2 Award the Sale of 1998 Bonds
CITY OF
CHANHASSEN
TO:
Don Ashworth, City Manager
Pam Snell, Finance Director ~'111
Request to award sale of 1998 Bonds, Series A, B & C and
approve contract for services for arbitrage compliance and
continuing disclosure requirements.
o City Cellter Dril'e, PO Box 141
~billlhfljje!l, Millllfjota 55311
Phone 612.937.1900
Gmeral Fax 612.937.5139
~lgilleering Fax 612.937.9152
lib/if 5rzfi't), Fax 612.934.2524
ll'eb li'1i'Ii '.ri.rb,lIlf,ili.iCil.!11Il.liS
FROM:
SUBJ:
DATE:
May 20, 1998
Proposals will be received on Tuesday, May 26th at 10:30 a.m. for 1998 Bonds,
Series A, B & c. David MacGillivray will be present at the City Council
meeting to go over the proposals.
Staff is also requesting approval of contract for services with Springsted for
arbitrage compliance and continuing disclosure requirements. Information as to
the necessity of these services is attached. David MacGillivray will also be in a
position to answer questions with regard to these areas.
~
'-.
'JI' fitll nrrl"n,!1I1HPl1 A flrtl1J1;J!11 f'flll11J1l111;f1! In,:tI, ,lr/111 lal,PI flu,dill',/'Ilf)n/i ,1 rl'l1lillil1ff dn1JmtfHlJ11 tI"o;n;l1fJ /71/I;l1f'iU'\ rtllrlllfJrl!1ti('d Ilil/l,\ A (fT,Jilt /),!,'i'/' to /':1'1'. lI'nrF (nIt! /1l11~
Kennedy
.
470 Pillsbury Center
200 South Sixth Street
Minneapolis MN 55402
(612) 337-9300 telephone
(612) 337-9310 fax
e-mail: attys@kennedy-graven.com
.
C H ART ERE 0
CHERYL A. WILLEY
Paralegal
Direct Dial (612) 337-9235
May 11, 1998
Mr. Donald Ashworth
City Manager
City of Chanhassen
P.O. Box 147
Chanhassen, Minnesota 55317
Re: $4,970,000 General Obligation Park Bonds, Series 1998A
$1,325,000 General Obligation Improvement Bonds, Series 1998B
$820,000 General Obligation Water Revenue Bonds, Series 1998C
City of Chanhassen, Minnesota
Dear Mr. Ashworth:
Enclosed is an extract of minutes awarding the sale of the above bond issues for the City Council
meeting on Tuesday, May 26, 1998.
Yours truly,
~,,".
./); . , jJ
{..IUV-oC
Cheryl A. Willey
. 'Paralegal to
David J. Kennedy
caw
Enclosures
cc: Springsted Incorporated
RECEiVED
MAY 1 2. 1998
en Y Ur l;,t",\\\rjl-\~SEN
DJK143143
CH135-29
Extract of Minutes of Meeting
of the City Council of the City of
Chanhassen, Carver and Hennepin Counties, Minnesota
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City
of Chanhassen, Minnesota, was duly held in the City Hall in said City on Tuesday, May 26,
1998, commencing at 6:30 o'clock P.M.
The following members were present:
and the following were absent:
* * *
* * *
* * *
The Mayor announced that the next order of business was consideration of the proposals
which had been received for the purchase of the City's $4,970,000 General Obligation Park
Bonds, Series 1998A.
The City Manager presented a tabulation of the proposals which had been received in the
manner specified in the Official Terms of Proposal for the Bonds. The proposals were as
follows:
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After due consideration of the proposals, Member
then introduced
the following resolution and moved its adoption.
RESOLUTION NO.
A RESOLUTION AWARDING THE SALE OF $4,970,000
GENERAL OBLIGATION PARK BONDS, SERIES 1998A;
FIXING THEIR FORM AND SPECIFICATIONS;
DIRECTING THEIR EXECUTION AND DELIVERY;
AND PROVIDING FOR THEIR PAYMENT
BE IT RESOLVED By the City Council of the City of Chanhassen, Carver and Hennepin
Counties Minnesota (City) as follows:
Section 1.
Sale of Bonds.
1.01. The proposal of (Purchaser) to
purchase $4,970,000 General Obligation Park Bonds, Series 1998A (Bonds) of the City described
in the Official Terms of Proposal thereof is hereby found and determined to be a reasonable offer
and is hereby accepted, the proposal being to purchase the Bonds at a price of $
plus accrued interest to date of delivery, for Bonds bearing interest as follows:
Year of
Maturity
Interest
Rate
Year of
Maturity
Interest
Rate
, - ~. -.,. .
2002
2003
2004
2005
2006
2007
2008
2009
2010
True interest cost:
1.02. The sum of $ being the amount proposed by the Purchaser in excess
of $4,900,000 is credited to the Debt Service Fund hereinafter created. The City Manager is
directed to deposit the good faith check of the Purchaser, pending completion of the sale of the
Bonds, and to return the good faith checks of the unsuccessful [bidders] proposers forthwith. The
Mayor and City Manager are directed to execute a contract with the Purchaser on behalf of the
City.
1.03. The City will forthwith issue and sell the Bonds pursuant to Minnesota Statutes,
Chapter 475 (Act), in the total principal amount of $4,970,000, originally dated June 1, 1998, in
the denomination of $5,000 each or any integral multiple thereof, numbered No. R-1, upward,
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bearing interest as above set forth, and maturing serially on February 1 in the years and amounts
as follows:
Year Amount Year Amount
2002 $225,000 2007 $755,000
2003 255,000 2008 835,000
2004 315,000 2009 920,000
2005 615,000 2010 370,000
2006 680,000
1.04. Optional Redemotion. The City may elect on February 1, 2006, and on any day
thereafter to prepay Bonds due on or after February 1, 2007. Redemption may be in whole or
in part and if in part, at the option of the City and in such manner as the City will determine.
If less than all Bonds of a maturity are called for redemption, the City will notify DTC (as
defined in Section 7 hereof) of the particular amount of such maturity to be prepaid. DTC will
determine by lot the amount of each participant's interest in such maturity to be redeemed and
each participant will then select by lot the beneficial ownership interests in such maturity to be
redeemed. Prepayments will be at a price of par plus accrued interest.
1.05. Term Bonds. (To be completed if Term Bonds are requested by the Purchaser.)
Section 2.
Registration and Payment.
2.01. Registered Form. The Bonds will be issued only in fully registered form. The
interest thereon and, upon surrender of each Bond, the principal amount thereof, is payable by
check or draft issued by the Registrar described herein.
2.02. Dates: Interest Payment Dates. Each Bond will be dated as of the last interest
payment date preceding the date of authentication to which interest on the Bond has been paid
or made available for payment, unless (i) the date of authentication is an interest payment date
to which interest has been paid or made available for payment, in which case the Bond will be
dated as of the date of authentication, or (ii) the date of authentication is prior to the first interest
payment date, in which case the Bond will be dated as of the date of original issue. The interest
on the Bonds is payable on February 1 and August 1 of each year, commencing February 1,
1999, to the registered owners of record thereof as of the close of business on the fifteenth day
of the immediately preceding month, whether or not such day is a business day.
2.03. Registration. The City will appoint a bond registrar, transfer agent, authenticating
agent and paying agent (Registrar). The effect of registration and the rights and duties of the
City and the Registrar with respect thereto are as follows:
(a) Register. The Registrar must keep at its principal corporate trust office a
bond register in which the Registrar provides for the registration of ownership of Bonds
and the registration of transfers and exchanges of Bonds entitled to be registered,
transferred or exchanged.
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(b) Transfer of Bonds. Upon surrender for transfer of a Bond duly endorsed
by the registered owner thereof or accompanied by a written instrument of transfer, in
form satisfactory to the Registrar, duly executed by the registered owner thereof or by an
attorney duly authorized by the registered owner in writing, the Registrar will authenticate
and deliver, in the name of the designated transferee or transferees, one or more new
Bonds of a like aggregate principal amount and maturity, as requested by the transferor.
The Registrar may, however, close the books for registration of any transfer after the
fifteenth day of the month preceding each interest payment date and until that interest
payment date.
(c) Exchange of Bonds. When Bonds are surrendered by the registered owner
for exchange the Registrar will authenticate and deliver one or more new Bonds of a like
aggregate principal amount and maturity as requested by the registered owner or the
owner's attorney in writing.
(d) Cancellation. Bonds surrendered upon transfer or exchange will be
promptly cancelled by the Registrar and thereafter disposed of as directed by the City.
(e) Improper or Unauthorized Transfer. When a Bond is presented to the
Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is
satisfied that the endorsement on the Bond or separate instrument of transfer is valid and
genuine and that the requested transfer is legally authorized. The Registrar will incur no
liability for the refusal, in good faith, to make transfers which it, in its judgment, deems
improper or unauthorized.
(f) Persons Deemed Owners. The City and the Registrar may treat the person
in whose name a Bond is registered in the bond register as the absolute owner of the
Bond, whether the Bond is overdue or not, for the purpose of receiving payment of, or
on account of, the principal of and interest on the Bond and for all other purposes, and
payments so made to a registered owner or upon the owner's order will be valid and
effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or
sums so paid.
(g) Taxes. Fees and Charges. The Registrar may impose a charge upon the
owner thereof for a transfer or exchange of Bonds sufficient to reimburse the Registrar
for any tax, fee or other governmental charge required to be paid with respect to the
transfer or exchange.
(h) Mutilated. Lost. Stolen or Destroved Bonds. If a Bond becomes mutilated
or is destroyed, stolen or lost, the Registrar will deliver a new Bond of like amount,
number, maturity date and tenor in exchange and substitution for and upon cancellation
of the mutilated Bond or in lieu of and in substitution for any Bond destroyed, stolen or
lost, upon the payment of the reasonable expenses and charges of the Registrar in
connection therewith; and, in the case of a Bond destroyed, stolen or lost, upon filing with
the Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and
of the ownership thereof, and upon furnishing to the Registrar an appropriate bond or
indemnity in form, substance and amount satisfactory to it and as provided by law, in
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which both the City and the Registrar must be named as obligees. Bonds so surrendered
to the Registrar will be cancelled by the Registrar and evidence of such cancellation must
be given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured
or been called for redemption in accordance with its terms it is not necessary to issue a
new Bond prior to payment.
(i) Redemotion. In the event any of the Bonds are called for redemption,
notice thereof identifying the Bonds to be redeemed will be given by the Registrar by
mailing a copy of the redemption notice by first class mail (postage prepaid) not more
than 60 and not less than 30 days prior to the date fixed for redemption to the registered
owner of each Bond to be redeemed at the address shown on the registration books kept
by the Registrar and by publishing the notice if required by law. Failure to give notice
by publication or by mail to any registered owner, or any defect therein, will not affect
the validity of the proceedings for the redemption of Bonds. Bonds so called for
redemption will cease to bear interest after the specified redemption date, provided that
the funds for the redemption are on deposit with the place of payment at that time.
2.04. Appointment of Initial Registrar. The City appoints
, Minnesota, as the initial
Registrar. The Mayor and the City Manager are authorized to execute and deliver, on behalf of
the City, a contract with the Registrar. Upon merger or consolidation of the Registrar with
another corporation, if the resulting corporation is a bank or trust company authorized by law to
conduct such business, the resulting corporation is authorized to act as successor Registrar. The
City agrees to pay the reasonable and customary charges of the Registrar for the services
performed. The City reserves the right to remove the Registrar upon 30 days' notice and upon
the appointment of a successor Registrar, in which event the predecessor Registrar must deliver
all cash and Bonds in its possession to the successor Registrar and must deliver the bond register
to the successor Registrar. On or before each principal or interest due date, without further order
of this Council, the City Finance Director must transmit to the Registrar moneys sufficient for
the payment of all principal and interest then due.
2.05. Execution. Authentication and Delivery. The Bonds will be prepared under the
direction of the City Manager and executed on behalf of the City by the signatures of the Mayor
and the City Manager, provided that all signatures may be printed, engraved or lithographed
facsimiles of the originals. If an officer whose signature or a facsimile of whose signature
appears on the Bonds ceases to be such officer before the delivery of any Bond, that signature
or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the officer
had remained in office until delivery. Notwithstanding such execution, a Bond will not be valid
or obligatory for any purpose or entitled to any security or benefit under this Resolution unless
and until a certificate of authentication on the Bond has been duly executed by the manual
signature of an authorized representative of the Registrar. Certificates of authentication on
different Bonds need not be signed by the same representative. The executed certificate of
authentication on a Bond is conclusive evidence that it has been authenticated and delivered under
this Resolution. When the Bonds have been so prepared, executed and authenticated, the City
Manager will deliver the same to the Purchaser upon payment of the purchase price in accordance
with the contract of sale heretofore made and executed, and the Purchaser is not obligated to see
to the application of the purchase price.
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2.06. Temporary Bonds. The City may elect to deliver in lieu of printed definitive
Bonds one or more typewritten temporary Bonds in substantially the form set forth in Section 3
with such changes as may be necessary to reflect more than one maturity in a single temporary
bond. Upon the execution and delivery of definitive Bonds the temporary Bonds will be
exchanged therefor and cancelled.
Section 3.
Form of Bond.
3.01. The Bonds will be printed or typewritten in substantially the following form:
[Face of the Bond]
No. R-_
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTIES OF CARVER AND HENNEPIN
CITY OF CHANHASSEN
$
GENERAL OBLIGATION PARK BOND, SERIES 1998A
Rate
Maturitv
Date of
Original Issue
CUSIP
June 1, 1998
Registered Owner: Cede & Co.
The City of Chanhassen, Minnesota, a duly organized and existing municipal corporation
in Carver and Hennepin Counti~s, Minnesota (City), acknowledges itself to be indebted and for
. value received hereby promises to pay to the Registered Owner specified above or registered
assigns, the principal sum of $ on the maturity date specified above, with interest
thereon from the date herepf at the annual rate specified above, payable February 1 and August 1
in each year, commencing February 1, 1999, to the person in whose name this Bond is registered
at the close of business on the fifteenth day (whether or not a business day) of the immediately
preceding ~onth. The interest hereon and, upon presentation and surrender hereof, the principal
hereof are payable in lawful money of the United States of America by check or draft by
, Minnesota, as Bond Registrar, Paying Agent,
Transfer Agent and Authenticating Agent, or its designated successor under the Resolution
described herein. F or the prompt and full payment of such principal and interest as the same
respectively become due, the full faith and credit and taxing powers of the City have been and
are hereby irrevocably pledged.
The City may elect on February 1,2006, and on any day thereafter to prepay Bonds due
on or after February 1, 2007. Redemption may be in whole or in part and if in part, at the option
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of the City and in such manner as the City will determine. If less than all Bonds of a maturity
are called for redemption, the City will notify The Depository Trust Company (DTC) of the
particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each
participant's interest in such maturity to be redeemed and each participant will then select by lot
the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a
price of par plus accrued interest.
The City Council has designated the issue of Bonds of which this Bond forms a part as
"qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Internal
Revenue Code of 1986, as amended (the Code) relating to disallowance of interest expense for
financial institutions and within the $10 million limit allowed by the Code for the calendar year
of issue.
Additional provisions of this Bond are contained on the reverse hereof and such provisions
will for all purposes have the same effect as though fully set forth in this place.
This Bond is not valid or obligatory for any purpose or entitled to any security or benefit
under the Resolution until the Certificate of Authentication hereon has been executed by the Bond
Registrar by manual signature of one of its authorized representatives.
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
or manual signatures of the Mayor and City Manager and has caused this Bond to be dated as
of the date set forth below.
Dated:
CITY OF CHANHASSEN, MINNESOTA
(facsimile)
City Manager
Mayor
( facsimil e)
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds delivered pursuant to the Resolution mentioned within.
By
Authorized Representative
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[Reverse of the Bond]
This Bond is one of an issue in the aggregate principal amount of $4,970,000 all of like
original issue date and tenor, except as to number, maturity date, redemption privilege, and
interest rate, all issued pursuant to a resolution adopted by the City Council on May 26, 1998 (the
Resolution), for the purpose of providing money to aid in financing the cost of improvements to
park, trail and open space recreational facilities, pursuant to and in full conformity with the
Constitution and laws of the State of Minnesota, including Minnesota Statutes, Chapter 475,
pursuant to authority granted by the voters of the City at a regularly called and duly held election,
and the principal hereof and interest hereon are payable primarily from ad valorem taxes, as set
forth in the Resolution to which reference is made for a full statement of rights and powers
thereby conferred. The full faith and credit of the City are irrevocably pledged for payment of
this Bond and the City Council has obligated itself to levy additional ad valorem taxes on all
taxable property in the City in the event of any deficiency, which additional taxes may be levied
without limitation as to rate or amount. The Bonds of this series are issued only as fully
registered Bonds in denominations of $5,000 or any integral multiple thereof of single maturities.
