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City Council Packet 07-17-2012
THF, CITY OF 11-�AKE ELMO Our mission is to Provide Quality Public Services in a Fiscally Responsible Manner While Preserving the City's Open Space Character NOTICE OF MEETING City of Lake Elmo 3800 Laverne Avenue North City Council Meeting Tuesday, July 17, 2012 7 :00 p.m. AGENDA A. CALL TO ORDER B. PLEDGE OF ALLEGIANCE C. ROLL CALL D. APPROVAL OF AGENDA E. ORDER OF BUSINESS/GROUND RULES F. ACCEPT MINUTES I . Accept July 3, 2012 City Council minutes G. PUBLIC COMMENTS/INQUIRIES H. PRESENTATIONS Virginia Holder, GTN L CONSENT AGENDA Note: Items listed under the Consent Agenda will be enacted by one motion with no separate discussion. If discussion on an item is desired, the item will be removed from the Consent Agenda for separate consideration, ................. ......................2.. Approve Payment of Disbursements and Payroll 2a. 2012 Second Quarter Financials 2b. Year-to-Date Permit Report 3. Professional Engineering Support Services Consulting Pool - Approve Updated Pool to add AE2S in the areas of Water and Wastewater Systems 4, Ordinance No. 2012-58 Amending 97.21 Watercraft and Water Surface Regulations and 97.23 (A) Prohibited Structures and Uses 5. Lions Park Tennis Court Resurfacing 6. Lions Park Safety Surface ). REGULAR AGENDA 7. Resolution 2012-35 Authorization for Sale of $4,090,000 General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A 8. Authorization to Enter into an Escrow Agreement with Northland Trust Services, Inc. related to the Sale of $4,090,000 General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A 9. Resolution 2012-36 Authorization for Sale of $865,000 General Obligation Improvement Bonds, Series 2012B 10, Resolution 2012-34 - 2012 Street and Water Quality Improvements - Approve Accepting Bids and Awarding Contract 11. Keats Avenue North MSA Street Improvements -Engineer's Update on Proposed Improvements and Authorize Report Revisions 12. Old Village Area Municipal Sanitary Sewer Service - Initiate Preliminary Study 13. Inwood Avenue Trunk Watermain and Booster Station - Initiate Preliminary Study 14. Administrator's Report: Organized Collection Feasibility and Proposed 2014 Plan of Work Schedule 15. Library Board Appointments K. SUMMARY REPORTS AND ANNOUNCEMENTS ® Mayor and Council ® Administrator ® City Attorney ® City Engineer ® Planning Director ® Finance Director L. Adjourn LAKE ELMO CITY COUNCIL MINUTES UTE JULY 3, 2012 CITY OF LAKE ELMO CITY COUNCIL MINUTES JUL:Y 3, 2012 Mayor Johnston called the meeting to order at 7:00 p.m. PRESENT: Mayor Johnston, Council Members Emmons, Smith,Pearson,and Park. Also Present: City Administrator Zuleger, City Attorney Snyder, Planning Director Matt, City Clerk Thone,and Finance Director Bendel. APPROVAL OF AGENDA MOTION.Council Member Smith moved to approve the June 19,2012 City Council Agenda as Amended. Council Member Park seconded the motion.Motion passed 3-0. ACCEPTED MINUTES 1. The June 19, 2012 City. Council minutes were approved as amended by consensus of the City Council, PUBLIC COMMEi4TS/INQUIRIES A) LAKE ELMO LIBRARY Steve DeLapp, Library Board President, introduced Olivia Moris, the new library director. Ms. Moris expressed her gratitude to the council for choosing her for the position. Ills.Moris stated she was excited for the opportunity to be involved with the new library, expressing it was a unique chance to create a vibrant local library. She explained September first has been proposed as a tentative date for the grand opening of the library. Council Member Pearson inquired about the type of volunteers currently needed. Moris replied there are numerous opportunities including data entry, cataloguing of materials, sorting, and shelving. Two Eagle Scout Projects are underway that include landscaping and furniture for the new library. Mr.DeLapp added that many volunteers would be needed to realize efforts to increase the hours of the library over current staffing levels. Ms.Moris gave the council a brief synopsis of her previous work experience. B) FRIENDS OF THE LAKE ELMO LIBRARY Karen Johnston, Friends of the Lake Elmo Library, reported that 1200 people have visited the Interim Library and 800 books have been checked out. Summer story time hours held on Friday mornings have been well attended. She expressed, on behalf of the group,their gratitude for all of the volunteers whose help and assistance in getting the new library ready for opening has been very much appreciated. ......... ......... ......... ........ ....... .. ..... .... ......... ..... ... .. ................. .............. Q HUFF`N PUFF EVENT Mayor Johnson read the Huff'n Puff Proclamation. Jaycee's Chairperson,Heather Noyes, and Rusty Monroe, State Jaycees delegate, spoke specifically about the vitality of the annual event and explained in detail the event activities and invited the community and surrounding communities to Page 1 of 6 LADE ELMO CITY COUNCIL MINUTES DULY 3, 2012 participate in the event on August 9 through 12, 2012. They especially thanked the city for its continued support and for supporting the event for the past 36 years. Council Member Smith thanked the Jaycees for all of the work they do in the community and expressed her appreciation for the event for the city's residents. PRESENTATIONS None CONSENT AGENDA 2. Approve Payment of Disbursements in the Amount of$130,984.61 3. Approve Resolution 2012-32 Designating Certified Building Official and Approval of Joint Powers Agreement with the City of Hugo 4. Approve Building Official Position, Posting and Recruitment 5. Proclaim August 9 through 12, 2012, Huff'n Puff Days 6. Approve Temporary Liquor License for Lake Elmo Jaycees MOTION; Council Member