
each number, shall equal the principal amount of such Bonds to be redeemed. The Bonds to be
redeemed shall be the Bonds to which were assigned numbers so selected; provided, however,
that only so much of the principal amount of each such Bond of a denomination of more than
$5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. If
a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar (with, if the
City or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the
City and Bond Registrar duly executed by the Holder thereof or the Holder's attorney duly
authorized in writing) and the City shall execute (if necessary) and the Bond Registrar shall
authenticate and deliver to the Holder of the Bond, without service charge, a new Bond or Bonds
having the same stated maturity and interest rate and of any Authorized Denomination or
Denominations, as requested by the Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Bond so surrendered.
6. Bond Registrar. Bond Trust Services Corporation, in Roseville, Minnesota, is
appointed to act as bond registrar and transfer agent with respect to the Bonds (the "Bond
Registrar"), and shall do so unless and until a successor Bond Registrar is duly appointed, all
pursuant to any contract the City and Bond Registrar shall execute which is consistent herewith.
The Bond Registrar shall also serve as paying agent unless and until a successor paying agent is
duly appointed. Principal and interest on the Bonds shall be paid to the registered holders (or
record holders) of the Bonds in the manner set forth in the form of Bond and paragraph 12.
7. Form of Bond. The Bonds, together with the Bond Registrar's Certificate of
Authentication, the form of Assignment and the registration information thereon, shall be in
substantially the following form:
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UNITED STATES OF AMERICA
STATE OF MINNESOTA
CARVER AND HENNEPIN COUNTIES
CITY OF CHANHASSEN
R-_______ $_________
GENERAL OBLIGATION WATER REVENUE BOND, SERIES 2016B
Interest Rate Maturity Date Date of Original Issue CUSIP
___% February 1, 20__ December 29, 2016
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
THE CITY OF CHANHASSEN, CARVER AND HENNEPIN COUNTIES,
MINNESOTA (the "Issuer"), certifies that it is indebted and for value received promises to pay
to the registered owner specified above, or registered assigns, unless called for earlier
redemption, in the manner hereinafter set forth, the principal amount specified above, on the
maturity date specified above, and to pay interest thereon semiannually on February 1 and
August 1 of each year (each, an "Interest Payment Date"), commencing August 1, 2017, at the
rate per annum specified above (calculated on the basis of a 360-day year of twelve 30-day
months) until the principal sum is paid or has been provided for. This Bond will bear interest
from the most recent Interest Payment Date to which interest has been paid or, if no interest has
been paid, from the date of original issue hereof. The principal of and premium, if any, on this
Bond are payable upon presentation and surrender hereof at the principal office of Bond Trust
Services Corporation, in Roseville, Minnesota (the "Bond Registrar"), acting as paying agent, or
any successor paying agent duly appointed by the Issuer. Interest on this Bond will be paid on
each Interest Payment Date by check or draft mailed to the person in whose name this Bond is
registered (the "Holder" or "Bondholder") on the registration books of the Issuer maintained by
the Bond Registrar and at the address appearing thereon at the close of business on the fifteenth
day of the calendar month next preceding such Interest Payment Date (the "Regular Record
Date"). Any interest not so timely paid shall cease to be payable to the person who is the Holder
hereof as of the Regular Record Date, and shall be payable to the person who is the Holder
hereof at the close of business on a date (the "Special Record Date") fixed by the Bond Registrar
whenever money becomes available for payment of the defaulted interest. Notice of the Special
Record Date shall be given to Bondholders not less than ten days prior to the Special Record
Date. The principal of and premium, if any, and interest on this Bond are payable in lawful
money of the United States of America. So long as this Bond is registered in the name of the
Depository or its Nominee as provided in the Resolution hereinafter described, and as those
terms are defined therein, payment of principal of, premium, if any, and interest on this Bond and
notice with respect thereto shall be made as provided in Letter of Representations, as defined in
the Resolution, and surrender of this Bond shall not be required for payment of the redemption
price upon a partial redemption of this Bond. Until termination of the book-entry only system
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pursuant to the Resolution, Bonds may only be registered in the name of the Depository or its
Nominee.
Optional Redemption. All Bonds of this issue (the "Bonds") maturing on February 1,
2038, and thereafter, shall be subject to redemption and prepayment at the option of the City on
February 1, 2026, and on any date thereafter at a price of par plus accrued interest. Redemption
may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the
maturities and the principal amounts within each maturity to be redeemed shall be determined by
the Issuer; and if only part of the Bonds having a common maturity date are called for
prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar.
Bonds or portions thereof called for redemption shall be due and payable on the redemption date,
and interest thereon shall cease to accrue from and after the redemption date. Mailed notice of
redemption shall be given to the paying agent and to each affected registered holder of the Bonds
not more than sixty (60) days and not fewer than thirty (30) days prior to the date fixed for
redemption.
Selection of Bonds for Redemption; Partial Redemption. To effect a partial redemption
of Bonds having a common maturity date, the Bond Registrar shall assign to each Bond having a
common maturity date a distinctive number for each $5,000 of the principal amount of such
Bond. The Bond Registrar shall then select by lot, using such method of selection as it shall
deem proper in its discretion, from the numbers assigned to the Bonds, as many numbers as, at
$5,000 for each number, shall equal the principal amount of the Bonds to be redeemed. The
Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided,
however, that only so much of the principal amount of Bond of a denomination of more than
$5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. If
a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar (with, if the
Issuer or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the
Issuer and Bond Registrar duly executed by the Holder thereof or the Holder's attorney duly
authorized in writing) and the Issuer shall execute (if necessary) and the Bond Registrar shall
authenticate and deliver to the Holder of the Bond, without service charge, a new Bond or Bonds
having the same stated maturity and interest rate and of any Authorized Denomination or
Denominations, as requested by the Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Bond so surrendered.
Issuance; Purpose; General Obligation. This Bond is one of an issue in the total principal
amount of $3,630,000, all of like date of original issue and tenor, except as to number, maturity,
interest rate, denomination and redemption privilege, issued pursuant to and in full conformity
with the Constitution and laws of the State of Minnesota and pursuant to a resolution adopted by
the City Council on December 12, 2016 (the "Resolution"), for the purpose of providing money
to finance improvements to the water system of the Issuer. This Bond is payable out of the
General Obligation Water Revenue Bonds, Series 2016B Fund of the Issuer. This Bond
constitutes a general obligation of the Issuer, and to provide moneys for the prompt and full
payment of its principal, premium, if any, and interest when the same become due, the full faith
and credit and taxing powers of the Issuer have been and are hereby irrevocably pledged.
Denominations; Exchange; Resolution. The Bonds are issuable solely in fully registered
form in Authorized Denominations (as defined in the Resolution) and are exchangeable for fully
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registered Bonds of other Authorized Denominations in equal aggregate principal amounts at the
principal office of the Bond Registrar, but only in the manner and subject to the limitations
provided in the Resolution. Reference is hereby made to the Resolution for a description of the
rights and duties of the Bond Registrar. Copies of the Resolution are on file in the principal
office of the Bond Registrar.
Transfer. This Bond is transferable by the Holder in person or by the Holder's attorney
duly authorized in writing at the principal office of the Bond Registrar upon presentation and
surrender hereof to the Bond Registrar, all subject to the terms and conditions provided in the
Resolution and to reasonable regulations of the Issuer contained in any agreement with the Bond
Registrar. Thereupon the Issuer shall execute and the Bond Registrar shall authenticate and
deliver, in exchange for this Bond, one or more new fully registered Bonds in the name of the
transferee (but not registered in blank or to "bearer" or similar designation), of an Authorized
Denomination or Denominations, in aggregate principal amount equal to the principal amount of
this Bond, of the same maturity and bearing interest at the same rate.
Fees upon Transfer or Loss. The Bond Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection with the transfer
or exchange of this Bond and any legal or unusual costs regarding transfers and lost Bonds.
Treatment of Registered Owners. The Issuer and Bond Registrar may treat the person in
whose name this Bond is registered as the owner hereof for the purpose of receiving payment as
herein provided (except as otherwise provided herein with respect to the Record Date) and for all
other purposes, whether or not this Bond shall be overdue, and neither the Issuer nor the Bond
Registrar shall be affected by notice to the contrary.
Authentication. This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security unless the Certificate of Authentication hereon shall have been executed
by the Bond Registrar.