As provided in the Resolution and subject to certain limitations set forth therein, this Bond
is transferable upon the books of the City at the principal office of the Bond Registrar, by the
registered owner hereof in person or by the owner's attorney duly authorized in writing, upon
surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar,
duly executed by the registered owner or the owner's attorney; and may also be surrendered in
exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City
will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner,
of the same aggregate principal amount, bearing interest at the same rate and maturing on the
same date, subject to reimbursement for any tax, fee or governmental charge required to be paid
with respect to such transfer or exchange.
The City and the Bond Registrar may deem and treat the person in whose name this Bond
is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose
of receiving payment and for all other purposes, and neither the City nor the Bond Registrar will
, be affected by any notice to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts,
conditions and things required by the Constitution and laws of the State of Minnesota to be done,
to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order
to make it a valid and binding general obligation of the City in accordance with its terms, have
been done, do exist, have happened and have been performed as so required, and that the issuance
of this Bond does not cause the indebtedness of the City to exceed any constitutional or statutory
limitation of indebtedness.
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The following abbreviations, when used in the inscription on the face of this Bond, will
be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants
In common
UNIF GIFT MIN ACT Custodian
(Cust) (Minor)
TEN ENT -- as tenants
by entireties
under Uniform Gifts or
Transfers to Minors
JT TEN --
as joint tenants with
right of survivorship and
not as tenants in common
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 all rights thereunder, and
does hereby irrevocably constitute and appoint attorney to transfer
the said Bond on the books kept for registration of the within Bond, 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:
NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the
Securities Transfer Agent Medallion Program (liST AMP "), the Stock Exchange Medallion
Program ("SEMp"), the New York Stock Exchange, Inc. Medallion Signatures Program ("MSP")
or other such "signature guarantee program" as may be determined by the Registrar in addition
to, or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange
Act of 1934, as amended.
The Bond Registrar will not effect transfer of this Bond unless the information concerning
the assignee requested below is provided.
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Name and Address:
(Include information for all joint owners if this
Bond is held by joint account.)
Please insert social security or other
identifying number of assignee
PROVISIONS AS TO REGISTRATION
The ownership of the principal of and interest on the within Bond has been registered on
the books of the Registrar in the name of the person last noted below.
Date of Registration
Registered Owner
Signature of
Officer of the Registrar
Cede & Co.
Federal ID #13-2555119
3.02. The City Manager is authorized and directed to obtain a copy of the proposed
approving legal opinion of Kennedy & Graven, Chartered, Minneapolis, Minnesota, which will
be complete except as to dating thereof and cause the opinion to be printed on or accompany each
Bond.
Section 4.
Payment: Security: Pledges and Covenants.
4.01. The Bonds will be payable from the General Obligation Park Bonds, Series 1998A
Debt Service Fund (Debt Service Fund) hereby created, and the proceeds of the ad valorem taxes
hereinafter levied described in the resolution authorizing the sale of the Bonds, are hereby
pledged to the Debt Service Fund. If a payment of principal or interest on the Bonds becomes
due when there is not sufficient money in the Debt Service Fund to pay the same, the Finance
Director will pay such principal or interest from the general fund of the City, and the general
fund will be reimbursed for those advances out of the proceeds of the taxes levied by this
resolution, when collected. There is appropriated to the Debt Service Fund (i) capitalized interest
financed from Bond proceeds, if any, (ii) any amount over the minimum purchase price of the
Bonds paid by the purchaser, and (iii) the accrued interest paid by the Purchaser upon closing
and delivery of the Bonds.
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4.02. For the purpose of paying the principal of and interest on the Bonds, there is levied
a direct annual irrepealable ad valorem tax upon all of the taxable property in the City, to be
spread upon the tax rolls and collected with and as part of other general taxes of the City. The
tax will be credited to the Debt Service Fund above provided and is in the years and amounts as
follows (year stated being year of levy for collection the following year):
Year I&yy
(See Attachment A)
4.03. It is determined that the estimated collection of the foregoing taxes will produce
at least five percent in excess of the amount needed to meet when due, the principal and interest
payments on the Bonds. The tax levy herein provided will be irrepealable until all of the Bonds
are paid, provided that at the time the City makes its annual tax levies the City Manager may
certify to the County Auditor of Carver County and the Taxpayer Services Division Manager of
Hennepin County the amount available in the Debt Service Fund to pay principal and interest due
during the ensuing year, and the County Auditor and Taxpayer Services Division Manager will
thereupon reduce the levy collectible during such year by the amount so certified.
4.04. The City Manager is authorized and directed to file a certified copy of this
resolution with the County Auditor and Taxpayer Services Division Manager and to obtain the
certificate required by Minnesota Statutes, Section 475.63.
Section 5.
Authentication of Transcript.
5.01. The officers of the City are authorized and directed to prepare and furnish to the
Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records
of the City relating to the Bonds and to the financial condition and affairs of the City, and such
other certificates, affidavits and transcripts as may be required to show the facts within their
knowledge or as shown by the books and records in their custody and under their control, relating
to the validity and marketability of the Bonds, and such instruments, including any heretofore
furnished, will be deemed representations of the City as to the facts stated therein.
5.02. The Mayor and City Manager are authorized and directed to certify that they have
examined the Official Statement prepared and circulated in connection with the issuance and sale
of the Bonds and that to the best of their knowledge and belief the Official Statement is a
complete and accurate representation of the facts and representations made therein as of the date
of the Official Statement.
Section 6.
Tax Covenant.
6.01. The City covenants and agrees with the holders from time to time of the Bonds
that it will not take or permit to be taken by any of its officers, employees or agents any action
which would cause the interest on the Bonds to become subject to taxation under the Internal
Revenue Code of 1986, as amended (the Code), and the Treasury Regulations promulgated
thereunder, in effect at the time of such actions, and that it will take or cause its officers,
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employees or agents to take, all affirmative action within its power that may be necessary to
ensure that such interest will not become subject to taxation under the Code and applicable
Treasury Regulations, as presently existing or as hereafter amended and made applicable to the
Bonds.
6.02. (a) The City will comply with requirements necessary under the Code to establish
and maintain the exclusion from gross income of the interest on the Bonds under Section 103 of
the Code, including without limitation requirements relating to temporary periods for investments,
limitations on amounts invested at a yield greater than the yield on the Bonds
6.03. The City further covenants not to use the proceeds of the Bonds or to cause or
permit them or any of them to be used, 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.
6.04. The City will use its best efforts to comply with any federal procedural
requirements which may apply in order to effectuate the designations made by this section.
Section 7.
Book-Entry System; Limited Obligation of City.
7.01. The Bonds will be initially issued in the form of a separate single typewritten or
printed fully registered Bond for each of the maturities set forth in Section 1.03 hereof. Upon
initial issuance, the ownership of each Bond will be registered in the registration books kept by
the Bond Registrar in the name of Cede & Co., as nominee for The Depository Trust Company,
New York, New York, and its successors and assigns (DTC). Except as provided in this section,
all of the outstanding Bonds will be registered in the registration books kept by the Bond
Registrar in the name of Cede & Co., as nominee of DTC.
7.02. With respect to Bonds registered in the registration books kept by the Bond
Registrar in the name of Cede & Co., as nominee of DTC, the City, the Bond Registrar and the
Paying Agent will have no responsibility or obligation to any broker dealers, banks and other
financial institutions from time to time for which DTC holds Bonds as securities depository
(Participants) or to any other person on behalf of which a participant holds an interest in the
. Bonds, including but not limited to any responsibility or obligation with respect to (i) the
accuracy of the records of DTC, Cede & Co. or any participant with respect to any ownership
interest in the Bonds, (ii) the delivery to any participant or any other person (other than a
registered owner of Bonds, as shown by the registration books kept by the Bond Registrar), of
any notice with respect to the Bonds, including any notice of redemption, or (Hi) the payment to
any participant or any other person, other than a registered owner of Bonds, of any amount with
respect to principal of, premium, if any, or interest on the Bonds. The City, the Bond Registrar
and the Paying Agent may treat and consider the person in whose name each Bond is registered
in the registration books kept by the Bond Registrar as the holder and absolute owner of such
Bond for the purpose of payment of principal, premium and interest with respect to such Bond,
for the purpose of registering transfers with respect to such Bonds, and for all other purposes.
The Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to
or on the order of the respective registered owners, as shown in the registration books kept by
the Bond Registrar, and all such payments will be valid and effectual to fully satisfy and
discharge the City's obligations with respect to payment of principal of, premium, if any, or
DJK142938
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interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered
owner of Bonds, as shown in the registration books kept by the Bond Registrar, will receive a
certificated Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City
Manager of a written notice to the effect that DTC has determined to substitute a new nominee
in place of Cede & Co., the words "Cede & Co.," will refer to such new nominee of DTC; and
upon receipt of such a notice, the City Manager will promptly deliver a copy of the same to the
Bond Registrar and Paying Agent.
7.03. Representation Letter. The City has heretofore executed and delivered to DTC a
Blanket Issuer Letter of Representations (Representation Letter) which shall govern payment of
principal of, premium, if any, and interest on the Bonds and notices with respect to the Bonds.
Any Paying Agent or Bond Registrar subsequently appointed by the City with respect to the
Bonds will agree to take all action necessary for all representations of the City in the
Representation letter with respect to the Bond Registrar and Paying Agent, respectively, to be
complied with at all times.
7.04. Transfers Outside Book-Entry System. In the event the City, by resolution of the
City Council, determines that it is in the best interests of the persons having beneficial interests
in the Bonds that they be able to obtain Bond certificates, the City will notify DTC, whereupon
DTC will notify the Participants, of the availability through DTC of Bond certificates. In such
event the City will issue, transfer and exchange Bond certificates as requested by DTC and any
other registered owners in accordance with the provisions of this Resolution. DTC may
determine to discontinue providing its services with respect to the Bonds at any time by giving
notice to the City and discharging its responsibilities with respect thereto under applicable law.
In such event, if no successor securities depository is appointed, the City will issue and the Bond
Registrar will authenticate Bond certificates in accordance with this resolution and the provisions
hereof will apply to the transfer, exchange and method of payment thereof.
7.05. Payments to Cede & Co. Notwithstanding any other provision of this Resolution
to the contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC,
payments with respect to principal of, premium, if any, and interest on the Bond and all notices
with respect to the Bond will be made and given, respectively in the manner provided in DTC's
Operational Arrangements, as set forth in the Representation Letter.
Section 8. Continuing Disclosure.
8.01. The City hereby covenants and agrees that it will comply with and carry out all of
the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of
this Resolution, failure of the City to comply with the Continuing Disclosure Certificate is not
to be considered an event of default with respect to the Bonds; however, any Bondholder may
take such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the City to comply with its obligations under this section.
8.02. "Continuing Disclosure Certificate" means that certain Continuing Disclosure
Certificate executed by the Mayor and City Manager and dated the date of issuance and delivery
of the Bonds, as originally executed and as it may be amended from time to time in accordance
with the terms thereof.
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The motion for the adoption of the foregoing resolution was duly seconded by Member
, and upon 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 ) SS.
)
CITY OF CHANHASSEN )
I, the undersigned, being the duly qualified and acting Manager of the City of Chanhassen,
Carver and Hennepin Counties, Minnesota, do hereby certify that I have carefully compared the
attached and foregoing extract of minutes of a regular meeting of the City Council of the City
held on May 26, 1998 with the original minutes on file in my office and the extract is a full, true
and correct copy of the minutes insofar as they relate to the issuance and sale of $4,970,000
General Obligation Park Bonds, Series 1998A of the City.
WITNESS My hand officially as such Manager and the corporate seal of the City this
day of
, 1998.
City Manager
Chanhassen, Minnesota
(SEAL)
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COUNTY OF CARVER
COUNTY AUDITOR'S
CERTIFICATE AS TO
T AX LEVY AND
REGISTRATION
ST ATE OF MINNESOTA
I, the undersigned County Auditor of Carver County, Minnesota, hereby certify that a
certified copy of a resolution adopted by the governing body of Chanhassen, Minnesota, on May
26, 1998, levying taxes for the payment of $4,970,000 General Obligation Park Bond, Series
1998A, of said municipality dated June 1, 1998, has been filed in my office and said bonds have
been entered on the register of obligations in my office and that such tax has been levied as
required by law.
WITNESS My hand and official seal this _ day of
, 1998.
County Auditor
Carver County, Minnesota
(SEAL)
By
Deputy
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STATE OF MINNESOTA
HENNEPIN COUNTY
TAXPAYER SERVICES DIVISION MANAGER
CERTIFICATE AS TO
TAX LEVY AND
REGISTRATION
COUNTY OF HENNEPIN
I, the undersigned Taxpayer Services Division Manager of Hennepin County, Minnesota,
hereby certify that a certified copy of a resolution adopted by the governing body of Chanhassen,
Minnesota, on May 26, 1998, levying taxes for the payment of $4,970,000 General Obligation
Park Bond, Series 1998A, of said municipality dated June 1, 1998, has been filed in my office
and said bonds have been entered on the register of obligations in my office and that such tax
has been levied as required by law.
WITNESS My hand and official seal this _ day of
, 1998.
Taxpayer Services Division Manager
Hennepin County, Minnesota
(SEAL)
By
Deputy
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Extract of Minutes of Meeting
of the City Council of the City of
Chanhassen, Carver and Hennepin Counties, Minnesota
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City
of Chanhassen, Minnesota, was duly held in the City Hall in said City on Tuesday, May 26,
1998, commencing at 6:30 o'clock P.M.
The following members were present:
and the following were absent:
* * *
* * *
* * *
The Mayor announced that the next order of business was consideration of the proposals
which had been received for the purchase of the City's $1,325,000 General Obligation
Improvement Bonds, Series 1998B.
The City Manager presented a tabulation of the proposals which had been received in the
. !.fianner specified in the Terms of Proposal for the Bonds. The proposals were as set forth in
Exhibit A attached.
After due consideration of the proposals, Member
then introduced
the following resolution and moved its adoption:
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RESOLUTION NO.
A RESOLUTION AWARDING THE SALE OF $1,325,000
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 1998B;
FIXING THEIR FORM AND SPECIFICATIONS;
DIRECTING THEIR EXECUTION AND DELIVERY;
AND PROVIDING FOR THEIR PAYMENT
BE IT RESOLVED By the City Council of the City of Chanhassen, Carver and Hennepin
Counties, Minnesota (City) as follows:
Section 1.
Sale of Bonds.
1.01. The proposal of (Purchaser) to
purchase $1,325,000 General Obligation Improvement Bonds, Series 1998B (Bonds) of the City
described in the Terms of Proposal thereof is hereby found and determined to be a reasonable
offer and is hereby accepted, the proposal being to purchase the Bonds at a price of
$ plus accrued interest to date of delivery, for Bonds bearing interest as follows:
Year of
Maturity
Interest
Rate
Year of
Maturity
Interest
Rate
2000
2001
2002
2003
2004
2005
2006
2007
True interest cost:
1.02. The sum of $ being the amount proposed by the Purchaser in excess
of $1,311,750 will be credited to the Debt Service Fund hereinafter created. The City Manager
is directed to deposit the good faith check of the Purchaser, pending completion of the sale of
the Bonds, and to return the good faith checks of the unsuccessful proposers forthwith. The
Mayor and City Manager are directed to execute a contract with the Purchaser on behalf of the
City.
1.03. The City will forthwith issue and sell the Bonds pursuant to Minnesota Statutes,
Chapter 429 (Act) in the total principal amount of $1,325,000, originally dated June 1, 1998, in
the denomination of $5,000 each or any integral multiple thereof, numbered No. R-l, upward,
bearing interest as above set forth, and maturing serially on February 1 in the years and amounts
as follows:
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Year Amount Year Amount
2000 $170,000 2004 $165,000
2001 180,000 2005 160,000
2002 175,000 2006 155,000
2003 170,000 2007 150,000
1.04. Optional Redemption. The City may elect on February 1, 2005, and on any day
thereafter to prepay Bonds due on or after February 1, 2006. Redemption may be in whole or
in part and if in part, at the option of the City and in such manner as the City will determine.
If less than all Bonds of a maturity are called for redemption, the City will notify DTC (as
defined in Section 7 hereof) of the particular amount of such maturity to be prepaid. DTC will
determine by lot the amount of each participant's interest in such maturity to be redeemed and
each participant will then select by lot the beneficial ownership interests in such maturity to be
redeemed. Prepayments will be at a price of par plus accrued interest.
1.05. Term Bonds. (To be completed if Term Bonds are requested by the Purchaser.)
Section 2.
Registration and Payment.
2.01. Registered Form. The Bonds will be issued only in fully registered form. The
interest thereon and, upon surrender of each Bond, the principal amount thereof, is payable by
check or draft issued by the Registrar described herein.
