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• <br />• <br />• <br />City of Lino Lakes, Minnesota <br />September 23, 2004 <br />(c) Bona Fide Debt Service Fund <br />(d) Economic Life <br />(e) Federal Reimbursement <br />Regulations <br />10. Continuing Disclosure <br />11. Attachments <br />The City must maintain a bona fide debt service <br />fund for the Bonds or be subject to yield <br />restriction. This requires restricting the <br />investments held in the debt service fund to the <br />yield on the bonds and /or paying back excess <br />investment earnings in the debt service fund to <br />the federal government. A bona fide debt <br />service fund is a fund for which there is an equal <br />matching of revenue to debt service expense, <br />with carry over permitted equal to the greater of <br />the investment earnings in the fund during that <br />year or 1/12 the debt service of that year. <br />Because prepayments of assessments may be <br />collected on the street improvement portion of <br />the Bonds, the City should be particularly careful <br />in monitoring the debt service fund for the <br />Bonds. Springsted currently provides arbitrage <br />rebate services for the City under a separate <br />contract. An amendment to that contract adding <br />this Issue has been provided to the City. <br />The average life of the Bonds cannot exceed <br />120% of the economic life of the projects to be <br />financed. The economic life of street <br />improvements is 20 years and the economic life <br />of water utility improvements is 50 years. The <br />average life of the Bonds is 8.884 years; <br />therefore the Bonds are within the economic life <br />requirements. <br />Federal reimbursement regulations require the <br />City to make a declaration, within 60 days of the <br />actual payment, of its intent to reimburse itself <br />from expenses paid prior to the receipt of bond <br />proceeds. It is our understanding the City has <br />taken whatever actions are necessary to comply <br />with the federal reimbursement regulations in <br />regards to the Bonds. <br />This Issue is subject to the continuing disclosure <br />requirements. The SEC rules require the City to <br />undertake an annual update of its Official <br />Statement information and report any material <br />events to the national repositories. Springsted <br />currently provides continuing disclosure services <br />for the City under a separate contract. An <br />amendment to that contract adding this Issue <br />has been provided to City staff. <br />• Sources and Uses of Funds <br />• Debt Service Schedule <br />• Assessment Income Schedule <br />• Terms of Proposal <br />Page 3 <br />