Qualified Tax-Exempt Obligation. This Bond has been designated by the Issuer as a
"qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue
Code of 1986, as amended.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things
required by the Constitution and laws of the State of Minnesota to be done, to happen and to be
performed, precedent to and in the issuance of this Bond, have been done, have happened and
have been performed, in regular and due form, time and manner as required by law; that the
Issuer has covenanted and agreed with the Holders of the Bonds that it will impose and collect
charges for the service, use and availability of its municipal water system (the "System") at the
times and in amounts necessary to produce net revenues, together with other sums pledged to the
payment of the Bonds, adequate to pay all principal and interest when due on the Bonds; and that
the Issuer will levy a direct, annual, irrepealable ad valorem tax upon all of the taxable property
of the Issuer, without limitation as to rate or amount, for the years and in amounts sufficient to
pay the principal and interest on the Bonds as they respectively become due, if the net revenues
from the System, and any other sums irrevocably appropriated to the Debt Service Account are
insufficient therefor; and that this Bond, together with all other debts of the Issuer outstanding on
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the date of original issue hereof and the date of its issuance and delivery to the original
purchaser, does not exceed any constitutional or statutory limitation of indebtedness.
IN WITNESS WHEREOF, the City of Chanhassen, Carver and Hennepin Counties,
Minnesota, by its City Council has caused this Bond to be executed on its behalf by the facsimile
signatures of its Mayor and its City Manager, the corporate seal of the Issuer having been
intentionally omitted as permitted by law.
Date of Registration:
December 29, 2016
BOND REGISTRAR'S
CERTIFICATE OF
AUTHENTICATION
This Bond is one of the Bonds described
in the resolution mentioned within.
Bond Trust Services Corporation
Roseville, Minnesota.
as Bond Registrar
By
Authorized Signature
Registrable by: BOND TRUST SERVICES
CORPORATION
Payable at: BOND TRUST SERVICES
CORPORATION
CITY OF CHANHASSEN, CARVER AND
HENNEPIN COUNTIES, MINNESOTA
/s/ Facsimile
Mayor
/s/ Facsimile
City Manager
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Bond, shall
be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UTMA - _________________ as custodian for ________________________
(Cust) (Minor)
under the _______________________________ Uniform Transfers to Minors Act
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
_____________________________________________________ the within Bond and does
hereby irrevocably constitute and appoint _________________ attorney to transfer the Bond on
the books kept for the registration thereof, with full power of substitution in the premises.
Dated:_____________ _____________________________________________
Notice: The assignor's signature to this assignment must correspond
with the name as it appears upon the face of the within
Bond in every particular, without alteration or any change
whatever.
Signature Guaranteed: ___________________________
Signature(s) must be guaranteed by a national bank or trust company or by a brokerage firm
having a membership in one of the major stock exchanges or any other "Eligible Guarantor
Institution" as defined in 17 CFR 240.17 Ad-15(a)(2).
The Bond Registrar will not effect transfer of this Bond unless the information
concerning the transferee requested below is provided.
Name and Address: ________________________________________
________________________________________
________________________________________
(Include information for all joint owners if the Bond is held by joint account.)
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8. Execution. The Bonds shall be in typewritten form, shall be executed on behalf of
the City by the signatures of its Mayor and City Manager and be sealed with the seal of the City;
provided, as permitted by law, both signatures may be photocopied facsimiles and the corporate
seal has been omitted. In the event of disability or resignation or other absence of either officer,
the Bonds may be signed by the manual or facsimile signature of the officer who may act on
behalf of the absent or disabled officer. In case either officer whose signature or facsimile of
whose signature shall appear on the Bonds shall cease to be such officer before the delivery of
the Bonds, the signature or facsimile shall nevertheless be valid and sufficient for all purposes,
the same as if the officer had remained in office until delivery.
9. Authentication. No Bond shall be valid or obligatory for any purpose or be
entitled to any security or benefit under this resolution unless a Certificate of Authentication on
the Bond, substantially in the form hereinabove set forth, shall have been duly executed by an
authorized representative of the Bond Registrar. Certificates of Authentication on different
Bonds need not be signed by the same person. The Bond Registrar shall authenticate the
signatures of officers of the City on each Bond by execution of the Certificate of Authentication
on the Bond and, by inserting as the date of registration in the space provided, the date on which
the Bond is authenticated, except that for purposes of delivering the original Bonds to the
Purchaser, the Bond Registrar shall insert as a date of registration the date of original issue of
December 29, 2016. The Certificate of Authentication so executed on each Bond shall be
conclusive evidence that it has been authenticated and delivered under this resolution.
10. Registration; Transfer; Exchange. The City will cause to be kept at the principal
office of the Bond Registrar a bond register in which, subject to such reasonable regulations as
the Bond Registrar may prescribe, the Bond Registrar shall provide for the registration of Bonds
and the registration of transfers of Bonds entitled to be registered or transferred as herein
provided.
Upon surrender for transfer of any Bond at the principal office of the Bond Registrar, the
City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of
registration (as provided in paragraph 9) of, and deliver, in the name of the designated transferee
or transferees, one or more new Bonds of any Authorized Denomination or Denominations of a
like aggregate principal amount, having the same stated maturity and interest rate, as requested
by the transferor; provided, however, that no Bond may be registered in blank or in the name of
"bearer" or similar designation.
At the option of the Holder, Bonds may be exchanged for Bonds of any Authorized
Denomination or Denominations of a like aggregate principal amount and stated maturity, upon
surrender of the Bonds to be exchanged at the principal office of the Bond Registrar. Whenever
any Bonds are so surrendered for exchange, the City shall execute (if necessary), and the Bond
Registrar shall authenticate, insert the date of registration of, and deliver the Bonds which the
Holder making the exchange is entitled to receive.
All Bonds surrendered upon any exchange or transfer provided for in this resolution shall
be promptly canceled by the Bond Registrar and thereafter disposed of as directed by the City.
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All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general
obligations of the City evidencing the same debt, and entitled to the same benefits under this
resolution, as the Bonds surrendered for such exchange or transfer.
Every Bond presented or surrendered for transfer or exchange shall be duly endorsed or
be accompanied by a written instrument of transfer, in form satisfactory to the Bond Registrar,
duly executed by the Holder thereof or the Holder's attorney duly authorized in writing.
The Bond Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with the transfer or exchange of any Bond and any
legal or unusual costs regarding transfers and lost Bonds.
Transfers shall also be subject to reasonable regulations of the City contained in any
agreement with the Bond Registrar, including regulations which permit the Bond Registrar to
close its transfer books between record dates and payment dates. The Finance Director is hereby
authorized to negotiate and execute the terms of said agreement.
11. Rights Upon Transfer or Exchange. Each Bond delivered upon transfer of or in
exchange for or in lieu of any other Bond shall carry all the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Bond.
12. Interest Payment; Record Date. Interest on any Bond shall be paid on each
Interest Payment Date by check or draft mailed to the person in whose name the Bond is
registered (the "Holder") on the registration books of the City maintained by the Bond Registrar
and at the address appearing thereon at the close of business on the fifteenth day of the calendar
month next preceding such Interest Payment Date (the "Regular Record Date"). Any such
interest not so timely paid shall cease to be payable to the person who is the Holder thereof as of
the Regular Record Date, and shall be payable to the person who is the Holder thereof at the
close of business on a date (the "Special Record Date") fixed by the Bond Registrar whenever
money becomes available for payment of the defaulted interest. Notice of the Special Record
Date shall be given by the Bond Registrar to the Holders not less than ten days prior to the
Special Record Date.
13. Treatment of Registered Owner. The City and Bond Registrar may treat the
person in whose name any Bond is registered as the owner of the Bond for the purpose of
receiving payment of principal of and premium, if any, and interest (subject to the payment
provisions in paragraph 12) on the Bond and for all other purposes whatsoever whether or not the
Bond shall be overdue, and neither the City nor the Bond Registrar shall be affected by notice to
the contrary.
14. Delivery; Application of Proceeds. The Bonds when so prepared and executed
shall be delivered by the Finance Director to the Purchaser upon receipt of the purchase price,
and the Purchaser shall not be obliged to see to the proper application thereof.
15. Fund and Accounts. There is hereby created a special fund to be designated the
"General Obligation Water Revenue Bonds, Series 2016B Fund" (the "Fund") to be administered
and maintained by the Finance Director as a bookkeeping account separate and apart from all
other funds maintained in the official financial records of the City. The Fund shall be maintained
8079381v1
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in the manner herein specified until all of the Bonds and the interest thereon have been fully
paid. The Operation and Maintenance Account heretofore established by the City for the System
shall continue to be maintained in the manner heretofore provided by the City. All moneys
remaining after paying or providing for the items set forth in the resolution(s) establishing the
Operation and Maintenance Account shall constitute or are referred to as "net revenues" until the
Bonds have been paid. There shall be maintained in the Fund the following separate accounts to
which shall be credited and debited all income and disbursements of the System as hereinafter
set forth. The Finance Director of the City and all officials and employees concerned therewith
shall establish and maintain financial records of the receipts and disbursements of the System in
accordance with this resolution. In such records there shall be established accounts or accounts
shall continue to be maintained as the case may be, of the Fund for the purposes and in the
amounts as follows:
(a) Construction Account. To the Construction Account there shall be credited the
proceeds of the sale of the Bonds less any amount paid for the Bonds in excess of the minimum
bid. From the Construction Account there shall be paid all costs and expenses of the Project,
including the cost of any construction contracts heretofore let and all other costs incurred and to
be incurred of the kind authorized in Minnesota Statutes, Section 475.65. Any balance
remaining in the fund after completion of the costs shall be transferred to the Debt Service
Account.