2.02. Dates~ Interest Payment Dates. Each Bond will be dated as of the last interest
payment date preceding the date of authentication to which interest on the Bond has been paid
or made available for payment, unless (i) the date of authentication is an interest payment date
to which interest has been paid or made available for payment, in which case the Bond will be
dated as of the date of authentication, or (ii) the date of authentication is prior to the first interest
payment date, in which case the Bond will be dated as of the date of original issue. The interest
on the Bonds is payable on February 1 and August 1 of each year, commencing February 1,
, ,1.999, to the registered owners of record thereof as of the close of business on the fifteenth day
of the immediately preceding month, whether or not that day is a business day.
2.03. Registration. The City will appoint a bond registrar, transfer agent, authenticating
agent and paying agent (Registrar). The effect of registration and the rights and duties of the
City and the Registrar with respect thereto are as follows:
(a) Register. The Registrar must keep at its principal corporate trust office a
bond register in which the Registrar provides for the registration of ownership of Bonds
and the registration of transfers and exchanges of Bonds entitled to be registered,
transferred or exchanged.
(b) Transfer of Bonds. Upon surrender for transfer of a Bond duly endorsed
by the registered owner thereof or accompanied by a written instrument of transfer, in
form satisfactory to the Registrar, duly executed by the registered owner thereof or by an
attorney duly authorized by the registered owner in writing, the Registrar will authenticate
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and deliver, in the name of the designated transferee or transferees, one or more new
Bonds of a like aggregate principal amount and maturity, as requested by the transferor.
The Registrar may, however, close the books for registration of any transfer after the
fifteenth day of the month preceding each interest payment date and until that interest
payment date.
( c) Exchange of Bonds. When Bonds are surrendered by the registered owner
for exchange the Registrar will authenticate and deliver one or more new Bonds of a like
aggregate principal amount and maturity as requested by the registered owner or the
owner's attorney in writing.
(d) Cancellation. Bonds surrendered upon transfer or exchange will be
promptly cancelled by the Registrar and thereafter disposed of as directed by the City.
(e) Improper or Unauthorized Transfer. When a Bond is presented to the
Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is
satisfied that the endorsement on the Bond or separate instrument of transfer is valid and
genuine and that the requested transfer is legally authorized. The Registrar will incur no
liability for the refusal, in good faith, to make transfers which it, in its judgment, deems
improper or unauthorized.
(f) Persons Deemed Owners. The City and the Registrar may treat the person
in whose name a Bond is registered in the bond register as the absolute owner of the
Bond, whether the Bond is overdue or not, for the purpose of receiving payment of, or
on account of, the principal of and interest on the Bond and for all other purposes and
payments so made to registered owner or upon the owner's order will be valid and
effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or
sums so paid.
(g) Taxes. Fees and Charges. The Registrar may impose a charge upon the
owner thereof for a transfer or exchange of Bonds, sufficient to reimburse the Registrar
for any tax, fee or other governmental charge required to be paid with respect to the
transfer or exchange.
(h) Mutilated. Lost. Stolen or Destroyed Bonds. If a Bond becomes mutilated
or is destroyed, stolen or lost, the Registrar will deliver a new Bond of like amount,
number, maturity date and tenor in exchange and substitution for and upon cancellation
of the mutilated Bond or in lieu of and in substitution for a Bond destroyed, stolen or lost,
upon the payment of the reasonable expenses and charges of the Registrar in connection
therewith; and, in the case of a Bond destroyed, stolen or lost, upon filing with the
Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of
the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or
indemnity in form, substance and amount satisfactory to it and as provided by law, in
which both the City and the Registrar must be named as obligees. Bonds so surrendered
to the Registrar will be cancelled by the Registrar and evidence of such cancellation must
be given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured
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or been called for redemption in accordance with its terms it is not necessary to issue a
new Bond prior to payment.
(i) Redemption. In the event any of the Bonds are called for redemption,
notice thereof identifying the Bonds to be redeemed will be given by the Registrar by
mailing a copy of the redemption notice by first class mail (postage prepaid) not more
than 60 and not less than 30 days prior to the date fixed for redemption to the registered
owner of each Bond to be redeemed at the address shown on the registration books kept
by the Registrar and by publishing the notice if required by law. Failure to give notice
by publication or by mail to any registered owner, or any defect therein, will not affect
the validity of the proceedings for the redemption of Bonds. Bonds so called for
redemption will cease to bear interest after the specified redemption date, provided that
the funds for the redemption are on deposit with the place of payment at that time.
2.04. Appointment of Initial Registrar. The City appoints
, , Minnesota, as the initial
Registrar. The Mayor and the City Manager are authorized to execute and deliver, on behalf of
the City, a contract with the Registrar. Upon merger or consolidation of the Registrar with
another corporation, if the resulting corporation is a bank or trust company authorized by law to
conduct such business, the resulting corporation is authorized to act as successor Registrar. The
City agrees to pay the reasonable and customary charges of the Registrar for the services
performed. The City reserves the right to remove the Registrar upon 30 days' notice and upon
the appointment of a successor Registrar, in which event the predecessor Registrar must deliver
all cash and Bonds in its possession to the successor Registrar and must deliver the bond register
to the successor Registrar. On or before each principal or interest due date, without further order
of this Council, the City Finance Director must transmit to the Registrar monies sufficient for the
payment of all principal and interest then due.
2.05. Execution. Authentication and Delivery. The Bonds will be prepared under the
direction of the City Manager and executed on behalf of the City by the signatures of the Mayor
and the City Manager, provided that all signatures may be printed, engraved or lithographed
facsimiles of the originals. If an officer whose signature or a facsimile of whose signature
appears on the Bonds ceases to be such officer before the delivery of any Bond, that signature
or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the officer
had remained in office until delivery. Notwithstanding such execution, a Bond will not be valid
or obligatory for any purpose or entitled to any security or benefit under this Resolution unless
and until a certificate of authentication on the Bond has been duly executed by the manual
signature of an authorized representative of the Registrar. Certificates of authentication on
different Bonds need not be signed by the same representative. The executed certificate of
authentication on a Bond is conclusive evidence that it has been authenticated and delivered under
this Resolution. When the Bonds have been so prepared, executed and authenticated, the City
Manager will deliver the same to the Purchaser upon payment of the purchase price in accordance
with the contract of sale heretofore made and executed, and the Purchaser is not obligated to see
to the application of the purchase price.
2.06. Temoorary Bonds. The City may elect to deliver in lieu of printed definitive
Bonds one or more typewritten temporary Bonds in substantially the form set forth in Section 3
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with such changes as may be necessary to reflect more than one maturity in a single temporary
bond. Upon the execution and delivery of definitive Bonds the temporary Bonds will be
exchanged therefor and cancelled.
Section 3.
Form of Bond.
3.01. The Bonds will be printed or typewritten in substantially the following form:
[Face of the Bond]
No. R-
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTIES OF CARVER AND HENNEPIN
CITY OF CHANHASSEN
$
GENERAL OBLIGATION IMPROVEMENT BOND, SERIES 1909B
Rate
Maturity
Date of
Ori ginal Issue
CUSIP
June 1, 1998
Registered Owner: Cede & Co.
The City of Chanhassen, Minnesota, a duly organized and existing municipal corporation
in Carver and Hennepin Counties, Minnesota (City), acknowledges itself to be indebted and for
value received hereby promises to pay to the Registered Owner specified above or registered
assigns, the principal sum of $ on the maturity date specified above, with interest
thereon from the date hereof at the annual rate specified above, payable February 1 and August
1 in each year, commencing February 1, 1999, to the person in whose name this Bond is
registered at the close of business on the fifteenth day (whether or not a business day) of the
immediately preceding month. The interest hereon and, upon presentation and surrender hereof,
the principal hereof are payable in lawful money of the United States of America by check or
draft by , Minnesota, as Bond Registrar, Paying
Agent, Transfer Agent and Authenticating Agent, or its designated successor under the Resolution
described herein. For the prompt and full payment of such principal and interest as the same
respectively become due, the full faith and credit and taxing powers of the City have been and
are hereby irrevocably pledged.
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The City may elect on February 1,2005, and on any day thereafter to prepay Bonds due
on or after February 1,2006. Redemption may be in whole or in part and if in part, at the option
of the City and in such manner as the City will determine. If less than all Bonds of a maturity
are called for redemption, the City will notify Depository Trust Company (DTC) of the particular
amount of such maturity to be prepaid. DTC will determine by lot the amount of each
participant's interest in such maturity to be redeemed and each participant will then select by lot
the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a
price of par plus accrued interest.
The City Council has designated the issue of Bonds of which this Bond forms a part as
"qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Internal
Revenue Code of 1986, as amended (the Code) relating to disallowance of interest expense for
financial institutions and within the $10 million limit allowed by the Code for the calendar year
of issue.
Additional provisions of this Bond are contained on the reverse hereof and such provisions
for all purposes have the same effect as though fully set forth in this place.
This Bond is not valid or obligatory for any purpose or entitled to any security or benefit
under the Resolution until the Certificate of Authentication hereon has been executed by the Bond
Registrar by manual signature of one of its authorized representatives.
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
or manual signatures of the Mayor and City Manager and has caused this Bond to be dated as
of the date set forth below.
Dated:
CITY OF CHANHASSEN, MINNESOTA
(Facsimile)
City Manager
(Facsimile)
Mayor
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds delivered pursuant to the Resolution mentioned within.
By
Authorized Representative
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[Reverse of the Bond]
This Bond is one of an issue in the aggregate principal amount of $1,325,000 all of like
original issue date and tenor, except as to number, maturity date, redemption privilege, and
interest rate, all issued pursuant to a resolution adopted by the City Council on May 26, 1998 (the
Resolution), for the purpose of providing money to defray the expenses incurred and to be
incurred in making local improvements, pursuant to and in full conformity with the Constitution
and laws of the State of Minnesota, including Minnesota Statutes, Chapter 429, and the principal
hereof and interest hereon are payable primarily from special assessments against property
specially benefitted by local improvements, as set forth in the Resolution to which reference is
made for a full statement of rights and powers thereby conferred. The full faith and credit of the
City are irrevocably pledged for payment of this Bond and the City Council has obligated itself
to levy ad valorem taxes on all taxable property in the City in the event of any deficiency in
special assessments pledged, which taxes may be levied without limitation as to rate or amount.
The Bonds of this series are issued only as fully registered Bonds in denominations of $5,000 or
any integral multiple thereof of single maturities.
As provided in the Resolution and subject to certain limitations set forth therein, this Bond
is transferable upon the books of the City at the principal office of the Bond Registrar, by the
registered owner hereof in person or by the owner's attorney duly authorized in writing, upon
surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar,
duly executed by the registered owner or the owner's attorney; and may also be surrendered in
exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City
will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner,
of the same aggregate principal amount, bearing interest at the same rate and maturing on the
same date, subject to reimbursement for any tax, fee or governmental charge required to be paid
with respect to such transfer or exchange.
The City and the Bond Registrar may deem and treat the person in whose name this Bond
is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose
of receiving payment and for all other purposes, and neither the City nor the Bond Registrar will
be affected by any notice to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts,
conditions and things required by the Constitution and laws of the State of Minnesota, to be done,
to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order
to make it a valid and binding general obligation of the City in accordance with its terms, have
been done, do exist, have happened and have been performed as so required, and that the issuance
of this Bond does not cause the indebtedness of the City to exceed any constitutional or statutory
limitation of indebtedness.
The following abbreviations, when used in the inscription on the face of this Bond, will
be construed as though they were written out in full according to applicable laws or regulations:
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TEN COM -- as tenants
in common
UNIF GIFT MIN ACT Custodian
(Cust ) (Minor)
TEN ENT -- as tenants
by entireties
under Uniform Gifts or
Transfers to Minors
JT TEN --
as joint tenants with
right of survivorship and
not as tenants in common
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 all rights thereunder, and
attorney to transfer
of the within Bond, with full power of
does hereby irrevocably constitute and appoint
the said Bond on the books kept for registration
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:
NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the
Securities Transfer Agent Medallion Program ("STAMP"), the Stock Exchange Medallion
Program ("SEMP"), the New York Stock Exchange, Inc. Medallion Signatures Program ("MSP")
or other such "signature guarantee program" as may be determined by the Registrar in addition
to, or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange
Act of 1934, as amended.
The Bond Registrar will not effect transfer of this Bond unless the information concerning
the assignee requested below is provided.
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Name and Address:
(Include information for all joint owners if this
Bond is held by joint account.)
Please insert social security or other
identifying number of assignee
PROVISIONS AS TO REGISTRATION
The ownership of the principal of and interest on the within Bond has been registered on
the books of the Registrar in the name of the person last noted below.
Date of Registration
Registered Owner
Signature of
Officer of Registrar
Cede & Co.
Federal ID #13-2555119
3.02. The City Manager is directed to obtain a copy of the proposed approving legal
opinion of Kennedy & Graven, Chartered, Minneapolis, Minnesota, which is to be complete
except as to dating thereof and to cause the opinion to be printed on or accompany each Bond.
Section 4.
Payment: Security: Pledges and Covenants.
4.01. (a) The Bonds are payable from the Improvement Bonds, Series 1998B Debt
Service Fund (Debt Service Fund) hereby created, and the proceeds of special assessments
(Assessments) levied or to be levied for the improvements described in the resolution authorizing
the sale of the Bonds (Improvements) financed by the Bonds are hereby pledged to the Debt
Service Fund. If a payment of principal or interest on the Bonds becomes due when there is not
sufficient money in the Debt Service Fund to pay the same, the Finance Director is directed to
pay such principal or interest from the general fund of the City, and the general fund will be
reimbursed for the advances out of the proceeds of Assessments when collected. There is
appropriated to the Debt Service Fund (i) capitalized interest financed from Bond proceeds, if
any, (ii) any amount over the minimum purchase price paid by the Purchaser, and (iii) the
accrued interest paid by the Purchaser upon closing and delivery of the Bonds.
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(b) The proceeds of the Bonds, less the appropriations made in paragraph (a), together
with any other funds appropriated for the Improvements and Assessments collected during the
construction of the Improvements will be deposited in a separate construction fund (which may
contain separate accounts for each Improvement) to be used solely to defray expenses of the
Improvements and the payment of principal and interest on the Bonds prior to the completion and
payment of all costs of the Improvement. Any balance remaining in the construction fund after
completion of the Improvements may be used to pay the cost in whole or in part of any other
improvement instituted under the Act. When the Improvements are completed and the cost
thereof paid, the construction account is to be closed and subsequent collections of Assessments
for the Improvements are to be deposited in the Debt Service Fund.
4.02. It is hereby determined that the Improvements will directly and indirectly benefit
abutting property, and the City hereby covenants with the holders from time to time of the Bonds
as follows: .
(a) The City has caused or will cause the Assessments for the Improvements
to be promptly levied so that the first installment will be collectible not later than 1999
and will take all steps necessary to assure prompt collection, and the levy of the
Assessments is hereby authorized. The City Council will cause to be taken with due
diligence all further actions that are required for the construction of each Improvement
financed wholly or partly from the proceeds of the Bonds, and will take all further actions
necessary for the final and valid levy of the Assessments and the appropriation of any
other funds needed to pay the Bonds and interest thereon when due.
(b) In the event of any current or anticipated deficiency in Assessments, the
City Council will levy ad valorem taxes in the amount of the current or anticipated
deficiency.
(c) The City will keep complete and accurate books and records showing:
receipts and disbursements in connection with the Improvements, Assessments levied
therefor and other funds appropriated for their payment, collections thereof and
disbursements therefrom, monies on hand and, the balance of unpaid Assessments.
(d) The City will cause its books and records to be audited at least annually
and will furnish copies of such audit reports to any interested person upon request.
4.03. It is hereby determined that the estimated collections of Assessments and interest
thereon for payment of principal and interest on the Bonds will produce at least five percent in
excess of the amount needed to meet when due, the principal and interest payments on the Bonds
and that no tax levy is needed at this time.
4.04. The City Manager is authorized and directed to file a certified copy of this
resolution with the County Auditor of Carver County and the Taxpayer Services Division
Manager of Hennepin County and to obtain the certificate required by Minnesota Statutes, Section
475.63.
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Section 5.
Authentication of Transcript.
5.01. The officers of the City are authorized and directed to prepare and furnish to the
Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records
of the City relating to the Bonds and to the financial condition and affairs of the City, and such
other certificates, affidavits and transcripts as may be required to show the facts within their
knowledge or as shown by the books and records in their custody and under their control, relating
to the validity and marketability of the Bonds, and such instruments, including any heretofore
furnished, may be deemed representations of the City as to the facts stated therein.
5.02. The Mayor and City Manager are authorized and directed to certify that they have
examined the Official Statement prepared and circulated in connection with the issuance and sale
of the Bonds and that to the best of their knowledge and belief the Official Statement is a
complete and accurate representation of the facts and representations made therein as of the date
of the Official Statement.
Section 6.
Tax Covenant.
