HomeMy WebLinkAbout05-11-2015 EDA Packet
LINO LAKES
ECONOMIC DEVELOPMENT AUTHORITY
Monday, May 11, 2015
6:00 P.M.
City Council Chambers
AGENDA
1. Call to Order and Roll Call
2. Approval of Agenda
3. Approval of March 23, 2015 Minutes
4. Action Items
A. Lino Lakes Fire Station Financing
i Consideration of Resolution No. 15-02, Authorizing the Execution and
Delivery of a Ground Lease, Lease-Purchase Agreement, and Related
Documents.
ii Consideration of Resolution No. 15-03, Approving Post-Issuance
Compliance Procedure and Policy for Tax-Exempt Governmental Bonds.
5. Adjourn
EDA MINUTES March 23, 2015
DRAFT
DATE : March 23, 2015
TIME STARTED : 6:10 p.m.
TIME ENDED : 6:25 p.m.
MEMBERS PRESENT : Commissioners Kusterman, Reinert, Rafferty,
Stoesz and Roeser
MEMBERS ABSENT : none
OTHERS PRESENT: : Administrator Jeff Karlson; Community
Development Director Michael Grochala;
Finance Director Al Rolek; City Clerk Julie
Bartell
The meeting was called to order at 6:10 p.m. by President Roeser.
CONSIDERATION OF THE MINUTES OF JANUARY 12, 2015
Economic Development Authority (EDA) Member Rafferty moved to approve the January 12,
2015 minutes. EDA Member Reinert seconded the motion. Motion carried on a voice vote.
CONSIDERATION OF RESOLUTION NO. 15-01, PROVIDING FOR ISSUANCE AND
SALE OF LEASE REVENUE BONDS, SERIES 2015A, IN THE MAXIMUM
AGGREGATE AMOUNT OF $4,885,000 SUBJECT TO CERTAIN PARAMETERS
Finance Director Rolek reviewed his written report. The city is proposing to develop a second
fire station in the city and has developed and received a proposal to construct that facility. The
city’s fiscal advisor is recommending the issuance of lease revenue bonds through the EDA to
finance the cost of facility construction. He introduced Terri Heaton, of Springsted, Inc, to
explain the bonding process. It was noted that the amount of bonding was reduced based on
discussions just previous to the meeting.
Ms. Heaton reviewed a PowerPoint presentation (on file) and outlined:
- What are lease revenue bonds;
- The city’s EDA can issue this type of bonds and therefore the lease will be a government-
to government situation;
- The bonds would have a twenty year term;
- The amount of the bonding has been reduced by the council to $4,885,000;
- A competitive sale of the bonds is recommended;
- The award of the bonds will be handled by a pricing committee;
- The maximum interest rate is five percent;
Ms. Heaton remarked that the market is in a good place at this time; interest rates are very
reasonable.
Mayor Reinert noted that while the EDA is authorizing a bond amount of $4,885,000, that
amount includes some extras that won’t be spent such as contingency. The actual project cost is
$4.2 million.
1
EDA MINUTES March 23, 2015
DRAFT
Council Member Roeser concurred; the amount being approved is conservative to allow for
contingencies. He asked if there is any reason not to bundle the bonds with others being
considered this evening. Ms. Heaton explained that these EDA bonds couldn’t be bundled with
general obligation bonds of the city.
EDA member Reinert moved to approve EDA Resolution No. 15-01. EDA Member Kusterman
seconded the motion. Motion carried on a voice vote.
ADJOURNMENT
There being no further business, EDA Member Stoesz moved to adjourn. EDA Member
Kusterman seconded the motion. Motion carried on a voice vote.
The meeting was adjourned at 6:25 p.m.
2
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY
AGENDA ITEM 4A(i)
STAFF ORIGINATOR: Al Rolek
MEETING DATE: May 11, 2015
TOPIC: Consider Resolution 15-02 Authorizing the Execution and
Delivery of a Ground Lease, Lease-Purchase Agreement and
Related Documents
VOTE REQUIRED: 3/5
INTRODUCTION
The Lino Lakes Economic Development Authority (EDA) has approved Resolution 15-01
setting parameters for the issuance of Lease Revenue Bonds, Series 2015A, for financing for a
new fire station facility. The EDA must now consider entering into a ground lease and a lease-
purchase agreement with the City of Lino Lakes to go forward with this financing. Attached to
this report are drafts of Resolution 15-02, the Ground Lease agreement and the Lease-Purchase
agreement.
BACKGROUND
The City Council has entered into a contract to construct a fire station facility at Birch Street
and Centerville Road. The project will be financed with lease-revenue bonds issued through
the Lino Lakes Economic Development Authority (EDA). The City currently owns the
property on which the facility is to be built. In order for the EDA to finance the project, the
City must provide a ground lease to the EDA for the land on which the building will reside.
The lease will commence upon the signing of the agreement, tentatively June 1, 2015, and will
terminate according to the terms written in Article III of the agreement. The rent on the lease of
the property will consist of good consideration and the payment of $1.00.
The EDA will also enter into a lease-purchase agreement with the City. The lease will be in
effect through February 1, 2036, at which time the financing for the facility will be retired. At
that time the facility will become the property of the City. The City will annually appropriate
funds to pay its lease obligation to the EDA, equal to the annual debt service payments,
according to Exhibit B of the agreement, including all fees, charges and agent and counsel fees
as they come due. The City agrees to maintain the property during the term of the lease and
keep it in good repair. The City also agrees to provide liability and property insurance on the
property and to indemnify the EDA during the lease term. All other terms and conditions of the
lease-purchase agreement will also apply.
Julie Eddington of the firm of Kennedy and Graven, Ltd., is the EDA’s bond counsel. Ms.
Eddington will be in attendance at tonight’s meeting to address any questions or concerns you
may have relative to these agreements.
RECOMMENDATION
Staff recommends approval of Resolution 15-02.
ATTACHMENTS
Resolution 15-02
Ground Lease between the City of Lino Lakes and
The Lino Lakes Economic Development Authority
Lease-Purchase Agreement between the Lino Lakes Economic Development Authority and
the City of Lino Lakes
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. 15-02
RESOLUTION AUTHORIZING THE EXECUTION AND
DELIVERY OF A GROUND LEASE, LEASE-PURCHASE
AGREEMENT, AND RELATED DOCUMENTS
BE IT RESOLVED By the Board of Commissioners (the “Board”) of the Lino Lakes Economic
Development Authority (the “Authority”) as follows:
1. Background; Authorizations.
(a) The City of Lino Lakes, Minnesota (the “City”) and the Authority have
determined that it is in the best interests of the City and its residents that the City undertake the
acquisition, construction, and equipping of a new fire hall (the “Facility”) to be located on certain
land (the “Site”) in the City (the “Project”).
(b) The Board has previously authorized the issuance and sale of its Lease Revenue
Bonds, Series 2015 (City of Lino Lakes, Minnesota Lease Obligation) (the “Bonds”).
(c) Forms of the following lease documents have been presented before the Board:
(i) a Ground Lease, to be dated on or after June 1, 2015 (the “Ground Lease”), between the City,
as lessor, and the Authority, as lessee, pursuant to which the Authority will lease the Site from the
City; and (ii) a Lease-Purchase Agreement, to be dated on or after June 1, 2015 (the “Lease”),
between the Authority, as lessor, and the City, as lessee, pursuant to which the City will lease the
Site and the Facility to be constructed thereon from the Authority.
(d) An Official Statement (the “Official Statement”) has been prepared by Springsted
Incorporated with respect to the Bonds and has been presented before the Board.
2. Payment of Lease Payments. Pursuant to a resolution adopted by the City Council of the
City on the date hereof, the City has agreed to pay to the registrar for the Bonds, promptly when due, all of
the lease payments due under the Lease (the “Lease Payments”) and other amounts required by the Lease. To
provide moneys to make such payments, the City will include in its annual budget, for each fiscal year (the
“Fiscal Year”) during the term of the Lease, commencing with the Fiscal Year ending on December 31, 2016,
moneys sufficient to pay and for the purpose of paying all Lease Payments, a reasonable estimate of
additional Lease Payments, and other amounts payable under the Lease. The City will approve its annual
budget no less than three months prior to any Lease Payment paid with a tax levy or other moneys included in
that annual budget. The agreement of the City in this section is subject to the City’s right to terminate the
Lease at the end of any Fiscal Year, as set forth in Section 5.6 of the Lease.
3. Official Statement. The Official Statement, as completed and supplemented, and its
distribution to potential purchasers of the Bonds, is hereby approved. The President and Executive Director
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.
460962v1 JAE LN140-112
4. Paying Agent. There has been presented before the Board a form of Paying Agent
Agreement, to be dated on or after June 1, 2015 (the “Paying Agent Agreement”), between the Authority and
U.S. Bank National Association, as paying agent (the “Paying Agent”). Pursuant to the Paying Agent
Agreement, the Paying Agent will agree to perform the duties as paying agent and bond registrar for the
Bonds.
5. Authorization of Documents.
(a) The President and Executive Director are authorized and directed to execute and
deliver the Ground Lease, the Lease, and the Paying Agent Agreement on behalf of the Authority,
substantially in the forms on file with the Authority, but with all such changes therein as shall be
approved by the officers executing the same, which approval shall be conclusively evidenced by the
execution thereof. Copies of all of the transaction documents shall be delivered, filed and recorded
as provided therein. The President, Executive Director, and other Authority officers are also
authorized and directed to execute such other instruments as may be required to give effect to the
transactions herein contemplated.
(b) The officers of the Authority are authorized and directed to prepare and furnish to
the original purchaser of the Bonds, and to the attorneys approving the Bonds, certified copies of all
proceedings and records of the Authority relating to the power and authority of the Authority to enter
into the Ground Lease, the Lease, and the Paying Agent Agreement within their knowledge or as
shown by the books and records in their custody and control, and such certified copies and
certificates shall be deemed representations of the Authority as to the facts stated therein.
Adopted by the Board of Commissioners of the Lino Lakes Economic Development Authority this 11th day
of May, 2015.
President
ATTEST:
Executive Director
2
460962v1 JAE LN140-112
First Draft
April 29, 2015
GROUND LEASE
between
CITY OF LINO LAKES, MINNESOTA,
as Lessor
and
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY,
as Lessee
Dated as of June 1, 2015
Related to:
$4,430,000
Lino Lakes Economic Development Authority
Lease Revenue Bonds, Series 2015
(City of Lino Lakes, Minnesota Lease Obligation)
This instrument drafted by:
KENNEDY & GRAVEN, Chartered (JAE)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
(612) 337-9300
GROUND LEASE
THIS GROUND LEASE, dated as of June 1, 2015 (the “Ground Lease”), is by and between the
CITY OF LINO LAKES, MINNESOTA, a home rule charter city and political subdivision of the State of
Minnesota, as lessor (the “City”), and the LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY,
a public body corporate and politic and political subdivision of the State of Minnesota, as lessee (together
with its successors and assigns as lessee hereunder, the “Authority”).
WITNESSETH:
In consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
Demise of Site and Warranties
Section 1.01. Demise. Subject to and upon the terms, conditions, covenants and undertakings
hereinafter set forth, the City hereby leases and permits the use to, and the Authority hereby leases from
the City, the property described in EXHIBIT A attached hereto, located in Anoka County, Minnesota
(hereinafter called the “Site”).
Section 1.02. Warranties. The City covenants and warrants to the Authority:
(1) That the City has good and merchantable title to the Site, has authority to enter
into, execute and deliver this Ground Lease, has duly authorized the execution and delivery of
this Ground Lease, and has duly executed and delivered this Ground Lease;
(2) That the Site is not subject to any dedication, easement, right-of-way, reservation
in patent, covenant, condition, restriction, lien or encumbrance which would prohibit or
materially interfere with the alteration, improvement or operation of certain facilities (hereinafter
called the “Facilities”) on the Site, as contemplated by that certain Lease-Purchase Agreement,
dated as of June 1, 2015 (the “Lease”), between the Authority, as lessor, and the City, as lessee;
(3) That all taxes, assessments or impositions of any kind with respect to the Site,
except current taxes, have been paid in full;
(4) That the Site is properly zoned for the purpose of the Facilities; and
(5) That the City has authority to enter into, execute and deliver the Lease, has duly
authorized its execution and delivery, and has duly executed and delivered the Lease.
Section 1.03. Environmental Covenant. To the best knowledge of the City, after due inquiry,
(i) no dangerous, toxic or hazardous pollutants, contaminants, chemicals, waste, materials or substances,
as defined in or governed by the provisions of any federal, state or local law, statute, code, ordinance,
regulation, requirement or rule relating thereto (collectively, “Environmental Regulations”), and also
including urea-formaldehyde, polychlorinated biphenyls, asbestos, asbestos-containing materials, nuclear
fuel or waste, radioactive materials, explosives, carcinogens and petroleum products, or any other waste,
material, substance, pollutant or contaminant which would subject the owner of the Site and the Facilities
to any damages, penalties or liabilities under any applicable Environmental Regulation (collectively,
“Hazardous Substances”) are now or have been stored, located, generated, produced, processed, treated,
460514v1 JAE LN140-112 1
transported, incorporated, discharged, emitted, released, deposited or disposed of in, upon, under, over or
from the Site or the Facilities in violation of any Environmental Regulation; (ii) no threat exists of a
discharge, release or emission of a Hazardous Substance upon or from the Site into the environment;
(iii) the Site has not been used as or for a mine, a landfill, a dump or other disposal facility, an industrial
or manufacturing facility, or a gasoline service station; (iv) no underground storage tank is located at the
Site or has previously been located therein but has been removed therefrom; (v) no violation of any
Environmental Regulation now exists relating to the Site or the Facilities, no notice of any such violation
or any alleged violation thereof has been issued or given by any governmental entity or agency, and there
is not now any investigation or report involving the Site or the Facilities by any governmental entity or
agency which in any way relates to Hazardous Substances; (vi) no person, party or private or
governmental agency or entity has given any notice of or asserted any claim, cause of action, penalty, cost
or demand for payment or compensation, whether or not involving any injury or threatened injury to
human health, the environment or natural resources, resulting or allegedly resulting from any activity or
event described in (i) above; (vii) there are not now any actions, suits, proceedings or damage settlements
relating in any way to Hazardous Substances, in, upon, under, over or from the Site; (viii) the Site is not
listed in the United States Environmental Protection Agency’s National Priorities List of Hazardous
Waste Sites or any other list of Hazardous Substance sites maintained by any federal, state or local
governmental agency; and (ix) the Site is not subject to any lien or claim for lien or threat of a lien in
favor of any governmental entity or agency as a result of any release or threatened release of any
Hazardous Substance.
