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$1,135,000 Utility Portion <br />Description of Purpose <br />PURPOSE: <br />AUTHORITY: <br />Proceeds of the Utility Portion are being used to finance construction of a well and well <br />house. <br />Statutory Authority: The Utility Portion of the Bonds is being issued pursuant to Minnesota <br />Statutes, Chapters 475 and 444. <br />Statutory Requirements: Minnesota Statutes, Chapter 444 requires that the City covenant <br />to maintain water rates and charges in an amount sufficient to generate revenues to <br />support the operation of the water utility and to pay debt service. The City is required to <br />annually review the budget of the water utility to determine whether current rates and <br />charges are sufficient and to adjust them as necessary. <br />SECURITY AND The Utility Portion will be a general obligation of the City for which the City pledges its full <br />SOURCE OF faith and credit and power to levy general ad valorem taxes. The Utility Portion is expected <br />PAYMENT: to be repaid entirely from net revenues of the City's water utility. <br />STRUCTURING The Utility Portion of the Bonds has been structured over a term of 10 years with level <br />SUMMARY: annual payments of principal and interest. <br />The City has two outstanding general obligation bond issues to which net revenues of the <br />City's water utility are pledged: <br />• General Obligation Utility Revenue Bonds, Series 2006D (final maturity February <br />1, 2017) <br />• General Obligation Improvement and Utility Revenue Bonds, Series 2010A (final <br />maturity February 1, 2020); only a portion of this issue is paid from the water utility <br />The projected maximum annual debt service payable from net revenues of the water utility, <br />including the Utility Portion of the Bonds, is projected to be approximately $262,642. The <br />table below shows the City's Water Fund net revenues available for debt service for the <br />fiscal year ending 2013. The 2013 net revenues of the Water Fund are greater than the <br />annual debt service payable from the City's water utility. <br />Operating Revenues <br />Operating Expenses <br />Add Back: Depreciation <br />Add: Investment Earnings <br />$1,208,742 <br />(927,800) <br />416,468 <br />43.075 <br />Net Revenues Available <br />for Debt Service $740,485 <br />Springsted <br />Page 4 <br />