6.01. The City covenants and agrees with the holders from time to time of the Bonds
that it will not take or permit to be taken by any of its officers, employees or agents any action
which would cause the interest on the Bonds to become subject to taxation under the Internal
Revenue Code of 1986, as amended (the Code), and the Treasury Regulations promulgated
thereunder, in effect at the time of such actions, and that it will take or cause its officers,
employees or agents to take, all affirmative action within its power that may be necessary to
ensure that such interest will not become subject to taxation under the Code and applicable
Treasury Regulations, as presently existing or as hereafter amended and made applicable to the
Bonds.
6.02. (a) The City will comply with requirements necessary under the Code to establish
and maintain the exclusion from gross income of the interest on the Bonds under Section 103 of
the Code, including without limitation requirements relating to temporary periods for investments,
limitations on amounts invested at a yield greater than the yield on the Bonds.
6.03. The City further covenants not to use the proceeds of the Bonds or to cause or
permit them or any of them to be used, 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.
6.04. The City will use its best efforts to comply with any federal procedural
requirements which may apply in order to effectuate the designations made by this section.
Section 7.
Book-Entry System: Limited Obligation of City.
7.01. The Bonds will be initially issued in the form of a separate single typewritten or
printed fully registered Bond for each of the maturities set forth in Section 1.03 hereof. Upon
initial issuance, the ownership of each Bond will be registered in the registration books kept by
the Bond Registrar in the name of Cede & Co., as nominee for The Depository Trust Company,
New York, New York, and its successors and assigns (DTC). Except as provided in this section,
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all of the outstanding Bonds will be registered in the registration books kept by the Bond
Registrar in the name of Cede & Co., as nominee of DTC.
7.02. With respect to Bonds registered in the registration books kept by the Bond
Registrar in the name of Cede & Co., as nominee of DTC, the City, the Bond Registrar and the
Paying Agent will have no responsibility or obligation to any broker dealers, banks and other
financial institutions from time to time for which DTC holds Bonds as securities depository
(Participants) or to any other person on behalf of which a Participant holds an interest in the
Bonds, including but not limited to any responsibility or obligation with respect to (i) the
accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership
interest in the Bonds, (ii) the delivery to any Participant or any other person (other than a
registered owner of Bonds, as shown by the registration books kept by the Bond Registrar,) of
any notice with respect to the Bonds, including any notice of redemption, or (Hi) the payment to
any Participant or any other person, other than a registered owner of Bonds, of any amount with
respect to principal of, premium, if any, or interest on the Bonds. The City, the Bond Registrar
and the Paying Agent may treat and consider the person in whose name each Bond is registered
in the registration books kept by the Bond Registrar as the holder and absolute owner of such
Bond for the purpose of payment of principal, premium and interest with respect to such Bond,
for the purpose of registering transfers with respect to such Bonds, and for all other purposes.
The Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to
or on the order of the respective registered owners, as shown in the registration books kept by
the Bond Registrar, and all such payments will be valid and effectual to fully satisfy and
discharge the City's obligations with respect to payment of principal of, premium, if any, or
interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered
owner of Bonds, as shown in the registration books kept by the Bond Registrar, will receive a
certificated Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City
Manager of a written notice to the effect that DTC has determined to substitute a new nominee
in place of Cede & Co., the words "Cede & Co.," will refer to such new nominee of DTC; and
upon receipt of such a notice, the City Manager will promptly deliver a copy of the same to the
Bond Registrar and Paying Agent.
7.03. Representation Letter. The City has heretofore executed and delivered to DTC a
. Blanket Issuer Letter of Representations (Representation Letter) which shall govern payment of
principal of, premium, if any, and interest on the Bonds and notices with respect to the Bonds.
Any Paying Agent or Bond Registrar subsequently appointed by the City with respect to the
Bonds will agree to take all action necessary for all representations of the City in the
Representation letter with respect to the Bond Registrar and Paying Agent, respectively, to be
complied with at all times.
7.04. Transfers Outside Book-Entrv Svstem. In the event the City, by resolution of the
City Council, determines that it is in the best interests of the persons having beneficial interests
in the Bonds that they be able to obtain Bond certificates, the City will notify DTC, whereupon
DTC will notify the Participants, of the availability through DTC of Bond certificates. In such
event the City will issue, transfer and exchange Bond certificates as requested by DTC and any
other registered owners in accordance with the provisions of this Resolution. DTC may
determine to discontinue providing its services with respect to the Bonds at any time by giving
notice to the City and discharging its responsibilities with respect thereto under applicable law.
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In such event, if no successor securities depository is appointed, the City will issue and the Bond
Registrar will authenticate Bond certificates in accordance with this resolution and the provisions
hereof will apply to the transfer, exchange and method of payment thereof.
7.05. Payments to Cede & Co. Notwithstanding any other provision of this Resolution
to the contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC,
payments with respect to principal of, premium, if any, and interest on the Bond and notices with
respect to the Bond will be made and given, respectively in the manner provided in DTC's
Operational Arrangements, as set forth in the Representation Letter.
Section 8. Continuing Disclosure.
8.01. The City hereby covenants and agrees that it will comply with and carry out all of
the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of
this Resolution, failure of the City to comply with the Continuing Disclosure Certificate is not
to be considered an event of default with respect to the Bonds; however, any Bondholder may
take such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the City to comply with its obligations under this section.
8.02. "Continuing Disclosure Certificate" means that certain Continuing Disclosure
Certificate executed by the Mayor and City Manager and dated the date of issuance and delivery
of the Bonds, as originally executed and as it may be amended from time to time in accordance
with the terms thereof.
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The motion for the adoption of the foregoing resolution was duly seconded by Member
, and upon vote being taken thereon, the following voted in favor
thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
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STATE OF MINNESOTA )
)
COUNTIES OF CARVER AND HENNEPIN ) SS.
)
CITY OF CHANHASSEN )
I, the undersigned, being the duly qualified and acting City Manager of the City of
Chanhassen, Carver and Hennepin Counties, Minnesota, do hereby certify that I have carefully
compared the attached and foregoing extract of minutes of a regular meeting of the City Council
of the City held on May 26, 1998 with the original minutes on file in my office and the extract
is a full, true and correct copy of the minutes insofar as they relate to the issuance and sale of
$1,325,000 General Obligation Improvement Bonds, Series 1998B of the City.
WITNESS My hand officially as such City Manager and the corporate seal of the City
this
day of
, 1998.
City Manager
Chanhassen, Minnesota
(SEAL)
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COUNTY OF CARVER
COUNTY AUDITOR'S
CERTIFICATE AS TO
REGISTRATION WHERE NO AD
VALOREM TAX LEVY
STATE OF MINNESOTA
I, the undersigned County Auditor of Carver County, Minnesota, hereby certify that a
resolution adopted by the City Council of the City of Chanhassen, Minnesota, on May 26, 1998,
relating to General Obligation Improvement Bonds, Series 1998B, in the amount of $1,325,000,
dated June 1, 1998, has been filed in my office and said obligations have been registered on the
register of obligations in my office.
WITNESS My hand and official seal this _ day of
, 1998.
County Auditor
Carver County, Minnesota
(SEAL)
By
Deputy
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STATE OF MINNESOTA
TAXPAYER SERVICES
DIVISION MANAGER'S
CERTIFICATE AS TO
REGISTRATION WHERE NO AD
VALOREM TAX LEVY
COUNTY OF HENNEPIN
I, the undersigned Taxpayer Services Division Manager of Hennepin County, Minnesota,
hereby certify that a resolution adopted by the City Council of the City of Chanhassen,
Minnesota, on May 26, 1998, relating to General Obligation Improvement Bonds, Series 1998B,
in the amount of $1 ,325,000, dated June 1, 1998, has been filed in my office and said obligations
have been registered on the register of obligations in my office.
WITNESS My hand and official seal this _ day of
, 1998.
Taxpayer Services Division Manager
Hennepin County, Minnesota
(SEAL)
By
Deputy
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Extract of Minutes of Meeting
of the City Council of the City of
Chanhassen, Carver and Hennepin Counties, Minnesota
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City
of Chanhassen, Minnesota, was duly held in the City Hall in said City on Tuesday, May 26,
1998, commencing at 6:30 o'clock P.M.
The following members were present:
and the following were absent:
* * *
* * *
* * *
The Mayor announced that the next order of business was consideration of the proposals
which had been received for the purchase of the City's $820,000 General Obligation Water
. .~evenue Bonds, Series 1998C.
The City Manager presented a tabulation of the proposals which had been received in the
manner specified in the Terms of Proposal for the Bonds. The proposals were as follows:
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After due consideration of the proposals, Member
then introduced
the following resolution and moved its adoption:
RESOLUTION NO.
A RESOLUTION A WARDING THE SALE OF $820,000 GENERAL
OBLIGATION WATER REVENUE BONDS, SERIES 1998C;
FIXING THEIR FORM AND SPECIFICATIONS;
DIRECTING THEIR EXECUTION AND DELIVERY;
AND PROVIDING FOR THEIR PAYMENT
BE IT RESOLVED By the City Council of the City of Chanhassen, Carver and Hennepin
Counties, Minnesota (City) as follows:
Section I.
Sale of Bonds.
1.01. The proposal of (Purchaser) to
purchase $820,000 General Obligation Water Revenue Bonds, Series 1998C (Bonds) of the City
described in the Terms of Proposal thereof is found and determined to be a reasonable offer and
is accepted, the proposal being to purchase the Bonds at a price of $ plus accrued
interest to date of delivery, for Bonds bearing interest as follows:
Year of
Maturity
Interest
Rate
Year of
Maturity
Interest
Rate
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
True interest cost:
1.02. The sum of $ being the amount proposed by the Purchaser in excess
of $809,750 will be credited to the Debt Service Fund hereinafter created. The City Manager is
directed to deposit the good faith check of the Purchaser, pending completion of the sale of the
Bonds, and to return the good faith checks of the unsuccessful proposers forthwith. The Mayor
and City Manager are directed to execute a contract with the Purchaser on behalf of the City.
1.03. The City will forthwith issue and sell the Bonds pursuant to Minnesota Statutes,
Section 444.075 (Act), in the total principal amount of $820,000, originally dated June I, 1998,
in the denomination of $5,000 each or any integral multiple thereof, numbered No. R-I, upward,
bearing interest as above set forth, and maturing serially on February 1 in the years and amounts
as follows:
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Year Amount Year Amount
2000 $35,000 2005 $ 90,000
2001 55,000 2006 90,000
2002 75,000 2007 95,000
2003 85,000 2008 105,000
2004 85,000 2009 105,000
1.04. Optional Redemption. The City may elect on February 1, 2007, and on any day
thereafter to prepay Bonds due on or after February 1, 2007. Redemption may be in whole or
in part and if in part, at the option of the City and in such manner as the City will determine.
If less than all Bonds of a maturity are called for redemption, the City will notify DTC (as
defined in Section 7 hereof) of the particular amount of such maturity to be prepaid. DTC will
determine by lot the amount of each participant's interest in such maturity to be redeemed and
each participant will then select by lot the beneficial ownership interests in such maturity to be
redeemed. Prepayments will be at a price of par plus accrued interest.
Section 2.
Registration and Payment.
2.01. Registered Form. The Bonds will be issued only in fully registered form. The
interest thereon and, upon surrender of each Bond, the principal amount thereof, is payable by
check or draft issued by the Registrar described herein.
2.02. Dates: Interest Payment Dates. Each Bond will be dated as of the last interest
payment date preceding the date of authentication to which interest on the Bond has been paid
or made available for payment, unless (i) the date of authentication is an interest payment date
to which interest has been paid or made available for payment, in which case the Bond will be
dated as of the date of authentication, or (ii) the date of authentication is prior to the first interest
payment date, in which case the Bond will be dated as of the date of original issue. The interest
on the Bonds will be payable on February 1 and August 1 of each year, commencing February 1,
1999, to the registered owners of record thereof as of the close of business on the fifteenth day
of the immediately preceding month, whether or not that day is a business day.
2.03. Registration. The City will appoint a bond registrar, transfer agent, authenticating
agent and paying agent (Registrar). The effect of registration and the rights and duties of the
City and the Registrar with respect thereto are as follows:
(a) Register. The Registrar must keep at its principal corporate trust office a
bond register in which the Registrar provides for the registration of ownership of Bonds
and the registration of transfers and exchanges of Bonds entitled to be registered,
transferred or exchanged.
(b) Transfer of Bonds. Upon surrender for transfer of a Bond duly endorsed
by the registered owner thereof or accompanied by a written instrument of transfer, in
form satisfactory to the Registrar, duly executed by the registered owner thereof or by an
attorney duly authorized by the registered owner in writing, the Registrar will authenticate
and deliver, in the name of the designated transferee or transferees, one or more new
Bonds of a like aggregate principal amount and maturity, as requested by the transferor.
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The Registrar may, however, close the books for registration of any transfer after the
fifteenth day of the month preceding each interest payment date and until that interest
payment date.
( c) Exchange of Bonds. When Bonds are surrendered by the registered owner
for exchange the Registrar will authenticate and deliver one or more new Bonds of a like
aggregate principal amount and maturity as requested by the registered owner or the
owner's attorney in writing.
(d) Cancellation. Bonds surrendered upon transfer or exchange will be
promptly cancelled by the Registrar and thereafter disposed of as directed by the City.
(e) Imorooer or Unauthorized Transfer. When a Bond is presented to the
Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is
satisfied that the endorsement on the Bond or separate instrument of transfer is valid and
genuine and that the requested transfer is legally authorized. The Registrar will incur no
liability for the refusal, in good faith, to make transfers which it, in its judgment, deems
improper or unauthorized.
(f) Persons Deemed Owners. The City and the Registrar may treat the person
in whose name a Bond is registered in the bond register as the absolute owner of the
Bond, whether the Bond is overdue or not, for the purpose of receiving payment of, or
on account of, the principal of and interest on the Bond and for all other purposes, and
payments so made to a registered owner or upon the owner's order will be valid and
effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or
sums so paid.
(g) Taxes. Fees and Charges. The Registrar may impose a charge upon the
owner thereof for a transfer or exchange of Bonds sufficient to reimburse the Registrar
for any tax, fee or other governmental charge required to be paid with respect to the
transfer or exchange.
(h) Mutilated. Lost. Stolen or Destroved Bonds. If a Bond becomes mutilated
or is destroyed, stolen or lost, the Registrar will deliver a new Bond of like amount,
number, maturity date and tenor in exchange and substitution for and upon cancellation
of the mutilated Bond or in lieu of and in substitution for a Bond destroyed, stolen or lost,
upon the payment of the reasonable expenses and charges of the Registrar in connection
therewith; and, in the case of a Bond destroyed, stolen or lost, upon filing with the
Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of
the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or
indemnity in form, substance and amount satisfactory to it and as provided by law, in
which both the City and the Registrar must be named as obligees. Bonds so surrendered
to the Registrar will be cancelled by the Registrar and evidence of such cancellation must
be given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured
or been called for redemption in accordance with its terms it is not necessary to issue a
new Bond prior to payment.
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(i) Redemption. In the event any of the Bonds are called for redemption,
notice thereof identifying the Bonds to be redeemed will be given by the Registrar by
mailing a copy of the redemption notice by first class mail (postage prepaid) not more
than 60 and not less than 30 days prior to the date fixed for redemption to the registered
owner of each Bond to be redeemed at the address shown on the registration books kept
by the Registrar and by publishing the notice if required by law. Failure to give notice
by publication or by mail to registered owners, or any defect therein, will not affect the
validity of the proceedings for the redemption of Bonds. Bonds so called for redemption
will cease to bear interest after the specified redemption date, provided that the funds for
the redemption are on deposit with the place of payment at that time.
2.04. Appointment of Initial Registrar. The City appoints
, Minnesota, as the initial
Registrar. The Mayor and the City Manager are authorized to execute and deliver, on behalf of
the City, a contract with the Registrar. Upon merger or consolidation of the Registrar with
another corporation, if the resulting corporation is a bank or trust company authorized by law to
conduct such business, the resulting corporation is authorized to act as successor Registrar. The
City agrees to pay the reasonable and customary charges of the Registrar for the services
performed. The City reserves the right to remove the Registrar upon 30 days' notice and upon
the appointment of a successor Registrar, in which event the predecessor Registrar must deliver
all cash and Bonds in its possession to the successor Registrar and must deliver the bond register
to the successor Registrar. On or before each principal or interest due date, without further order
of this Council, the City Finance Director must transmit to the Registrar moneys sufficient for
the payment of all principal and interest then due.