Pearson moved to approve the Consent Agenda as presented. Council Member Smith seconded the motion. Motion passed 5-0. REGULAR AGENDA ITEM 7: 2011 FINAL AUDIT REPORT REVIEW Finance Director Bendel reported the 2011 Final Audit Report had been received and introduced Matt Voss of Abdo, Eick and Meyers, LLP. He provided a brief summary of the City's financial statement and reviewed the specifics of the management letter with the council. City Administrator Zuleger recognized Finance Director Bendel for her hard work in getting the city's financial records into shape for the audit, and acknowledged the additional hours and weekends spent during this time. The City Council expressed appreciation for staffs hard work as well. MOTION; Council Member Pearson moved to accept the 2011 Year End Annual Finance Report and Management Letter. Council Member Emmons seconded the motion. Motion passed 5-0. ITEM 8: ORDINANCE 2012-60 ADOPTING MAYOR AND CITE' COUNCIL SALARIES EFFECTIVE JANUARY 1, 2013 Administrator Zuleger requested Council consider adopting the proposed ordinance compensating the council and mayor by raising the annual salaries. He explained that this was originally requested by the Council for consideration in November 2011 and presented by previous interim Administrator Dawson. The ordinance failed with a 3-2 vote. City Administrator Zuleger stated a comparative study was included in the packet, and that a reasonable and adequate salary adjustment was being presented. Mayor Johnston spoke in support of the salary increase and stated although he voted against the increase in 2011, he has since heard much support for the increase in discussions with various residents. He added the compensation is minimal comparatively to the time involved in the position. Page 2 of 6 LADE ELM® CITY COUNCIL MINUTES DULY 3, 2012 Council Member Pearson expressed his discomfort with the salary increase coming back for approval on a typically minimal attended meeting and questioned the reasoning. He specifically questioned the perception or lack of `trust' that may be created by the city leaders in this sort of practice. Council Member Pearson stated council has a second shot to get this right and feels this sends a negative message. Council Member Pearson continued he did not want to re-hash the details of salary increase as nothing has changed except for maybe the political ambitions and the tightening up of the budget but reiterated his disapproval for the increase. Council Member Park expressed her support for the increase. Council Member Emmons spoke in support of the increase. He expressed, although, that he was not excited about it. Council Member Smith expressed her support for the increase and stated the time at meetings at City Hall and outside of City Hall are numerous, and this increase does not seem unreasonable in the least. Currently, Lake Elmo does not pay for additional city council meetings and feels that could be addressed as well or at least discussion of limiting extra meetings. She stated in addition, the increase may be a draw for quality people as elected officials for the city. Mayor Johnston stated he was opposed to pay for extra meetings and stated these are just expected for people who enter into public service. Council Member Park explained her support for some type of compensation for extra meetings and stated it was likely the Council would continue to have more meetings than usual as the City continues to grow. Administrator Zuleger explained there are many communities that add compensation for special or additional meetings. MOTION, Mayor Johnston moved to approve Ordinance 2012-60 adopting annual mayor and council salaries to $6,250 and$4,860, respectively effective January 1, 2013. Council Member Park seconded the motion. Motion passed 4-I,Pearson -Nay. ITEM 9: COUNTRY SUN FARMS -AGRICULTURE)BUILDING CONSTRUCTION Planning Director IClatt requested Council review the proposed request from Country Sun Farms and Greenhouse to construct two agricultural buildings on their property; a lean-to addition to an existing barn and a new structure replacing a farm building. Under the terms of the approved Interim Use Permit,the Council must review all new construction. Council Member Smith inquired if the parcel size had changed, and if Agricultural zoning still required a 20 acre minimum. Mayor Johnston asked if the proposed structure met the RR zoning requirements. Planning Director Klatt responded in the affirmative. MOTION, Council Member Smith moved to authorize construction authorize construction of two agricultural buildings at 11211 60tb Street North that are consistent with the A - Agricultural and RR - Rural Residential Zoning for this property, Council Member Park seconded the motion. Page 3 of 6 LAKE ELMO CITY COUNCIL MINUTES JVL1 3, 2012 Motion passed 5-0. ITEM 10: THIRD QUARTER GOALS City Administrator Zuleger reported that the 2nd Quarter Work Schedule Program had been met with three exceptions due to disruptions and office modifications of City Hall and the HVAC system in the Annex. The Economic Development Authority (EDA) workshop is scheduled for the July 10th Council Workshop; the budget process is currently underway; City Engineer Griffin is working on the CIP process. Council Member Pearson inquired about the current status of organized trash hauling in the City. He expressed his concern for local business owners and their need for a decision on where this may be heading in the future. He expressed his frustration with the state of limbo,and hoped this would not be delayed until after November. Council Member Pearson expressed he is neither in support or opposed to organized hauling but encouraged the council to make a decision to move on it