(b) Debt Service Account. There are hereby irrevocably appropriated and pledged to,
and there shall be credited to, the Debt Service Account: (i) the net revenues of the System not
otherwise pledged and applied to the payment of other obligations of the City, in an amount,
together with other funds which may herein or hereafter from time to time be irrevocably
appropriated to the account sufficient to meet the requirements of Minnesota Statutes, Section
475.61 for the payment of the principal and interest of the Bonds; (ii) any collections of all taxes
which may hereafter be levied in the event the net revenues and other funds herein pledged to the
payment of the principal and interest on the Bonds are insufficient therefor; (iii) all funds paid
for the Bonds in excess of the minimum bid; (iv) all funds remaining in the Construction
Account after completion of the Project and payment of the costs thereof; (v) all investment
earnings on funds held in the Debt Service Account; and (vi) any and all other moneys which are
properly available and are appropriated by the governing body of the City to the Debt Service
Account. The amount of any surplus remaining in the Debt Service Account when the Bonds
and interest thereon are paid shall be used consistent with Minnesota Statutes, Section 475.61,
Subdivision 4. The moneys in the Debt Service Account shall be used solely to pay the principal
of and interest on the Bonds or any other bonds hereafter issued and made payable from the
Fund.
No portion of the proceeds of the Bonds shall be used directly or indirectly to acquire
higher yielding investments or to replace funds which were used directly or indirectly to acquire
higher yielding investments, except (1) for a reasonable temporary period until such proceeds are
needed for the purpose for which the Bonds were issued and (2) in addition to the above in an
amount not greater than the lesser of five percent of the proceeds of the Bonds or $100,000. To
this effect, any proceeds of the Bonds and any sums from time to time held in the Construction
Account or the Debt Service Account (or any other City account which will be used to pay
principal or interest to become due on the bonds payable therefrom) in excess of amounts which
8079381v1
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under then applicable federal arbitrage regulations may be invested without regard to yield shall
not be invested at a yield in excess of the applicable yield restrictions imposed by said arbitrage
regulations on such investments after taking into account any applicable "temporary periods" or
"minor portion" made available under the federal arbitrage regulations. Money in the Fund shall
not be invested in obligations or deposits issued by, guaranteed by or insured by the United
States or any agency or instrumentality thereof if and to the extent that such investment would
cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the
Internal Revenue Code of 1986, as amended (the "Code").
16. Excess Net Revenues. Net revenues in excess of those required for the foregoing
may be used for any proper purpose.
17. Sufficiency of Net Revenues; Coverage Test. It is hereby found, determined and
declared that the net revenues of the System, together with the net revenues of the Sewer System,
are sufficient in an amount to pay when due the principal and interest on the Outstanding Water
and Sewer Bonds and a sum at least five percent in excess thereof. It is hereby found,
determined and declared that the net revenues of the System are sufficient in amount to pay when
due the principal of and interest on the Bonds and on the Outstanding Water Bonds and a sum at
least five percent in excess thereof, and the net revenues of the System are hereby pledged on a
parity lien with the Outstanding Water and Sewer Bonds and the Outstanding Water Bonds and
shall be applied for that purpose, but solely to the extent required to meet, together with other
pledged sums, the principal and interest requirements of the Bonds.
As used herein the term net revenues means the gross revenues derived by the City from
the operation of the System, including all charges for service, use, availability, and connection to
the System, and all monies received from the sale of any facilities or equipment of the System or
any by-products thereof, less all normal, reasonable, or current costs of owning, operating, and
maintaining the System. Excess net revenues of the System in excess of those required for the
foregoing may be used for any proper purpose.
Nothing contained herein shall be deemed to preclude the City from making further
pledges and appropriations of the net revenues of the System for the payment of other or
additional obligations of the City, provided that it has first been determined by the City Council
that the estimated net revenues of the System will be sufficient in addition to all other sources,
for the payment of the Bonds and such additional obligations and any such pledge and
appropriation of the net revenues of the System may be made superior or subordinate to, or on a
parity with the pledge and appropriation herein.
18. Covenant to Maintain Rates and Charges. In accordance with Minnesota Statutes,
Section 444.075, the City hereby covenants and agrees with the Holders of the Bonds that it will
impose and collect charges for the service, use, availability and connection to the System at the
times and in the amounts required to produce net revenues adequate to pay all principal and
interest when due on the Bonds. Minnesota Statutes, Section 444.075, Subdivision 2, provides
as follows: "Real estate tax revenues should be used only, and then on a temporary basis, to pay
general or special obligations when the other revenues are insufficient to meet the obligations".
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19. Defeasance. When all Bonds have been discharged as provided in this paragraph,
all pledges, covenants and other rights granted by this resolution to the registered holders of the
Bonds shall cease, to the extent permitted by law. The City may discharge its obligations with
respect to any Bonds which are due on any date by irrevocably depositing with the Bond
Registrar on or before that date a sum sufficient for the payment thereof in full; or if any Bond
should not be paid when due, it may nevertheless be discharged by depositing with the Bond
Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such
deposit. The City may also discharge its obligations with respect to any prepayable Bonds called
for redemption on any date when they are prepayable according to their terms, by depositing
with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full,
provided that notice of redemption thereof has been duly given. The City may also at any time
discharge its obligations with respect to any Bonds, subject to the provisions of law now or
hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a
suitable banking institution qualified by law as an escrow agent for this purpose, cash or
securities described in Minnesota Statutes, Section 475.67, Subdivision 8, bearing interest
payable at such times and at such rates and maturing on such dates as shall be required, without
regard to sale and/or reinvestment, to pay all amounts to become due thereon to maturity or, if
notice of redemption as herein required has been duly provided for, to such earlier redemption
date.
20. Compliance With Reimbursement Bond Regulations. The provisions of this
paragraph are intended to establish and provide for the City's compliance with United States
Treasury Regulations Section 1.150-2 (the "Reimbursement Regulations") applicable to the
"reimbursement proceeds" of the Bonds, being those portions thereof which will be used by the
City to reimburse itself for any expenditure which the City paid or will have paid prior to the
Closing Date (a "Reimbursement Expenditure").
The City hereby certifies and/or covenants as follows:
(a) Not later than sixty days after the date of payment of a Reimbursement
Expenditure, the City (or person designated to do so on behalf of the City) has made or will have
made a written declaration of the City's official intent (a "Declaration") which effectively (i)
states the City's reasonable expectation to reimburse itself for the payment of the Reimbursement
Expenditure out of the proceeds of a subsequent borrowing; (ii) gives a general and functional
description of the property, project or program to which the Declaration relates and for which the
Reimbursement Expenditure is paid, or identifies a specific fund or account of the City and the
general functional purpose thereof from which the Reimbursement Expenditure was to be paid
(collectively the "Project"); and (iii) states the maximum principal amount of debt expected to be
issued by the City for the purpose of financing the Project; provided, however, that no such
Declaration shall necessarily have been made with respect to: (i) "preliminary expenditures" for
the Project, defined in the Reimbursement Regulations to include engineering or architectural,
surveying and soil testing expenses and similar prefatory costs, which in the aggregate do not
exceed twenty percent of the "issue price" of the Bonds, and (ii) a de minimis amount of
Reimbursement Expenditures not in excess of the lesser of $100,000 or five percent of the
proceeds of the Bonds.
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(b) Each Reimbursement Expenditure is a capital expenditure or a cost of issuance of
the Bonds or any of the other types of expenditures described in Section 1.150-2(d)(3) of the
Reimbursement Regulations.
(c) The "reimbursement allocation" described in the Reimbursement Regulations for
each Reimbursement Expenditure shall and will be made forthwith following (but not prior to)
the issuance of the Bonds and in all events within the period ending on the date which is the later
of three years after payment of the Reimbursement Expenditure or one year after the date on
which the Project to which the Reimbursement Expenditure relates is first placed in service.