The City shall not store, locate, generate, produce, process, treat, transport, incorporate,
discharge, emit, release, deposit or dispose of any Hazardous Substance in, upon, under, over or from the
Site or the Facilities in violation of any Environmental Regulation; shall not permit any Hazardous
Substance to be stored, located, generated, produced, processed, treated, transported, incorporated,
discharged, emitted, released, deposited, disposed of or to escape therein, thereupon, thereunder,
thereover or therefrom in violation of any Environmental Regulation; shall cause all Hazardous
Substances to be properly removed therefrom and properly disposed of in accordance with all applicable
Environmental Regulations; and shall not install or permit to be installed any underground storage tank
therein or thereunder in violation of any Environmental Regulations which are applicable to the Site and
the Facilities.
In the event any Hazardous Substance is found upon, under, over or from the Site or the Facilities
in violation of any Environmental Regulation or if any lien or claim for lien in favor of any governmental
entity or agency as a result of any release of any Hazardous Substance is threatened, the City, at its sole
cost and expense, shall, within ten days of such finding, deliver written notice thereof to the Authority and
shall promptly remove such Hazardous Substances upon, under, over or from the Site or the Facilities and
prevent the imposition of any liens against the Site or the Facilities for the cleanup of any Hazardous
Materials. Such removal shall be conducted and completed in compliance with all applicable federal,
state and local laws, regulations, rules, ordinances and policies, in accordance with the orders and
directives of all federal, state and local governmental authorities. In the event the City has not removed
such Hazardous Substances within a time period deemed reasonable by the Authority, the City shall, at
the written direction of the Authority, take such remedial action as the Authority shall direct. In the event
the City shall not comply with the written directions of the Authority within the time frame established
within its written directions, the City hereby grants to the Authority an irrevocable license to remove
Hazardous Substances from, repair, clean up, and detoxify the Site and the Facilities and agrees to
reimburse the Authority for all of its costs therefor.
The City further agrees, to the extent permitted by Minnesota law, to reimburse the Authority for
any and all claims, demands, judgments, penalties, liabilities, costs, damages and expenses, including
court costs and attorneys’ fees directly or indirectly incurred by the Authority (prior to trial, at trial and on
460514v1 JAE LN140-112 2
appeal) in any action against or involving the Authority, resulting from any breach of the foregoing
covenants, or from the discovery of any Hazardous Substance, in, upon, under or over, or emanating from
the Site or the Facilities, whether or not the City is responsible therefor, it being the intent of the City and
the Authority that the Authority shall have no liability or responsibility for damage or injury to human
health, the environment or natural resources caused by, for abatement and/or clean up of, or otherwise
with respect to, Hazardous Substances by virtue of the interest of the Authority in the Site and the
Facilities pursuant to this Ground Lease, or hereafter created, or as the result of the Authority exercising
any of its rights or remedies with respect thereto hereunder or under any other instrument, including but
not limited to becoming the owner thereof by foreclosure or conveyance in lieu of foreclosure. The
foregoing representations, warranties and covenants of this Section shall be deemed continuing covenants,
representations and warranties for the benefit of the Authority, including but not limited to any purchaser
at a foreclosure sale, any transferee of the title of the Authority or any other purchaser at a foreclosure
sale, and any subsequent owner of the Site or the Facilities, and shall survive the satisfaction or release of
this Ground Lease, any foreclosure of a mortgage lien under any instrument, and/or any acquisition of
title to the Site or the Facilities or any part thereof by the Authority, by deed in lieu of foreclosure of
otherwise. Any amounts covered by the foregoing shall bear interest from the date incurred at the
maximum rate permitted by law and shall be payable on demand.
ARTICLE II
Term and Rent
Section 2.01. Term. The term of this Ground Lease shall commence as of the day and year first
above written and shall end on the date the term of this Ground Lease is terminated in accordance with
Section 3.01 hereof.
Section 2.02. Rent. The rent for the entire term of this Ground Lease shall be One Dollar
($1.00), payable in one installment in advance on the Closing Date.
ARTICLE III
Termination
Section 3.01. Termination. Subject to the other provisions of this Ground Lease, this Ground
Lease shall terminate upon the occurrence of any one of the following events:
(1) The payment by the City of all Lease Payments owing by the City as lessee under
the Lease.
(2) The exercise by the City of its option to prepay the Lease Payments and all other
sums due in accordance with the terms and conditions of the Lease.
(3) The termination of the Term of Lease by the City for non-appropriation pursuant
to Section 5.6 of the Lease and the receipt by the Authority of amounts from the sublease or other
disposition of the Authority’s interest in the Site and the Facilities sufficient to:
(a) Reimburse the Authority for all administrative costs and expenses,
including reasonable attorneys’ fees, incurred by the Authority as a result of the
460514v1 JAE LN140-112 3
termination of the Term of Lease and the sublease or sale of the Authority’s interest in
the Site and the Facilities; and
(b) Reimburse the Authority for all capital costs and expenses in any manner
incurred by the Authority with respect to preparing the Site and the Facilities for sublease
for commercial or other lawful purposes (as used in this Ground Lease, the right to
sublease the Site includes the right to sell all leasehold interests in the Site); and
(c) Pay the unpaid principal of and interest on the Bonds described in the
Lease.
(4) The termination of the Term of Lease upon the occurrence of an Event of Default
by the City under Article X of the Lease and the receipt by the Authority of amounts from the
sublease or sale of the Authority’s interest in the Site and the Facilities sufficient to:
(a) Reimburse the Authority for all administrative costs and expenses,
including reasonable attorneys’ fees, incurred by the Authority as a result of the Event of
Default and the termination of the Lease and the sublease or sale of the Authority’s
interest in the Site and the Facilities; and
(b) Reimburse the Authority for all capital costs and expenses in any manner
incurred by the Authority with respect to preparing the Site and the Facilities for sublease
for commercial or other lawful purposes; and
(c) Pay the unpaid principal of and interest on the Bonds described in the
Lease.
The amounts referred to in paragraphs (a), (b) and (c) of Section 3.01(3) or 3.01(4), as applicable,
are hereinafter referred to as the “Reimbursement Amount.”
Section 3.02. Use of Revenues. After termination of the Term of Lease by the City because of
non-appropriation pursuant to Section 5.6 of the Lease or termination of the Term of Lease upon the
occurrence of an Event of Default under Article X of the Lease, revenues received by the Authority from
the Site and the Facilities as contemplated in Section 3.01(3) or 3.01(4) hereof shall be applied as follows:
FIRST -- An amount thereof equal to ongoing administrative costs and costs of
operation of the Site and the Facilities may be retained by the Authority;
SECOND -- An amount thereof equal to interest on the outstanding Reimbursement
Amount at the rates per annum specified in Exhibit B to the Lease may
be retained by the Authority; and
THIRD -- Any remaining amount thereof shall be retained by the Authority and
credited to the payment of the Reimbursement Amount.
Use of the Site and the Facilities by the Authority or any affiliate of the Authority, other than for
the purpose of assuming control, making any necessary changes in the Site or the Facilities, and the initial
subleasing thereof, shall be treated as the sublease thereof on a monthly basis at the then current monthly
value.
460514v1 JAE LN140-112 4
Section 3.03. Reports. In the event that the Term of Lease is terminated by the City because of
non-appropriation pursuant to Section 5.6 of the Lease or terminated by the Authority as a result of the
occurrence of an Event of Default by the City thereunder, the Authority shall keep complete and accurate
records regarding any sublease of the Site and the Facilities and shall, within sixty (60) days after the end
of each Fiscal Year of the City, deliver a written report to the City showing (a) all amounts received by
the Authority from any sublease of the Site and the Facilities; (b) an analysis as to whether the Authority
has received the Reimbursement Amount, with all supporting calculations; and (c) the date, if any, during
the next Fiscal Year of the City on which the Authority expects to receive the Reimbursement Amount.
Such written report shall be verified by a certified public accountant or firm of certified public
accountants not in the regular employ of the Authority. The City shall have the right, at its own expense,
to examine all of the Authority’s records insofar as they relate to the Site and the Facilities. Such
examination shall be made at the Authority’s offices during normal business hours.
Section 3.04. City’s Option to Pay Reimbursement Amount. In the event that the Term of Lease
is terminated by the City because of non-appropriation pursuant to Section 5.6 of the Lease or terminated
by the Authority as a result of the occurrence of an Event of Default by the City thereunder, the unpaid
balance of the Reimbursement Amount and any other payment required under Section 3.02 hereof may be
paid by the City at any time. Upon such payment, this Ground Lease and the Authority’s interest in the
Site and the Facilities shall terminate; provided, that if the Authority’s interest in the Site or the Facilities
has been subleased to any sublessee pursuant to any sublease that is still in effect, this Ground Lease shall
not terminate, but the Authority shall assign and set over to the City all of the Authority’s interest in the
Site and the Facilities granted under this Ground Lease, subject to all existing rights created in the Site
and the Facilities by all such subleases, and the City shall be entitled to all rent payments with respect to
any subleases of the Site and the Facilities.
Section 3.05. Effect of Termination of Lease. In the event that the Term of Lease is terminated
by the City because of non-appropriation pursuant to Section 5.6 of the Lease or terminated by the
Authority as a result of the occurrence of an Event of Default by the City thereunder, the City shall have
no continuing obligation under this Ground Lease after such termination, other than to continue to allow
the Authority to continue to use and enjoy the Site and the Facilities as provided herein.
ARTICLE IV
Use of Site; Additional Covenants
Section 4.01. Use. The Authority shall not use or permit the use of the Site for any unlawful
purpose.
Section 4.02. Quiet Enjoyment. The City covenants that upon the Authority’s paying the rent
reserved herein, and performing all conditions and covenants set forth in this Ground Lease and the
Lease, the Authority shall and may peaceably have, hold and enjoy the Site for the term of this Ground
Lease. The Authority covenants that upon expiration of this Ground Lease, it shall give the City
peaceable possession of the Site, together with the Facilities and any other improvements constructed
thereon pursuant to the Lease.
Section 4.03. Assignment and Subletting. The Authority shall have the right to assign its interest
in this Ground Lease, and to sublet the Site in accordance with the Lease.
Section 4.04. Additional Covenants. In the event that any person or entity, however organized
(other than the Authority or any assignee of the Authority), shall be determined to hold any interest that in
460514v1 JAE LN140-112 5
any manner affects the City’s good and merchantable title to the Site, the City shall use its best efforts to
acquire the interest so held, such acquisition to be made at the City’s sole cost and expense. The City
hereby agrees to save and keep harmless the Authority, or any assignee of the Authority, from and against
any and all liabilities, obligations, losses, damages, penalties, claims, actions, costs and expenses
(including reasonable attorneys’ fees, but only in the event that litigation is actually commenced by the
Authority) of whatever kind and nature, imposed on, incurred by or asserted against the Authority, or any
assignee of the Authority, that in any way relate to or arise out of the assertion of any interest affecting
the City’s good and merchantable title to the Site by any person or entity, however organized (other than
the Authority or any assignee of the Authority).
ARTICLE V
Miscellaneous
Section 5.01. Binding Effect. This Ground Lease shall be binding upon, and inure to the benefit
of, the parties hereto, and their successors and assigns.
Section 5.02. Certain Defined Terms. Unless the context hereof clearly requires otherwise,
capitalized terms used in this Ground Lease and defined in the Lease are used herein with the same
meanings as set forth in the Lease.
(The remainder of this page is intentionally left blank.)
460514v1 JAE LN140-112 6
IN WITNESS WHEREOF, the City has caused this Ground Lease to be executed in its corporate
name by its duly authorized officers and the Authority has caused this Ground Lease to be executed in its
name by its duly authorized officers, all as of the date and year first written above.
CITY OF LINO LAKES, MINNESOTA
By
Its Mayor
By
Its City Administrator
STATE OF MINNESOTA )
) ss.
COUNTY OF ANOKA )
The foregoing instrument was acknowledged before me this ___ day of June, 2015, by Jeff
Reinert, the Mayor of the City of Lino Lakes, Minnesota, a home rule charter city and political
subdivision of the State of Minnesota, on behalf of the City.
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF ANOKA )
The foregoing instrument was acknowledged before me this ___ day of June, 2015, by Jeff
Karlson, the City Administrator of the City of Lino Lakes, Minnesota, a home rule charter city and
political subdivision of the State of Minnesota, on behalf of the City.
Notary Public
460514v1 JAE LN140-112 S-1
Execution page of the Authority to the Ground Lease, dated as of the date and year first written above.
LINO LAKES ECONOMIC DEVELOPMENT
AUTHORITY
By
Its President
By
Its Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF ANOKA )
The foregoing instrument was acknowledged before me this ___ day of June, 2015, by
_________________, the President of the Lino Lakes Economic Development Authority, a public body
corporate and politic and political subdivision of the State of Minnesota, on behalf of the Authority.
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF ANOKA )
The foregoing instrument was acknowledged before me this ___ day of June, 2015, by
_________________, the Executive Director of the Lino Lakes Economic Development Authority, a
public body corporate and politic and political subdivision of the State of Minnesota, on behalf of the
Authority.
Notary Public
460514v1 JAE LN140-112 S-2
EXHIBIT A
DESCRIPTION OF SITE
[Insert legal description]
460514v1 JAE LN140-112 A-1
First Draft
April 29, 2015
LEASE-PURCHASE AGREEMENT
between
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY,
as Lessor
and
CITY OF LINO LAKES, MINNESOTA,
as Lessee
Dated as of June 1, 2015
Related to:
$4,430,000
Lino Lakes Economic Development Authority
Lease Revenue Bonds, Series 2015
(City of Lino Lakes, Minnesota Lease Obligation)
This instrument drafted by:
Kennedy & Graven, Chartered (JAE)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
(612) 337-9300
Error! Bookmark not defined.