2.05. Execution. Authentication and Delivery. The Bonds will be prepared under the
direction of the City Manager and executed on behalf of the City by the signatures of the Mayor
and the City Manager, provided that all signatures may be printed, engraved or lithographed
facsimiles of the originals. If an officer whose signature or a facsimile of whose signature
appears on the Bonds ceases to be such officer before the delivery of any Bond, that signature
or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the officer
had remained in office until delivery. Notwithstanding such execution, a Bond will not be valid
or obligatory for any purpose or entitled to any security or benefit under this Resolution unless
and until a certificate of authentication on the Bond has been duly executed by the manual
signature of an authorized representative of the Registrar. Certificates of authentication on
different Bonds need not be signed by the same representative. The executed certificate of
authentication on a Bond is conclusive evidence that it has been authenticated and delivered under
this Resolution. When the Bonds have been so prepared, executed and authenticated, the City
Manager will deliver the same to the purchaser upon payment of the purchase price in accordance
with the contract of sale heretofore made and executed, and the purchaser is not obligated to see
to the application of the purchase price.
2.06. Temporary Bonds. The City may elect to deliver in lieu of printed definitive
Bonds one or more typewritten temporary Bonds in substantially the form set forth in Section 3
with such changes as may be necessary to reflect more than one maturity in a single temporary
bond. Upon the execution and delivery of definitive Bonds the temporary Bonds will be
exchanged therefor and cancelled.
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Section 3.
Form of Bond.
3.01. The Bonds will be printed or typewritten in substantially the following form:
[Face of the Bond]
No. R-
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTIES OF CARVER AND HENNEPIN
CITY OF CHANHASSEN
$
GENERAL OBLIGATION WATER REVENUE BOND, SERIES 1998C
Rate
Maturity
Date of
Original Issue
CUSIP
June 1, 1998
Registered Owner: Cede & Co.
The City of Chanhassen, Minnesota, a duly organized and existing municipal corporation
in Carver and Hennepin Counties, Minnesota (City), acknowledges itself to be indebted and for
value received hereby promises to pay to the Registered Owner specified above or registered
assigns, the principal sum of $ on the maturity date specified above, with interest
thereon from the date hereof at the annual rate specified above, payable February 1 and August 1
in each year, commencing February 1, 1999, to the person in whose name this Bond is registered
at the close of business on the fifteenth day (whether or not a business day) of the immediately
preceding month. The interest hereon and, upon presentation and surrender hereof, the principal
hereof are payable in lawful money of the United States of America by check or draft by
, Minnesota, as Bond Registrar, Paying Agent,
Transfer Agent and Authenticating Agent, or its designated successor under the Resolution
described herein. For the prompt and full payment of such principal and interest as the same
respectively become due, the full faith and credit and taxing powers of the City have been and
are hereby irrevocably pledged.
The City may elect on February 1,2006, and on any day thereafter to prepay Bonds due
on or after February 1,2007. Redemption may be in whole or in part and ifin part, at the option
of the City and in such manner as the City will determine. If less than all Bonds of a maturity
are called for redemption, the City will notify The Depository Trust Company (DTC) of the
particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each
participant's interest in such maturity to be redeemed and each participant will then select by lot
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the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a
price of par plus accrued interest.
The City Council has designated the issue of Bonds of which this Bond forms a part as
"qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Internal
Revenue Code of 1986, as amended (the Code) relating to disallowance of interest expense for
financial institutions and within the $10 million limit allowed by the Code for the calendar year
of issue.
Additional provisions of this Bond contained on the reverse hereof have the same effect
as though fully set forth in this place.
This Bond is not valid or obligatory for any purpose or entitled to any security or benefit
under the Resolution until the Certificate of Authentication hereon has been executed by the Bond
Registrar by manual signature of one of its authorized representatives.
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
or manual signatures of the Mayor and City Manager and has caused this Bond to be dated as
of the date set forth below.
Dated:
CITY OF CHANHASSEN, MINNESOTA
(Facsimile)
City Manager
(Facsimile)
Mayor
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds delivered pursuant to the Resolution mentioned within.
By
Authorized Representative
[Reverse of the Bond]
This Bond is one of an issue in the aggregate principal amount of $820,000 all of like
original issue date and tenor, except as to number, maturity date, redemption privilege, and
interest rate, all issued pursuant to a resolution adopted by the City Council on May 26, 1998 (the
Resolution), for the purpose of providing money to aid in financing various improvements to the
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water system of the City, pursuant to and in full conformity with the Constitution and laws of
the State of Minnesota, including Minnesota Statutes, Section 444.075 and the principal hereof
and interest hereon are payable primarily from the net revenues of the water system of the City
and from tax increment revenues from the City's Tax Increment District No.6-I, in a special
debt service fund of the City, as set forth in the Resolution to which reference is made for a full
statement of rights and powers thereby conferred. The full faith and credit of the City are
irrevocably pledged for payment of this Bond and the City Council has obligated itself to levy
ad valorem taxes on all taxable property in the City in the event of any deficiency in net revenues
pledged, which taxes may be levied without limitation as to rate or amount. The Bonds of this
series are issued only as fully registered Bonds in denominations of $5,000 or any integral
multiple thereof of single maturities.
IT IS HEREBY CERTIFIED AND RECITED That in and by the Resolution, the City has
covenanted and agreed that it will continue to own and operate the water plant system free from
competition by other like utilities; that adequate insurance on said plant and system and suitable
fidelity bonds on employees will be carried; that proper and adequate books of account will be
kept showing all receipts and disbursements relating to the Water Fund, into which it will pay
all of the gross revenues from the water system; that it will also create and maintain a General
Obligation Water Revenue Bonds, Series 1998C Debt Service Fund, into which it will pay, out
of the net revenues from the water system and the tax increment district a sum sufficient to pay
principal hereof and interest thereon when due; and that it will provide, by ad valorem tax levies,
for any deficiency in required net water system and the tax increment district revenues.
As provided in the Resolution and subject to certain limitations set forth therein, this Bond
is transferable upon the books of the City at the principal office of the Bond Registrar, by the
registered owner hereof in person or by the owner's attorney duly authorized in writing upon
surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar,
duly executed by the registered owner or the owner's attorney; and may also be surrendered in
exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City
will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner,
of the same aggregate principal amount, bearing interest at the same rate and maturing on the
same date, subject to reimbursement for any tax, fee or governmental charge required to be paid
with respect to such transfer or exchange.
The City and the Bond Registrar may deem and treat the person in whose name this Bond
is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose
of receiving payment and for all other purposes, and neither the City nor the Bond Registrar will
be affected by any notice to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts,
conditions and things required by the Constitution and laws of the State of Minnesota to be done,
to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order
to make it a valid and binding general obligation of the City in accordance with its terms, have
been done, do exist, have happened and have been performed as so required, and that the issuance
of this Bond does not cause the indebtedness of the City to exceed any constitutional or statutory
limitation of indebtedness.
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The following abbreviations, when used in the inscription on the face of this Bond, will
be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants
in common
UNIF GIFT MIN ACT Custodian
(Cust) (Minor)
TEN ENT -- as tenants
by entireties
under Uniform Gifts or
Transfers to Minors
JT TEN .-
as joint tenants with
right of survivorship and
not as tenants in common
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 all rights thereunder, and
attorney to transfer
with full power of
does hereby irrevocably constitute and appoint
the said Bond on the books kept for registration of the within Bond,
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:
NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the
Securities Transfer Agent Medallion Program ("STAMP"), the Stock Exchange Medallion
Program ("SEMP"), the New York Stock Exchange, Inc. Medallion Signature Program ("MSP")
or other such "signature guarantee program" as may be determined by the Registrar in addition
DJK143064
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to, or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange
Act of 1934, as amended.
The Bond Registrar will not effect transfer of this Bond unless the information concerning
the assignee requested below is provided.
Name and Address:
(Include information for all joint owners if this
Bond is held by joint account.)
Please insert social security or other
identifying number of assignee
PROVISIONS AS TO REGISTRA nON
The ownership of the principal of and interest on the within Bond has been registered on
the books of the Registrar in the name of the person last noted below.
Date of Registration
Registered Owner
Signature of
Officer of the Registrar
Cede & Co.
Federal ID #13-2555119
3.02. The City Manager will obtain a copy of the proposed approving legal opinion of
Kennedy & Graven, Chartered, Minneapolis, Minnesota, which will be complete except as to
dating thereof and will cause the opinion to be printed on or accompany each Bond.
Section 4.
Payment: Security: Pledges and Covenants.
4.01. (a) The City will create and continue to operate its Water Fund to which will
be credited all gross revenues of the water system and out of which will be paid all
normal and reasonable expenses of current operations of the water system. Any balance
therein are deemed net revenues and will be transferred, from time to time, together with
tax increment revenues of Tax Increment District No.6-I, to a General Obligation Water
Revenue Bonds, Series 1998C Debt Service Fund (Debt Service Fund) hereby created in
the Water Fund, which fund will be used only to pay principal of and interest on the
Bonds and any other bonds similarly authorized. There will always be retained in the
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Debt Service Fund a sufficient amount to pay principal of and interest on all the Bonds
described in the resolution authorizing the sale of the Bonds, and the City Manager must
report any current or anticipated deficiency in the Debt Service Fund to the City Council.
There is appropriated to the Debt Service Fund (i) capitalized interest financed from Bond
proceeds, if any, (ii) any amount over the minimum purchase price of the Bonds paid by
the Purchaser, and (iii) the accrued interest paid by the Purchaser upon closing and
delivery of the Bonds.
(b) The proceeds of the Bonds, less the appropriations made in paragraph (a),
together with any other funds appropriated during the construction of the Projects financed
by the Bonds as identified in the Resolution authorizing the sale of the Bonds (Projects)
will be deposited in a separate construction fund to be used solely to defray expenses of
the Projects and the payment of principal and interest on the Bonds prior to the
completion and payment of all costs of the Projects. When the Projects are completed and
the cost thereof paid, the construction account is to be closed and any balance therein is
to be deposited in the Debt Service Fund.
4.02. The City Council covenants and agrees with the holders of the Bonds that so long
as any of the Bonds remain outstanding and unpaid, it will keep and enforce the following
covenants and agreements:
(a) The City will continue to maintain and efficiently operate the water system
as public utilities and conveniences free from competition of other like utilities and will
cause all revenues therefrom to be deposited in bank accounts and credited to the water
system accounts as hereinabove provided, and will make no expenditures from those
accounts except for a duly authorized purpose and in accordance with this resolution.
(b) The City will also maintain the Debt Service Fund as a separate account
in the Water Fund and will cause money to be credited thereto from time to time, out of
net revenues from the water plant and system and tax increment revenues in sums
sufficient to pay principal of and interest on the Bonds when due.
(c) The City will keep and maintain proper and adequate books of records and
accounts separate from all other records of the City in which will be complete and correct
entries as to all transactions relating to the water system and which will be open to
inspection and copying by any bondholder, or the bondholder's agent or attorney, at any
reasonable time, and it will furnish certified transcripts therefrom upon request and upon
payment of a reasonable fee therefor, and said account will be audited at least annually
by a qualified public accountant and statements of such audit and report will be furnished
to all bondholders upon request.
(d) The City Council will cause persons handling revenues of the water system
and tax increment district to be bonded in reasonable amounts for the protection of the
City and the bondholders and will cause the funds collected on account of the operations
of the water and tax increment district system to be deposited in a bank whose deposits
are guaranteed under the Federal Deposit Insurance Law.
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( e) The Council will keep the water system insured at all times against loss by
fire, tornado and other risks customarily insured against with an insurer or insurers in
good standing, in such amounts as are customary for like plants, to protect the holders,
from time to time, of the Bonds and the City from any loss due to any such casualty and
will apply the proceeds of such insurance to make good any such loss.
(f) The City and each and all of its officers will punctually perform all duties
with reference to the water system as required by law.
(g) The City will impose and collect charges of the nature authorized by
Minnesota Statutes, Section 444.075 at the times and in the amounts required to produce,
together with any tax increment revenues designated as a source of payment of the Bonds,
net revenues adequate to pay all principal and interest when due on the Bonds and to
create and maintain such reserves securing said payments as may be provided in this
resolution.
(h) The City Council will levy general ad valorem taxes on all taxable property
in the City, when required to meet any deficiency in net revenues.
4.03. It is hereby determined that the estimated collection of net revenues for the
payment of principal and interest on the Bonds will produce at least five percent in excess of the
amount needed to meet, when due, the principal and interest payments on the Bonds and that no
tax levy is needed at this time.
4.04. The City Manager is authorized and directed to file a certified copy of this
resolution with the County Auditor of Carver County and the Taxpayer Services Division
Manager of Hennepin County and to obtain the certificate required by Minnesota Statutes, Section
475.63.
Section 5.
Authentication of Transcript.
5.01. The officers of the City are authorized and directed to prepare and furnish to the
Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records
of the City relating to the Bonds and to the financial condition and affairs of the City, and such
other certificates, affidavits and transcripts as may be required to show the facts within their
knowledge or as shown by the books and records in their custody and under their control, relating
to the validity and marketability of the Bonds, and such instruments, including any heretofore
furnished, will be deemed representations of the City as to the facts stated therein.
5.02. . The Mayor and City Manager are authorized and directed to certify that they have
examined the Official Statement prepared and circulated in connection with the issuance and sale
of the Bonds and that to the best of their knowledge and belief the Official Statement is a
complete and accurate representation of the facts and representations made therein as of the date
of the Official Statement.
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Section 6.
Tax Covenant.
6.01. The City covenants and agrees with the holders from time to time of the Bonds
that it will not take or permit to be taken by any of its officers, employees or agents any action
which would cause the interest on the Bonds to become subject to taxation under the Internal
Revenue Code of 1986, as amended (the Code), and the Treasury Regulations promulgated
thereunder, in effect at the time of such actions, and that it will take or cause its officers,
employees or agents to take, all affirmative action within its power that may be necessary to
ensure that such interest will not become subject to taxation under the Code and applicable
Treasury Regulations, as presently existing or as hereafter amended and made applicable to the
Bonds.
6.02. (a) The City will comply with requirements necessary under the Code to establish
and maintain the exclusion from gross income of the interest on the Bonds under Section 103 of
the Code, including without limitation requirements relating to temporary periods for investments,
limitations on amounts invested at a yield greater than the yield on the Bonds.
6.03. The City further covenants not to use the proceeds of the Bonds or to cause or
permit them or any of them to be used, 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.
6.04. The City will use its best efforts to comply with any federal procedural
requirements which may apply in order to effectuate the designations made by this section.
Section 7. Book-Entrv System: Limited Obligation of City.
7.01. The Bonds will be initially issued in the form of a separate single typewritten or
printed fully registered Bond for each of the maturities set forth in Section 1.03 hereof. Upon
initial issuance, the ownership of each Bond will be registered in the registration books kept by
the Bond Registrar in the name of Cede & Co., as nominee for The Depository Trust Company,
New York, New York, and its successors and assigns (DTC). Except as provided in this section,
all of the outstanding Bonds will be registered in the registration books kept by the Bond
. Registrar in the name of Cede & Co., as nominee of DTC.
7.02. With respect to Bonds registered in the registration books kept by the Bond
Registrar in the name of Cede & Co., as nominee of DTC, the City, the Bond Registrar and the
Paying Agent will have no responsibility or obligation to any broker dealers, banks and other
financial institutions from time to time for which DTC holds Bonds as securities depository
(Participants) or to any other person on behalf of which a Participant holds an interest in the
Bonds, including but not limited to any responsibility or obligation with respect to (i) the
accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership
interest in the Bonds, (ii) the delivery to any Participant or any other person (other than a
registered owner of Bonds, as shown by the registration books kept by the Bond Registrar), of
any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to
any participant or any other person, other than a registered owner of Bonds, of any amount with
respect to principal of, premium, if any, or interest on the Bonds. The City, the Bond Registrar
and the Paying Agent may treat and consider the person in whose name each Bond is registered
DJK143064
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in the registration books kept by the Bond Registrar as the holder and absolute owner of such
Bond for the purpose of payment of principal, premium and interest with respect to such Bond,
for the purpose of registering transfers with respect to such Bond, and for all other purposes. The
Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to or on
the order of the respective registered owners, as shown in the registration books kept by the Bond
Registrar, and all such payments will be valid and effectual to fully satisfy and discharge the
City's obligations with respect to payment of principal of, premium, if any, or interest on the
Bonds to the extent of the sum or sums so paid. No person other than a registered owner of
Bonds, as shown in the registration books kept by the Bond Registrar, will receive a certificated
Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City Manager
of a written notice to the effect that DTC has determined to substitute a new nominee in place
of Cede & Co., the words "Cede & Co.," will refer to such new nominee of DTC; and upon
receipt of such a notice, the City Manager will promptly deliver a copy of the same to the Bond
Registrar and Paying Agent.
7.03. Representation Letter. The City has heretofore executed and delivered to DTC a
Blanket Issuer Letter of Representations (Representation Letter) which shall govern payment of
principal of, premium, if any, and interest on the Bonds and notices with respect to the Bonds.
