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Northland Securities, Inc. Page 4 • Special Assessments. The City is expected to levy special assessments against benefited properties in the amount of $1,091,600 for the Improvement Portion of the Bonds. The assessments will be payable over 15 years, with an interest rate of 1.00% over the average coupon on the Improvement Portion of the Bonds (currently estimated to be 4.25%) and structured for level annual payments of principal and interest. Because the special assessments are structured over 15 years, revenues will continue to be received beyond the life of the Improvement Portion of the Bonds. The plan assumes that the assessments will be levied in 2023 for initial payment in 2024. • Utility Revenues. Net revenues of the City’s sewer and water utilities will be pledged for payment of the Revenue Portions of the Bonds. The City will covenant to adopt sewer and water rates and charges that are sufficient to produce net revenues equal to at least 105% of the debt service requirements on the Revenue Portions of the Bonds. In the event there is a deficiency in the amount of net revenues available for payment of debt service, the City may levy taxes to cover the insufficiency, but only on a temporary basis until rates are adjusted. • Property Taxes. The remaining revenues needed to pay debt service on the Bonds are expected to come from property tax levies. The initial projections show an average annual tax levy of approximately $362,865 is needed to produce the statutory requirement of 105% of debt service, after accounting for assessments and utility revenues. The levy may be adjusted annually based on actual special assessment collections and additional monies in the debt service fund. The initial tax levy will be made in 2023 for taxes payable in 2024. Given the timing of the initial revenue from the tax levy and special assessments, capitalized interest will be included in the Improvement Portion to cover the first interest payment due on February 1, 2024, before the first tax and assessment collections are received. Plan Rationale The Finance Plan recommended in this report is based on a variety of factors and information provided by the City related to the financed project and City objectives, Northland’s knowledge of the City and our experience in working with similar cities and projects. The issuance of General Obligation Improvement & Utility Revenue Bonds provides the best means of achieving the City’s objectives and cost-effective financing. The City has successfully issued and managed this type of debt for previous projects. Issuing Process Northland will receive bids to purchase the Bonds on Tuesday, June 6, 2023, at 10:00 AM. Market conditions and the marketability of the Bonds support issuance through a competitive sale. This process has been chosen as it is intended to produce the lowest combination of interest expense and underwriting expense on the date and time set to receive bids. The calendar of events for the issuing process can be found in Attachment 4. Municipal Advisor: Northland Securities, Inc., Minneapolis, Minnesota Bond Counsel: Kennedy & Graven Chartered, Minneapolis, Minnesota Paying Agent: U.S. Bank Trust Company, National Association, St. Paul, Minnesota