TABLE OF CONTENTS
Page
PARTIES AND RECITALS ............................................................................................................................... 1
ARTICLE I
Definitions and Exhibits
Section 1.1. Definitions .......................................................................................................................... 2
Section 1.2. Exhibits ............................................................................................................................... 4
ARTICLE II
Representations, Covenants and Warranties
Section 2.1. Representations, Covenants and Warranties of the City ..................................................... 6
Section 2.2. Representations, Covenants and Warranties of the Authority ............................................ 7
ARTICLE III
Acquisition, Construction, and Equipping of Facilities;
Payment of Project Costs
Section 3.1. Project Costs ....................................................................................................................... 8
Section 3.2. Acquisition, Construction, and Equipping of Facilities; Payment of Costs ........................ 8
ARTICLE IV
Lease and Sale of Facilities
Section 4.1. Lease and Sale of Facilities............................................................................................... 10
Section 4.2. Lease Payments ................................................................................................................. 10
Section 4.3. Additional Lease Payments............................................................................................... 10
Section 4.4. Source of Lease Payments ................................................................................................ 10
Section 4.5. City’s Obligations and Remedies...................................................................................... 11
Section 4.6. Possession and Enjoyment ................................................................................................ 11
Section 4.7. Authority Access to Site and Facilities ............................................................................. 12
ARTICLE V
Term of Lease;
Transfer or Surrender of Site and Facilities
Section 5.1. Term of Lease ................................................................................................................... 13
Section 5.2. Termination of Term of Lease .......................................................................................... 13
Section 5.3. Authority’s Interest in the Site and Facilities ................................................................... 13
Section 5.4. Surrender of Site and Facilities ......................................................................................... 13
Section 5.5. Purchase; Conveyance of Title ......................................................................................... 13
Section 5.6. Non-Appropriation ............................................................................................................ 14
Section 5.7. Intent to Continue Term; Appropriations ......................................................................... 14
Section 5.8. Effect of Termination ........................................................................................................ 14
460515v1 JAE LN140-112 i
ARTICLE VI
General Matters
Section 6.1. Use; Permits ...................................................................................................................... 15
Section 6.2. Maintenance and Modification of Facilities by the City ................................................... 15
Section 6.3. Taxes, Other Governmental Charges and Utility Charges ................................................ 16
Section 6.4. Liens ................................................................................................................................. 16
Section 6.5. Easements ......................................................................................................................... 16
Section 6.6. Addition and Substitution of Land .................................................................................... 16
Section 6.7. Compliance with Bond Resolution ................................................................................... 17
Section 6.8. Tax Covenants .................................................................................................................. 17
Section 6.9. Rebate ............................................................................................................................... 18
ARTICLE VII
Insurance and Indemnification;
Damage, Destruction and Condemnation
Section 7.1. Liability Insurance ............................................................................................................ 19
Section 7.2. Property Insurance ............................................................................................................ 19
Section 7.3. Administration of Claims, Etc .......................................................................................... 19
Section 7.4. Other Insurance and Requirements for All Insurance ....................................................... 19
Section 7.5. Indemnification ................................................................................................................. 20
Section 7.6. Hazardous Substance Indemnification .............................................................................. 20
Section 7.7. Damage, Destruction and Condemnation ......................................................................... 20
Section 7.8. Insufficiency of Net Proceeds ........................................................................................... 21
Section 7.9. Cooperation of Authority .................................................................................................. 21
ARTICLE VIII
Option to Purchase; Option to Prepay
Section 8.1. Option to Purchase or Prepay ........................................................................................... 22
Section 8.2. Exercise of Option ............................................................................................................ 22
Section 8.3. Provision for Payment of Purchase Price; Discharge of City’s Obligation ...................... 22
Section 8.4. Prerequisite; No Default ................................................................................................... 22
ARTICLE IX
Assignment, Subleasing, Indemnification,
Mortgaging and Selling
Section 9.1. Assignment by Authority .................................................................................................. 23
Section 9.2. Assignment and Subleasing by the City ........................................................................... 23
Section 9.3. Restriction on Mortgage or Sale by the City..................................................................... 23
ARTICLE X
Events of Default and Remedies
Section 10.1. Events of Default Defined ................................................................................................ 24
Section 10.2. Remedies on Default ......................................................................................................... 25
Section 10.3. Delay; Notice .................................................................................................................... 25
460515v1 JAE LN140-112 ii
Section 10.4. No Remedy Exclusive ...................................................................................................... 25
Section 10.5. No Additional Waiver Implied by One Waiver ................................................................ 25
ARTICLE XI
Administrative Provisions
Section 11.1. Notices .............................................................................................................................. 26
Section 11.2. Binding Effect ................................................................................................................... 26
Section 11.3. Severability ....................................................................................................................... 26
Section 11.4. Amendments, Changes and Modifications ....................................................................... 26
Section 11.5. Further Assurances and Corrective Instruments ............................................................... 26
Section 11.6. Execution in Counterparts................................................................................................. 26
Section 11.7. Applicable Law ................................................................................................................. 26
Section 11.8. Authorized Officers .......................................................................................................... 26
Section 11.9. Captions ............................................................................................................................ 27
SIGNATURES ......................................................................................................................................... S-1
EXHIBIT A Description of Site and Permitted Encumbrances........................................................... A-1
EXHIBIT B Schedule of Lease Payments ........................................................................................... B-1
EXHIBIT C Form of Completion Certificate ...................................................................................... C-1
460515v1 JAE LN140-112 iii
LEASE-PURCHASE AGREEMENT
THIS LEASE-PURCHASE AGREEMENT, dated as of June 1, 2015 (the “Lease”), is by and
between the LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and
politic and political subdivision of the State of Minnesota, as lessor (the “Authority”), and the CITY OF
LINO LAKES, MINNESOTA, a home rule charter city and political subdivision of the State of Minnesota,
as lessee (the “City”).
WITNESSETH:
WHEREAS, the City is authorized by law to acquire such items of real and personal property as are
needed to carry out its governmental and proprietary functions, and to acquire such real and personal property
by entering into lease-purchase contracts; and
WHEREAS, the City has determined that it is necessary for it to acquire pursuant to this Lease the
Authority’s interest in certain real property described on EXHIBIT A attached hereto (the “Site”), together
with the fire hall, structures and improvements constructed and to be constructed thereon and certain
equipment to be contained therein (the “Facilities”); and
WHEREAS, the development of the Site and the Facilities is consistent with and furthers the
economic development functions of the Authority; and
WHEREAS, the Authority is willing to acquire a leasehold interest in the Site pursuant to a Ground
Lease, dated as of June 1, 2015 (the “Ground Lease”), between the City, as lessor, and the Authority, as
lessee, and to acquire title to the Facilities and to lease and sell the Site and the Facilities to the City, pursuant
to this Lease; and
WHEREAS, to provide funds for the acquisition and renovation of the Facilities, the Authority will
issue its Lease Revenue Bonds, Series 2015 (City of Lino Lakes, Minnesota Lease Obligation) (the “Bonds”),
in the original aggregate principal amount of $4,430,000, pursuant to a resolution adopted by the Authority
on March 23, 2015 (the “Bond Resolution”); and
NOW, THEREFORE, in the joint and mutual exercise of their powers, and in consideration of the
mutual covenants herein contained, the parties hereto recite and agree as follows:
(The remainder of this page is intentionally left blank.)
460515v1 JAE LN140-112 1
ARTICLE I
Definitions and Exhibits
Section 1.1. Definitions. Unless the context otherwise requires, the terms defined in this Section
shall, for all purposes of this Lease and Exhibits attached hereto, have the meanings herein specified:
“Additional Lease Payments” means payments due from the City pursuant to Section 4.3 hereof.
“Authority” means the Lino Lakes Economic Development Authority, a public body corporate and
politic and political subdivision of the State of Minnesota, and its successors and assigns as lessor hereunder.
“Authorized Officer,” when used with respect to the City, means its Mayor, City Administrator,
Finance Director, City Clerk or any other person who is designated in writing by the City as an Authorized
Officer for purposes of this Lease, and when used with respect to the Authority means its Executive Director
or any other person who is designated in writing by the Authority as an Authorized Officer for purposes of
this Lease.
“Bond Counsel” means any attorney or law firm having a national reputation as bond counsel in
connection with the issuance of state and local governmental obligations and appointed by the Authority as
bond counsel.
“Bond Registrar” means U.S. Bank National Association, Saint Paul, Minnesota, or any successor
Bond Registrar appointed by the Authority.
“Bond Resolution” means the resolution authorizing the issuance and sale of the Bonds adopted by
the Board of Commissioners of the Authority on March 23, 2015.
“Bonds” means the Lease Revenue Bonds, Series 2015 (City of Lino Lakes, Minnesota Lease
Obligation), issued by the Authority in the original aggregate principal amount of $4,430,000, pursuant to the
Bond Resolution.
“City” means the City of Lino Lakes, a home rule city and political subdivision of the State of
Minnesota, and any successor to its functions.
“City Council” means the City Council of the City and any successor as governing body of the City.
“Closing Date” means June 18, 2015, the date upon which the Bonds are delivered to the Original
Purchaser thereof against payment therefor.
“Code” means the Internal Revenue Code of 1986, as amended.
“Completion Date” means the date of completion of the acquisition, construction and equipping of
the Facilities, as evidenced by the certificate of the City described in Section 3.2(f) hereof.
“Costs of Issuance” means all fees and expenses incurred by the City and the Authority in connection
with the execution and delivery of the Lease and the issuance of the Bonds, including, but not limited to,
costs of preparing and printing the Bonds, this Lease, the Ground Lease, the Paying Agent Agreement, the
Official Statement relating to the Bonds, and related documents; legal fees (including, without limitation,
those of Bond Counsel and counsel to the Authority and the City); recording fees and title insurance
460515v1 JAE LN140-112 2
premiums; Rating Agency fees; financial advisor’s fees; and the Bond Registrar’s and Paying Agent’s initial
fees.
“Facilities” means the fire hall and any other buildings, structures and improvements to be
constructed on the Site, and all furniture, fixtures and equipment to be acquired with proceeds of sale of the
Bonds and located thereon.
“Fiscal Year” means the twelve-month fiscal period of the City, which commences on January 1 and
ends on December 31 of each year.
“Ground Lease” means the Ground Lease, dated as of June 1, 2015, by which the City leases the Site
to the Authority, as amended or supplemented from time to time.
“Independent,” when used with reference to an attorney, engineer, architect, certified public
accountant, consultant or other professional person, means a person who (i) is in fact independent, (ii) does
not have any material financial interest in the City or the transaction to which such person’s certificate or
opinion relates (other than payment to be received for professional services rendered), and (iii) is not
connected with the Authority or the City as an officer, director or employee.
“Independent Counsel” means an Independent attorney duly admitted to practice law before the
highest court of any state.
“Interest Payment Date” means February 1, 2016, and each August 1 and February 1 thereafter until
the Bonds are paid in full.
“Lease” means this Lease-Purchase Agreement, dated as of June 1, 2015, between the Authority, as
lessor, and the City, as lessee, as amended or supplemented from time to time.
“Lease Payment” means each of the payments due from the City to the Authority on each Lease
Payment Date during the Term of Lease, as shown on EXHIBIT B attached hereto.
“Lease Payment Date” means the date upon which any Lease Payment is due and payable as
provided in EXHIBIT B attached hereto.
“Net Proceeds,” when used with respect to proceeds of insurance or a condemnation award, means
moneys received or receivable by the City, as owner or as lessee hereunder, or the Authority, as lessee under
the Ground Lease or as secured party, of the Site or the Facilities, less the cost of recovery (including
attorneys’ fees) of such moneys from the insuring company or the condemning authority.
“Original Purchaser” means Piper Jaffray & Co.
“Outstanding,” when used as of any particular time with reference to the Bonds, means all Bonds
theretofore authenticated and delivered by the City under the Bond Resolution except: (i) Bonds theretofore
canceled by the Bond Registrar or surrendered to the Bond Registrar for cancellation; (ii) Bonds for the
payment or redemption of which funds or direct obligations of or obligations fully guaranteed by the United
States of America in the necessary amount shall have theretofore been deposited with the Bond Registrar
(whether upon or prior to the maturity or the redemption date of such Bonds), provided that if such Bonds are
to be redeemed prior to the maturity thereof, notice of such redemption shall have been given pursuant to the
Bond Resolution, or provision satisfactory to the Bond Registrar shall have been made for the giving of such
notice; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authenticated and
460515v1 JAE LN140-112 3
delivered by the Bond Registrar pursuant to the terms of Section 2.03(h) of the Bond Resolution pertaining to
the replacement of Bonds.
“Owner” means the registered owner of any Outstanding Bond.
“Paying Agent” means U.S. Bank National Association, Saint Paul, Minnesota, or any successor
paying agent appointed by the Authority.
“Paying Agent Agreement” means the Paying Agent Agreement, dated as of June 1, 2015, between
the Paying Agent and the Authority, as amended or supplemented from time to time.
“Permitted Encumbrances” means, as of any particular time: (i) liens for taxes and assessments not
then delinquent, or which the City may, pursuant to provisions of Section 6.3 hereof, permit to remain
unpaid; (ii) the Ground Lease, this Lease and amendments hereto or thereto; (iii) the Authority’s interest in
the Facilities; (iv) any mechanic’s, laborer’s, materialmen’s, supplier’s or vendor’s lien or right not filed or
perfected in the manner prescribed by law; (v) such minor defects, irregularities, encumbrances, easements,
rights-of-way and clouds on title as normally exist with respect to properties similar in character to the Site
and which do not, in the opinion of Independent Counsel, materially impair the property affected thereby for
the purpose for which it was intended; and (vi) easements, restrictions or encumbrances, if any, shown on
EXHIBIT A hereto.
“Project” means the Site and the Facilities, as they exist at any time.
“Project Costs” has the meaning provided in Section 3.2(b) hereof.
“Project Fund” means the Project Fund established under the Bond Resolution.
“Purchase Price” means, with respect to any date, cash or obligations of or guaranteed by the United
States of America maturing at such times and in such amounts as to provide for the full and timely payment
of all interest and premium, if any, on and principal of the Outstanding Bonds to maturity or an earlier
redemption date, if applicable. The City shall be entitled to credit against the Purchase Price the amount of
any moneys theretofore paid to and held by the Authority or the Paying Agent and available for the payment
of the Outstanding Bonds.
“Site” means the real property described in EXHIBIT A hereto, including any property added to or
substituted for any portion of the Site, and less any real property released from this Lease pursuant to
Article VI hereof.
“State and Federal Laws” means the Constitution and any law of the State of Minnesota and any
ordinance, rule or regulation of any agency or political subdivision of the State of Minnesota; and any law of
the United States, and any rule or regulation of any executive department or federal agency.
“Term of Lease” means the period during which this Lease may remain in effect as specified in
Section 5.1 hereof.
Section 1.2. Exhibits. The following Exhibits are attached to and by reference made a part of this
Lease:
EXHIBIT A: A legal description of the Site and a listing of Permitted Encumbrances.
460515v1 JAE LN140-112 4
EXHIBIT B: The date and amount of each Lease Payment coming due during the Term of
Lease.
EXHIBIT C: The form of Completion Certificate to be delivered by the City to the
Authority pursuant to Section 3.2(f) hereof.
(The remainder of this page is intentionally left blank.)
460515v1 JAE LN140-112 5
ARTICLE II
Representations, Covenants and Warranties
Section 2.1. Representations, Covenants and Warranties of the City. The City represents, covenants,
and warrants as follows:
(a) The City is authorized under its charter and the Constitution and laws of the State of
Minnesota to enter into this Lease and the transactions contemplated hereby, and to perform all of its
obligations hereunder.
(b) Neither the execution and delivery of this Lease, nor the fulfillment of or
compliance with the terms and conditions thereof, nor the consummation of the transactions
contemplated thereby, conflicts with or results in a breach of the terms, conditions or provisions of
any restriction or any agreement or instrument to which the City is now a party or by which the City
is bound, constitutes a default under any of the foregoing, or results in the creation or imposition of
any lien, charge or encumbrance whatsoever upon any of the property or assets of the City, or upon
the Site and the Facilities except Permitted Encumbrances.