Any Paying Agent or Bond Registrar subsequently appointed by the City with respect to the
Bonds will agree to take all action necessary for all representations of the City in the
Representation letter with respect to the Bond Registrar and Paying Agent, respectively, to be
complied with at all times.
7.04. Transfers Outside Book-Entry SYstem. In the event the City, by resolution of the
City Council, determines that it is in the best interests of the persons having beneficial interests
in the Bonds that they be able to obtain Bond certificate, the City will notify DTC, whereupon
DTC will notify the Participants, of the availability through DTC of Bond certificates. In such
event the City will issue, transfer and exchange Bond certificates as requested by DTC and any
other registered owner in accordance with the provisions of this Resolution. DTC may determine
to discontinue providing its services with respect to the Bonds at any time by giving notice to the
City and discharging its responsibilities with respect thereto under applicable law. In such event,
if no successor securities depository is appointed, the City will issue and the Bond Registrar will
authenticate Bond certificates in accordance with this resolution and the provisions hereof will
apply to the transfer, exchange and method of payment thereof.
7.05. Payments to Cede & Co. Notwithstanding any other provision of this Resolution
to the contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC,
payments with respect to principal of, premium, if any, and interest on the Bond and all notices
with respect to the Bond will be made and given, respectively in the manner provided in DTC's
Operational Arrangements, as set forth in the Representation Letter.
Section 8. Continuing Disclosure.
8.01. The City hereby covenants and agrees that it will comply with and carry out all of
the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of
this Resolution, failure of the City to comply with the Continuing Disclosure Certificate is not
to be considered an event of default with respect to the Bonds; however, any Bondholder may
DJK143064
CH135-29
take such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the City to comply with its obligations under this section.
8.02. "Continuing Disclosure Certificate" means that certain Continuing Disclosure
Certificate executed by the Mayor and City Manager and dated the date of issuance and delivery
of the Bonds, as originally executed and as it may be amended from time to time in accordance
with the terms thereof.
The motion for the adoption of the foregoing resolution was duly seconded by Member
, and upon vote being taken thereon, the following voted in favor
thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
DJK143064
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STATE OF MINNESOTA )
)
COUNTIES OF CARVER AND HENNEPIN ) SS.
)
CITY OF CHANHASSEN )
I, the undersigned, being the duly qualified and acting Manager of the City ofChanhassen,
Carver and Hennepin Counties, Minnesota, do hereby certify that I have carefully compared the
attached and foregoing extract of minutes of a regular meeting of the City Council of the City
held on May 26, 1998 with the original minutes on file in my office and the extract is a full, true
and correct copy of the minutes insofar as they relate to the issuance and sale of $820,000
General Obligation Water Revenue Bonds, Series] 1998C of the City.
WITNESS My hand officially as such Manager and the corporate seal of the City this
day of
, 1998.
City Manager
Chanhassen, Minnesota
(SEAL)
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COUNTY OF CARVER
COUNTY AUDITOR'S
CERTIFICATE AS TO
REGISTRATION WHERE NO AD
VALOREM TAX LEVY
STATE OF MINNESOTA
I, the undersigned County Auditor of Carver County, Minnesota, hereby certify that a
resolution adopted by the City Council of the City of Chanhassen, Minnesota, on May 26, 1998,
relating to General Obligation Water Revenue Bonds, Series 1998C, in the amount of $820,000,
dated June 1, 1998, has been filed in my office and said obligations have been registered on the
register of obligations in my office.
WITNESS My hand and official seal this _ day of
, 1998.
County Auditor
Carver County, Minnesota
(SEAL)
By
Deputy
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STATE OF MINNESOTA
T AXP A YER SERVICES
DIVISION MANAGER'S
CERTIFICATE AS TO
REGISTRATION WHERE NO AD
VALOREM TAX LEVY
COUNTY OF HENNEPIN
I, the undersigned Taxpayer Services Division Manager of Hennepin County, Minnesota,
hereby certify that a resolution adopted by the City Council of the City of Chanhassen,
Minnesota, on May 26, 1998, relating to General Obligation Water Revenue Bonds, Series 1998C,
in the amount of $820,000, dated June 1, 1998, has been filed in my office and said obligations
have been registered on the register of obligations in my office.
WITNESS My hand and official seal this _ day of
, 1998.
Taxpayer Services Division Manager
Hennepin County, Minnesota
(SEAL)
By
Deputy
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85 E. SEVENTH PLACE, SUITE 100
SAINT PAUL, MN 55101-2887
612-223-3000 FAX: 612-223-3002
f
SPRINGSTED
Public Finance Advisors
~
April 22, 1998
Ms. Pam Snell, Finance Director
City of Chanhassen
P.O. Box 147
690 Coulter Drive
Chanhassen, MN 55317-0147
Re: Rebate Requirements
Dear Ms. Snell:
Your issues of $4,970,000 General Obligation Park Bonds, Series 1998A, $1,325,000 General
Obligation Improvement Bonds, Series 1998B, and $820,000 General Obligation Water
Revenue Bonds, Series 1998C are scheduled for sale on May 26, 1998. Upon award of the
bonds the City will be committing to comply with the arbitrage regulations. This commitment is
necessary in order for the City to issue municipal debt. We have enclosed a summary
discussion of arbitrage rebate requirements to assist you in understanding these complex rules
and explaining them to the City. We will, if requested, be pleased to provide an explanation of
these rules to your City. We have also enclosed two copies of the contract. If the City wishes
to engage Springsted in providing arbitrage services, please sign the contract, return both
copies to Springsted, we will sign our copies and return one copy to you for your records.
. Arbitrage Earnings Are Increasing Thereby Causing Rebate Liabilities. Penalties for
Non-Compliance Can Be Substantial.
In the event of non-compliance:
. Assessed penalties will equal 100% of the rebate amount, plus a 50% penalty and
interest.
. Investments may have to be yield-restricted.
. The bonds may become taxable.
Non-compliance with arbitrage requirements may subject issuers to a class-action lawsuit by
investors either because the bonds may be declared taxable with a diminished market value or
the securities may be unmarketable. To protect your constituents from the consequences of
non-compliance, you must exercise one of two options: hire professionals to track and
calculate your rebate liability (whether that be Springsted or someone else) or do it yourself.
SAI:-.JT PAUL, M:'\ . MINNEAPOLIS, MN . BROOKFlELD,WI . OVERLAND PARK, KS . WASHINGTON, DC
ImVA CITY, II'.
City of Chanhassen, Minnesota
April 22, 1998
Page 2
We have already seen instances where employee turnover may put compliance at risk when an
issuer relies on staff to do the work.
Springsted is fully prepared to assist clients with arbitrage rebate by providing the following
services:
· Perform rebate calculations to determine the yield on the debt obligations and the
amount to be rebated.
· Notify you of the rebate amount and prepare a determination statement for you to file
with the IRS in a timely manner.
These services were established to provide a secure mechanism to ensure Springsted clients
are in full compliance both today and for as long as your debt is outstanding.
We strongly recommend that you make a final decision as to how you will handle arbitrage
rebate on or before the award of the bonds. Due to the urgency of this matter, we have
enclosed a copy of the Springsted Agreement For Financial Advisor Services with an
Addendum related to Arbitrage Rebate Monitoring Services.
We have also enclosed a response card advising us of your determination with respect to how
you plan to handle this compliance issue. Please return the response card (at minimum) no
later than one week prior to the date of sale because we will be advising Bond Counsel of your
decision as to how you intend to comply with these requirements.
We stress the importance of fully complying with these regulations. We are available at your
convenience to discuss these regulations and your responsibility for compliance.
Respectfully submitted,
-........ % /,
) .-' ,'/i .
~1:;r:~/7J:{/cl5J..[I::{t-ZC<f:
~ ~J'1~
David N. MacGillivray, Principal ':"
Client Representative
jen
Enclosures
ARBITRAGE AND REBATE PRIMER
Background
The following information entitled "Arbitrage and Rebate Primer" is a general description of the
arbitrage and rebate requirements under existing laws and regulations. In June 1993, the
Treasury issued its final arbitrage regulations, which we have attempted to address in this
discussion. This material is being furnished by Springsted Incorporated in order to provide
issuers with general information relating to the arbitrage regulations. It does not purport to be
a definitive set of instructions, and it should not be construed as legal advice. While this
description represents a consensus among nationally recognized bond counsel firms on the
issues discussed, issuers should be aware that different bond counsels may have differing
opinions.
It should further be noted that this description may not reflect changes in law that may occur,
or certain Treasury regulations and administrative and judicial rulings that may have been
promulgated, subsequent to the date of its preparation. Any such changes in law or new
rulings and regulations may have a material effect on the issuer's duties.
Concept
What is the general concept behind the arbitrage laws? The arbitrage laws minimize the
benefits that can be obtained through the investment of proceeds from the issuance of tax-
exempt obligations. These laws remove the incentive to issue more obligations, issue
obligations earlier, or to leave obligations outstanding longer than necessary to carry out the
governmental purpose of the issue.
Definition
The general definition of an arbitrage obligation is any obligation which attempts to exploit the
difference between tax-exempt and taxable interest rates by investing in a materially higher
yield (except under certain permitted temporary periods) or to increase the burden on the tax-
exempt market through early issuance or over issuance. An arbitrage obligation cannot be
issued as a tax-exempt obligation. The arbitrage rules set forth certain exemptions or "safe
harbor" provisions for permitting the issuance of tax-exempt obligations. With each issue, the
, 'rssuer must reasonably expect to expend not less than 5% of obligation proceeds, including
investment earnings but exclusive of any reserve, within six months of receipt and 85% within
three years. In addition to the 5%, the issuer must continue with due diligence to complete the
projecfand expend the proceeds.
In General
The arbitrage laws can be broken into two sections. The first section has roots which began in
the provisions enacted by congress in the Tax Reform Act of 1969. These rules set forth the
criteria by which the proceeds of the tax-exempt obligations can be invested. The second
section calls for arbitrage profits to be rebated back to the IRS. The second portion originated
in 1981 when congress imposed a rebate requirement on mortgage revenue bonds. The
rebate extended to industrial development bonds in 1985 and generally to most other tax-
exempt obligations in 1986.
~ SPRINGSTED
-i-
January 24, 1996
Since the Tax Code of 1986, regulations of 1989, 1992, 1993 and 1994 have been written.
The most important of these are the comprehensive revised regulations of 1993 which are
effective for tax-exempt obligations issued after June 30, 1993.
Funds Subject to Arbitrage and Rebate
Gross Proceeds of an issue are subject to the arbitrage restriction and arbitrage rebate
provisions. Gross proceeds, as defined in the Tax Code, include original proceeds from the
issuance of tax-exempt obligations, investment earnings on those proceeds, and any money
provided for payment of debt service on the obligations or as security or a reserve for the
obligations, regardless of source.
Yield on Tax-Exempt Obligations
The arbitrage laws limit allowable earnings and determine rebate by using "yield" as a
measurement. The yield on a fixed rate issue is the discount rate that, when computing the
present value as of the issue date of all payments of principal, interest and fees for qualified
guarantees on the issue (i.e. insurance premium) produces an amount equal to the present
value, using the same discount rate, of the aggregate issue price of the tax-exempt obligation
as of the issue date. The yield on a variable rate issue is the discount rate that, when used in
computing the present value as of the first date of a computation period of all payments
attributable to the computation period, produces an amount equal to the present value of the
aggregate issue price (or deemed issue price for the computation period) as of the first date of
the computation period.
Restricted Yields and Temporary Periods
In addition to the rebate provisions under certain circumstances, investments of the proceeds
from the issuance of tax-exempt obligations are restricted to a yield not to exceed one-eighth
of one percent of the yield on the obligations. This concept is referred to in the regulations as
"materially higher yield." Restricted yield is required for (i) proceeds, including investment
earnings but excluding reserve funds not expended within the three-year period; (ii) that
portion of proceeds in a reserve fund in excess of 10% of the issue amount; (iii) funds from any
source in a reserve fund in excess of 10% of the issue amount; and (iv) amounts in a debt
service fund in excess of a bona fide debt service fund amount plus the minor portion.
Proceeds not subject to these restricted yield requirements qualify for temporary periods and
are eligible to be invested at an unrestricted yield.
Rebate Exemptions
The Code and regulations provide some exceptions to the rebate requirements. They are as
follows:
a) small issuer exception;
b) exception for investments in tax-exempt securities;
c) six-month spending exception;
d) 18-month spending exception;
e) 24-month spending exception;
f) six-month tax and revenue anticipation note (TRANs) spending exception; and
g) bona fide debt service fund exception.
~ SPRINGSTED
- ii -
January 24, 1996
Although these exceptions exempt an issuer from being subject to various rebate
requirements, an issuer must comply with the arbitrage provisions.
Small Issuer Exception
According to the 1993 regulations, an issue (other than a refunding issue) qualifies for the
small issuer exception only if the issuer reasonably expects, as of the issue date, that the
aggregate face amount of all tax-exempt obligations (other than private activity bonds) issued
during that calendar year does not exceed $5,000,000. Unlike other arbitrage and rebate
tests, actual events prevail over reasonable expectations. If additional unexpected obligations
are issued, so the total amount exceeds $5,000,000 during the calendar year, the small issuer
exception will no longer apply.
Obligations issued by a subordinate entity must be included in the aggregate face amount of
any obligations issued by an entity.
Only the portion of a current refunding tax-exempt obligation that exceeds the face amount of
the obligation being refunded is included in the total aggregate face amount issued.
Advance refunding obligations are subject to rebate unless all the following criteria are met:
a) the face amount of all tax-exempt obligations (other than private activity bonds)
issued during the calendar year does not exceed $5,000,000;
b) the refunded issues were exempted from rebate when issued or, if issued prior
to 1986, they were issued in a year when the issuer did not issue more than
$5,000,000 of governmental obligations;
c) the average maturity date of the refunding issues is not later than the average
maturity date of the obligations to be refunded; and
d) no refunding bond has a maturity date later than 30 years after the date the
original bond was issued.
The 1993 regulations also set forth special provisions if any original issue discount or original
issue premium is not a "de minimis" amount. If either is not a "de minimis" amount, the total
aggregate face amount of the issue may be different than the par amount of tax-exempt
obligations issued.
Exception for Investments in Tax-Exempt Securities
The regulations provide an exemption from rebate if the gross proceeds of an issue are
invested in certain tax-exempt securities. The tax-exempt securities must not be subject to the
Alternative Minimum Tax (AMT) for their earnings to be exempt. For obligations issued after
March 31, 1988, whose proceeds are invested in tax-exempt obligations subject to the AMT,
the earnings from the AMT investments will be subject to the rebate requirements.
Spending Exceptions
Issuers are not required to rebate excess earnings on project funds if they meet either the six-
month, 18-month or 24-month spending exceptions. For all three spending exceptions, rebate
will still be due on any reserve funds, debt service funds and sinking funds. Expenditures of
tax-exempt proceeds to redeem bonds do not qualify toward the various expenditure targets.
~ SPRINGSTED
-iii-
January 24, 1996
The six-month and 18-month exceptions can apply to any type of tax-exempt obligations,
including industrial development bonds or mortgage revenue bonds. The 24-month exception
applies only to "construction issues." See discussion under "24-Month Spending Exception"
for details on this exception.
.. t;xrip.~@1:I::::: :EXa~nClitQrgTl!$tP~riQ(I$
.... .. :::wtmU~[:::::r::: $iXRM90*fii C:::1S4MdnthC .24AMBntH
.. .. ", ...... .... ............-...... ..................................
........--........................ ..............................
6 month s 1 00% 1 5 % 1 0%
1 2 months 60 % 45%
1 8 months 1 00% 75 %
24 months 1 00%
Six-Month Spending Exception
Issuers can qualify for the six-month exception if 100% of the proceeds are expended within
six months. This law allows issuers of governmental use bonds or 501 (c){3) bonds an
additional six months to spend proceeds, provided the unspent amount after the first six
months did not exceed the lesser of 5% of proceeds or $100,000.
18-Month Spending Exception
Issuers can qualify for the 18-month exception if 100% of the gross proceeds are spent within
18 months according to the following schedule:
a) at least 15% of the gross proceeds were spent within six months after the date
of the issuance of the bonds;
b) 60% of such proceeds were spent within one year;
c) 100% of such proceeds were spent within 18 months.
Failure to spend down a "de minimis" amount at the final payment date is disregarded for the
18-month exception if:
a) the amount does not exceed the lesser of 3% of the issue price or $250,000;
b) the issuer exercises due diligence to complete the project; and
c) if, after 18 months a "reasonable retainage," limited to 5% of construction
proceeds is spent within the next twelve months.
24-Month Spending Exception
The 24-month spending exception provides an exception from the rebate requirements for
construction' proceeds if at least 75% of the proceeds of the issue are for construction
purposes and if the following spending criteria are met:
a) at least 10% of the "available construction proceeds" were spent within six
months after the date of issuance of the bonds;
b) 45% of such proceeds were spent within one year;
c) 75% of such proceeds were spent within 18 months; and
d) 100% of such proceeds were spent within two years.