(d) Each such reimbursement allocation will be made in a writing that evidences the
City's use of Bond proceeds to reimburse the Reimbursement Expenditure and, if made within
thirty days after the Bonds are issued, shall be treated as made on the day the Bonds are issued.
Provided, however, that the City may take action contrary to any of the foregoing
covenants in this paragraph upon receipt of an opinion of its Bond Counsel for the Bonds stating
in effect that such action will not impair the tax-exempt status of the Bonds.
21. Continuing Disclosure. The City is the sole obligated person with respect to the
Bonds. The City hereby agrees, in accordance with the provisions of Rule 15c2-12 (the "Rule"),
promulgated by the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended, and a Continuing Disclosure Undertaking (the
"Undertaking") hereinafter described to:
(a) Provide or cause to be provided to the Municipal Securities Rulemaking Board
(the "MSRB") by filing at www.emma.msrb.org in accordance with the Rule, certain annual
financial information and operating data in accordance with the Undertaking. The City reserves
the right to modify from time to time the terms of the Undertaking as provided therein.
(b) Provide or cause to be provided to the MSRB notice of the occurrence of certain
events with respect to the Bonds in not more than ten (10) business days after the occurrence of
the event, in accordance with the Undertaking.
(c) Provide or cause to be provided to the MSRB notice of a failure by the City to
provide the annual financial information with respect to the City described in the Undertaking, in
not more than ten (10) business days following such occurrence.
(d) The City agrees that its covenants pursuant to the Rule set forth in this paragraph
and in the Undertaking is intended to be for the benefit of the Holders of the Bonds and shall be
enforceable on behalf of such Holders; provided that the right to enforce the provisions of these
covenants shall be limited to a right to obtain specific enforcement of the City's obligations under
the covenants.
The Mayor and City Manager of the City, or any other officer of the City authorized to
act in their place (the "Officers") are hereby authorized and directed to execute on behalf of the
City the Undertaking in substantially the form presented to the City Council subject to such
modifications thereof or additions thereto as are (i) consistent with the requirements under the
Rule, (ii) required by the Purchaser of the Bonds, and (iii) acceptable to the Officers.
8079381v1
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22. General Obligation Pledge. For the prompt and full payment of the principal and
interest on the Bonds, as the same respectively become due, the full faith, credit and taxing
powers of the City shall be and are hereby irrevocably pledged. If the balance in the Debt
Service Account is ever insufficient to pay all principal and interest then due on the Bonds and
any other bonds payable therefrom, the deficiency shall be promptly paid out of any other funds
of the City which are available for such purpose, and such other funds may be reimbursed with
or without interest from the Debt Service Account when a sufficient balance is available therein.
23. Certificate of Registration. The City Manager is hereby directed to file a certified
copy of this resolution with the County Auditor of Carver County, Minnesota, and with the
Director of Property Tax and Public Records of Hennepin County, Minnesota, together with such
other information as the County Auditor and the Director shall require, and to obtain from the
County Auditor and Director the certificates that the Bonds have been entered in the County
Auditor's and Director's Bond Registers.
24. Records and Certificates. The officers of the City are hereby authorized and
directed to prepare and furnish to the Purchaser, and to the attorneys approving the legality of the
issuance of the Bonds, certified copies of all proceedings and records of the City relating to the
Bonds and to the financial condition and affairs of the City, and such other affidavits, certificates
and information as are required to show the facts relating to the legality and marketability of the
Bonds as the same appear from the books and records under their custody and control or as
otherwise known to them, and all such certified copies, certificates and affidavits, including any
heretofore furnished, shall be deemed representations of the City as to the facts recited therein.
25. Negative Covenant as to Use of Bond Proceeds and Project. The City hereby
covenants not to use the proceeds of the Bonds or to use the Project, or to cause or permit them
to be used, or to enter into any deferred payment arrangements for the cost of the Project, in such
a manner as to cause the Bonds to be "private activity bonds" within the meaning of Sections 103
and 141 through 150 of the Code.
26. Tax-Exempt Status of the Bonds; Rebate. The shall comply with requirements
necessary under the Code to establish and maintain the exclusion from gross income under
Section 103 of the Code of the interest on the Bonds, including without limitation (1)
requirements relating to temporary periods for investments, (2) limitations on amounts invested
at a yield greater than the yield on the Bonds, and (3) the rebate of excess investment earnings to
the United States. The City expects to satisfy the 24-month expenditure exemption for gross
proceeds of the Bonds as provided in Section 1.148-7(d)(1) of the Regulations. The Mayor
and/or City Manager are hereby authorized and directed to make such elections as to arbitrage
and rebate matters relating to the Bonds as they deem necessary, appropriate or desirable in
connection with the Bonds, and all such elections shall be, and shall be deemed and treated as,
elections of the City.
27. Designation of Qualified Tax-Exempt Obligations. In order to qualify the Bonds
as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, the
City hereby makes the following factual statements and representations:
(a) the Bonds are issued after August 7, 1986;
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(b) the Bonds are not "private activity bonds" as defined in Section 141 of the Code;
(c) the City hereby designates the Bonds as "qualified tax-exempt obligations" for
purposes of Section 265(b)(3) of the Code;
(d) the reasonably anticipated amount of tax-exempt obligations (other than private
activity bonds, treating qualified 501(c)(3) bonds as not being private activity bonds) which will
be issued by the City (and all entities treated as one issuer with the City, and all subordinate
entities whose obligations are treated as issued by the City) during this calendar year 2016 will
not exceed $10,000,000;
(e) not more than $10,000,000 of obligations issued by the City during this calendar
year 2016 have been designated for purposes of Section 265(b)(3) of the Code; and
(f) the aggregate face amount of the Bonds does not exceed $10,000,000.
The City shall use its best efforts to comply with any federal procedural requirements
which may apply in order to effectuate the designation made by this paragraph.
28. Official Statement. The Official Statement relating to the Bonds prepared and
distributed by Ehlers is hereby approved and the officers of the City are authorized in connection
with the delivery of the Bonds to sign such certificates as may be necessary with respect to the
completeness and accuracy of the Official Statement.
29. Payment of Issuance Expenses. The City authorizes the Purchaser to forward the
amount of Bond proceeds allocable to the payment of issuance expenses to KleinBank, Chaska,
Minnesota, on the closing date for further distribution as directed by the City's municipal
advisor, Ehlers.
30. Severability. If any section, paragraph or provision of this resolution shall be held
to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section,
paragraph or provision shall not affect any of the remaining provisions of this resolution.
31. Headings. Headings in this resolution are included for convenience of reference
only and are not a part hereof, and shall not limit or define the meaning of any provision hereof.
The motion for the adoption of the foregoing resolution was duly seconded by member
_____________ and, after a full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon the resolution was declared duly passed and adopted.
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STATE OF MINNESOTA
COUNTIES OF CARVER AND HENNEPIN
CITY OF CHANHASSEN
I, the undersigned, being the duly qualified and acting City Manager of the City of
Chanhassen, Minnesota, DO HEREBY CERTIFY that I have compared the attached and
foregoing extract of minutes with the original thereof on file in my office, and that the same is a
full, true and complete transcript of the minutes of a meeting of the City Council, duly called and
held on the date therein indicated, insofar as such minutes relate to providing for the issuance
and the sale of $3,630,000 General Obligation Water Revenue Bonds, Series 2016B.
WITNESS my hand on December __, 2016.
________________________________
City Manager
8079381v1
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EXHIBIT A
Bid Tabulation
[To be supplied by Ehlers & Associates, Inc.]
8079381v1
STATE OF MINNESOTA COUNTY AUDITOR'S CERTIFICATE
COUNTY OF CARVER AS TO REGISTRATION
I, the undersigned, being the duly qualified and acting County Auditor of Carver County,
Minnesota, DO HEREBY CERTIFY that on the date hereof, there was filed in my office a
certified copy of a resolution adopted on December 12, 2016, by the City Council of the City of
Chanhassen, Minnesota, authorizing the issuance of $3,630,000 General Obligation Water
Revenue Bonds, Series 2016B (the "Bonds"), and the Bonds have been entered in my Bond
Register.
WITNESS my hand and the seal of the County Auditor on ________________, 2016.
____________________________________
County Auditor
(SEAL)
8079381v1
STATE OF MINNESOTA DIRECTOR OF PROPERTY TAX AND
PUBLIC RECORD'S CERTIFICATE
COUNTY OF HENNEPIN AS TO REGISTRATION
I, the undersigned, being the duly qualified and acting Director of Property Tax and
Public Records of Hennepin County, Minnesota, DO HEREBY CERTIFY that on the date
hereof, there was filed in my office a certified copy of a resolution adopted on December 12,
2016, by the City Council of the City of Chanhassen, Minnesota, authorizing the issuance of
$3,630,000 General Obligation Water Revenue Bonds, Series 2016B (the "Bonds"), and the
Bonds have been entered in my Bond Register.