(c) This Lease is entered into under authority of and pursuant to Minnesota Statutes,
Section 465.71.
(d) The officers of the City executing this Lease have been duly authorized to do so.
(e) The City will not pledge, mortgage or assign this Lease, or its rights, duties and
obligations hereunder to any other person, firm or corporation except as provided under the terms of
this Lease.
(f) Subject to the City’s rights under Section 5.6 hereof, the Facilities will be used until
the Bonds have all been paid primarily to carry out the essential governmental or proprietary
purposes of the City.
(g) Subject to the provisions of Section 5.6 hereof, the Finance Director of the City will
include in the annual budget of the City submitted to the City Council, for each Fiscal Year during
the Term of Lease, moneys sufficient to pay and for the purpose of paying all Lease Payments and
Additional Lease Payments and other obligations of the City under this Lease, and for this purpose
the City will make a reasonable estimate of Additional Lease Payments to become due in the next
Fiscal Year, and will take all other actions necessary to provide moneys for the payment of the
obligations of the City under this Lease from sources of the City lawfully available for this purpose.
(h) Except to the extent specifically provided herein, the City is not obligated to
appropriate or otherwise provide moneys for the payment of the Lease Payments or any other
amounts coming due hereunder; and in the event of non-appropriation or non-renewal by the City,
the City shall not be liable for general, special, incidental, consequential or other damages resulting
therefrom. This Lease does not constitute a general obligation of the City, and the full faith and
credit and taxing powers of the City are not pledged for the payment of the Lease Payments or other
amounts coming due, or other actions required to be performed, hereunder.
(i) The City hereby declares its current need for the Facilities. The City has determined
that the purchase price to be paid for the Site and the Facilities under this Lease represents the fair
460515v1 JAE LN140-112 6
market value of the Facilities; that the Lease Payments and Additional Lease Payments hereunder
during the Term of Lease represent the fair value of the use of the improved Facilities; and that the
Purchase Price represents the fair purchase price of the Facilities. The City hereby determines that
the Lease Payments and Additional Lease Payments do not exceed a reasonable amount so as to
place the City under an economic compulsion to renew this Lease or to exercise its option to
purchase the Facilities hereunder. In making such determinations the City has given consideration to
the costs of the Facilities, the uses and purposes for which the Facilities will be employed by the
City, the benefit to the City by reason of the acquisition of the Facilities pursuant to the terms and
provisions of this Lease and the City’s option to purchase the Facilities. The City hereby determines
and declares that the acquisition, construction and equipping of the Facilities and the leasing of the
Facilities pursuant to this Lease will result in facilities of comparable quality and meeting the same
requirements and standards as would be necessary if the acquisition of the Facilities were performed
by the City other than pursuant to this Lease. The City hereby determines and declares that the
period during which the City has an option to purchase the Facilities (i.e., the Term of Lease) does
not exceed the anticipated useful life of the Facilities.
Section 2.2. Representations, Covenants and Warranties of the Authority. The Authority represents,
covenants, and warrants as follows:
(a) The Authority is a public body corporate and politic and political subdivision of the
State of Minnesota; has power to enter into this Lease; is possessed of full power to own and hold
real and personal property, and to sell the same; and has duly authorized the execution and delivery
of this Lease.
(b) Neither the execution and delivery of this Lease, nor the fulfillment of or
compliance with the terms and conditions thereof, nor the consummation of the transactions
contemplated thereby, conflicts with or results in a breach of the terms, conditions or provisions of
any restriction or any agreement or instrument to which the Authority is now a party or by which the
Authority is bound, constitutes a default under any of the foregoing, or results in the creation or
imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the
Authority, or upon the Site and the Facilities except Permitted Encumbrances.
(c) This Lease is entered into under authority of and pursuant to Minnesota Statutes,
Sections 469.090 through 469.1082.
(d) The Authority declares and finds that the Facilities promote economic development
generally by ensuring a modern and efficient fire hall in the City.
(e) The officers of the Authority executing this Lease have been duly authorized to do
so.
(The remainder of this page is intentionally left blank.)
460515v1 JAE LN140-112 7
ARTICLE III
Acquisition, Construction and Equipping of Facilities;
Payment of Costs
Section 3.1. Project Costs. The City has estimated that the costs of acquiring, constructing, and
equipping of the Facilities and the Costs of Issuance of the Bonds will be not less than $4,430,000. In order
to provide the moneys needed to pay such costs when due, and in consideration of the actions agreed to be
performed by the City under this Lease, the Authority has adopted the Bond Resolution, pursuant to which
the proceeds of the sale of the Bonds in the amount of $_________ (par amount of $4,430,000, [plus original
issue premium of $______,] [less original issue discount of $_______,] less underwriter’s discount of
$________), plus accrued interest, if any, will be deposited with the City.
Section 3.2. Acquisition, Construction and Equipping of Facilities; Payment of Costs.
(a) The Authority shall cause the Facilities to be constructed with all reasonable dispatch. The
Authority hereby appoints the City as its agent for the purpose of acquisition, construction and equipping of
the Facilities, and the City may perform the same itself or through its agents, and may make or issue such
contracts, orders, receipts and instructions, and in general do or cease to be done all such other things as it
may consider requisite or advisable for the completion of the acquisition, construction and equipping of the
Facilities and for fulfilling its obligations under this Article. The City shall have full authority and the sole
right under this Lease to supervise and control, directly or indirectly, all aspects of the acquisition,
construction and equipping of the Facilities.
(b) The Authority shall deposit the proceeds of the Bonds in the amount of $____________
with the City for credit to the Project Fund, as provided in the Bond Resolution. Amounts in the Project Fund
shall be disbursed to pay the following costs (referred to as “Project Costs”):
(i) Obligations incurred for labor and to contractors, builders and material suppliers in
connection with the construction of the Facilities, including obligations for machinery, materials and
equipment therefor;
(ii) Costs of acquisition of land and all interests in land required specifically for the Site,
site improvements required for the construction or operation of the Facilities, demolition of any
portion of the existing building on the Site and removal of any equipment therefrom (net of any
salvage);
(iii) Costs of acquisition and installation of equipment, furnishings and other tangible
personal property required for the Facilities;
(iv) Fees and expenses of engineers and architects for surveys, estimates and other
preliminary investigations, preparation of plans, drawings and specifications, and supervising
construction, as well as for the performance of all other duties of engineers and architects in relation
to the Facilities or the issuance of the Bonds therefor, including the costs of such services as may
have been performed by employees of the City;
(v) Expenses of administration, supervision and inspection properly chargeable to the
construction of the Facilities, administrative fees and other expenses relating to construction of the
Facilities, title insurance premiums, abstracting and filing fees, and legal expenses and fees;
460515v1 JAE LN140-112 8
(vi) Costs of Issuance of the Bonds;
(vii) The payment of interest on the Bonds during construction of the Facilities; and
(viii) Any other obligation or expense heretofore or hereafter incurred by the City in
connection with the Facilities defined as and constituting a proper cost of the Facilities and approved
by an Authorized Officer of the City.
(c) Before any of the payments referred to in this Section may be made from the Project Fund,
an Authorized Officer of the City shall certify to the Authority with respect to each such payment: (i) that
none of the items for which the payment is proposed to be made has formed the basis for any payment
theretofore made from the Project Fund; and (ii) that each item for which payment is proposed to be made is
or was necessary in connection with acquisition, construction, and equipping of the Facilities. In the case of
any construction contract providing for the retention of a portion of the contract price, there shall be paid only
the net amount remaining after deduction of any such portion. Notwithstanding anything to the contrary
herein, proceeds of the Bonds may be applied directly to pay Costs of Issuance.
(d) Money in the Project Fund shall be subject to withdrawal from time to time only for the
purposes of paying Project Costs or for the reimbursement to the City, subject to any applicable provision of
law, for payments theretofore made by the City for Project Costs. The Authority agrees that none of the
funds in the Project Fund shall be used for any purposes other than payment or reimbursement of Project
Costs and the payment of principal of, premium (if any) on and interest on the Bonds.
(e) If the proceeds of the Bonds, together with any other moneys available to pay the costs of
acquisition, construction, and equipping of the Facilities, shall not be sufficient to pay such costs in full, then
the City shall pay all that portion of the costs in excess of the moneys available therefor. If the City shall
make any payments pursuant to this paragraph (e), it shall not be entitled to any reimbursement therefor from
the Authority or the Owners of the Bonds, nor shall it be entitled to any diminution in or postponement of the
payment of the Lease Payments, the Additional Lease Payments or the payment of any other amounts
payable under this Lease.
(f) The Completion Date shall be the date on which the Facilities are completed in their entirety
and are ready to be placed in service and all other property which constitutes the Facilities has been acquired
and installed, all as determined by the City. Promptly after the Completion Date, the City shall submit to the
Authority a certificate signed by an officer of the City, substantially in the form of EXHIBIT C hereto, which
shall specify the Completion Date and shall state that construction of the Facilities has been completed and
the costs thereof have been paid, except for any portion thereof which has been incurred but is not then due
and payable, or the liability for the payment of which is being contested or disputed by the City.
Notwithstanding the foregoing, such certificate may state that it is given without prejudice to any rights
against third parties which exist at the date thereof or which may subsequently come into being. The
certificate as to the Completion Date shall include a list of the equipment financed with proceeds of the
Bonds and included as part of the Facilities.
(g) Upon the Completion Date, the Authority shall transfer any remaining balance in the Project
Fund to the Debt Service Fund for the Bonds in accordance with the Bond Resolution.
460515v1 JAE LN140-112 9
ARTICLE IV
Lease and Sale of Facilities
Section 4.1. Lease and Sale of Facilities. The Authority hereby leases and sells its leasehold interest
in the Site and the Facilities to the City, and the City hereby leases and purchases the Authority’s interest in
the Site and the Facilities from the Authority, upon the terms and conditions set forth in this Lease. The sale
shall be completed in accordance with the terms of Section 5.5 hereof.
The Site and the Facilities are leased and sold in their present condition without representation or
warranty of any kind by the Authority, and subject to the rights of parties in possession, to the existing state
of title, to all applicable legal requirements now or hereafter in effect, and to Permitted Encumbrances. The
City has examined the Site and title thereto and has found all of the same to be satisfactory for the purposes of
this Lease.
Section 4.2. Lease Payments. Subject to the provisions of Section 4.4 hereof, the City shall pay to
the Authority Lease Payments at the times and in the manner specified in the attached EXHIBIT B. The
Lease Payments shall be paid in lawful money of the United States of America, in same-day funds, directly to
the Paying Agent. It is acknowledged that the Lease Payment to be made on each February 1 or August 1
shall be applied by the Paying Agent to payment of the principal of and interest on the Bonds to be paid on
the same date.
Section 4.3. Additional Lease Payments. During the Term of Lease, the City shall pay or cause to
be paid as Additional Lease Payments the following amounts:
(a) All fees, charges and expenses, including agent and counsel fees, of the Bond
Registrar and Paying Agent, as and when the same become due.
(b) All costs incident to the payment of the principal of, premium, if any, and interest
on the Bonds as the same become due and payable, including redemption premiums, if any, and all
other costs and expenses in connection with the call, redemption and payment of Bonds.
(c) An amount sufficient to reimburse the Authority for all expenses reasonably
incurred by the Authority hereunder and in connection with the performance of the Authority’s
obligations under this Lease or the Bond Resolution.
(d) All expenses incurred in connection with the enforcement of any rights under this
Lease by the Authority or the Owners of the Bonds.
(e) All other payments of whatever nature which the City has agreed to pay or assume
under the provisions of this Lease (including, without limitation, any amounts advanced under
Section 6.2(b) hereof and interest thereon).
(f) All costs, charges, expenses and other amounts and obligations due and owing by
the Authority under the Ground Lease, as and when the same become due.
Section 4.4. Source of Lease Payments. Notwithstanding any other provision of this Lease to the
contrary, this Lease shall not constitute a general obligation of the City, and the full faith and credit of the
City are not pledged for the payment of the Lease Payments or the performance by the City of its obligations
hereunder. The Lease Payments and Additional Lease Payments shall be paid, and other obligations of the
460515v1 JAE LN140-112 10
City hereunder shall be met, solely from the amount appropriated by the City Council for such purpose in the
City’s annual budget and shall constitute a current expense of the City for the Fiscal Year then in effect. It
shall not constitute an indebtedness of the City within the meaning of the Constitution and laws of the State
of Minnesota.
The other obligations of the City hereunder shall be met solely from one or more of the following:
(a) Net Proceeds of insurance or self-insurance required to be maintained by the City under Article VII
hereof; (b) Net Proceeds of any condemnation award with respect to the Site and Facilities; and (c) moneys
from time to time appropriated by the City Council for this purpose, provided that the City Council shall have
no legal obligation to appropriate moneys for this purpose.
Section 4.5. City’s Obligations and Remedies.
(a) Except as provided in Section 5.6 hereof, the City’s obligation to pay Lease Payments due
with respect to the Site and the Facilities, and to perform and observe all other covenants and agreements of
the City contained herein, shall be absolute and unconditional; and the Lease Payments and Additional Lease
Payments due and payable hereunder shall be made without notice or demand and without set-off,
counterclaim, abatement, deduction or defense including, without limitation, any failure or delay by the
Authority in the performance of any of its obligations hereunder, and irrespective of whether the Facilities
shall have been started or completed, or whether the City’s or the Authority’s title thereto or to any part
thereof is defective or nonexistent, and notwithstanding any damage to, loss, theft or destruction of the
Facilities or any part thereof, any failure of consideration, the taking by eminent domain of title to or of the
right of temporary use of all or any part of the Facilities, legal curtailment of the City’s use thereof, the
eviction or constructive eviction of the City, any change in the tax or other laws of the United States of
America, the State of Minnesota or any political subdivision thereof, any change in the Authority’s legal
organization or status, or any default of the Authority hereunder, and regardless of the invalidity of any action
of the Authority, and regardless of the invalidity of any portion of this Lease.
(b) Notwithstanding any provision or covenant contained in this Lease or the Bonds, the City is
not obligated to renew the Lease beyond any Fiscal Year from time to time in effect, nor is it obligated to
budget or appropriate moneys or to pay Lease Payments or Additional Lease Payments beyond the end of the
Fiscal Year in effect at a given time.