~ SPRINGSTED
- iv-
January 24, 1996
The same rules that define failure to spend down a "de minimis" amount at the final payment
date for the 18-month spending exception also apply to the 24-month spending exception.
The term "available construction proceeds" means an amount equal to the "issue price" (the
principal amount plus accrued interest less discount) of the obligations, increased by the
earnings on the issue price, and decreased by both the amount of the issue price in a
reasonably required reserve fund and the issuance costs of the issue.
At the time of issuance, the issuer may elect that shortfalls in meeting the expenditure tests will
be subject to 1.5% penalty each six months, instead of subjecting the entire issue to rebate.
Under the 24-month spending exception the issuer can elect the following provisions:
a) to apply provisions based on actual facts in lieu of reasonable expectations;
b) to exclude earnings on a reasonably required reserve or replacement fund from
available construction proceeds;
c) to treat a portion of an issue used for construction as a separate issue
(bifurcation); and
d) to terminate the 1.5% penalty and subject the issue to rebate.
TRANs Six-Month Spending Exception
Issuers can qualify for this six-month exception if, within the first six-months of issuance, the
actual cash position, including the TRANs proceeds, reduces to no more than 10% of the size
of the TRANs borrowing.
Bona Fide Debt Service Exception
Amounts deposited into a bona fide debt service fund (BDSF) are exempt from rebate for long-
term fixed rate issues and for short-term or variable rate issues if the BDSF earned less than
$100,000 during each bond year. A BDSF is defined as a fund which equally matches the
revenues to the debt service within each bond year, with a permitted carryover of the greater of
the actual earnings in the fund in the preceding bond year or 1/12th of the debt service. See
. discussion under "Other Topics of Interest" for more information regarding debt service funds.
Rebate
If an issue or fund does not meet any of the above mentioned exceptions, it is subject to the
rebate requirements and any arbitrage earnings will have to be rebated to the Internal
Revenue Service.
Rebate Computation Periods and Payments
At the time the bond issue is sold, an anniversary date is established by the issuer. This is
usually the dated date of the bonds, but can be any reasonable date within that year. Not less
than every five years from the anniversary date, the issuer must compute the rebatable
amount and send at least 90% of the amount to the Treasury. Within 60 days of the final debt
service payment, regardless of the length of the issue, the final computations must be
completed and all remaining rebatable funds sent to the Treasury. An issuer may recover an
~ SPRlNGSTED
-v-
January 24, 1996
overpayment for an issue of tax-exempt obligations by establishing to the satisfaction of the
Commissioner that the overpayment occurred.
Annual vs. Fifth Year
Although rebate reporting is not required by federal regulations until each fifth year interval, we
have long maintained the position that the issuer is best served by annual calculations. Debt
management and recognition of financial obligations are better served by annual
computations, particularly during the period of time when the project funds remain available or
if rebatable earnings are anticipated.
Information Necessary to Generate a Rebate Calculation
In order to properly comply with the arbitrage and rebate provisions, careful records have to be
maintained by the issuer for all funds subject to rebate. The information needed to produce a
rebate calculation consists of all investment cash flow transactions (receipts and
disbursements) into and out of the funds subject to rebate as summarized as follows:
1) Deposits of proceeds or funds from other sources into each fund.
2) Investments of moneys in the fund (Le. purchase price, purchase date, accrued
interest, etc.).
3) Dates and amounts of receipts of interest and principal from investment
balances.
4) Fund and investment balances as of the computation date.
Calculating Rebate on TRANs
If the issuer does not qualify for the available six-month exception, the regulations require that
cash on hand is expended first, then future revenues received before the deficit, and finally the
TRANs proceeds. Issuers beware. Under this method of use of funds, it becomes very
unlikely that short-term borrowing proceeds will be expended quickly. Thus, most of your
short-term borrowing proceeds will be assumed to be available for a period of time and could
generate a rebate liability.
Other Topics of Interest
Arbitraoe Reauirements
An issue that is exempt from the rebate requirements is not exempt from the arbitrage
requirement~.
Private Activitv Bonds
Private activity bonds are generally those for which (i) more than 10% of the bond proceeds
will be used for private business and more than 10% of debt service payments will be paid or
secured, either directly or indirectly, by a private business interest; or (ii) a loan of more than
5% of the bond proceeds (or $5,000,000, if less) will be made to a "non-governmental person."
A special category of private activity bonds exist for 501 (c)(3) organizations, primarily not-for-
profit educational and health care facilities.
~ SPRINGSTED
- vi-
January 24, 1996
Governmental Purpose Bonds
Governmental purpose bonds are bonds that are not private activity bonds.
Application of the 1993 Reaulations
The 1993 regulations are generally effective for bonds issued after June 30, 1993. Issuers
also may elect to apply 1993 regulations, except for the 18-month spending exception from
rebate, to bonds issued on or before June 30, 1993 that are still outstanding on that date.
Reimbursement Bonds
A reimbursement bond is a portion of a bond issue used to pay an expenditure that was paid
prior to the date the bond was issued. A reimbursement bond cannot be issued as tax-exempt
unless the issuer meets the following requirements:
If an issuer wishes to reimburse itself with proceeds from tax-exempt bonds to be issued after
the expenditure is actually made. it must declare its intent to do so within 60 days after the
expenditure has been made. The declaration must contain (i) a description of the project or
identify the fund or account used to pay the expenditure and (ii) state the maximum amount of
bonds expected to be issued for the project.
Preliminary expenditures in an amount not greater than 20% of the bond issue may be paid
without the declaration of intent. These expenditures include architectural, engineering,
testing, surveying. bond issuance costs and other incidental costs incurred prior to
commencement of the project. Eligible costs do not include land acquisition or site
preparation. A "de minimis" amount equal to the lesser of $100,000 or 5% of the proceeds is
also available.
Reimbursement must take place not later than 18 months after the later of (i) the date the
expenditure was made or (ii) the date the financed property is placed in service or abandoned,
but in no event later than three years after the expenditure is made. Small issuers
(governmental units that issue $5.000,000 or less of tax-exempt bonds during the calendar
year) get a three-year period instead of 18 months.
Useful Life
To assure tax-exempt obligations are not outstanding too long. safe harbors should be
, ,.adhered to. A safe harbor maturity limits the average maturity of the issue to 120% of the
useful life of the capital project being financed with the proceeds from the tax-exempt
obligation. The IRS has provided some guidelines as to expected useful life calculations which
can be taken into account in the structuring of each bond issue.
Yield Reduction Payments on Non Bona Fide Portion of Debt Service Fund
With the demise of the ten-year temporary period for debt service funds for tax-exempt
obligations issued after June 30, 1993. amounts in excess of the bona fide portion of a debt
service fund must be yield restricted. Because yield restricting debt service funds can be a
complicated and cumbersome process, the IRS allows issuers to make yield reduction
payments (similar to rebate) on non bona fide amounts of up to 15% of the original stated
principal amount of the issue. Once the non bona fide portion exceeds 15% the fund must be
yield restricted. Small issuers as well as those subject to rebate can use yield reduction
payments instead of making restricted investments.
Note: Being a small issuer does not exempt an issuer from being subject to yield restriction.
~ SPRINGSTED
- vii-
January 24. 1996
85 E. SEVENTH PLACE, SUITE 100
SAINT PAUL, MN 55101-2887
612-223-3000 FAX: 612-223-3002
AGREEMENT FOR CONTINUING DISCLOSURE AND/OR ARBITRAGE AND REBATE
MONITORING
THIS AGREEMENT is made as of the day of , 199_, by and between City
of Chanhassen, Minnesota, ("Client") and Springsted Incorporated ("Advisor").
WHEREAS, the Client wishes to retain the services of the Advisor on the terms and conditions
set forth herein, and the Advisor wishes to provide such services:
NOW, THEREFORE, the parties hereto agree as follows:
1. Services. Advisor shall provide financial advisory services to the Client with respect to
continuing disclosure and/or arbitrage rebate monitoring services as identified in the
Addendum(s) attached hereto.
2. Compensation. The Client shall compensate the Advisor in the amount of $250, payable
upon execution of this Agreement, and at the rates set forth in Addendum(s) attached
hereto for services to be provided by Advisor. The rates set out within the Addendum(s)
shall be effective for twelve months from the effective date of each Addendum.
Thereafter, the Advisor's compensation can be adjusted to then current rates charged
other similar clients upon sixty days written notice from Advisor to Client of the rate
adjustment.
3. Term and Termination. This Agreement shall commence as of the date hereof, and shall
continue until terminated by either party by written notice given at least thirty days before
the effective date of such termination, provided that no such termination shall affect or
terminate the rights and obligations of each of the parties hereto with respect to any
project, whether or not complete, for which the Advisor has provided services prior to the
date that such notice was given.
4. Indemnification: Sole Remedy. The Client and the Advisor each hereby agree to
indemnify and hold the other harmless from and against any and all losses, claims,
damages, expenses, including without limitation, reasonable attorneys' fees, costs,
liabilities, demands and cause of action (collectively referred to herein as "Damages")
which the other may suffer or be subjected to as a consequence of any act, error or
omission of the indemnifying party in connection with the performance or
nonperformance of its obligations hereunder, less any payment for damages made to
the indemnified party by a third party. Notwithstanding the foregoing, no party hereto
shall be liable to the other for Damages suffered by the other to the extent that those
Damages are the consequence of: (a) events or conditions beyond the control of the
indemnifying party, including without limitation changes in economic conditions; (b)
actions of the indemnifying party which were reasonable based on facts and
circumstances existing at the time and known to the indemnifying party at the time the
service was provided; or (c) errors made by the indemnifying party due to its reliance on
facts and materials provided to the indemnifying party by the indemnified party.
Whenever the Client or the Advisor becomes aware of a claim with respect to which it
may be entitled to indemnification hereunder, it shall promptly advise the other in writing
of the nature of the claim. If the claim arises from a claim made against the indemnified
party by a third party, the indemnifying party shall have the right, at its expense, to
contest any such claim, to assume the defense thereof, to employ legal counsel in
connection therewith, and to compromise or settle the same, provided that any
compromise or settlement by the indemnifying party of such claim shall be deemed an
admission of liability hereunder. The remedies set forth in this paragraph shall be the
sole remedies available to either party against the other in connection with any Damages
suffered by it.
5. Confidentiality: Disclosure of Information.
5.1 Client Information. All information, files, records, memoranda and other data of
the Client which the Client provides to the Advisor or which the Advisor becomes
aware of in the performance of its duties hereunder ("Client Information") shall be
deemed by the parties to be the property of the Client. The Advisor may disclose
the Client Information to third parties in connection with the performance by it of
its duties hereunder.
5.2 Advisor Information. The Client acknowledges that in connection with the
performance by the Advisor of its duties hereunder, the Client may become
aware of internal files, records, memoranda and other data, including without
limitation computer programs of the Advisor ("Advisor Information"). The Client
acknowledges that all Advisor Information, except reports prepared by the
Advisor for the Client, is confidential and proprietary to the Advisor, and agrees
that the Client will not, directly or indirectly, disclose the same or any part thereof
to any person or entity except under the express written consent of the Advisor.
6. Miscellaneous.
6.1 Deleoation of Duties. The Advisor shall not delegate its duties hereunder to any
third party without the express written consent of the Client.
6.2 No Third Party Beneficiarv. No third party shall have any rights or remedies
under this Agreement.
6.3 Entire Contract: Amendment. The Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and supersedes all
prior written or oral negotiations, understandings or agreements with respect
hereto. This Agreement may be amended in whole or in part by mutual consent
of the parties, and this Agreement shall not preclude the Client and the Advisor
from entering into separate agreements for other projects.
6.4 Governino Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
6.5 Severability. To the extent any provision of this Agreement shall be determined
invalid or unenforceable, the invalid or unenforceable portion shall be deleted
from this Agreement, and the validity and enforceability of the remainder shall be
unaffected.
- 2-
6.6 Notice. All notices required hereunder shall be in writing and shall be deemed to
have been given when delivered, transmitted by first class, registered or certified
mail, postage prepaid and addressed as follows:
If to the Client: If to the Advisor, to:
Springsted Incorporated
85 East Seventh Place
Suite 100
St. Paul, MN 55101-2887
Attention: Managing Principal
The foregoing Agreement is hereby entered into on behalf of the respective parties by signature
of the following persons each of whom is duly authorized to bind the parties indicated.
FOR CLIENT
SPRINGSTED Incorporated
Title
David N. MacGillivray, Principal
Client Representative
- 3 -
ADDENDUM B OF AGREEMENT BETWEEN
City of Chanhassen, Minnesota
AND
Springsted Incorporated
Effective as of
,199_"
ARBITRAGE AND REBATE MONITORING SERVICES
Tax-Exempt Obliaation(s)
$4,970,000 General Obligation Park Bonds,
Series 1998A
$1,325,000 General Obligation Improvement
Bonds, Series 1998B
$820,000 General Obligation Water Revenue
Bonds, Series 1998C
I. For each Client Tax-Exempt Obligation listed above, the Advisor shall, based on
information supplied by Client, make all rebate calculations (to include for purposes of
this document, yield reduction calculations) required by Section 148 of the Code and
related U.S. Treasury regulations. In carrying out its duties, the Advisor shall
periodically, as designated herein:
Determination Designation
(check applicable desianation)
Annuallv Fifth Year
o
o
o
o
o
o
A. Determine the yield on the Tax-Exempt Obligation;
B. Determine if spending exceptions have been met;
C. Determine the amount required to be rebated;
D. Notify Client and/or its designee of the rebate amount;
. ~. .
E.
Prepare for submission by Client a determination statement with respect to the
rebate amount for filing with the Internal Revenue Service at the appropriate
intervals throughout the term of the Tax-Exempt Obligations;
II. Client agrees to provide the Advisor with accurate information concerning cash and
investment activity within all funds which are subject to rebate. The information to be
provided shall include:
A. deposits and withdrawals of proceeds or money from other sources;
B. payments of principal and interest on the Tax-Exempt Obligations; and
C. all investment activity including:
1. date of purchase or acquisition;
2. purchase price of investments including any accrued interest;
3. the face amount and maturity date;
B-1
4. the stated rate of interest;
5. the interest payment dates;
6. the date of sale, transfer, or other disposition;
7. the sale or disposition price; and
8. the accrued interest due on the date of sale or disposition;
or any other information necessary for the Advisor to make the calculations required by
this Addendum. The information will be provided in a timely manner and in such detail
as the Advisor may request. Client agrees to provide the information separately for each
Tax-Exempt Obligation.
III. For services specified in I. above, the Advisor shall be compensated in the amount of
$1,300 per determination for each Tax-Exempt Obligation covered by this Addendum
when such determinations are made annually at the close of each bond year, or $2,750
per determination for each Tax-Exempt Obligation covered by this Addendum when
such determinations are made at the close of every fifth bond year.
At such time as a spending exception has been met or the original proceeds and
investment earnings thereon are completely expended, the Advisor will notify the Client if
compliance with the arbitrage and rebate provisions can be accomplished through
monitoring of remaining funds which are subject to rebate. In the event such
recommendation is made and it is accepted by the Client, Springsted will perform
monitoring activities on an hourly basis at its then standard hourly rates for a fee not to
exceed $400 for annual monitoring or $850 for monitoring at the close of every fifth bond
year. If, for any determination period, monitoring reveals a need to perform rebate
calculations, any charge for monitoring for that determination period will apply toward the
applicable fee for rebate and arbitrage services.
If separate information for each Tax-Exempt Obligation is not provided, if Advisor is
required to perform allocations of investments among funds, or if the Advisor is required
to perform other duties in fulfillment of this Addendum, additional compensation charged
at hourly rates then in effect for officers will be payable to Advisor by Client.
This Addendum shall continue for the term of each Tax-Exempt Obligation or until such time as
either Client or Advisor terminates it by not less than 30 days written notice to the other party.
Advisor shall be relieved of all liability with respect to its obligations hereunder if any information
required to be submitted to Advisor hereunder is not timely submitted to Advisor.
In the event at Client's request Advisor performs services described in this Addendum
reasonably understood by Advisor to be performed pursuant to the Addendum after signing by
Advisor, but before signing by Client, such services shall be subject to the provisions of the
Addendum as if the Addendum had been signed by both parties.
Signed as of , 19_, the effective date of the Addendum.
FOR CLIENT SPRINGSTED Incorporated
Title David N. MacGillivray, Principal
Client Representative
B-2
85 E. SEVENTH PLACE, SUITE 100
SAINT PAUL, MN 55101-2887
612-223-3000 FAX: 612-223-3002
AGREEMENT FOR CONTINUING DISCLOSURE AND/OR ARBITRAGE AND REBATE
MONITORING
THIS AGREEMENT is made as of the day of , 199_, by and between City
of Chanhassen, Minnesota, ("Client") and Springsted Incorporated ("Advisor").