or not. Council Member Smith stated at the LMC conference they learned how difficult moving forward with the organized collections process may be,and deferred to Administrator Zuleger for details. Administrator Zuleger stated he had been gathering data on the impact multiple haulers have on the condition of the roads, the savings to the residents which appears to be in the amount of approximately 40 percent, and indemnification from future liability. Maplewood is one of the only local cities in 20 years to have successfully made this transition. He expressed it would be expected to be a 9 to 13 month process and would likely cause much external pressure and cautioned that it could take a considerable toII on council and staff Council Member Smith suggested placing this on a future agenda as it was not on this agenda. City Administrator Zuleger asked whether council would like staff to schedule organized trash hauling on a future agenda. Council Member Park agreed with Council Member Pearson that the residents and business owners concerns should be addressed and there are several versions of organized collections, but suggested tabling the discussion until 2014. In response to Council Member Park, City Attorney Snyder stated it was not appropriate to make a motion on an item not on the agenda. Mayor Johnston asked staff to place this item on the next meeting's agenda. Council Member Emmons clarified other communities have been successful at organized collection. Page 4 of 6 LADE ELMO CITY COUNCIL MINUTES IDLY 3, 2012 Mayor Johnston stated our first responsibility is to our residents and there appears to be significant savings. He supported moving forward as is reasonably possible. Council Member Emmons added there would need to be some communication with the residents and discussion about the I-94 Corridor zoning for this to occur. Planning Director Matt responded that base zoning was in place and materials will be provided to the Council to determine design areas in an efficient manner. SUMMARY REPORTS AND ANNOUNCEMENTS Council Member Emmons welcomed DSG Architects,a new business located on Lake Elmo Avenue. Council Member Smith reported she received a design for the logo for Elmo Days and expressed her appreciation for the LMC conference, especially the key note speaker who spoke about the next generation. Council Member Park reported her son Bobby won the Minnesota Junior Gold Championship tournament with a score of 69. Council Member Pearson reported that he attended a Library Board meeting, expressing his appreciation for everybody's work on the library and expressed his support in the hiring of Library Director Olivia Moris. He attended a Eire Department meeting with Bayport where he experienced being 110 feet high in the lift truck. Mayor Johnston reported he attended the LMC Conference, attended. Metro Cities who are looking for people to fill various committees, and spoke highly of various communities' Citizen's Academy programs and the possibility of such a program for Lake Elmo in the future. City Administrator Zuleger reported he had a Citizens Academy at his former city and the closing session was a mock council meeting,which was very effective. rive attended the HOA meeting and the interaction and feedback was helpful; working on code enforcement; participated in a Moody's telephone conversation confirming the City's Aa2 bond rating; discussions with Washington County on Hwy S about a traffic and speed study; reviewed the design of brackets for flowering pots on utility poles; meeting with developers about a sophisticated greenhouse project that could provide developmentally disabled adults work, next week's Council Workshop will expound on development of an EDA; he participated in the )uly 4th parade with his granddaughter Iris and expressed his appreciation for Steve Johnson for putting this very community oriented event together. City Attorney Snyder reported well #4 access easements are completed; internal staff issues have gone smoothly; Joint Powers Agreement with the City of Hugo was completed; a motion to dismiss for detachment hearing is scheduled at the end of July and requested Lake Elmo residents attend. Page 5 of 6 LAKE EL MO CITY COUNCIL MINUTES JULY 3, 2 012 Planning Director Klatt reported that Whistling Valley development is complete; transition with the City of Hugo building officials was going smoothly; working on a more aggressive comprehensive plan schedule and upcoming public hearings. Finance Director Bendel reported on the completed audit; stated City Administrator Zuleger and herself participated in the Moody's telephone call and received the final bond rating; City received the levy money today; Workers Compensation audit proved to save over eight thousand dollars, and was requesting appraisals on the facilities. ADJOURN:The meeting adjourned at 8:47 p.m. LAKE ELMO CITY COUNCIL Dean A.Johnston, Mayor Sandie Thane, City Clerk Page 6 of 6 THE CITY OF j TAKE ELMO MAYOR AND COUNCIL COMMUNICATION DATE: 07/17/2012 CONSENT ITEM#: 2 MOTION Consent Agenda AGENDA ITEM: Approve Disbursements in the Amount of$204,836.20 SUBMITTED BY: Cathy Bendel, Finance Director THROUGH: Dean Zuleger, City Administrator REN71EWED BY: Joan Ziertman, Finance Consultant SUMMARY AND ACTION REQUESTED: As part of its Consent Agenda, the City Council is asked to approve disbursements in the amount of$204,836.20. No specific motion is needed, as this is recommended to be part of the overall approval of the Consent Agenda. BACKGROUND INFORMATION: The City of Lake Elmo has fiduciary authority and responsibility to conduct normal business operation. Below is a summary of current claims to be disbursed and paid in accordance with. State law and City policies and procedures. Claim# Amount Description ACH $ 9,775.61 Payroll Taxes to IRS &MN Revenue 7/12/2012 ACH $ 4,766.47 Payroll Retirement to PERA 7/1.2/12 DD4045—DD4083 $ 30,674.83 Payroll Dated 7/12/12 (Direct Deposit) 38610-38614 $ 2,131.04 Payroll Dated 7/12/2012 (Payroll Paper Checks) 38615 $ 7,800.00 Accounts Payable Dated 7/11/12 (Manual Checks) 38616-38667 $ 148,968.25 Accounts Payable Dated 712/12 .............. .. ................................................................................................................................................................................................... 