(c) Nothing in this Lease shall be construed to release the Authority from the performance of
any agreement on its part herein contained or as a waiver by the City of any rights or claims which the City
may have against the Authority under this Lease or otherwise, but any recovery upon such rights and claims
shall be had from the Authority separately, it being the intent of this Lease that the City shall be
unconditionally and absolutely obligated to perform fully all of its obligations, agreements and covenants
under this Lease during the Term of Lease unless sooner terminated in accordance with Section 5.2 hereof
(including the obligation to make Lease Payments and Additional Lease Payments) for the benefit of the
Owners of the Bonds. The City may, however, at its own cost and expense and in its own name or in the
name of the Authority, prosecute or defend any action or proceeding or take any other action involving third
persons which the City deems reasonably necessary in order to secure or protect its right of possession,
occupancy and use hereunder, and in such event the Authority hereby agrees to cooperate fully with the City
and to take all action necessary to effect the substitution of the City for the Authority in any such action or
proceeding if the City shall so request.
Section 4.6. Possession and Enjoyment. The Authority hereby covenants to provide the City during
the Term of Lease with quiet use and enjoyment of the Site and Facilities, and the City shall during such
Term peaceably and quietly have and hold and enjoy the Site and Facilities, without suit, trouble or hindrance
from the Authority, except as expressly set forth in this Lease. At the request of the City and at the City’s
460515v1 JAE LN140-112 11
cost, the Authority will join in any legal action in which the City asserts its right to such possession and
enjoyment to the extent the Authority may lawfully do so.
Section 4.7. Authority Access to Site and Facilities. The Authority shall have the right at all
reasonable times to examine and inspect the Site and Facilities, and shall have such rights of access to the Site
and Facilities as may be reasonably necessary to cause the proper maintenance thereof in the event of failure
by the City to perform its obligations hereunder.
(The remainder of this page is intentionally left blank.)
460515v1 JAE LN140-112 12
ARTICLE V
Term of Lease;
Transfer or Surrender of Site and Facilities
Section 5.1. Term of Lease. Subject to the provisions of Section 5.6 hereof, this Lease shall be in
effect for a term commencing upon the execution hereof and ending on February 1, 2036.
Section 5.2. Termination of Term of Lease. The Term of Lease will terminate upon the occurrence
of the first of the following events:
(a) non-appropriation by the City pursuant to Section 5.6 hereof;
(b) the payment by the City of the Purchase Price, pursuant to Section 8.1 hereof;
(c) the discharge by the City of its obligation to pay the Lease Payments and Additional
Lease Payments required to be paid by it hereunder pursuant to Section 8.3 hereof; or
(d) a default by the City and the Authority’s election to terminate this Lease pursuant to
Article X hereof.
Section 5.3. Authority’s Interest in the Site and Facilities. Upon payment of all Lease Payments and
Additional Lease Payments due hereunder, or upon prepayment of the Lease Payments and Additional Lease
Payments or discharge of the City’s obligation to make the Lease Payments and Additional Lease Payments
in accordance with Article VIII hereof, and in either event, upon defeasance of the Bonds, full and
unencumbered legal title to the Facilities shall pass to the City, and the Authority shall have no further
interest therein. In such event the Authority and its officers shall take all actions necessary to authorize,
execute and deliver to the City any and all documents necessary to vest in the City, all of the Authority’s
right, title and interest in and to the Site and Facilities, free and clear of all liens, leasehold interests,
encumbrances (other than Permitted Encumbrances), including, if necessary, a release of any and all interests
or liens created under the provisions of this Lease.
Section 5.4. Surrender of Site and Facilities. Upon termination of the Term of Lease pursuant to
Section 5.2(a) or 5.2(d), or upon exercise by the Authority of its right to take possession of the Site and
Facilities under Section 10.2 hereof, the City shall surrender the Site and Facilities to the Authority in the
condition in which they were originally received from the Authority, except as repaired, rebuilt, restored,
altered or added to as permitted or required hereby, ordinary wear and tear excepted. The City shall have the
right to remove from the Site and Facilities at or prior to such termination or possession all personal property
located therein which was not financed with proceeds of the Bonds, or which has not replaced personal
property so financed, and which is not otherwise owned by the Authority, but the City shall repair any
damages caused by such removal.
Section 5.5. Purchase; Conveyance of Title. At any time when the Purchase Price, together with any
unpaid or delinquent interest, has been fully paid or provided for, whether by (i) payment of all Lease
Payments and Additional Lease Payments as provided in Section 8.1 hereof, or (ii) payment or provision for
payment of the Purchase Price as provided in Article VIII hereof, then the purchase of the Site and the
Facilities by the City shall be deemed to have been completed. The Authority shall thereupon deliver to the
City such instruments of conveyance or release as, in the opinion of the City, may be necessary to release the
interest of the Authority in the Site and Facilities.
460515v1 JAE LN140-112 13
Section 5.6. Non-Appropriation. If the City Council does not appropriate or budget moneys
sufficient to pay the Lease Payments and reasonably estimated Additional Lease Payments coming due in the
next Fiscal Year, as determined by the City’s budget for the Fiscal Year in question, then the Term of Lease
shall terminate at the end of the preceding Fiscal Year. The City Council shall effect such non-appropriation
by adoption of a resolution specifically referring to this Lease and determining (i) not to provide moneys for
payments due hereunder in the next Fiscal Year and (ii) that the Lease shall terminate at the end of the then-
current Fiscal Year, and the City shall give the Authority a written notice of such non-appropriation and shall
pay to the Authority any Lease Payments and Additional Lease Payments which are due and have not been
paid at or before the end of its then current Fiscal Year. The City shall endeavor to give as much notice of
non-renewal as possible prior to the end of such Fiscal Year, but in any event the City shall not be required to
give more than twelve (12) months’ notice, and the City shall notify the Authority of any anticipated
termination. In the event of termination of this Lease as provided in this Section, the City shall surrender
possession of the Site and Facilities to the Authority in accordance with Section 5.4 hereof and convey to the
Authority or release its interest in the Site and Facilities within ten (10) days after the expiration of the then
current term.
Section 5.7. Intent to Continue Term; Appropriations. The City presently intends to continue this
Lease for the entire Term of Lease and to pay all Lease Payments specified in EXHIBIT B and Additional
Lease Payments. The City reasonably believes that moneys in an amount sufficient to make all such Lease
Payments and Additional Lease Payments can and will lawfully be appropriated or budgeted and made
available.
Section 5.8. Effect of Termination. Upon termination of this Lease as provided in Section 5.6
hereof, the City shall not be responsible for the payment of any Lease Payments or Additional Lease
Payments coming due with respect to succeeding Fiscal Years, but if the City has not delivered possession of
the Site and Facilities to the Authority in accordance with Section 5.4 hereof and conveyed to the Authority
or released its interest in the Site and Facilities within ten (10) days after the termination date, the termination
shall nevertheless be effective, but the City shall be responsible for the payment of damages in an amount
equal to the amount of the Lease Payments thereafter coming due under EXHIBIT B and Additional Lease
Payments which are attributable to the number of days during which the City fails to take such actions and for
any other loss suffered by the Authority as a result of the City’s failure to take such actions as required. The
City shall be required to pay over to the Authority any moneys which it has appropriated or budgeted for the
purpose of paying obligations under this Lease for any Fiscal Years preceding the Fiscal Year for which
non-renewal under Section 5.6 hereof is effective.
(The remainder of this page is intentionally left blank.)
460515v1 JAE LN140-112 14
ARTICLE VI
General Matters
Section 6.1. Use; Permits. The City shall exercise due care in the use, operation and maintenance of
the Site and Facilities, and shall not use, operate or maintain the Site and Facilities improperly, carelessly, in
violation of any State and Federal Law or for a purpose or in a manner contrary to that contemplated by this
Lease. The City shall obtain or cause to be obtained all permits and licenses necessary for the operation,
possession and use of the Site and Facilities. The City shall comply with all State and Federal Laws
applicable to the operation, possession and use of the Site and Facilities, and if compliance with any such
State and Federal Law requires changes or additions to be made to the Site and Facilities, such changes or
additions shall be made by the City at its expense.
Section 6.2. Maintenance and Modification of Facilities by the City.
(a) During the Term of Lease the City shall, at its own expense, maintain, preserve and keep the
Site and the Facilities in good repair, working order and condition, and shall from time to time make all
repairs, replacements and improvements necessary to keep the Site and the Facilities in such condition. The
Authority shall have no responsibility for any of these repairs, replacements or improvements. In addition,
the City shall, at its own expense, have the right to remodel the Facilities or to make additions, modifications
and improvements thereto. All such additions, modifications and improvements shall thereafter comprise
part of the Facilities and be subject to the provisions of this Lease. Such additions, modifications and
improvements shall not in any way damage the Facilities; and the Facilities, upon completion of any
additions, modifications and improvements made pursuant to this Section, shall be of a value not less than the
value of the Facilities immediately prior to the making of such additions, modifications and improvements.
Any property for which a substitution or replacement is made pursuant to this Section may be disposed of by
the City in such manner and on such terms as are determined by the City. The City will not permit any
mechanic’s or other lien to be established or remain against the Site and Facilities for labor or materials
furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or
replacements made by the City pursuant to this Section; provided that if any such lien is established and the
City shall first notify the Authority of the City’s intention to do so, the City may in good faith contest any lien
filed or established against the Site or the Facilities, and in such event may permit the items so contested to
remain undischarged and unsatisfied during the period of such contest and any appeal therefrom unless the
Authority shall notify the City that, in the opinion of Independent Counsel, by nonpayment of any such item
the interest of the Authority in the Site or the Facilities will be materially endangered or the Site or the
Facilities or any part thereof will be subject to loss or forfeiture, in which event the City shall promptly pay
and cause to be satisfied and discharged all such unpaid items or provide the Authority with full security
against any such loss or forfeiture, in form satisfactory to the Authority. The Authority will cooperate fully
with the City in any such contest, upon the request and at the expense of the City.
(b) In the event the Authority becomes aware of any condition on the Site or in the Facilities
which, in the reasonable opinion of the Authority, creates a risk to the health and safety of any users of the
Facilities or creates a risk of significant deterioration of the Facilities if not corrected, the Authority may, but
shall be under no obligation to, notify the City of such condition and request that it be cured as promptly as is
reasonably possible. In the event the City does not promptly cure such condition, the Authority may, but
shall be under no obligation to, take reasonable steps to correct such condition. In such event, the cost to the
Authority and interest thereon at the highest rate specified in any Bond until paid will be charged to the City
as an Additional Lease Payment.
460515v1 JAE LN140-112 15
Section 6.3. Taxes, Other Governmental Charges and Utility Charges. During the Term of Lease the
City shall also pay or cause to be paid when due all gas, water, steam, electricity, heat, power and other
charges incurred in the operation, maintenance, use, occupancy and upkeep of the Site and the Facilities. The
City shall also pay all property and excise taxes and governmental charges of any kind whatsoever which
may at any time be lawfully assessed or levied against or with respect to the Site or the Facilities or any part
thereof or the Lease Payments, and which become due during the Term of Lease with respect thereto; and all
special assessments and charges lawfully made by any governmental body for public improvements that may
be secured by a lien on the Site or the Facilities; provided that with respect to special assessments or other
governmental charges that may lawfully be paid in installments over a period of years, the City shall be
obligated to pay only such installments as are required to be paid during the Term of Lease as and when the
same become due. The City shall not be required to pay any federal, state or local income, inheritance, estate,
succession, transfer, gift, franchise, gross receipts, profit, excess profit, capital stock, corporate, or other
similar tax payable by the Authority, its successors or assigns, unless such tax is made in lieu of or as a
substitute for any real estate or other tax upon property.
The City may, at the City’s expense and in the City’s name, in good faith contest any such taxes,
assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments
or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom
unless the Authority shall notify the City that, in the opinion of Independent Counsel, by nonpayment of any
such items the interest of the Authority in the Site or the Facilities will be materially endangered or the Site,
the Facilities or any part thereof will be subject to loss or forfeiture, in which event the City shall promptly
pay such taxes, assessments or charges or provide the Authority with full security against any loss which may
result from nonpayment, in form satisfactory to the Authority.
Section 6.4. Liens. The City shall not, directly or indirectly, create, incur, assume or suffer to exist
any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Site or the Facilities,
except the respective rights of the Authority and the City as herein provided and Permitted Encumbrances.
Except as expressly provided in this Article, the City shall promptly, at its own expense, take such action as
may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or
claim if the same shall arise at any time. The City shall reimburse the Authority for any expense incurred by
it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.
Section 6.5. Easements. The Authority will from time to time, at the request of the City and at the
City’s cost and expense, cooperate and join with the City: (a) in granting easements and other rights in the
nature of easements, releasing existing easements or other rights in nature of easements which are for the
benefit of the Site or the Facilities; (b) in executing amendments to any covenants and restrictions affecting
the Site or the Facilities; (c) in executing and delivering to any person any instrument appropriate (i) to
confirm or to the effect that such grant, release or execution is not detrimental to the proper conduct of the
operations of the City on or in the Site or the Facilities, (ii) to show the consideration, if any, being paid for
such grant, release or amendment, (iii) to show that such grant, release, dedication, transfer, petition or
amendment does not materially impair the use of the Site or the Facilities or reduce the value of the Site or
the Facilities, or (iv) to confirm that the City will remain obligated hereunder to the same extent as if such
grant, release, or amendment had not been made, and the City will perform all obligations under such
instrument. The consideration, if any, received by the Authority or the City for such grant, release, or
amendment shall be applied to the payment of the Bonds.
Section 6.6. Addition and Substitution of Land. The Authority and the City agree to add to the
Ground Lease and this Lease certain additional interests in land, and to release from the Ground Lease and
this Lease certain portions of the Site, and to substitute other interests in real property for some or all of the
portions of the Site so released, but only upon the conditions hereinafter set forth:
460515v1 JAE LN140-112 16
(1) The City may, from time to time, add additional real property to the Site subject to
the Ground Lease and this Lease if (i) the additional real property is to be the site of a portion of the
Facilities, and (ii) the City provides the Authority with an adequate legal description and survey of
the Site, satisfactory to the Authority.
(2) The City may, from time to time and with the prior written consent of the Authority,
obtain the release of a portion of the Site as now described, if (i) the City certifies that such portion of
the Site is not reasonably necessary for the construction the Facilities and (ii) the unreleased portion
of the Site is not impaired by such release with respect to ingress and egress, access to dedicated
roads and use of the unreleased portion of the Site for its then current or intended purposes.
(3) To accomplish the addition, release or substitution of real property as described in
paragraph (1) or (2), the City shall prepare and furnish to the Authority amendments or supplements
to this Lease, the Ground Lease and any UCC Financing Statements filed in connection with this
Lease. The City shall pay all expenses, including attorneys’ fees, incurred in accomplishing any such
addition, release or substitution.
Section 6.7. Compliance with Bond Resolution. During the Term of Lease, the City agrees to
perform all obligations imposed upon the Authority or the City by the Bond Resolution.
Section 6.8. Tax Covenants.