WITNESS my hand and the seal of the Director of Property Tax and Public Records on
________________, 2016.
____________________________________
Director of Property Tax and Public Records
(SEAL)
8079381v1
SIGNATURE AND NONLITIGATION CERTIFICATE
We, the undersigned, being respectively the duly qualified and acting Mayor and City
Manager of the City of Chanhassen, Carver and Hennepin Counties, Minnesota, DO HEREBY
CERTIFY that we did, in our official capacities as such officers, sign our own proper names by
facsimile signature, attested by the manual signature of a person or persons authorized on behalf
of Bond Trust Services Corporation, duly designated by the City Council as Bond Registrar and
authenticating agent (the "Bond Registrar"), on the City's $3,630,000 General Obligation Water
Revenue Bonds, Series 2016B, dated December 29, 2016, as the date of original issue (the
"Bonds"), numbered from R-1 upward, each in the denomination equal to the total principal
amount for the Bonds due on the specified maturity date therefor. The Bonds mature on
February 1 in the years and amounts and bear interest until paid or discharged as follows:
Year Amount Interest Rate
2038
2039
2040
2041
2042
WE FURTHER CERTIFY that the signature of Greg Sticha affixed hereto is the true and
proper signature of the duly qualified and acting Finance Director of the City.
WE FURTHER CERTIFY that we are now and were on the date of signing the Bonds,
the duly qualified and acting officers therein indicated, and duly authorized to execute the same,
and the Bond Registrar has been duly authorized to act as agent of the City for purposes of
authenticating the Bonds by one or more persons signing bonds on behalf of the Bond Registrar,
and we hereby ratify, confirm, and adopt our facsimile signatures on the Bonds as the true and
proper signatures for the execution thereof.
WE FURTHER CERTIFY that the Bonds have been in all respects duly executed for
delivery pursuant to authority conferred upon us as such officers; and no obligations other than
the Bonds have been issued pursuant to such authority, and that none of the proceedings or
records which have been certified to the purchasers of the Bonds or the attorneys approving the
same have been in any manner repealed, amended or changed, and that there has been no change
in the financial condition of the City or of the facts affecting the Bonds.
WE FURTHER CERTIFY that the Official Statement prepared for the issuance of the
Bonds as of its date and the date hereof, did not and does not contain any untrue statement of
material fact or omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not misleading.
WE FURTHER CERTIFY that there is no litigation pending or, to our knowledge,
threatened questioning the organization or boundaries of the City, or the right of any of us to our
respective offices, or in any manner questioning our right and power to execute and deliver the
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Bonds, or otherwise questioning the validity of the Bonds or the pledge of net revenues for the
payment of the Bonds and the interest thereon.
Dated: December 29, 2016.
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CITY OF CHANHASSEN, MINNESOTA
By: _____________________________
Its Mayor
By: _____________________________
Its City Manager
8079381v1
FINANCE DIRECTOR'S RECEIPT
I, the undersigned, being the duly qualified and acting Finance Director of the City of
Chanhassen, Minnesota, DO HEREBY CERTIFY AND ACKNOWLEDGE that on the date
hereof, I received from ____________________ in _____________, _____________, the
purchaser of $3,630,000 General Obligation Water Revenue Bonds, Series 2016B, dated
December 29, 2016, as the date of original issue, $________________, the purchase price
thereof, no interest having accrued thereon to the date hereof, and the Bonds were thereupon
delivered to the purchaser.
Dated: December 29, 2016.
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CITY OF CHANHASSEN, MINNESOTA
By: _____________________________
Its Finance Director
8079381v1
NONARBITRAGE CERTIFICATE
The undersigned are the duly qualified and acting Mayor, City Manager and Finance
Director of the City of Chanhassen, Carver and Hennepin Counties, Minnesota (the "Issuer"),
charged, either alone or with others, with the responsibility of issuing the $3,630,000 General
Obligation Water Revenue Bonds, Series 2016B, dated December 29, 2016, as the date of
original issue (the "Bonds"). This Certificate is being executed in accordance with the income
tax regulations relating to arbitrage bonds (the "Regulations") and may be relied upon as a
certification under Section 1.148-2(b)(2) of the Regulations under Section 148 of the Internal
Revenue Code of 1986, as amended (the "Code"). The undersigned, having made an
investigation of the facts, circumstances and estimates pertaining to and in connection with the
Bonds, hereby certify in good faith and reasonably expect as follows with respect to the Bonds:
1. Purpose; Statement. The proceeds of the Bonds will be used to finance
improvements to the municipal water utility system (the "Project"). As of the date hereof, all of
the representations and statements of fact contained in the resolution adopted by the City Council
on December 12, 2016 (the "Resolution"), relating to the Bonds are true and correct, and nothing
has occurred between the date of adoption of the Resolution and the date hereof to cause any
expectation or covenant stated in the Resolution to become unlikely or impossible of occurrence
or performance, unreasonable or otherwise invalid.
2. Only Issue. No bonds (in addition to the Bonds) (i) are sold or are to be sold at
substantially the time as the Bonds, (ii) are sold pursuant to the same plan of financing with the
Bonds, and (iii) are reasonably expected to be paid from substantially the same source of funds
as the Bonds will be paid.
3. Proceeds and Uses. The Bonds were delivered and paid for on the date of this
Certificate. The total sale proceeds received on the sale of the Bonds (i.e. the issue price of the
Bonds or the offering price of the Bonds to the public) is $____________, which together with
accrued interest ($-0-) and earnings thereon (estimated to be $__________), do not exceed the
total of:
(a) $___________, estimated total financeable costs of acquisition and
betterment of the Project; and
(b) $___________, expenses anticipated to be incurred in connection with the
issuance of the Bonds, including Underwriting Compensation as defined below;
(c) $___________, representing unused bond discount and surplus funds will
be returned to the Issuer and deposited in the Debt Service Account hereinafter described.
"Underwriting Compensation" is the difference between the amount paid by the
underwriter in purchasing the Bonds from the Issuer and the amount of the issue price or
reoffering price of the Bonds to the public.
4. Governmental Purposes; No Over-burdening of Tax-Exempt Market. The stated
purposes of the Bonds are governmental purposes within the meaning of applicable law and
regulations. The "Sale Proceeds" of the Bonds (i.e., the issue price of the Bonds less accrued
8079381v1
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interest), less any amounts used to pay issuance expenses, together with estimated earnings
thereon, will not exceed the estimated dollar cost of financing and constructing the Project less
all other funds to be expended for paying such costs.
5. Fund and Accounts. The Bonds are payable from the Issuer's General Obligation
Water Revenue Bonds, Series 2016B Fund (the "Fund"), which contains a Construction Account
(for the construction of the Project), an Operation and Maintenance Account (for the payment of
current operation and maintenance costs) and a Debt Service Account (for payment of debt
service on the Bonds).
6. Construction Account: Time Test; Due Diligence Test; Expenditure Test.
(a) Costs of Construction and Issuance. The costs of constructing the Project
and issuing the Bonds will be paid from the Construction Account in the Fund. The
Issuer reasonably expects to satisfy the time test, the due diligence test and the
expenditure test as set forth below:
(i) Time Test. Substantial binding contracts or commitments for
constructing the Project obligating the expenditure of not less than $___________
(five percent of the Net Sale Proceeds (as defined below) of the Bonds) have
heretofore been entered into or made or will be entered into or made within six
months from the date hereof. "Net Sale Proceeds" is the issue price of the Bonds
less the accrued interest and less any Bond proceeds deposited in any reserve fund
or account. All such contracts are, or will be, binding obligations of the Issuer.
(ii) Due Diligence Test. The acquisition and construction of the
Project and the allocation of the Net Sale Proceeds of the Bonds to expenditures
has proceeded and will continue to proceed with due diligence to completion.
The Project is estimated to be completed by _____________, 20__.
(iii) Expenditure Test. Any contract or commitment for the
construction of the Project heretofore or hereafter executed has provided or will
provide for the acquisition and construction of the Project in less than three years
from the date hereof; and proceeds of the Bonds in an amount equal to at least
eighty five percent of the Net Sale Proceeds of the Bonds will be spent in paying
the cost of the acquisition and construction of the Project within three years from
the date hereof.
(b) Costs of Issuance; Transfer. The costs of issuing the Bonds will be
incurred and paid within three years from the date hereof. Any moneys remaining in the
Construction Account after completion of the Project and payment of the costs of issuing
the Bonds will be transferred to the Debt Service Account unless transferred to the fund
of any other improvement as authorized by law.