1524-1535 $ 720.00 Accounts Payable Dated 7/12/12 (Library Checks) TOTAL S 204.836.20 �... STAFF REPORT: City staff has complied and reviewed the attached set of claims. All appears to be in order and consistent with City budgetary and fiscal policies and Council direction. RECOMMENDATION: It is recommended that the City Council approve as part of the Consent Agenda proposed disbursements in the amount of$204,836.20. Alternatively, the City Council does have the authority to remove this item from the Consent Agenda or a particular claim from this item and further discuss and deliberate prior to taking action. If done so,the appropriate action of the Council following such discussion would be: "Move to approve the July 17, 2012, Disbursements as Presented[and modified]herein." ATTACHMENTS: 1. Accounts Payable Dated 7/17/2012 SUGGESTED ORDER. 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Cd N b0 O C _ cc O O C P'1 N N N n_ n r c a O C O _ 00 bC Off„ p 7d�'^ N NN N o7 bG L .4 en to rq CN N bA^ N N G za a C op 00 El U n N O c � �r IT o IT °Y v, c en 0 o N a � C, ow dK `^ CS ° Ica �-_ o � N � C9 C z C', � \ C> C> C) .� �/ // � k \C> Z S 45 Kg. ...... ... .. ... ............................... ........................ .............. ......... .. cd 44 z p co� u 4-j 5 < rq z U /\ _ > THE C17YOF TAKE ELMS MAYOR AND COUNCIL COMMUNICATION DATE: July 17, 2012 CONSENT ITEM#: 2a MOTION AGENDA ITEM: 21'd Quarter Financial Report SUBMITTED BY: Cathy Bendel, Finance Director THROUGH: Dean Zuleger, City Administrator REVIEWED BY: Dean Zuleger, City Administrator SUMMARY AND ACTION REQUESTED: As part of its Consent Agenda, the City Council is respectfully asked to accept the 2n1 Quarter Financial Report. No specific motion is needed, as this is recommended to be part of the overall approval of the Consent Agenda. BACKGROUND INFORMATION: The City of Lake Elmo has fiduciary authority and responsibility to conduct normal business operation and report the financial (unaudited) statement to the City Council. City guidelines suggest the Council be updated on a quarterly basis. STAFF REPORT: Attached please find a 2nd Quarter summary report highlighting the 2012 2nd quarter actual results and compares those results to the 2012 Budget. RECOMMENDATION: Based upon the above background information, it is recommended that the City Council accept the 2nd Quarter Financial Report as part of tonight's Consent Agenda. ATTACHMENTS. 1. Memorandum outlining 2nd Quarter highlights 2 2nd Quarter Financial Report ........ ..... . ........ ..... ..... ... ..... ... ......... • Insurance premiums for 2012 all hit in the month of June. Some departmental corrections were made at renewal to accurately charge the expense to the correct department. In total the premiums were under budget for 2012. • Although no contract services were budgeted for Administration, expenses were incurred to cover the front desk prior to being fully staffed. • The Finance Department also used contracted services to cover the Finance department lack of full-time staff and is over budget.in that category as a result. The contractor services were primarily used to prepare for the annual Financial Audit which is now complete. There will be some on-going clerical support until the Deputy Clerk is in place. • The Planning Department also used a part-time contractor to cover the Planning Assistant functions until a full-time staff person was hired. The new Planning Assistant starts May 29`". • Although the MN Dot landscaping project is 100%reimbursable, the expense appears in the Public Works department and will be offset by the Grant money when received. ................................................ 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G c; C: � of -• �= ¢va 6 c � °� c G � �„ Ufa- � 'm C.J� �. ❑ G yv� �% � Ci c eJ c� � uJ `iJ � Lti " � Q •Y m "�� 0. s v �'. m I-Hr--i CITY OF MAYOR AND COUNCIL COMMUNICATION DATE: 07/17/2012 CONSENT ITEM#: 2b MOTION Consent Agenda AGENDA ITEM: Year to Date Permit Report SUBMITTED BY: Carole Luczak, Program Support Assistant THROUGH: Cathy Bendel, Finance Director REVIEWED BY: Cathy Bendel, Finance Director SUMMARY AND ACTION REQUESTED: As part of its Consent Agenda, the City Council is asked to accept the monthly permit report. No specific motion is needed, as this is recommended to be part of the overall approval of the Consent Agenda. STAFF REPORT: Below are some key statistics for Jan 1-June 30: 2012 2011 Total building permits: 136 158 (Ice and water damage repair) (35) New homes 17 11 Total valuation $6,943,112 $5,024,800 Avg home value $408,418 $456,800 For the first half of 2012 there has been a noticeable increase in building activity over 201.L ........... .................... ....... ......... . ........ ......... co 00 OD 00 00 OD W W w W -4• ZZ, � cn C', CD 0) c ;I, o 0 0 z 0 ID ZI zs 90' j zi ro C, co cn, CDI I0 1 1 =r CA CL <D CD CD M -n CD CD CD QN4 cc cc ................................... ....................................................... ..................................... ............................................. ................ ........................................... r If Q, i o CD :s qb ............ r, r � ' i y r, 00 co ml 00 ao I 00 00 41,; N La :4 CD -4fff II It iz kol CL o o CD CD 0 0 cr -a: 72 EL CL (D CO B ' 3 CD (D 0 CD CD (D CD 0) II -.4-4 ro co it coti i;) iQ co 44, 0 CD 0' Cl C� R); Q6� CA (1) 0 i S S CD M CO CD -n -n Cz 3 B 0 I 0 3 Ol <D CD cc Cc to I II ................ ................ -Al...... ....... . .. . .......... ...... ............................... ......................... ............................i .................. 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Ln ............ _00 C� I tj o,:; =a, Vt -31 Iz Iz o � �•�'= CD\ ro r wM \ \ d r• v`� u ct 1 b i \ \ i \ O w r4 1 ' b 0 THE CITY OF LAKE ELMO 1AY0R AND COUNCIL COMMUNICATION DATE: July 17, 21012 CONSENT ITEM #: 3 MOTION AGENDA ITEM: Professional Engineering Support Services Consulting Pool—Approve Updated Pool to add AE2S in the areas of Water and Wastewater Systems SUBMITTED BY: Jack Griffin, City Engineer THROUGH: Dean A. Zuleger, City Administrator REVIEWED BY: Ryan Stempski, Assistant City Engineer SUMMARY AND ACTION REQUESTED: The City Council is respectfully requested to consider approving the updated Professional Engineering Support Services Consulting Pool, thereby adding Advanced Engineering and Environmental Services, Inc. (AE2S) in the areas of Water and Wastewater Systems. BACKGROUND INFORMATION AND STAFF REPORT: The City Council approved the Professional Engineering Support Services Consulting Pool on March 20, 2012. The purpose of the pool is to establish a list of prequalified firms :For staff to turn to for specialized engineering, architectural, landscape architectural, surveying and other support services when the need arises. The prequalification step serves to streamline the process for staff to access the available support services and to simplify the Request for Proposal (RFP) process when a specific project need is requested. At this time, due to some recent staff turnover at some of the Consulting Firms, the City Engineer is recommending that AE2S be added to the Consulting Pool so that their specialized expertise in Water and Wastewater Systems may be made available for assisting staff with various engineering studies and design. AE2S submitted a Proposal to the City of Fake Elmo in February, 2012 along with the original RFP process. RECOMMENDATION: Based upon the above staff report, it is recommended that the City Council consider approving the updated Professional Engineering Support Services Consulting Pool, thereby adding Advanced Engineering and Environmental Services, Inc. (Al:E2S) in the areas-of-Water and:-Wastewater Systems The recommended motion for this action is as follows: "Alove to approve the updated Professional Engineering Support Services Consulting Pool, thereby adding Advanced Engineering and Environmental Services, Inc. OE2S) in the areas of Water and Wastewater Systems." ATTACHMENTS: 1. Updated Professional Engineering Support Services Consulting Pool .................................................. r c m °p N tll m @ vT 4 J o a Z c ra Z7 z •� Q � z v� Lu.. V 4 u co > LUaj t� q) C cz m c m q o :. tP E a w o g a \ u. m s to t'7 AD , ::.: �.::: m 2 d d a 'Qa e 2 fu m a \ s v c cj v d 3132;C; m c C 3 w to #° 3Lu '. m vwl Q fl m .0 � C V J C m C LIJ y a 0a LLl c C oA O aC-� <:.. C u C w O --t O C u a ^ u u L4: c v) v) y Q � � V •U 7 C y VI W a1 � a d fRl }4t-� C C C U C 7 G J o N y d Y ; b c � m ............. . .._ ._5. . ... . ...Y o 9....\.. ... .. ......�. v w u vi a `v o?) C uj a vz3i THF CITY OF LAKE ELMO MAYOR & COUNCIL COMMUNICATION . --- DATE: July 17, 2012 CONSENT ITEM#: 4 MOTION AGENDA ITEM: Ordinance No. 2012-58 Amending 97.21 Watercraft and Water Surface Regulations and 97.23 (A) prohibited Structures and Uses SUBMITTED BY: Dean Zuleger, City Administrator THROUGH: Mayor Johnston, Ad Hoc Reviewers from the Tri Lakes Association REVIEWED BY: Dean Zuleger, City Administrator SUMMARY AND ACTION REQUESTED: To approve by consent, the MNDNR reviewed amendment to City Ordinances regulating watercraft regulations (§97.21) and prohibited structures and uses (§97.23 (L). BACKGROUND INFORMATION: In the course business during 2011, the City of Lake Elmo and affected land owners residing on the shores of Lake Olson, Lake Demontreville and Lake Jane crafted an amendment to current city code that would regulate the use of three lakes in the area known as the l:'ri-Lake area of the City of Lake Elmo. After considerable debate, the parties reached a consensus on three main areas: I. A slow, no wake speed condition be set if the lake level of 929.7 feet above sea level is exceeded for five consecutive days for Lake Olson and Lake Demontreville; 2. Motorboat operation that causes wake may be allowed on Lake Jane between 9:00 AM and sunset: 3. Motorboat races, tournaments et al are allowed only as specifically authorized by State Statutes and Rules, the Washington County Sheriff, and City Council. Notice shall be provided to the City Council, The City Council approved this ordinance change in July and the MNDNR approved the amendment effective through October of 2011. STAFF REPORT: During the winter of 2011, interim staff'worked with the MNDNR to craft an ordinance that would meet with all party's approval. Specifically, MNDNR did not want to specify a specific elevation level for no wake imposition on Lake Olson and Lake Demontreville _ .................................and....they.._wished..to._malt._the..City Code consistent with MN Statute 86 — governing motorized ................._._............. ........................................................ water craft operation. After several months of MNDNR review and text changes,..staff brought..a.............................................. draft ordinance to the City Council for their review on June 5, 2012. At this time several lake shore residents expressed their dislike for the draft as they felt that the statutory norming that --page I -- City Council Meeting Consent Agenda Item 4 July 17,2012 tools place defeated the intent and purpose of the ordinance. It was agreed that the City Administrator and members of the Tri-Lakes association would meet with MNDNR officials to discuss specific concerns about lake elevation levels and a provision of state statutes that creates a slow, no wake speed for personal watercraft within 150 feet of shoreline. A delegation from Lake Elmo consisting of Mayor Dean Johnston, Administrator Dean Luleger, Tri-Lakes President Justin Bloyer and Lake Olson Association President Roger Johnson met with j MNDNR's Kim Elverum, Boat & Water Safety Coordinator, to broker a compromise and clarify whether MN Statute 86 had preemption over local ordinances. At this meeting, it was agreed that if MNDNR technical staff agreed to the specific lake level definition of 929.7, the ordinance passed in July 2011 could stand permanently. The City Administrator spoke with MDNR technical staff(Schodeen) who had no objections to a pre-deteimined ordinary high water mark of 929.7(MSL). In the meeting with Elverum, it was noted that the MN Statute 8613.313 ("the 150' rule") is specifically directed at personal water craft -- jet skis, water bikes, et al -- and not traditional motorboats. This statute does preempt local ordinances for safety purposes. l Appropriate changes were made to the ordinance and were reviewed by Mr. Roger Johnson, Mr. Justin Bloyer and Mayor Dean Johnson for approval prior to final drafting. RECOMMENDATION: Based upon the background information presented, the staff recommends that the City of Lake Elmo City Council: I j Motion: To approve Ordinance 2012-58, as approved through review by the MNDNR, to amend §97.21 of the City Code regulating watercraft and water surface regulations and §97.23 (L) prohibited structures and uses. ATTACHMENTS: Ordinance 2012 - 58 SUGGESTED ORDER OF BUSYNESS: l - Introduction of Item..............................................................City Administrator e - Report/Presentation................................................City Administrator - Questions from Council to Staff'............................................. Mayor Facilitates i - Public Input, if Appropriate.................................................... Mayor Facilitates - Call for Motion...............................................................Mayor& City Council ' -.........Discussion.......................................................................Mayor& City Council Action on Motion........................... .. Mayor Facilitates E 1 -page 2 x CITY OF LAKE ELMO COUNTY OF WASHINGTON STATE OF MINNESOTA ORDINANCE 2012-58 AN ORDINANCE AMENDING 97.21 WATERCRAFT AND WATER SURFACE REGULATIONS AND 97.23 (A) PROHIBITED STRUCTURES AND USES § 97.21 WATERCRAFT AND WATER SURFACE USE REGULATIONS. The following regulations shall apply to the use of watercraft on lakes entirely within the city limits, to the use of a lake entirely within the city limits, and to the use of ice surfaces on lakes entirely within the city limits. (A) Dumping. No person shall. dump or throw garbage, paper, bottles, cans, refuse, or debris into any lake or on the shore of any lake or in any public area around any lake in the city. (B) Hours of operation. (1) Normal conditions. No person shall operate any motorboat at a speed greater than a slow, no-wake speed as defined by MN Statute 86B.005 between sunset and noon the following day with the exception of 1,ake Jane, where the slow no- wake speed is in effect between sunset and 9:00 a.m. on the following day. (2) .High water conditions. No person shall operate any motorboat at greater than a slow, no-wake speed as defined by MN Statute 86B.005 whenever the lake level of Lakes Olson and Demontreville is above 920.7 feet above sea level (MSI,) for five (5) consecutive days. This restriction will remain in. effectt until the wafer level drops beloW 929.7 feet, and remains there fcsr eve (5) consecutive gys. (C) Operating regulations. No person shall operate any watercraft in violation of the provisions of this code, or in violation of the provisions of Minnesota Statutes, Chapter 86B or Minnesota Boat and Water Safety Rules (6110.0100-6110.2300) which statutes and rules are hereby adopted and incorporated herein. In the event of a conflict between the various city and state regulations, the more restrictive regulation.shall apply. (D) Buoys. No person shall place a buoy on a lake unless the buoy is specifically authorized by the City Council.and the Washington County Sheriff. (E) Operation. All motorboats, operating in excess of a slow, no-wake speed shall operate in a counter clockwise direction. Personal. watercraft engaging in constant turning activity.shall..confine.that-activity to-the center..of the lake.... _. ................................................................................................................................................ (F) Non-public lake access. No person, except riparian owners, shall launch a watercraft or gain access to or egress from a lake other than at a designated public access point except in the case of any emergency or except with the written permission of the riparian lot owner. A person who has written permission to launch a watercraft from a riparian lot shall park their vehicle(s) and trailer(s) on the lot of the riparian owner. Riparian lot owners who grant permission to use their property as a launch site shall otherwise comply with all of the land use regulations