(a) The City covenants and agrees with the Authority for the benefit of the Owners from time to
time of the Bonds that it will take, and will cause its officers, employees or agents to take, all actions
necessary to comply with the applicable provisions of the Code, and that it will not take or permit to be taken
by any of its officers, employees or agents any actions that would cause the interest on the Bonds to become
subject to federal income taxation under the applicable provisions of the Code.
(b) None of the proceeds of the Bonds will be used, directly or indirectly, to replace funds which
were used in any business carried on by any person other than a state or local governmental unit.
(c) The payment of the Lease Payments will not be (A) directly or indirectly secured by any
interest in (i) property used or to be used for a private business use by any person other than a state or local
governmental unit or (ii) payments in respect of such property, or (B) directly or indirectly derived from
payments (whether or not by or to the Authority or the City), in respect of property or borrowed money, used
or to be used for a private business use by any person other than a state or local governmental unit.
(d) None of the proceeds of the Bonds will be used, directly or indirectly, to make or finance
loans to persons other than a state or local governmental unit.
(e) Except as provided below, no user of the Facilities or other property financed with proceeds
of the Bonds will use the Facilities or such other property in a trade or business on any basis other than the
same basis as the general public; and no person other than a state or local governmental unit will be a user of
the Facilities or such other property in a trade or business as a result of (i) ownership, or (ii) actual or
beneficial use pursuant to a lease or a management or incentive payment contract, or (iii) joint venture or any
other similar arrangement. Notwithstanding the foregoing, the City may permit a portion of the useable
square footage of the Facilities to be used in the trade or business of a person other than a governmental unit,
subject to the same conditions that apply to any sublease by the City under Section 9.2 hereof (e.g., consent
of the Authority and receipt of an opinion of nationally recognized bond counsel).
460515v1 JAE LN140-112 17
Section 6.9. Rebate. The City shall take such actions and make all calculations, transfers and
payments that may be necessary to comply with the rebate requirements contained in Section 148(f) of the
Code. The City will compute the rebate requirement and make rebate payments in accordance with law. The
City must make periodic computations of the amount to be paid to the United States under Section 148(f) of
the Code and transfer the appropriate amount to the United States or to the Authority for transfer to the
United States. The City will use any funds legally available to make any such required deposit or rebate
payment.
(The remainder of this page is intentionally left blank.)
460515v1 JAE LN140-112 18
ARTICLE VII
Insurance and Indemnification;
Damage, Destruction and Condemnation
Section 7.1. Liability Insurance. During the Term of Lease the City shall procure and maintain
continuously in effect with respect to the Site and the Facilities, insurance against liability for injuries to or
death of any person or damage to or loss of property arising out of or in any way relating to the maintenance,
use or operation of the Site, the Facilities or any part thereof, in amounts not less than the City’s tort liability
limits under Minnesota Statutes, Chapter 466 (“Chapter 466”) for death of or personal injury to any one
person, in amounts not less than the City’s tort liability limits under Chapter 466 for all personal injuries and
deaths arising out of any one occurrence, and in amounts not less than the City’s tort liability limits under
Chapter 466 for property damage arising out of any one occurrence. The Net Proceeds of all such insurance
shall be applied toward extinguishment or satisfaction of the liability with respect to which the insurance
proceeds may be paid. It is understood that with respect to persons or entities other than the Authority, this
insurance covers any and all liability of the City and its officers, employees and agents. As an alternative to
the purchase of liability insurance, the City may self-insure against such liabilities in accordance with the
provisions of applicable law. Policies of commercial insurance may include deductibles of no more than ten
percent (10%) of policy amounts.
Section 7.2. Property Insurance. During the Term of Lease, the City shall procure and maintain
continuously in effect, to the extent of the full insurable value of the Facilities, other than building
foundations, but in an amount at least equal to the principal amount of the outstanding Bonds from time to
time, insurance against loss from or damage by vandalism and fire, with a uniform standard extended
coverage endorsement limited only as may be provided in the standard form of extended coverage
endorsement at the time in use in the State of Minnesota, in such amount as will be at least sufficient so that a
claim may be made for the full replacement cost of any part thereof damaged or destroyed. All policies (or
endorsements or riders) evidencing insurance required in this Section shall be carried in the names of the City
and the Authority, as their respective interests may appear. The Net Proceeds of insurance required by this
Section shall be applied as provided in this Article.
Section 7.3. Administration of Claims, Etc. Neither the City nor the Authority shall be required to
prosecute any claim against or contest any settlement proposed by any insurer, but any of them may
prosecute any such claim or contest any such settlement. In the event of a contest by the City, it shall be at
the City’s expense, and the City may bring such claim or contest in the name of the Authority, the City or
both, and the Authority will join therein at the City’s written request upon the receipt by the Authority of an
indemnity from the City against all costs, liabilities and expenses in connection with such claim or contest.
Section 7.4. Other Insurance and Requirements for All Insurance. All insurance required by this
Article may be carried under a separate policy or a rider or endorsement; shall be taken out and maintained
with responsible insurance companies organized under the laws of one of the states of the United States and
qualified to do business in the State of Minnesota; shall contain a provision that the insurer shall not cancel or
revise coverage thereunder without giving written notice to the City and the Authority at least thirty (30) days
before the cancellation or revision becomes effective; and shall name the City and the Authority as insured
parties. The insurance required by Sections 7.1 and 7.2 hereof may be provided by the City pursuant to an
umbrella policy which provides coverage for the amounts and the insurable incidents provided in such
Sections. Annually, the City shall deposit with the Authority policies evidencing any such insurance
procured by it, or a certificate or certificates of the respective insurers stating that such insurance is in force
and effect. Before the expiration of any such policy, the City shall furnish to the Authority evidence that the
460515v1 JAE LN140-112 19
policy has been renewed or replaced by another policy conforming to the provisions of this Article, unless
such insurance is no longer obtainable.
Section 7.5. Indemnification. As between the Authority and the City, to the extent permitted by the
laws of the State of Minnesota, the City assumes all risks and liabilities, whether or not covered by insurance,
for loss or damage to the Facilities and for injury to or death of any person or damage to any property,
whether such injury or death be with respect to agents or employees of the City, the Authority or of third
parties, and whether such property damage be to the City or the Authority’s property or the property of
others, which is proximately caused by the negligent conduct of the City, its officers, employees, agents and
lessees, or arising out of the operation, maintenance or use of the Site and the Facilities by the City, its
officers, employees, agents and lessees. The City hereby assumes responsibility for and agrees to reimburse
the Authority for all liabilities, obligations, losses, damages, penalties, claims, actions, costs and expenses
(including reasonable attorney’s fees) of whatsoever kind and nature, imposed on, incurred by or asserted
against the Authority or its officers or employees that in any way relate to or arise out of a claim, suit or
proceeding based in whole or in part on the foregoing, to the maximum extent permitted by law.
Section 7.6. Hazardous Substance Indemnification. The City agrees, to the extent permitted by the
laws of the State of Minnesota, to defend, indemnify and hold harmless the Authority, its officers, employees,
agents, successors and assigns (the “Indemnitees”) from and against, and shall reimburse the Indemnitees for,
any and all loss, claim, liability, damage, judgment, penalty, injunctive relief, injury to personal property or
natural resources, cost, expense, action or cause of action arising in connection with or as the result of any
past, present or future existence, use, handling, storage, transportation, manufacture, release or disposal of
any Hazardous Substance in, on or under the land upon which the Project is located, whether foreseeable or
unforeseeable, regardless of the source, the time of occurrence or the time of discovery (collectively referred
to as “Loss”). This indemnification against Loss includes, without limitation, indemnification against all
costs in law or in equity or removal, response, investigation, or remediation of any kind, and disposal of such
Hazardous Substances, all costs of determining whether the land upon which the Project is located, is in
compliance with, and of causing the land upon which the Project is located, to be in compliance with, all
applicable Environmental Laws, all costs associated with claims for damages to persons, property, or natural
resources, and the Indemnitees’ reasonable attorneys’ and consultants’ fees, court costs and expenses incurred
in connection with any of the above. For this purpose “Hazardous Substance” shall be defined as any
substance, the presence of which requires investigation, permitting, control or remediation under any federal,
state or local statute, regulation, ordinance or order, including without limitation: (a) any substance defined
as “hazardous waste” under the Resource Conservation and Recovery Act, as amended (42 U.S.C. §6901, et
seq.); (b) any substance defined as a “hazardous substance” under the Comprehensive Environmental
Response, Compensation and Liability Act, as amended (42 U.S.C. §9601, et seq.); (c) any substance defined
as a “hazardous material” under the Hazardous Materials Transportation Act (49 U.S.C. §5101, et seq.);
(d) any substance defined under any Minnesota statute analogous to (a), (b) or (c), to the extent that said
statute defines any term more expansively; (e) asbestos; (f) urea formaldehyde; (g) polychlorinated biphenyls;
(h) petroleum, or any distillate or fraction thereof; (i) any hazardous or toxic substance designated pursuant to
the laws of the State of Minnesota; and (j) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority.
Section 7.7. Damage, Destruction and Condemnation. If the Facilities or any portion thereof is
destroyed (in whole or in part) or is damaged by fire or other casualty or title to or the temporary use of the
Facilities or any part thereof, or the interest of the City or the Authority in the Site or the Facilities or any part
thereof is taken under the exercise of the power of eminent domain by any governmental body or by any
person, firm or corporation acting under governmental authority, the City shall have the rights with respect to
the Net Proceeds of any insurance or condemnation award specified in this Section, but the City shall be
obligated to continue to pay the Lease Payments and Additional Lease Payments due with respect to the
Facilities. All Net Proceeds shall be applied to the prompt repair, restoration, modification, improvement or
460515v1 JAE LN140-112 20
replacement of the Site and the Facilities by the City, or, if the City elects not to repair or rebuild, all Net
Proceeds shall be applied to prepay the Lease Payments and Additional Lease Payments; in either event all
Net Proceeds not needed for the purpose shall belong to the City.
Section 7.8. Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in full the cost
of any repair, restoration, modification, improvement or replacement of the Site and the Facilities, the City
shall either: (a) complete the work and pay any cost in excess of the amount of the Net Proceeds, and the City
agrees that if by reason of any such insufficiency of the Net Proceeds, the City shall make any payments
pursuant to the provisions of this Section 7.8, the City shall not be entitled to any reimbursement therefor
from the Authority nor shall the City be entitled to any diminution of the Lease Payments or Additional Lease
Payments due with respect to the Facilities; or (b) prepay the Lease Payments and Additional Lease
Payments, in which event the Net Proceeds shall be used for this purpose. If the City elects not to repair,
rebuild or restore, the City shall prepay or discharge the Lease Payments and Additional Lease Payments to
the full extent of the Net Proceeds.
Section 7.9. Cooperation of Authority. The Authority shall cooperate fully with the City at the
expense of the City in filing any proof of loss with respect to any insurance policy covering the casualties
described in Section 7.7 hereof and in the prosecution or defense of any prospective or pending condemnation
proceeding with respect to the Site or the Facilities or any part thereof and will, to the extent it may lawfully
do so, permit the City to litigate in any proceeding resulting therefrom in the name of and on behalf of the
Authority. In no event will the Authority voluntarily settle, or consent to the settlement of, any proceeding
arising out of any insurance claim or any prospective or pending condemnation proceeding with respect to the
Site or the Facilities or any part thereof without the written consent of the City.
(The remainder of this page is intentionally left blank.)
460515v1 JAE LN140-112 21
ARTICLE VIII
Option to Purchase; Option to Prepay
Section 8.1. Option to Purchase or Prepay. The City shall have the option at any time to purchase
the Site and Facilities by payment to the Authority of the Purchase Price then applicable, or to prepay unpaid
Lease Payments and Additional Lease Payments, in whole or in part.
Section 8.2. Exercise of Option. The City shall give notice to the Authority of its intention to
exercise its purchase or prepayment option not less than forty-five (45) days in advance of the date of
prepayment or purchase, and shall pay to the Authority on the date of prepayment or purchase the
prepayment amount or (in the event of a purchase) an amount equal to the then current Purchase Price, less
any Net Proceeds to be applied to the amount to be so paid in accordance with Section 7.8 hereof.
Section 8.3. Provision for Payment of Purchase Price; Discharge of City’s Obligation. The City may
at any time provide for the payment of the Purchase Price or discharge its obligation to pay Lease Payments
due under this Lease by:
(a) depositing with the Paying Agent cash in the amount specified in Section 8.2 hereof; or
(b) depositing irrevocably in escrow with a bank or trust company, cash or direct obligations of
the United States, bearing interest payable at such times and at such rates and maturing on such dates, but not
callable prior thereto, as shall be required to provide moneys sufficient to pay or prepay all unpaid Lease
Payments and the applicable redemption premium, if any, on the Outstanding Bonds, on the dates when they
are due or subject to prepayment as provided in Section 8.1, as determined by the City, together with
(i) computations and an opinion letter of a certified public accounting firm showing and attesting to the
sufficiency of such moneys and securities for this purpose, and (ii) an opinion letter of Bond Counsel stating
that the deposit of such cash or securities will not cause the Bonds to become “arbitrage bonds” under
Section 148 of the Code.
Section 8.4. Prerequisite; No Default. The City may exercise the rights specified in Sections 8.1,
8.2, and 8.3 hereof only if it is not in default under this Lease or if such exercise cures any default then
existing.
(The remainder of this page is intentionally left blank.)
460515v1 JAE LN140-112 22
ARTICLE IX
Assignment, Subleasing, Indemnification,
Mortgaging and Selling
Section 9.1. Assignment by Authority. Except as expressly provided in this Section, the Authority’s
rights and obligations under this Lease, including the right to receive and enforce payment of the Lease
Payments and Additional Lease Payments to be made by the City under this Lease and its interest in the Site
and the Facilities, shall not be assigned, pledged, mortgaged or transferred, in whole or in part. The rights
and obligations of the Authority may be transferred and assigned to any legal successor to the functions of the
Authority.
Section 9.2. Assignment and Subleasing by the City. The rights and obligations of the City under
this Lease may not be assigned by the City without the written consent of the Authority. The City may
sublease the Project, or any portion thereof, to any other entity, provided that the City furnishes to the
Authority an Opinion of Counsel, who is nationally recognized bond counsel, that such sublease will not
adversely affect the validity of the Outstanding Bonds or the exemption of the interest thereon from federal
income taxation.
Section 9.3. Restriction on Mortgage or Sale by the City. Without the prior written consent of the
Authority, the City will not mortgage, sell, assign, transfer or convey the Site or the Facilities or any portion
thereof during the Term of Lease.
(The remainder of this page is intentionally left blank.)
460515v1 JAE LN140-112 23
ARTICLE X
Events of Default and Remedies
Section 10.1. Events of Default Defined. Any one or more of the following events shall be an
“Event of Default” under this Lease:
(a) Failure by the City to pay any Lease Payment, Additional Lease Payment, or other
payment required to be paid hereunder at the time and from the sources specified herein.