(c) Investments. The Issuer shall not invest amounts in the Construction
Account at a yield materially higher than the yield on the Bonds or in obligations exempt
from federal income taxation under Section 103(a) of the Code if and to the extent
moneys remain therein after the earlier of (i) construction of the Project is complete or,
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(ii) three years from the date hereof.
7. Debt Service Account and Operation and Maintenance Account: Funding;
Investment Covenants. The principal and interest on the Bonds are payable from the Debt
Service Account. The Issuer has covenanted that any sums from time to time held in the
Construction Account, the Operation and Maintenance Account as net revenues and expected to
be transferred to the Debt Service Account, and the Debt Service Account (or any other account
of the City which will be used to pay debt service on the Bonds) in excess of amounts which
under then applicable federal arbitrage regulations may be invested without regard to yield (after
taking into account all temporary periods) shall not be invested at a yield in excess of the
applicable yield restrictions imposed by the Regulations on such investments. Besides the Debt
Service Account and any sums held in the Operation and Maintenance Account as net revenues
and expected to be transferred to the Debt Service Account, there is no other fund or account of
cash or securities which the City has set aside and expects to invest or maintain at a yield greater
than the yield on the Bonds for the purpose of paying debt service on the Bonds.
8. Debt Service Account: Bona Fide Debt Service Fund; Minor Portion; Temporary
Periods; Yield. The Debt Service Account and any balance (the "Holding Account") of net
revenues held in the Operation and Maintenance Account and expected to be used to pay debt
service on the Bonds are both: (i) a bona fide debt service fund (within the meaning of Section
1.148-1(b) of the Regulations) which is used primarily to achieve a proper matching of revenues
and principal and interest payments within each Bond Year and is depleted at least once a Bond
Year except for a reasonable carryover amount not to exceed the greater of the earnings on the
Debt Service Account for the immediately preceding Bond Year or one-twelfth of principal and
interest payments on the Bonds for the immediately preceding Bond Year, and (ii) a sinking fund
(within the meaning of Section 1.148-1(c)(2) of the Regulations), and each such function shall be
treated for the purposes hereof as if it occurred in a separate account.
Amounts deposited in the Debt Service Account and the Holding Account which are to
be used to pay debt service on the Bonds within twelve months of their receipt by the Issuer (or
which are a reasonable carryover amount with respect thereto) will be invested without regard to
yield for a temporary period not longer than thirteen months. Receipts in the Debt Service
Account and the Holding Account which will not be used to pay debt service on the Bonds
within thirteen months of their receipt will be invested without regard to yield to the extent they
do not exceed the "minor portion" of $__________, which is an amount equal to the lesser of
$100,000 or five percent of the Sale Proceeds of the Bonds. Sale Proceeds of the Bonds are the
issue price of the Bonds less accrued interest.
All receipts in the Debt Service Account and the Holding Account may be invested
without regard to yield for a temporary period of thirty days from receipt, and investment
earnings on such sums may be invested without regard to yield for a longer temporary period of
one year from receipt. Amounts not entitled to a temporary period or within said minor portion
will not be invested at a yield which is materially higher than the yield on the Bonds, or will be
invested without regard to yield in tax-exempt bonds as defined in Section 150(a)(6) of the Code,
being obligations the interest on which is excluded from gross income under Section 103(a) of
the Code.
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9. Yield Determination; Materially Higher. The yield on the Bonds, based on their
issue price being the initial offering price to the public (excluding bond houses and brokers), as
shown in the Certificate of Purchaser, at which a substantial amount of the Bonds (at least ten
percent of each maturity of the Bonds, except as otherwise set forth in the Certificate of
Purchaser) were sold has been calculated to be ____________%; this yield on the Bonds will be
recalculated if and as required by the Code or the Regulations. A "materially higher" yield is
defined at Section 1.148-2(d)(2) of the Regulations and is generally one-eighth of one percent
(0.125%).
10. Rebate. The Issuer is subject to the rebate requirement imposed by §148(f) of the
Code. The Issuer shall pay to the United States rebates of excess investment earnings in amounts
at least equal to the amounts, and at times no later than the times, required by §148(f) of the
Code and any Regulations promulgated thereunder.
In applying the rebate requirement the Issuer will not take into account any amount
earned on a bona fide debt service fund (as described in paragraph 6), because (a) the Bonds are
not private activity bonds, (b) the rates of interest on the Bonds do not vary during the term of
the issue, and (c) the average maturity of the Bonds is at least five years. Though the Issuer may
utilize a temporary period, as set forth in paragraph 6, the Issuer expects that the Debt Service
Account will in fact function as a bona fide debt service fund.
The Issuer will purchase investments at fair market value and will avoid "prohibited
payments" with respect to investments. The Issuer shall make determinations of the yield on the
Bonds and the yield on investments within sixty days after the end of each fifth bond year and
finally within sixty days of the final payment or redemption of the Bonds, and shall maintain
records thereof until six years after the retirement of the last of the Bonds. If Regulations permit
the Issuer to comply with the rebate requirement in a different manner, the Issuer may do so.
The Issuer need not rebate any earnings on "available construction proceeds" of the
Bonds if all "available construction proceeds" are expended within two years of the date hereof.
The Issuer expects to spend all such moneys within such period. The Bonds are entitled to an
exception for rebate if all available construction proceeds are expended within two years of the
date hereof because at least seventy-five percent of the available construction proceeds of the
Bonds are to be used for construction expenditures with respect to property which is to be owned
by a governmental unit or 501(c)(3) organization.
The Issuer expects to spend all such moneys for construction expenditures as follows:
(a) not less than ten percent of the available construction proceeds will be
spent for the governmental purpose of the Bonds within the six month period beginning
on the date hereof; and
(b) not less than forty-five percent of the available construction proceeds will
be spent for such purposes within one year of the date hereof; and
(c) not less than seventy-five percent of the available construction proceeds
will be spent for such purposes within eighteen months of the date hereof; and
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(d) not less than one hundred percent of the available construction proceeds
will be spent for such purposes within two years of the date hereof; provided that one
hundred percent of the available construction proceeds shall be treated as spent if such
requirement is met within the three year period beginning on the date hereof and if the
expenditure requirement would have been met within the two year period but for the
withholding of a reasonable retainage not exceeding five percent of the available
construction proceeds of the Bonds. The Issuer hereby declines to make, and does not
make, an election of the application of §148(f)(4)(C)(vii) of the Code and the penalty it
provides in lieu of rebate. The Issuer hereby declines to make, and does not make, an
election to treat portions of the Bonds separately or any other elections with respect to the
two year expenditure exception to rebate which are required to be made on or before the
date the Bonds are issued.
"Available construction proceeds" includes an amount equal to the issue price of the
Bonds, increased by earnings on the issue price, earnings on amounts in any reasonably required
reserve or replacement fund, and earnings on the foregoing earnings, reduced by the amount of
the issue price in any reasonably required reserve or replacement fund and the issuance costs
financed by the issue.
Under §1.148-7(f)(2), the Issuer may elect on or before the date of issue, with respect to
all of those two year expenditure requirements which are based on reasonable expectations, to
apply them instead based on actual facts. The Issuer does not make this election.
For purposes of determining compliance with the spending as of the end of each of the
first three six month spending periods, available construction proceeds includes the amount of
future earnings that the Issuer reasonably expected as of the issue date. That amount is
$__________. For any later spending periods, future earnings must be estimated as of the end of
the spending period.
§1.148-7(b)(4) provides a de minimis rule; any failure to satisfy the final spending
requirement of the two year exception is disregarded if the Issuer exercises due diligence to
complete the Project and the amount of the failure does not exceed the lesser of three percent of
the issue price ($_____________) or $250,000.
11. Intentional Acts. The Issuer shall not take any deliberate, intentional action after
the date hereof to earn arbitrage profit except to the extent such action would not have caused the
Bonds to be arbitrage bonds had it been reasonably expected on the date hereof.
12. Basis For Expectations. The facts and estimates on which the foregoing
expectations are based are (a) the documents included in the "Bond Transcript" prepared for the
Bond Closing, (b) all engineering and architectural estimates, drawings, reports and plans and
specifications heretofore furnished the Issuer with respect to the Project, (c) all contracts, if any,
heretofore executed for the acquisition and construction of the Project, (d) all expenditures which
were heretofore made by the Issuer for the acquisition and construction of the Project and which
are to be reimbursed out of the proceeds of the Bonds, and (e) such other facts and estimates, if
any, as may be set forth in an Exhibit A attached hereto.