of the city. (G)Public launching areas. Except as noted in(F) no person shall.launch a watercraft or gain access to or egress from a lake except from a public right-of-way or other public park area in those locations specifically designated and posted for the purpose. (H) Non-motorized carry-on access. A person may access any public waters through public land with a hand-carried non-motorized watercraft in accordance with MN Statutes 86B.201, Subd.3. (1)Safe operating distance. (1) No person shall operate or permit the operation of a personal watercraft per Minnesota Statutes, Chapter 86B.313, in excess of slow, no-wake speed, within 150 feet of a shoreline. (2) Launching or landing a personal watercraft or towing a person on skis or other devices must be done by using the most direct route to or from open water. (J) Non-motorized watercraft. A non-motorized watercraft has the right-of--way over motor-powered watercraft except when it is the overtaking watercraft. Motor-powered watercraft should always keep clear and pass astern on non-motorized watercraft (MN Rule 6110.1200, Sub. 1, 13)(1997 Code, § 1380.03) (K) Permanent "slow - no wake"areas. The channels and narrows between Lake Olson and. Lake Demontreville are hereby designated as permanent "slow - no wake" areas and appropriate signs or buoys meeting the specifications found in MN Rules 6110.1500 shall be posted. <`§ 97.23 PROIIIBITED STRUCTURES .AND USES. (L) Lake Activities. Motorboat races, tournaments, ski jumps, slalom courses, or other competition or exhibition events are allowed only as specifically authorized by State Statutes and Rules, the Washington County Sheriff, and the City Council. Notice shall be provided to the City Council. Penalty—See 10.99 ... ..... .... .....-Section 2: Effective Date: This ordinance.becomes--effective on the date o€its...publication,._or....upon....thhe................................................ publication of a summary of the ordinance as provided by Minn. Stat. §412.191, Subdivision 4. ADOPTION DATE: Adopted by Lake Elmo City Council on the seventeenth day of July 2012. CITY OF LAKE ELMO Dean A. Johnston Mayor. Attest: Sandie Thone City Clerk This Ordinance 2012-58 was published on the day of 2012. CERTIFICATION I hereby certify that the foregoing Resolution is a true and correct copy of a resolution presented to and adopted by the Council of the City of Lake Elmo at a duly authorized meeting thereof held on the seventeenth day of July 2012, as shown by the minutes of said meeting in my possession. Sandie Thone City Clerk (Seal) .. . ... ........... ... . . ........._...... .................................................................... THE CITY OF LAKE ELMO MAYOR AND COUNCIL COMMUNICATION DATE: July 17, 2012 CONSENT ITEM#: 5 MOTION: SS Fiscal Impact AGENDA ITEM: Lions Park Tennis Court Resurfacing SUBMITTED BY: Michael Bouthilet, Public Works Superintendent THROUGH: Dean Zuleger, City Administrator REVIEWED BY: Cathy Bendel, Finance Director SUMMARY AND ACTION REQUESTED: Every S to 7 years tennis courts require resurfacing and painting. The courts at Lions Park are due and the condition of the court dictates it should be done. FISCAL IMPACT: S 15,870.00 BACKGROUND INFORMATION: The courts are showing significant cracking, peeling and blistering paint. The courts at the minimum require: • Routing of the structural cracks, clean, treat with defoliant and filled with crack filler. • Pressure wash and scrape court surface free of delaminating material. • Apply 1 tack filler coat. • Apply 2 filler courses to mask delamination scars. • Apply 1 colored texture coat. • Apply i colored finish coat and stripe to USTA rules. STAFF REPORT: The court was evaluated for repair options which included the typical resurfacing (described above), or an additional treatment known as "Armor Crack Repair", which addresses the reflective cracking that typically occurs, The "Armor Crack Repair" costs an additional $9,000.00, Due to the age of the asphalt on the court, it was deemed it would need and asphalt ...................................._........overlay. n 5-7 years, not.be appropriate.._for extra treatment to the cracks at this time. .. .. _......... ...... .. ............... _ The basketball court is included in this project for painting and striping. Three quotes were solicited from companies we have used and/or vetted. Only two quotes were provided as follows: • Tennis West $I5,870.00 • Tennis Court Doctor $16, 666.00 This is a CIP identified and park land dedication fund expenditure. RECOMMENDATION: To contract with Tennis West to crack fill, level, paint and stripe tennis courts, and paint/stripe basketball court at Lions Park for$1.5,870.00 ATTACHMENTS: 1. Tennis West quote. ...................................................................................................................................................................................................................................................................................................................................................................................................................................... Quotation To: Lake Elmo Po W. From: Finley Bros. Inc. 3445 Ideal Av. No. d.b.a. Tennis West Lake Elmo, Mn. 55042 P ® Box 677 Attn: Mike Bouthilet Hopkins, Mn. 55343 o.) 651-233-5414 o.) 952-933-8272 e.) mikebouthilet@iakeelmo.org fx.) 952-933-6164 Re: Resurfacing a battery of two (2) tennis courts at Lions Park. Base Bid ( spec.) Router structural cracks, clean, treat with defoliant, and fill ( full depth } with proprietary crack filler. Scrape and sand surface edges smooth, screed a second and/or third filler to a level surface. Note: do to the nature of structural cracks, there permanent repair can not be guaranteed. i.e. they will reflect. ( Same four step process as used w. Armor System. ) * See attached below Add Alt. bid for Armor Crack System Pressure wash & scrape court surface, free of deiaminating material. Patch for bird baths. ( max, three applications ) Additional patching shouldn't be required, if the surface has a 1"/10' slope or greater. Supply and install a Nova USA Color Surface System for existing acrylic over asphalt construction. Skin patch crack and bird bath repairs. Apply a (1) tack/filler coat. Apply two (2) filler courses. Needed to mask delamination scars. Apply one (1) colored texture courses. Apply a (1) colored finish coat. Color: all green. Stripe for doubles tennis: 2" white playing lines per USTA rules. Base Bid : battery of two (2) courts $14,970.00 Add Alt. 1A. Armor Crack System for approx. 