(b) Failure by the City to observe and perform any covenant, condition or agreement on
its part to be observed or performed, other than as referred to in clause (a) of this Section, for a period
of sixty (60) days after written notice specifying such failure and requesting that it be remedied has
been given to the City by the Authority, unless the Authority shall agree in writing to an extension of
such time prior to its expiration; provided, however, if the failure stated in the notice cannot be
corrected within the applicable period, the Authority shall not unreasonably withhold their consent to
an extension of such time if corrective action is instituted by the City within the applicable period
and diligently pursued until the default is corrected.
(c) The occurrence of any of the following events:
(i) The City shall (a) apply for or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee, liquidator or the like of the City or of all or a
substantial part of its property, (b) commence a voluntary case under the Federal Bankruptcy
Code (as now or hereafter in effect), or (c) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts; or
(ii) A proceeding or case shall be commenced, without the application or
consent of the City, as the case may be, in any court of competent jurisdiction, seeking
(a) the liquidation, reorganization, dissolution, winding-up, or the composition or adjustment
of debts, of the City, (b) the appointment of a trustee, receiver, custodian, liquidator or the
like of the City, or (c) similar relief in respect of the City under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts,
and such proceeding or case has not been dismissed within sixty (60) days of the filing
thereof.
The provisions of Section 10.1(b) are subject to the following limitation: if by reason of force
majeure either party is unable in whole or in part to carry out its obligations under this Lease, it shall not be
deemed in default during the continuance of such inability or during any other delays which are a direct
consequence of the force majeure inability, and the time for such performance shall be extended to cover
such delays. The term “force majeure” as used herein shall mean, without limitation, the following: acts of
God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders or restraints of any kind
of the government of the United States of America or any of its departments, agencies or officials, or any civil
or military authority, or the State of Minnesota or any of its departments, agencies or officials; insurrections;
riots; landslides; earthquakes; fires; storms; droughts; floods; explosions; breakage or accident to machinery,
transmission pipes or canals; or any other cause or event not reasonably within the control of a party and not
resulting from its negligence. Each party agrees, however, to remedy with all reasonable dispatch the cause or
causes preventing it from carrying out its agreements.
460515v1 JAE LN140-112 24
Section 10.2. Remedies on Default. Whenever any Event of Default shall have happened and be
continuing, the Authority may take, but only upon not less than five (5) days’ written notice to the City, one
or any combination of the following remedial steps:
(a) Without terminating this Lease, re-enter and take possession of the Site and the
Facilities and exclude the City from using the Site and the Facilities until the Event of Default is
cured; or
(b) Subject to the provisions of Section 5.6 hereof, take any action at law or in equity
which may appear necessary or desirable to: (i) collect the Lease Payments and Additional Lease
Payments then due for the Fiscal Year then in effect, (ii) collect any Lease Payments and Additional
Lease Payments to become due and payable during the current Fiscal Year, or (iii) enforce
performance and observance of any obligation, agreement or covenant of the City under this Lease;
or
(c) Terminate the Term of Lease, exclude the City from possession of the Site and the
Facilities, and use its best efforts to lease the Site and the Facilities to another for the account of the
City, holding the City liable for the difference between the rentals received and the Lease Payments
and Additional Lease Payments which would have been receivable hereunder for the Fiscal Year
then in effect.
This provision does not limit any other remedies which the Authority may have under any other
document or provision of law.
Section 10.3. Delay; Notice. No delay or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle
any part to exercise any remedy reserved to it in this Lease it shall not be necessary to give any notice, other
than such notice as may be required in this Lease.
Section 10.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority
is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other
remedy given under this Lease or now or hereafter existing at law or in equity. No delay or omission to
exercise any right or power accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised from time to time and as
often as may be deemed expedient.
Section 10.5. No Additional Waiver Implied by One Waiver. In the event any agreement contained
in this Lease is breached by either party and thereafter waived by the other party, such waiver shall be limited
to the particular breach so waived and shall not be deemed to waive any other breach hereunder.
(The remainder of this page is intentionally left blank.)
460515v1 JAE LN140-112 25
ARTICLE XI
Administrative Provisions
Section 11.1. Notices. All notices, certificates or other communications hereunder shall be
sufficiently given and shall be deemed given when delivered or deposited in the United States mail in
certified or registered form with postage fully prepaid:
If to the City: City of Lino Lakes
600 Town Center Parkway
Lino Lakes, MN 55014
Attention: City Administrator
If to the Authority: Lino Lakes Economic Development Authority
600 Town Center Parkway
Lino Lakes, MN 55014
Attention: Executive Director
The above-named persons, by notice given hereunder, may designate different addresses to which subsequent
notices, certificates or other communications will be sent.
Section 11.2. Binding Effect. This Lease shall inure to the benefit of and shall be binding upon the
Authority and the City and their respective successors and assigns.
Section 11.3. Severability. In the event any provision of this Lease shall be held invalid or
unenforceable by any court or competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof.
Section 11.4. Amendments, Changes and Modifications. This Lease may be amended or any of its
terms modified only by written amendment authorized and executed by the City and the Authority.
Section 11.5. Further Assurances and Corrective Instruments. The Authority and the City agree that
they will, if necessary, execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such supplements hereto and such further instruments as may reasonably be required for correcting
any inadequate or incorrect description of the Site and the Facilities or for carrying out the expressed
intention of this Lease.
Section 11.6. Execution in Counterparts. This Lease may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
Section 11.7. Applicable Law. This Lease shall be governed by and construed in accordance with
the laws of the State of Minnesota.
Section 11.8. Authorized Officers. Whenever under the provisions of this Lease the approval of the
Authority or the City is required, or the Authority or the City is required to take some action at the request of
the other, such approval of such request shall be given for the Authority or for the City by an Authorized
Officer, and any party hereto shall be authorized to rely upon any such approval or request.
460515v1 JAE LN140-112 26
Section 11.9. Captions. The captions or headings in this Lease are for convenience only and in no
way define, limit or describe the scope or intent of any provisions or Sections of this Lease.
(The remainder of this page is intentionally left blank.)
460515v1 JAE LN140-112 27
IN WITNESS WHEREOF, the Authority has caused this Lease to be executed in its corporate name
by its duly authorized officers and the City has caused this Lease to be executed in its name by its duly
authorized officers, all as of the date and year first written above.
LINO LAKES ECONOMIC DEVELOPMENT
AUTHORITY
By
Its President
By
Its Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF ANOKA )
The foregoing instrument was acknowledged before me this ___ day of June __, 2015, by
_________________, the President of the Lino Lakes Economic Development Authority, a public body
corporate and politic and political subdivision of the State of Minnesota, on behalf of the Authority.
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF ANOKA )
The foregoing instrument was acknowledged before me this ___ day of June __, 2015, by
_________________, the Executive Director of the Lino Lakes Economic Development Authority, a
public body corporate and politic and political subdivision of the State of Minnesota, on behalf of the
Authority.
Notary Public
460515v1 JAE LN140-112 S-1
Execution page of the City to the Lease, dated as of the date and year first written above.
CITY OF LINO LAKES, MINNESOTA
By
Its Mayor
By
Its City Administrator
STATE OF MINNESOTA )
) ss.
COUNTY OF ANOKA )
The foregoing instrument was acknowledged before me this ___ day of June __, 2015, by Jeff
Reinert, the Mayor of the City of Lino Lakes, Minnesota, a home rule charter city and political
subdivision of the State of Minnesota, on behalf of the City.
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF ANOKA )
The foregoing instrument was acknowledged before me this ___ day of June ___, 2015, by Jeff
Karlson, the City Administrator of the City of Lino Lakes, Minnesota, a home rule charter city and
political subdivision of the State of Minnesota, on behalf of the City.
Notary Public
460515v1 JAE LN140-112 S-2
EXHIBIT A
DESCRIPTION OF SITE AND PERMITTED ENCUMBRANCES
Legal Description of the Site
Permitted Encumbrances
460515v1 JAE LN140-112 A-1
EXHIBIT B
SCHEDULE OF LEASE PAYMENTS
Payment Date Principal Interest Rate Interest Total Payment
02/01/2016
08/01/2016
02/01/2017
08/01/2017
02/01/2018
08/01/2018
02/01/2019
08/01/2019
02/01/2020
08/01/2020
02/01/2021
08/01/2021
02/01/2022
08/01/2022
02/01/2023
08/01/2023
02/01/2024
08/01/2024
02/01/2025
08/01/2025
02/01/2026
08/01/2026
02/01/2027
08/01/2027
02/01/2028
08/01/2028
02/01/2029
08/01/2029
02/01/2030
08/01/2030
02/01/2031
08/01/2031
02/01/2032
08/01/2032
02/01/2033
08/01/2033
02/01/2034
08/01/2034
02/01/2035
08/01/2035
02/01/2036
460515v1 JAE LN140-112 B-1
EXHIBIT C
FORM OF COMPLETION CERTIFICATE
I, the undersigned, hereby certify that I am the duly qualified and acting City Administrator of the
City of Lino Lakes, Minnesota (the “City”); and, with respect to the Lease-Purchase Agreement, dated as of
June 1, 2015 (the “Lease”), by and between the City and the Lino Lakes Economic Development Authority
(the “Authority”), that:
1. The Facilities described in the Lease have been completed, delivered, and installed in
accordance with the City’s specifications.
2. The City has appropriated and/or taken other lawful actions necessary to provide moneys
sufficient to pay all Lease Payments required to be paid under the Lease during the current Fiscal Year of the
City, and such moneys will be applied in payment of all Lease Payments due and payable during such current
Fiscal Year.
3. Attached as Exhibit A to this Certificate is a list of the equipment financed with proceeds of
the Bonds and utilized within the Facilities.
Capitalized terms used in this Certificate have the meaning provided in the Lease.
Dated: , 20___.
CITY OF LINO LAKES, MINNESOTA
By
Its City Administrator
460515v1 JAE LN140-112 C-1
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY
AGENDA ITEM 4A(ii)
STAFF ORIGINATOR: Al Rolek
MEETING DATE: May 11, 2015
TOPIC: Consider Resolution 15-03 Approving Post-Issuance
Compliance Procedure and Policy for Tax-Exempt
Governmental Bonds
VOTE REQUIRED: Simple Majority
INTRODUCTION
The EDA’s Bond Counsel has determined that for purposes of reporting bond sale
information to the Internal Revenue Service (IRS) and for ongoing reporting requirements it
would be prudent for the EDA to adopt a formal post-issuance compliance procedure and
policy for Authority-issued tax exempt bonds. This policy is identical to the policy adopted
by the Lino Lakes City Council on October 22, 2012.
BACKGROUND
In order for the EDA Lease-Revenue Series 2015 Bonds to retain their tax-exempt status, the
EDA is required to comply with various rules after the bonds have closed. In a letter to staff,
Bond Counsel Julie Eddington of Kennedy and Graven points out two key rules as follows:
1. Issuers must ensure that the facilities financed with proceeds of the bonds
continue to be used for public purposes. If the use is later changed to a private use
(or certain other things happen that would render the bonds taxable), the issuer
must take a “remedial action” to prevent the bonds from losing their tax-exempt
status. Usually, this means all or a portion of the bonds must be redeemed or
defeased.
2. Issuer must also ensure that proceeds of the bonds are used in a way that
complies with complex rules under Section 148 of the Code governing
“arbitrage.” Arbitrage is the term for what happens if the City invests proceeds of
tax-exempt bonds at a higher rate than the interest payable on the bonds. In some
cases, the City may in fact earn this arbitrage, but still must rebate the amounts
earned to the federal government.
While the EDA is not technically required to have written procedures on these matters, the
new IRS Form 8038-G provides strong incentive to adopt such procedures, as it will not be in
the Authority’s interest to file the new form without checking “yes” in these two boxes. The
procedures help show the IRS that the City has a strategy for compliance with the rules
described above.
The draft Policy responds to the IRS concerns. It generally designates the Executive Director
as the EDA staff person responsible to oversee compliance with the various post-issuance
rules. The Policy recognizes that the EDA’s financial advisor and bond counsel will play
significant roles in these efforts, both assisting staff, and in some cases undertaking certain
tasks directly.
The Policy simply puts in writing what the Authority has done (and should do) as a matter of
practice. This does not represent a significant Policy change, but merely formalizes how the
City will ensure the continued tax-exempt status of the governmental bonds it issues.
RECOMMENDATION
Staff is recommending approval of Resolution No. 15-03.
ATTACHMENTS
Resolution 15-03
Post-Issuance Compliance Procedure and Policy
for Tax-exempt Governmental Bonds
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. 15-03
RESOLUTION APPROVING POST-ISSUANCE COMPLIANCE
PROCEDURE AND POLICY FOR TAX-EXEMPT
GOVERNMENTAL BONDS
BE IT RESOLVED By the Board of Commissioners (the “Board of Commissioners”) of the Lino
Lakes Economic Development Authority, a body corporate and politic and political subdivision of the State
of Minnesota (the “Authority”), as follows:
Section 1. Recitals.
1.01. The Authority from time to time issues tax-exempt governmental bonds to finance various
public capital improvements.
1.02. Under Sections 103 and 140 to 150 of the Internal Revenue Code of 1986, as amended (the
“Code”) and related regulations, the Authority is required to take certain actions after the issuance of such
bonds to ensure that interest on those bonds remains tax-exempt.
1.03. The Authority has determined to adopt written procedures regarding how the Authority will
carry out its bond compliance responsibilities, and to that end has caused to be prepared a document titled
Post-Issuance Compliance Procedure and Policy for Tax-Exempt Governmental Bonds (the “Policy”).
1.04. The Board of Commissioners has reviewed the Policy has determined that it is in the best
interest of the Authority to adopt the Policy.
Section 2. Policy Approved.
2.01. The Board of Commissioners approves the Policy in substantially the form on file with the
Executive Director.
2.02. Authority staff are authorized to take all actions necessary to carry out the Policy.
Adopted by the Board of Commissioners of the Lino Lakes Economic Development Authority this 11th
day of May, 2015.
President
ATTEST:
Executive Director
460517v1 JAE LN140-112
Lino Lakes Economic Development Authority
POST-ISSUANCE COMPLIANCE PROCEDURE AND POLICY
FOR TAX-EXEMPT GOVERNMENTAL BONDS
May 11, 2015
460516v1 JAE LN140-112
Post-Issuance Compliance Procedure and Policy
for Tax-Exempt Governmental Bonds
The Lino Lakes Economic Development Authority (the “Authority”) issues tax-exempt
governmental bonds to finance capital improvements. As an issuer of tax-exempt governmental bonds,
the Authority is required by the terms of Sections 103 and 141-150 of the Internal Revenue Code of 1986,
as amended (the “Code”), and the Treasury Regulations promulgated thereunder (the “Treasury
Regulations”), to take certain actions subsequent to the issuance of such bonds to ensure the continuing
tax-exempt status of such bonds. In addition, Section 6001 of the Code and Section 1.6001-1(a) of the
Treasury Regulations, impose record retention requirements on the Authority with respect to its tax-
exempt governmental bonds. This Post-Issuance Compliance Procedure and Policy for Tax-Exempt
Governmental Bonds (the “Policy”) has been approved and adopted by the Authority to ensure that the
Authority complies with its post-issuance compliance obligations under applicable provisions of the Code
and Treasury Regulations.