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13. No Abusive Arbitrage Device. No "abusive arbitrage device" within the meaning
of Section 1.148-10 of the Regulations is used in connection with the Bonds. No action relating
to the Bonds has the effect of (i) enabling the Issuer to exploit the difference between tax-exempt
and taxable interest rates to obtain a material financial advantage and (ii) overburdening the tax-
exempt bond market.
14. Reimbursement Expenditures. $______________ of the proceeds of the Bonds
will be used to reimburse the Issuer for reimbursement expenditures. The official intent
declaration of the Issuer was dated __________________.
15. Monitoring of Expenditures and Investments. The Issuer will monitor the
investment of bond proceeds to assure compliance with Section 148 of the Code, and the Issuer
will consult with bond counsel periodically with regard to arbitrage issues and compliance.
16. Familiarity; Conclusion. We are generally familiar with the requirements of the
Regulations, and nothing has been called to our attention to cause us to believe that the proceeds
of the Bonds will be used in a manner which would cause the Bonds to be arbitrage bonds within
the meaning of Section 148 of the Code.
17. No Other Facts. To the best of the knowledge and belief of the undersigned, there
are no other facts, estimates or circumstances which would materially change the foregoing facts
and conclusions.
Dated: December 29, 2016.
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CITY OF CHANHASSEN, MINNESOTA
By: _____________________________
Its Mayor
By: _____________________________
Its City Manager
By: _____________________________
Its Finance Director
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CERTIFICATE OF BOND REGISTRAR AND AUTHENTICATING AGENT
I, ________________________, do hereby certify that I am a ____________________,
duly appointed and acting as such, of Bond Trust Services Corporation, in Roseville, Minnesota
(the "Bond Registrar"), and that:
1. Pursuant to the authorization and direction of the City of Chanhassen, Minnesota
(the "City"), certain of the authorized officers listed on the attached Exhibit A have on this day
authenticated each of the $3,630,000 General Obligation Water Revenue Bonds, Series 2016B
(the "Bonds"), being in fully registered form in denominations equal to the total principal amount
of the Bonds due on the specified maturity dates therefor and bearing the numbers of R-1 and
upward; and have caused each Bond to be registered in the name of a "person" as defined in
Section 1-201 of the Uniform Commercial Code, all in accordance with the provisions of the
resolution adopted by the City Council on December 12, 2016 (the "Resolution").
2. The authorized officers who have signed the bonds have been duly authorized to
sign the bonds on behalf of the Bond Registrar acting as authenticating agent.
3. To the best of our knowledge the provisions of any bond registrar's agreement to
be entered into between the City and the Bond Registrar will not conflict with the provisions of
the Resolution with respect to the duties and responsibilities of the Bond Registrar set forth
therein.
4. The CUSIP (Committee of Uniform Securities Identification Procedure) number
of the bonds of the above referenced issue with the latest maturity is: ________________.
Dated: December 29, 2016.
BOND TRUST SERVICES CORPORATION
By____________________________________
Authorized Officer
8079381v1
CERTIFICATE OF PURCHASER
I, ___________________, do hereby certify that I am the duly qualified and acting
________________ of _____________________________________________, in
_____________, ______________ (the "Purchaser"), and as such officer I do hereby further
certify as follows:
1. The Purchaser is purchasing on the date hereof $3,630,000 General Obligation
Water Revenue Bonds, Series 2016B (the "Bonds") of the City of Chanhassen, Minnesota (the
"Issuer").
2. The Purchaser hereby represents and certifies that each maturity of the Bonds has
been the subject of a bona fide initial offering to the public (excluding bond houses, brokers, or
similar person or organizations acting in the capacity of underwriters or wholesalers) and that the
reasonably expected reoffering price of the Bonds to the public is $____________, excluding
accrued interest. Calculations of the issue price for each maturity are as shown on Exhibit A.
3. At least 10% of the principal amount of each maturity of the Bonds was sold to
the public (excluding bond houses, brokers, or similar persons or organizations acting in the
capacity of underwriters or wholesalers) at not greater than the respective initial reoffering prices
set forth on Exhibit A, except for the Bonds maturing in the years ___, ____, and ___, due to
___________________________________ [explanation for reasons these maturities did not sell
at initial offering prices].
4. At the time the Purchaser agreed to purchase the Bonds, based upon the then
prevailing market conditions, the Purchaser reasonably expected that at least 10% of the
principal amount of each maturity of the Bonds would be sold to the public (excluding bond
houses, brokers, or similar persons or organizations acting in the capacity of underwriters or
wholesalers) at the yield or price and rate indicated on Exhibit A and the Purchaser had no
reason to believe that any of the Bonds would be sold to the public (excluding bond houses,
brokers or other persons or organizations acting in the capacity as underwriters or wholesalers) at
prices greater than such offering prices or yields lower than such offering yields, as the case may
be, and that the initial offering price of each maturity of the Bonds to the public (excluding bond
houses, brokers, or other persons or organizations acting in the capacity as underwriters or
wholesalers) represented their fair market value.
5. This certificate is given as a representation of the Purchaser, and may be relied
upon by the Issuer.
Dated: December 29, 2016.
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_________________________________
By_______________________________
Its _____________________________
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A-1
EXHIBIT A
Maturity
Initial Offering Price*
(Exclusive of
Accrued Interest)
2038
2039
2040
2041
2042
ISSUE PRICE**
(AGGREGATE)
* Issue Price is the price to customers, and includes accrued interest.
** Assuming deliveries to customers on the date of delivery to the Purchaser by the Issuer.
8079381v1
CERTIFICATE OF MUNICIPAL ADVISOR
The undersigned, being duly authorized to execute this Certificate on behalf of Ehlers and
Associates, Inc., in Roseville, Minnesota (the "Municipal Advisor"), HEREBY CERTIFIES:
1. We have served as the Municipal Advisor in connection with the sale of
$3,630,000 General Obligation Water Revenue Bonds, Series 2016B (the "Bonds") of the City of
Chanhassen, Minnesota (the "Issuer"), dated December 29, 2016.
2. The information set forth in the resolution of the governing body of the Issuer,
adopted on December 12, 2016, providing for the issuance of the Bonds, is true and correct in all
respects.
3. We have examined the Nonarbitrage Certificate of even date herewith and hereby
certify that we furnished the Issuer the information on which the Certificate has been based, that
such information is to the best of our knowledge true and correct in all respects and that no
matters have come to our attention which make unreasonable or incorrect the representations
made in the Nonarbitrage Certificate.
4. We hereby certify that the following information is true and correct and is
furnished for the exclusive purpose of completing Form 8038-G, Information Return for Tax-
Exempt Governmental Obligations ("Form 8038-G"), for the Bonds issued by the Issuer:
(a) the Issuer's federal employer identification number (EIN) is 41-0885331;
(b) the weighted average maturity based on the issue price of each maturity of
the Bonds and from their date of issue (not based on the face amount of the Bonds or from their
dated date) is __________ years; and
(c) the yield on the Bonds to maturity, based on the information supplied by
the original purchaser of the Bonds in the Certificate of Purchaser is ________%.
Dated: December 29, 2016. EHLERS & ASSOCIATES, INC.
By: _____________________________
Its __________________________
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CONTINUING DISCLOSURE UNDERTAKING
This Continuing Disclosure Undertaking (the "Disclosure Undertaking") is executed and
delivered by the City of Chanhassen, Minnesota (the "Issuer"), in connection with the issuance of
its $3,630,000 General Obligation Water Revenue Bonds, Series 2016B (the "Bonds"). The
Bonds are being issued pursuant to a Resolution adopted on December 12, 2016 (the
"Resolution"). Pursuant to the Resolution and this Undertaking, the Issuer covenants and agrees
as follows:
SECTION 1. Purpose of the Disclosure Undertaking. This Disclosure Undertaking is
being executed and delivered by the Issuer for the benefit of the Owners and in order to assist the
Participating Underwriters in complying with SEC Rule 15c2-12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Resolution,
which apply to any capitalized term used in this Disclosure Undertaking unless otherwise
defined in this Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any annual financial information provided by the Issuer
pursuant to, and as described in, Sections 3 and 4 of this Disclosure Undertaking.
"Audited Financial Statements" shall mean the financial statements of the Issuer audited
annually by an independent certified public accounting firm, prepared pursuant to generally
accepted accounting principles promulgated by the Financial Accounting Standards Board,
modified by governmental accounting standards promulgated by the Government Accounting
Standards Board.
"Dissemination Agent" shall mean such party from time to time designated in writing by
the Issuer to act as information dissemination agent and which has filed with the Issuer a written
acceptance of such designation.
