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- 8 - TAX EXEMPTION – SERIES 2016A BONDS In the opinion of Kennedy & Graven, Chartered, Bond Counsel, under federal and Minnesota laws, regulations, rulings and decisions in effect on the date of issuance of the Series 2016A Bonds, interest on the Series 2016A Bonds is excludable from gross income for federal income tax purposes, and, to the same extent, from taxable net income of individuals, estates and trusts for Minnesota income tax purposes. Interest on the Series 2016A Bonds is includable in taxable income of corporations and financial institutions for purposes of the Minnesota franchise tax. Certain provisions of the Internal Revenue Code of 1986, as amended (the “Code”), impose continuing requirements that must be met after the issuance of the Series 2016A Bonds in order for interest thereon to be and remain excludable from federal gross income and, to the same extent, from Minnesota taxable net income. Noncompliance with such requirements by the City may cause the interest on the Series 2016A Bonds to be includable in gross income for purposes of federal income taxation and, to the same extent, includable in taxable net income for purposes of Minnesota income taxation, retroactive to the date of issuance of the Series 2016A Bonds, irrespective in some cases of the date on which such noncompliance is ascertained. No provision has been made for redemption of Series 2016A Bonds or for an increase in the interest rate on the Series 2016A Bonds in the event that interest on the Series 2016A Bonds becomes includable in federal gross income or Minnesota taxable income. TAX EXEMPTION – SERIES 2016C BONDS The Series 2016C Bonds are “private activity bonds” within the meaning of Section 141(a) of the Internal Revenue Code of 1986, as amended (the “Code”), but bear interest not includable in gross income for purposes of federal income taxation under Section 103(a) of the Code, pursuant to the exemption for “qualified 501(c)(3) bonds” provided in Section 145 of the Code. Interest on the Series 2016C Bonds is not includable in the net taxable income of individuals, trusts, or estates for State of Minnesota income tax purposes. Interest on the Series 2016C Bonds is not an item of tax preference includable in “alternative minimum taxable income” for purposes of the federal alternative minimum tax applicable to taxpayers under Section 55 of the Code or the Minnesota alternative minimum tax applicable to individuals, estates, and trusts. Interest on the Series 2016C Bonds is includable in “adjusted current earnings” of corporations in determining alternative minimum taxable income for purposes of the federal alternative minimum tax imposed on corporations. Interest on the Series 2016C Bonds is includable in the taxable income of corporations and financial institutions for purposes of the Minnesota franchise tax. Certain provisions of the Code impose continuing requirements that must be met after the issuance of the Series 2016C Bonds in order for interest thereon to be and remain excludable from federal gross income and, to the same extent, from Minnesota taxable net income. Noncompliance with such requirements by the YMCA may cause the interest on the Series 2016C Bonds to be includable in gross income for federal income taxation and, to the same extent, includable in taxable net income for purposes of Minnesota income taxation, retroactive to the date of issuance of the Series 2016C Bonds irrespective in some cases of the date on which such noncompliance is ascertained. No provision has been made for redemption of the Series 2016C Bonds in the event that the interest on the Series 2016C Bonds become includable in federal gross income or Minnesota taxable net income. However, the Series 2016C Bonds are subject to extraordinary redemption on any day in whole, but not in part, at a redemption price equal to par, plus accrued interest to the redemption date, upon conveyance, lease or transfer in other mode of the YMCA Project to an entity that is not a qualified 501(c)(3) entity under the Code, or a unit of state or local government, in connection with the foreclosure of the Mortgage, Security Agreement, Fixture Financing Agreement and Assignment of Leases and Rents from the YMCA of Greater Saint Paul, a Minnesota nonprofit corporation, for the benefit of Patriot Bank Minnesota, provided in conjunction with the issuance of the City’s Revenue Note (YMCA Project), Series 2006A and Revenue Note (YMCA Project), Series 2006B.