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LAW OFFICES 13RIGGS AND MOROAN PROFESSIONAL ASSOCIATION 2200 FIRST NATIONAL BANK BUILDING SAINT PAUL, MINNESOTA 56101 TELEPLSONE 16121 291-1215 TELEGOPIER 1612) 222-4071 INOLUDINO THE PORMER FIRM OF LEVITT, PALMER, BOWEN, ROMAN & SHARE: Mr. Joseph Chlebeck City Clerk - Treasurer City Hall 515 Little Canada Road Little Canada, MN 55117 Re: December 13, 1988 City of Little Canada, MN - $2,345,000 General Obligation Bonds of 1986, consisting of $1,515,000 General Obligation Storm Sewer Bonds of 1986, $340,000 General Obligation State - Aid Street Bonds of 1986 and $490,000 General Obligation Improvement Bonds of 1986 Dear Mr. Chlebeck: The above referenced bonds (the "Bonds ") were issued in 1986 while the Tax Reform Act of 1986 (the "Act ") was pending in the United States House of Representatives and in the United States Senate. The Act contained several provisions which had a retroactive effective date prior to the date of issuance of the Bonds. One of these provisions affected purchasers of the Bonds in that it completely disallowed any interest expense on money which was treated as borrowed to purchase the Bonds. However, the Act contained a provision which allowed the City to designate the Bonds as "qualified tax exempt obligations" (commonly referred to as "bank qualified bonds "). This designation is important because it allows bondholders to deduct 80% of their interest expense on any money treated as borrowed for the bonds. If the designation of the Bonds as "qualified tax exempt obligations" is not effectively made, then no part of that interest expense is deductible. In the resolution authorizing the issuance of the Bonds, the City designated the Bonds under the Tax Reform Act as "qualified tax exempt obligations ". 2200 FIRST NATIONAL BANE BUILDING SAINT PAUL, MINNESOTA 66101 1012) 201 -1216 Page 7 2400 1 DS CENTER MINNEAPOLIS, MINNESOTA 6NO2 101.21 000 -0001