"Fiscal Year" shall be the fiscal year of the Issuer.
"Governing Body" shall, with respect to the Bonds, have the meaning given that term in
Minnesota Statutes, Section 475.51, Subdivision 9.
"MSRB" shall mean the Municipal Securities Rulemaking Board.
"Occurrence(s)" shall mean any of the events listed in Section 5 of this Disclosure
Undertaking.
"Official Statement" shall be the Official Statement dated December 1, 2016, prepared in
connection with the Bonds.
"Owners" shall mean the registered holders and, if not the same, the beneficial owners of
any Bonds.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds
required to comply with the Rule in connection with offering of the Bonds.
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"Resolution" shall mean the resolution or resolutions adopted by the Governing Body of
the Issuer providing for, and authorizing the issuance of, the Bonds.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from time
to time or interpreted by the Securities and Exchange Commission.
SECTION 3. Provision of Annual Reports.
A. Beginning in connection with the Fiscal Year ending on December 31, 2016, the
Issuer shall, or shall cause the Dissemination Agent to, as soon as available, but in any event not
later than December 31, 2017, and by December 31 of each year thereafter, provide to the MSRB
by filing at www.emma.msrb.org, together with such identifying information as prescribed by
the MSRB, an Annual Report which is consistent with the requirements of Section 4 of this
Disclosure Undertaking.
B. If the Issuer is unable to provide to the MSRB an Annual Report by the date
required in subsection A, the Issuer shall send a notice of such delay and estimated date of
delivery to the MSRB.
SECTION 4. Content and Format of Annual Reports. The Issuer's Annual Report shall
contain or incorporate by reference the financial information and operating data pertaining to the
Issuer listed below as of the end of the preceding Fiscal Year. The Annual Report may be
submitted to the MSRB as a single document or as separate documents comprising a package,
and may cross-reference other information as provided in this Disclosure Undertaking.
The following financial information and operating data shall be supplied:
A. An update of the operating and financial data of the type of information contained
in the Official Statement under the captions: Current Property Valuations; Direct Debt; Tax
Levies and Collections; US Census Data/Population Trend; and Employment/Unemployment
Data.
B. Audited Financial Statements of the Issuer. The Audited Financial Statements of
the Issuer may be submitted to the MSRB separately from the balance of the Annual Report. In
the event Audited Financial Statements of the Issuer are not available on or before the date for
filing the Annual Report with the MSRB as set forth in Section 3.A. above, unaudited financial
statements shall be provided as part of the Annual Report. The accounting principles pursuant to
which the financial statements will be prepared will be pursuant to generally accepted accounting
principles promulgated by the Financial Accounting Standards Board, as such principles are
modified by the governmental accounting standards promulgated by the Government Accounting
Standards Board, as in effect from time to time. If Audited Financial Statements are not
provided because they are not available on or before the date for filing the Annual Report, the
Issuer shall promptly provide them to the MSRB when available.
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SECTION 5. Reporting of Significant Events. This Section 5 shall govern the giving of
notices of the occurrence of any of the following events with respect to the Bonds:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults, if material;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-
TEB), or other material notices or determinations with respect to the tax status of
the Bonds, or other material events affecting the tax status of the Bonds;
(7) Modifications to rights of security holders, if material;
(8) Bond calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Bonds, if
material;
(11) Rating changes;
(12) Bankruptcy, insolvency, receivership or similar event of the Issuer;
(13) The consummation of a merger, consolidation, or acquisition involving an
obligated person or the sale of all or substantially all of the assets of the obligated
person, other than in the ordinary course of business, the entry into a definitive
agreement to undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its terms, if
material;
(14) Appointment of a successor or additional trustee or the change of name of a
trustee, if material.
Whenever an event listed above has occurred, the Issuer shall promptly, which may not
be in excess of the ten (10) business days after the Occurrence, file a notice of such Occurrence
with the MSRB, by filing at www.emma.msrb.org, together with such identifying information as
prescribed by the MSRB.
The Issuer agrees to provide or cause to be provided, in a timely manner, to the MSRB
notice of a failure by the Issuer to provide the Annual Reports described in Section 4.
SECTION 6. Termination of Reporting Obligation. The Issuer's obligations under this
Disclosure Undertaking shall terminate upon the legal defeasance, prior redemption or payment
in full of all of the Bonds.
SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or
engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure
Undertaking, and may discharge any such Agent, with or without appointing a successor
Dissemination Agent.
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Undertaking, the Issuer may amend this Disclosure Undertaking, and any provision of
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this Disclosure Undertaking may be waived, if (a) a change in law or change in the ordinary
business or operation of the Issuer has occurred, (b) such amendment or waiver would not, in and
of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been
effective on the date hereof but taking into account any subsequent change in or official
interpretation of the Rule, and (c) such amendment or waiver is supported by an opinion of
counsel expert in federal securities laws to the effect that such amendment or waiver would not
materially impair the interests of Owners.
SECTION 9. Additional Information. Nothing in this Disclosure Undertaking shall be
deemed to prevent the Issuer from disseminating any other information, using the means of
dissemination set forth in this Disclosure Undertaking or any other means of communication, or
including any other information in any Annual Report or notice of an Occurrence, in addition to
that which is required by this Disclosure Undertaking. If the Issuer chooses to include any
information in any Annual Report or notice of an Occurrence in addition to that which is
specifically required by this Disclosure Undertaking, the Issuer shall have no obligation under
this Disclosure Undertaking to update such information or include it in any future Annual Report
or notice of an Occurrence.
SECTION 10. Default. In the event of a failure of the Issuer to provide information
required by this Disclosure Undertaking, any Owner may take such actions as may be necessary
and appropriate, including seeking mandamus or specific performance by court order, to cause
the Issuer to comply with its obligations to provide information under this Disclosure
Undertaking. A default under this Disclosure Undertaking shall not be deemed an Event of
Default under the Resolution, and the sole remedy under this Disclosure Undertaking in the
event of any failure of the Issuer to comply with this Disclosure Undertaking shall be an action
to compel performance.
SECTION 11. Beneficiaries. This Disclosure Undertaking shall inure solely to the
benefit of the Issuer, the Participating Underwriters and Owners from time to time of the Bonds,
and shall create no rights in any other person or entity.
SECTION 12. Reserved Rights. The Issuer reserves the right to discontinue providing
any information required under the Rule if a final determination should be made by a court of
competent jurisdiction that the Rule is invalid or otherwise unlawful or, subject to the provisions
of Section 8 hereof, to modify the undertaking under this Disclosure Undertaking if the Issuer
determines that such modification is required by the Rule or by a court of competent jurisdiction.
Dated: December 29, 2016.
8079381v1
5
CITY OF CHANHASSEN, MINNESOTA
By ____________________________________
Its Mayor
By ____________________________________
Its City Manager
PRESS RELEASE: 12-8-16
CITY OF CHANHASSEN RECEIVES HIGHEST BOND RATING OF AAA
FROM STANDARD & POOR'S
The City of Chanhassen received a credit rating by Standard & Poor's Ratings Services of 'AAA'
for its Minnesota series 2016B and 2017A general obligation (GO) water revenue bonds. The
outlook is stable according to Standard & Poor's, a provider of independent credit ratings. The
rating agency cited "The City's stable financial operations, very strong reserves, and 'strong'
financial management assessment (FMA)." A financial management assessment of "strong"
indicates financial practices are strong, well imbedded, and likely sustainable. The AAA rating is
the highest rating offered by Standard & Poor's, and less than twenty cities in the entire State of
Minnesota have this rating.
Mayor Denny Laufenburger was quoted as saying, "We are proud to receive the 'AAA' rating,
which is a confirmation that Standard & Poor's recognizes the significant financial achievements
that the City of Chanhassen has realized through the combined leadership of the Chanhassen City
Council's fiscal and tax policies and the city staffs sound financial management. We are grateful
to all who have played a part in achieving this recognition."
The City requested a review of its credit rating in advance of its upcoming bond sale for the West
Water Treatment Plant. The bond rating of AAA is expected to save Chanhassen taxpayers
hundreds of thousands of dollars in interest costs in future years. The bond rating helps to ensure
that future Chanhassen debt will be issued with the lowest possible interest expense and costs to
the taxpayer.
The City Council established a goal to provide financial stability and the resources necessary to
exercise financial stewardship, implement best practices, and utilize long-term financial planning
tools to ensure that Chanhassen residents are receiving excellent public services. This bond
rating meets this goal of strengthening the city's financial position.
Contact: Todd Gerhardt, City Manager, City of Chanhassen 952-227-1119
ATTACHMENT
1. Standard & Poor's Rating Summary for the City of Chanhassen