1. Effective Date and Term. The effective date of this Policy is May 11, 2015, and shall
remain in effect until superseded or terminated by the Authority.
2. Responsible Parties. The Executive Director of the Authority shall be the party primarily
responsible for ensuring that the Authority successfully carries out its post-issuance compliance
requirements under applicable provisions of the Code and Treasury Regulations. The Executive Director
will be assisted by the staff of the Finance Department (the “Finance Department”) of the City of Lino
Lakes, Minnesota (the “City”) and by Authority staff and officials when appropriate. The Executive
Director of the Authority will also be assisted in carrying out post-issuance compliance requirements by
the following organizations:
(a) Bond Counsel (the law firm primarily responsible for providing bond counsel
services for the Authority);
(b) Municipal Advisor (the organization utilized from time to time for providing
financial advisor services to the Authority);
(c) Paying Agent (the person, organization, or Authority officer primarily
responsible for providing paying agent services for the Authority); and
(d) Rebate Analyst (the organization primarily responsible for providing rebate
analyst services for the Authority).
The Executive Director shall be responsible for assigning post-issuance compliance responsibilities to
members of the Finance Department, staff of the Authority, Bond Counsel, Municipal Advisor, Paying
Agent, and Rebate Analyst. The Executive Director shall utilize such other professional service
organizations as are necessary to ensure compliance with the post-issuance compliance requirements of
the Authority. The Executive Director shall provide training and educational resources to Authority staff
who are responsible for ensuring compliance with any portion of the post-issuance compliance
requirements of this Policy.
3. Post-Issuance Compliance Actions. The Executive Director shall take the following post-
issuance compliance actions or shall verify that the following post-issuance compliance actions have been
taken on behalf of the Authority with respect to each issue of tax-exempt governmental bonds issued by
the Authority:
460516v1 JAE LN140-112 1
(a) The Executive Director shall prepare a transcript of principal documents (this
action will be the primary responsibility of Bond Counsel).
(b) The Executive Director shall file with the Internal Revenue Service (the “IRS”),
within the time limit imposed by Section 149(e) of the Code and applicable Treasury Regulations,
an Information Return for Tax-Exempt Governmental Obligations, Form 8038-G (this action will
be the primary responsibility of Bond Counsel).
(c) The Executive Director shall prepare an “allocation memorandum” for each issue
of tax-exempt governmental bonds in accordance with the provisions of Treasury Regulations,
Section 1.148-6(d)(1), that accounts for the allocation of the proceeds of the tax-exempt bonds to
expenditures not later than the earlier of:
(i) eighteen (18) months after the later of (A) the date the expenditure is
paid, or (B) the date the project, if any, that is financed by the tax-exempt bond issue is
placed in service; or
(ii) the date sixty (60) days after the earlier of (A) the fifth anniversary of the
issue date of the tax-exempt bond issue, or (B) the date sixty (60) days after the
retirement of the tax-exempt bond issue.
Preparation of the allocation memorandum will be the primary responsibility of the Executive
Director (in consultation with Bond Counsel, and, if employed with respect to the tax-exempt
issue, the Municipal Advisor).
(d) The Executive Director, in consultation with Bond Counsel, shall identify
proceeds of tax-exempt governmental bonds that must be yield-restricted and shall monitor the
investments of any yield-restricted funds to ensure that the yield on such investments does not
exceed the yield to which such investments are restricted.
(e) In consultation with Bond Counsel, the Executive Director shall determine
whether the Authority is subject to the rebate requirements of Section 148(f) of the Code with
respect to each issue of tax-exempt governmental bonds. In consultation with Bond Counsel, the
Executive Director shall determine, with respect to each issue of tax-exempt governmental bonds
of the Authority, whether the Authority is eligible for any of the temporary periods for
unrestricted investments and is eligible for any of the spending exceptions to the rebate
requirements. The Executive Director shall contact the Rebate Analyst (and, if appropriate, Bond
Counsel) prior to the fifth anniversary of the date of issuance of each issue of tax-exempt
governmental bonds of the Authority and each fifth anniversary thereafter to arrange for
calculations of the rebate requirements with respect to such tax-exempt governmental bonds. If a
rebate payment is required to be paid by the Authority, the Executive Director shall prepare or
cause to be prepared the Arbitrage Rebate, Yield Reduction and Penalty in Lieu of Arbitrage
Rebate, Form 8038-T, and submit such Form 8038-T to the IRS with the required rebate payment.
If the Authority is authorized to recover a rebate payment previously paid, the Executive Director
shall prepare or cause to be prepared the Request for Recovery of Overpayments Under Arbitrage
Rebate Provisions, Form 8038-R, with respect to such rebate recovery, and submit such
Form 8038-R to the IRS.
4. Procedures for Monitoring, Verification, and Inspections. The Executive Director shall
institute such procedures as the Executive Director shall deem necessary and appropriate to monitor the
460516v1 JAE LN140-112 2
use of the proceeds of tax-exempt governmental bonds issued by the Authority, to verify that certain post-
issuance compliance actions have been taken by the Authority, and to provide for the inspection of the
facilities financed with the proceeds of such bonds. At a minimum, the Executive Director shall establish
the following procedures:
(a) The Executive Director shall monitor the use of the proceeds of tax-exempt
governmental bonds to: (i) ensure compliance with the expenditure and investment requirements
under the temporary period provisions set forth in Treasury Regulations, Section 1.148-2(e);
(ii) ensure compliance with the safe harbor restrictions on the acquisition of investments set forth
in Treasury Regulations, Section 1.148-5(d); (iii) ensure that the investments of any yield-
restricted funds do not exceed the yield to which such investments are restricted; and
(iv) determine whether there has been compliance with the spend-down requirements under the
spending exceptions to the rebate requirements set forth in Treasury Regulations,
Section 1.148-7.
(b) The Executive Director shall monitor the use of all bond-financed facilities in
order to: (i) determine whether private business uses of bond-financed facilities have exceeded
the de minimus limits set forth in Section 141(b) of the Code as a result of leases and subleases,
licenses, management contracts, research contracts, naming rights agreements, or other
arrangements that provide special legal entitlements to nongovernmental persons; and
(ii) determine whether private security or payments that exceed the de minimus limits set forth in
Section 141(b) of the Code have been provided by nongovernmental persons with respect to such
bond-financed facilities. The Executive Director shall provide training and educational resources
to any Authority staff who have the primary responsibility for the operation, maintenance, or
inspection of bond-financed facilities with regard to the limitations on the private business use of
bond-financed facilities and as to the limitations on the private security or payments with respect
to bond-financed facilities.
(c) The Executive Director shall undertake the following with respect to each
outstanding issue of tax-exempt governmental bonds of the Authority: (i) an annual review of the
books and records maintained by the Authority with respect to such bonds; and (ii) an annual
physical inspection of the facilities financed with the proceeds of such bonds, conducted by the
Executive Director with the assistance of any Authority staff who have the primary responsibility
for the operation, maintenance, or inspection of such bond-financed facilities.
5. Record Retention Requirements. The Executive Director shall collect and retain the
following records with respect to each issue of tax-exempt governmental bonds of the Authority and with
respect to the facilities financed with the proceeds of such bonds: (i) audited financial statements of the
Authority; (ii) appraisals, demand surveys, or feasibility studies with respect to the facilities to be
financed with the proceeds of such bonds; (iii) publications, brochures, and newspaper articles related to
the bond financing; (iv) trustee or paying agent statements; (v) records of all investments and the gains (or
losses) from such investments; (vi) paying agent or trustee statements regarding investments and
investment earnings; (vii) reimbursement resolutions and expenditures reimbursed with the proceeds of
such bonds; (viii) allocations of proceeds to expenditures (including costs of issuance) and the dates and
amounts of such expenditures (including requisitions, draw schedules, draw requests, invoices, bills, and
cancelled checks with respect to such expenditures); (ix) contracts entered into for the construction,
renovation, or purchase of bond-financed facilities; (x) an asset list or schedule of all bond-financed
depreciable property and any depreciation schedules with respect to such assets or property; (xi) records
of the purchases and sales of bond-financed assets; (xii) private business uses of bond-financed facilities
that arise subsequent to the date of issue through leases and subleases, licenses, management contracts,
research contracts, naming rights agreements, or other arrangements that provide special legal
460516v1 JAE LN140-112 3
entitlements to nongovernmental persons and copies of any such agreements or instruments;
(xiii) arbitrage rebate reports and records of rebate and yield reduction payments; (xiv) resolutions or
other actions taken by the governing body subsequent to the date of issue with respect to such bonds;
(xv) formal elections authorized by the Code or Treasury Regulations that are taken with respect to such
bonds; (xvi) relevant correspondence, including letters, faxes or emails, relating to such bonds;
(xvii) documents related to guaranteed investment contracts or certificates of deposit, credit enhancement
transactions, and financial derivatives entered into subsequent to the date of issue; (xviii) bidding of
financial products for investment securities; (xix) copies of all Form 8038-Ts, Form 8038-Rs, and
Form 8038-CPs filed with the IRS and any other forms or documents filed with the IRS; (xx) the
transcript prepared with respect to such tax-exempt governmental bonds, including but not limited to
(a) official statements, private placement documents, or other offering documents, (b) minutes and
resolutions, orders, or ordinances or other similar authorization for the issuance of such bonds, and
(c) certification of the issue price of such bonds; and (xxi) documents related to government grants
associated with the construction, renovation, or purchase of bond-financed facilities.
The records collected by the Executive Director shall be stored in any format deemed appropriate
by the Executive Director and shall be retained for a period equal to the life of the tax-exempt
governmental bonds with respect to which the records are collected (which shall include the life of any
bonds issued to refund any portion of such tax-exempt governmental bonds or to refund any refunding
bonds) plus three (3) years. The Executive Director shall also collect and retain reports of any IRS
examination of the Authority or any of its bond financings.
6. Remedies. In consultation with Bond Counsel, the Executive Director shall become
acquainted with the remedial actions (including redemption or defeasance) under Treasury Regulations,
Section 1.141-12, to be utilized in the event that private business use of bond-financed facilities exceeds
the de minimus limits under Section 141(b)(1) of the Code. In consultation with Bond Counsel, the
Executive Director shall become acquainted with the Tax Exempt Bonds Voluntary Closing Agreement
Program described in Notice 2008-31, 2008-11 I.R.B. 592, to be utilized as a means for an issuer to
correct any post-issuance infractions of the Code and Treasury Regulations with respect to outstanding
tax-exempt bonds.
7. Continuing Disclosure Obligations. In addition to its post-issuance compliance
requirements under applicable provisions of the Code and Treasury Regulations, the Authority has agreed
to provide continuing disclosure, such as annual financial information and material event notices,
pursuant to a continuing disclosure certificate or similar document (the “Continuing Disclosure
Document”) prepared by Bond Counsel and made a part of the transcript with respect to each issue of
bonds of the Authority that is subject to such continuing disclosure requirements. The Continuing
Disclosure Documents are executed by the Authority to assist the underwriters of the Authority’s bonds in
meeting their obligations under Securities and Exchange Commission Regulation, 17 C.F.R.
Section 240.15c2-12, as in effect and interpreted from time to time (“Rule 15c2-12”). The continuing
disclosure obligations of the Authority are governed by the Continuing Disclosure Documents and by the
terms of Rule 15c2-12. The Executive Director is primarily responsible for undertaking such continuing
disclosure obligations and to monitor compliance with such obligations.
8. Other Post-Issuance Actions. If, in consultation with Bond Counsel, Municipal Advisor,
Paying Agent, Rebate Analyst, the Executive Director, the Authority Attorney, or the Board of
Commissioners, the Executive Director determines that any additional action not identified in this Policy
must be taken by the Executive Director to ensure the continuing tax-exempt status of any issue of
governmental bonds of the Authority, the Executive Director shall take such action if the Executive
Director has the authority to do so. If, after consultation with Bond Counsel, Municipal Advisor, Paying
Agent, Rebate Analyst, the Executive Director, the Authority Attorney, or the Board of Commissioners,
460516v1 JAE LN140-112 4
the Executive Director and the Executive Director determine that this Policy must be amended or
supplemented to ensure the continuing tax-exempt status of any issue of governmental bonds of the
Authority, the Executive Director shall recommend to the Board of Commissioners that this Policy be so
amended or supplemented.
9. Taxable Governmental Bonds. Most of the provisions of this Policy, other than the
provisions of Section 7, are not applicable to governmental bonds the interest on which is includable in
gross income for federal income tax purposes. However, if an issue of taxable governmental bonds is
later refunded with the proceeds of an issue of tax-exempt governmental refunding bonds, then the uses of
the proceeds of the taxable governmental bonds and the uses of the facilities financed with the proceeds
of the taxable governmental bonds will be relevant to the tax-exempt status of the governmental refunding
bonds. Therefore, if there is any reasonable possibility that an issue of taxable governmental bonds may
be refunded, in whole or in part, with the proceeds of an issue of tax-exempt governmental bonds, for
purposes of this Policy, the Executive Director shall treat the issue of taxable governmental bonds as if
such issue were an issue of tax-exempt governmental bonds and shall carry out and comply with the
requirements of this Policy with respect to such taxable governmental bonds. The Executive Director
shall seek the advice of Bond Counsel as to whether there is any reasonable possibility of issuing tax-
exempt governmental bonds to refund an issue of taxable governmental bonds.
10. Qualified 501(c)(3) Bonds. If the Authority issues bonds to finance a facility to be
owned by the Authority but which may be used, in whole or in substantial part, by a nongovernmental
organization that is exempt from federal income taxation under Section 501(a) of the Code as a result of
the application of Section 501(c)(3) of the Code (a “501(c)(3) Organization”), the Authority may elect to
issue the bonds as “qualified 501(c)(3) bonds” the interest on which is exempt from federal income
taxation under Sections 103 and 145 of the Code and applicable Treasury Regulations. Although such
qualified 501(c)(3) bonds are not governmental bonds, at the election of the Executive Director, for
purposes of this Policy, the Executive Director shall treat such issue of qualified 501(c)(3) bonds as if
such issue were an issue of tax-exempt governmental bonds and shall carry out and comply with the
requirements of this Policy with respect to such qualified 501(c)(3) bonds.
460516v1 JAE LN140-112 5