WHEREAS, the Client wishes to retain the services of the Advisor on the terms and conditions
set forth herein, and the Advisor wishes to provide such services:
NOW, THEREFORE, the parties hereto agree as follows:
1. Services. Advisor shall provide financial advisory services to the Client with respect to
continuing disclosure and/or arbitrage rebate monitoring services as identified in the
Addendum(s) attached hereto.
2. Compensation. The Client shall compensate the Advisor in the amount of $250, payable
upon execution of this Agreement, and at the rates set forth in Addendum(s) attached
hereto for services to be provided by Advisor. The rates set out within the Addendum(s)
shall be effective for twelve months from the effective date of each Addendum.
Thereafter, the Advisor's compensation can be adjusted to then current rates charged
other similar clients upon sixty days written notice from Advisor to Client of the rate
adjustment.
. .3. Term and Termination. This Agreement shall commence as of the date hereof, and shall
continue until terminated by either party by written notice given at least thirty days before
the effective date of such termination, provided that no such termination shall affect or
terminate the rights and obligations of each of the parties hereto with respect to any
project, whether or not complete, for which the Advisor has provided services prior to the
date that such notice was given.
4. Indemnification: Sole Remedv. The Client and the Advisor each hereby agree to
indemnify and hold the other harmless from and against any and all losses, claims,
damages, expenses, including without limitation, reasonable attorneys' fees, costs,
liabilities, demands and cause of action (collectively referred to herein as "Damages")
which the other may suffer or be subjected to as a consequence of any act, error or
omission of the indemnifying party in connection with the performance or
nonperformance of its obligations hereunder, less any payment for damages made to
the indemnified party by a third party. Notwithstanding the foregoing, no party hereto
shall be liable to the other for Damages suffered by the other to the extent that those
Damages are the consequence of: (a) events or conditions beyond the control of the
indemnifying party, including without limitation changes in economic conditions; (b)
actions of the indemnifying party which were reasonable based on facts and
circumstances existing at the time and known to the indemnifying party at the time the
service was provided; or (c) errors made by the indemnifying party due to its reliance on
facts and materials provided to the indemnifying party by the indemnified party.
Whenever the Client or the Advisor becomes aware of a claim with respect to which it
may be entitled to indemnification hereunder, it shall promptly advise the other in writing
of the nature of the claim. If the claim arises from a claim made against the indemnified
party by a third party, the indemnifying party shall have the right, at its expense, to
contest any such claim, to assume the defense thereof, to employ legal counsel in
connection therewith, and to compromise or settle the same, provided that any
compromise or settlement by the indemnifying party of such claim shall be deemed an
admission of liability hereunder. The remedies set forth in this paragraph shall be the
sole remedies available to either party against the other in connection with any Damages
suffered by it.
5. Confidentiality: Disclosure of Information.
5.1 Client Information. All information, files, records, memoranda and other data of
the Client which the Client provides to the Advisor or which the Advisor becomes
aware of in the performance of its duties hereunder ("Client Information") shall be
deemed by the parties to be the property of the Client. The Advisor may disclose
the Client Information to third parties in connection with the performance by it of
its duties hereunder.
5.2 Advisor Information. The Client acknowledges that in connection with the
performance by the Advisor of its duties hereunder, the Client may become
aware of internal files, records, memoranda and other data, including without
limitation computer programs of the Advisor ("Advisor Information"). The Client
acknowledges that all Advisor Information, except reports prepared by the
Advisor for the Client, is confidential and proprietary to the Advisor, and agrees
that the Client will not, directly or indirectly, disclose the same or any part thereof
to any person or entity except under the express written consent of the Advisor.
6. Miscellaneous.
6.1 Deleoation of Duties. The Advisor shall not delegate its duties hereunder to any
third party without the express written consent of the Client.
6.2 No Third Party Beneficiarv. No third party shall have any rights or remedies
under this Agreement.
6.3 Entire Contract: Amendment. The Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and supersedes all
prior written or oral negotiations, understandings or agreements with respect
hereto. This Agreement may be amended in whole or in part by mutual consent
of the parties, and this Agreement shall not preclude the Client and the Advisor
from entering into separate agreements for other projects.
6.4 Governino Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
6.5 Severability. To the extent any provision of this Agreement shall be determined
invalid or unenforceable, the invalid or unenforceable portion shall be deleted
from this Agreement, and the validity and enforceability of the remainder shall be
unaffected.
- 2 -
6.6 Notice. All notices required hereunder shall be in writing and shall be deemed to
have been given when delivered, transmitted by first class, registered or certified
mail, postage prepaid and addressed as follows:
If to the Client: If to the Advisor, to:
Springsted Incorporated
85 East Seventh Place
Suite 100
St. Paul, MN 55101-2887
Attention: Managing Principal
The foregoing Agreement is hereby entered into on behalf of the respective parties by signature
of the following persons each of whom is duly authorized to bind the parties indicated.
FOR CLIENT
SPRINGSTED Incorporated
David N. MacGillivray, Principal
Client Representative
Title
- 3-
ADDENDUM B OF AGREEMENT BETWEEN
City of Chanhassen, Minnesota
AND
Springsted Incorporated
Effective as of
,199_"
ARBITRAGE AND REBATE MONITORING SERVICES
Tax-Exempt Obliaation(s)
Determination Designation
(check applicable desianation)
Annually Fifth Year
$4,970,000 General Obligation Park Bonds,
Series 1998A
$1,325,000 General Obligation Improvement
Bonds, Series 1998B
$820,000 General Obligation Water Revenue
Bonds, Series 1998C
D
o
o
o
o
o
I. For each Client Tax-Exempt Obligation listed above, the Advisor shall, based on
information supplied by Client, make all rebate calculations (to include for purposes of
this document, yield reduction calculations) required by Section 148 of the Code and
related U.S. Treasury regulations. In carrying out its duties, the Advisor shall
periodically, as designated herein:
A. Determine the yield on the Tax-Exempt Obligation;
B. Determine if spending exceptions have been met;
C. Determine the amount required to be rebated;
D. Notify Client and/or its designee of the rebate amount;
E. Prepare for submission by Client a determination statement with respect to the
rebate amount for filing with the Internal Revenue Service at the appropriate
intervals throughout the term of the Tax-Exempt Obligations;
II. Client agrees to provide the Advisor with accurate information concerning cash and
investment activity within all funds which are subject to rebate. The information to be
provided shall include:
A. . deposits and withdrawals of proceeds or money from other sources;
B. payments of principal and interest on the Tax-Exempt Obligations; and
C. all investment activity including:
1. date of purchase or acquisition;
2. purchase price of investments including any accrued interest;
3. the face amount and maturity date;
B-1
4. the stated rate of interest;
5. the interest payment dates;
6. the date of sale, transfer, or other disposition;
7. the sale or disposition price; and
8. the accrued interest due on the date of sale or disposition;
or any other information necessary for the Advisor to make the calculations required by
this Addendum. The information will be provided in a timely manner and in such detail
as the Advisor may request. Client agrees to provide the information separately for each
Tax-Exempt Obligation.
III. For services specified in I. above, the Advisor shall be compensated in the amount of
$1,300 per determination for each Tax-Exempt Obligation covered by this Addendum
when such determinations are made annually at the close of each bond year, or $2,750
per determination for each Tax-Exempt Obligation covered by this Addendum when
such determinations are made at the close of every fifth bond year.
At such time as a spending exception has been met or the original proceeds and
investment earnings thereon are completely expended, the Advisor will notify the Client if
compliance with the arbitrage and rebate provisions can be accomplished through
monitoring of remaining funds which are subject to rebate. In the event such
recommendation is made and it is accepted by the Client, Springsted will perform
monitoring activities on an hourly basis at its then standard hourly rates for a fee not to
exceed $400 for annual monitoring or $850 for monitoring at the close of every fifth bond
year. If, for any determination period, monitoring reveals a need to perform rebate
calculations, any charge for monitoring for that determination period will apply toward the
applicable fee for rebate and arbitrage services.
If separate information for each Tax-Exempt Obligation is not provided, if Advisor is
required to perform allocations of investments among funds, or if the Advisor is required
to perform other duties in fulfillment of this Addendum, additional compensation charged
at hourly rates then in effect for officers will be payable to Advisor by Client.
This Addendum shall continue for the term of each Tax-Exempt Obligation or until such time as
either Client or Advisor terminates it by not less than 30 days written notice to the other party.
Advisor shall be relieved of all liability with respect to its obligations hereunder if any information
. required to be submitted to Advisor hereunder is not timely submitted to Advisor.
In the event at Client's request Advisor performs services described in this Addendum
reasonably understood by Advisor to be performed pursuant to the Addendum after signing by
Advisor, but before signing by Client, such services shall be subject to the provisions of the
Addendum as if the Addendum had been signed by both parties.
Signed as of , 19_, the effective date of the Addendum.
FOR CLIENT SPRINGSTED Incorporated
Title David N. MacGillivray, Principal
Client Representative
B-2
85 E. SEVENTH PLACE, SUITE 100
SAINT PAUL, MN 55101-2887
612-223-3000 FAX: 612-223-3002
~/
SPRINGSTED
Pub!zc Fmance Advisors
~
April 22, 1998
Ms. Pam Snell, Finance Director
City of Chanhassen
P.O. Box 147
690 Coulter Drive
Chanhassen, MN 55317-0147
Re: Continuing Disclosure Requirements Relating to:
$4,970,000 General Obligation Park Bonds, Series 1998A
$1,325,000 General Obligation Improvement Bonds, Series 1998B
$820,000 General Obligation Water Revenue Bonds, Series 1998C
Dear Ms. Snell:
Previously, the City contracted with Springsted Incorporated to provide continuing disclosure
services for debt issues. The above-listed issues are subject to the same regulations as the
past issues.
We have enclosed a contract addendum for execution should the City wish to engage
Springsted to provide these same services for the new issues. Please sign and return both
copies to Springsted; we will return to you an executed copy and begin the monitoring process.
If you choose not to engage Springsted for these services, please advise us as to who will be
the responsible party so that we can coordinate efforts.
Respectfully, ;/
'iJ . -I#! / .~.
P?'t,.t:c;://Itio 7[{lt?:7'~< v1.
- . .. " AY(
David N. MacGillivray, Pnnclpa
Client Representative
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Enclosures
SAINT PAUL, M:\i . MINNEAPOLIS, MN . BROOKFIElD, WI . OVERLAND PARK, KS WASHINGTON, DC
IOWA CITY, Ii\.
AMENDMENT TO ADDENDUM A OF AGREEMENT FOR CONTINUING
DISCLOSURE AND/OR ARBITRAGE AND REBATE MONITORING
The Agreement dated June 9, 1997 for continuing disclosure and/or arbitrage and rebate
monitoring between City of Chanhassen, Minnesota ("Client") and Springsted Incorporated
("Advisor") is hereby amended as follows:
Client and Advisor agree that the following Client debt obligation(s) will be added to
Addendum A, Continuing Disclosure Services, and be subject to the terms and
provisions contained in the original Agreement:
$4,970,000
General Obligation Park Bonds, Series 1998A
$1,325,000
General Obligation Improvement Bonds, Series 1998B
$820,000
General Obligation Water Revenue Bonds, Series 1998C
The foregoing Amendment is hereby entered into, effective I
19_, on behalf of the respective parties by signature of the following persons each of whom is
duly authorized to bind the parties indicated.
FOR CLIENT
SPRINGSTED Incorporated
David N. MacGillivray, Principal
Client Representative
Title
AMENDMENT TO ADDENDUM A OF AGREEMENT FOR CONTINUING
DISCLOSURE AND/OR ARBITRAGE AND REBATE MONITORING
The Agreement dated June 9, 1997 for continuing disclosure and/or arbitrage and rebate
monitoring between City of Chanhassen, Minnesota ("Client") and Springsted Incorporated
("Advisor") is hereby amended as follows:
Client and Advisor agree that the following Client debt obligation(s) will be added to
Addendum A, Continuing Disclosure Services, and be subject to the terms and
provisions contained in the original Agreement:
$4,970,000
General Obligation Park Bonds, Series 1998A
$1,325,000
General Obligation Improvement Bonds, Series 1998B
$820,000
General Obligation Water Revenue Bonds, Series 1998C
The foregoing Amendment is hereby entered into, effective ,
19_, on behalf of the respective parties by signature of the following persons each of whom is
duly authorized to bind the parties indicated.
FOR CLIENT
SPRINGSTED Incorporated
Title
David N. MacGillivray, Principal
Client Representative
85 E. SEVENTH PLACE, SUITE 100
SAINT PAUL, MN 55101-2887
612-223-3000 FAX: 612-223-3002
//
85 E. SEVENTH PLACE, SUITE 100
SAINT PAUL, MN 55101-2887
612-223-3000 FAX: 612-223-3002
//
SPRINGSTED
Public Finance Advisors
~
$4,970,000
CITY OF CHANHASSEN, MINNESOTA
GENERAL OBLIGATION PARK BONDS, SERIES 1998A
(BOOK ENTRY ONLY)
AWARD:
DAIN RAUSCHER INCORPORATED
SALE: May 26, 1998 Standard & Poor's Ratings Services: AAA
FSA Insured
Interest Net Interest True Interest
Bidder Rates Price Cost Rate
DAIN RAUSCHER INCORPORATED 4.40% 2002-2007 $4,911,457.40 $1,928,777.60 4.6360%
4.45% 2008
4.55% 2009
4.625% 2010
CRONIN & COMPANY, INCORPORATED 4.15% 2002 $4,909,859.40 $1,939,928.93 4.6609%
SALOMON SMITH BARNEY 4.20% 2003
MORGAN STANLEY DEAN WITTER 4.25% 2004
DEAN WITTER REYNOLDS INC. 4.35% 2005
CIBC OPPENHEIMER CORPORATION 4.40% 2006
4.50% 2007 -2008
4.60% 2009
4.70% 2010
Bidder
Interest
Rates
Price
Net Interest True Intel
Cost Rate
NORWEST INVESTMENT SERVICES, INC.
PIPER JAFFRAY INC.
John G. Kinnard & Company
Incorporated
4.30% 2000-2004
4.40% 2005
4.50% 2006-2007
$1,311,750.00
$306,891.67
4.6133
A.G. EDWARDS & SONS, INCORPORATED 4.10% 2000
4.20% 2001
4.25% 2002
4.30% 2003
4.35% 2004
4.45% 2005
4.55% 2006
4.60% 2007
$1,311,750.00
$308,419.17
4.6331 I
----------------------------------------------------------------------------------------------------------------------------------
These Bonds are being reoffered at par.
BBI: 5.16
Average Maturity: 5.05 Ye~
8S E. SEVENTH PLACE, SUITE 100
SAINT PAUL, MN SS 101-2887
612-223-3000 FAX: 612-223.3002
//
SPRINGSTED
Public Finance Advisors
~
$820,000
CITY OF CHANHASSEN, MINNESOTA
GENERAL OBLIGATION WATER REVENUE BONDS, SERIES 1998C
(BOOK ENTRY ONLY)
AWARD:
DAIN RAUSCHER INCORPORATED
SALE: May 26, 1998 Standard & Poor's Ratings Services: A-
Interest Net Interest True Interest
Bidder Rates Price Cost Rate
DAIN RAUSCHER INCORPORATED 3.90% 2000 $809,750.00 $255,791.67 4.5889%
4.00% 2001
4.10% 2002
4.15% 2003
4.20% 2004
4.30% 2005
4.40% 2006
4.45% 2007
4.50% 2008
4.55% 2009
CRONIN & COMPANY, INCORPORATED 4.00% 2000 $812,825.00 $260,920.00 4.6698%
4.10% 2001
4.20% 2002
4.30% 2003
4.40% 2004
4.50% 2005
4.55% 2006
4.60% 2007 -2008
4.70% 2009
(Continued)
SAINT PAUL. MN MINNEAPOLIS. MN . BROOKFIELD. WI OVERLAND PARK. KS . WASHINGTON. DC . DES MOINES. IA
Bidder
Net Interest True Intel
Cost Rate
NORWEST INVESTMENT SERVICES, INC.
PIPER JAFFRAY INC.
John G. Kinnard & Company
Incorporated
BERNARDI SECURITIES, INCORPORATED
Interest
Rates
Price
$265,463.17
4.7579
4.00% 2000
4.10% 2001
4.20% 2002
4.30% 2003
4.40% 2004
4.50% 2005
4.60% 2006
4.65% 2007
4.70% 2008
4.75% 2009
$810,613.50
$282,676.50
5.0729
4.60% 2000
4.65% 2001-2003
4.70% 2004
4.75% 2005
4.85% 2006
4.90% 2007
5.00% 2008-2009
$809,756.00
------------------------------------------------------------------------------------------------------------------------------------------------
These Bonds are being reoffered at par.
BBI: 5.16
Average Maturity: 6.84 Yea