750 In. ft. of cracks. Supply & install Armor Crack Repair membrane masking system (over crack work in base bid, above. Unit price at $12.00/in.ft. est. 750 In. ft. -- -` - Note: does not include asphalt/concrete butt joint gaps. ( post footings .) Total Add Alt. 1A. (Add to base bid for Armor System ) $ 9,000.00 Alt. No. 2 Add basketball court approx. 30' x 42' Resurfacing basketball area. All Green w. 2" white In.'s $ 970.00 Respectfully submitted, Raymond S. Finley ( 6-04-12 ) c.) 61.2-363-3004 Estimate accepted: Date: THE CITY OF MAYOR AND COUNCIL COMMUNICATION DATE: July 17, 2012 CONSENT ITEM #: G MOTION: Fiscal Impact AGENDA ITEM: Lions Park Safety Surface SUBMITTED BY: Michael Bouthilet, Public Works Superintendent THROUGH: Dean luleger, City Administrator REVIEWED BY: Cathy Bendel, Finance Director SUMMARY AND ACTION REQUESTED: During a park visit by the Parks Commission, it was noted that the rubber safety surfacing circling the merry-go-round was deteriorating and had a hole that could be a trip hazard. A request was made for evaluation and repair. FISCAL IMPACT: $ 3,997.51 BACKGROUND INFORMATION: The rubber surfacing was installed over a concrete pad in 1994 after an insurance liability review recommended we either remove the play equipment or add safety surfacing. The Parks Commission at the time not only recommended the addition of rubber surfacing, but to also install a new merry-go-round. STAFF REPORT: Safety surfacing contractors were contacted to discuss the viability of patching and fill the holes in the rubber surface. It was determined the rubber and binder had deteriorated beyond repair. Two quotes were provided as follows: • Minnesota/Wisconsin Playgrounds $3,997.51 • Flagship Recreation $7,500.00 ..............................................This item is not identified in the- ip., but it the Public -Works Superintendent..recommends it should be funded by the park land dedication account, due to the Longevity of product. RECOMMENDATION: To contract with MN/WI Playgrounds to install new rubber safety surfacing at Lions Park for $3,997.51 ATTACHMENTS: 1. MN/WI Playground quote. ................................................................................................................................................................................................................................................................................................................................................................................................................................................................ t" •, :y�.,�> z Minnesota/Wisconsin Playground Ci T11�A5101 highway.55,Suite 6000 QUOTE Golden Valley,Minnesota.55422 #5871 - -- �'�� " Ph.800-622-5425 763-546-7787 Fax 763-546-5050 info@mnwiplay.com repair rubber surface City of Lake Elmo Ship To Zip:55042 Attn:Mike Bouthilet 3800 Laverne Avenue N. Lake Elmo,MN 55042 Plicna-t 651-233-54.14 Fax: 651-777-6530 1 PIP Remove anal Dispose of existing rubber $3,843.00 $3,843.00 surface.Install 2"poured.rubber,50%black and 50%blue. SubTotal: $3,843,00 Tax: $134.51 Total Amount: $3,977.51. This quotation is subject to polices in the current.Gametime.Park and Playground catalog and the following terms and conditions.Our quotation is based on shipment of all items at one time to a single destination,unless noted,and changes are subject to price adjustment.Purchases an excess of$1,000.00 to be supported by your written purchase order made out to Gametime,c/o Minnesota/Rrisconsin Playground. Exclusions:unless specifically included,this quotation excludes all site work and landscaping;removal of existing equipment;acceptance of equipment and offloading;storage of goods prior to installation;equipment assembly and installation;safety surfacing;borders and drainage provisions. Order Information: Bill To: Sbip To: _ Company: _ _ Project Name: Atm: — Attn: Address:—__ Address: City,State,Zip: _ City,State,Zip: Contact: Contact: Tel:_ _. _ — Tel: Fax: — Fax: Acceptance of quotation: Accepted By{printed): __ _. P.O.No: Signature: Date: Title: _._ Phone: Facsiiriile................._........."............................................................................_......................._.................................Pureliase Aisi66n $3.,9 5.1......................................... ...................................................................................................... Page 1 of I y THE t:ETY OF I-AKEELMO ". MAYOR AND COUNCIL COMMUNICATION DATE: July 17,2012 CONSENT ITEM#: 7 MOTION AGENDA ITEM: Authorization for sale of$4,090,000 General Obligation Water Revenue Crossover .Refunding Bonds, Series 2012A SUBMITTED BY: Cathy Bendel, Finance Director THROUGH: Dean Zuleger, City Administrator REVIEWED BY: Dean Zuleger, City Administrator SL"NIMARY AND ACTION REQUESTED: The City Council is respectfully asked to consider Resolution 201.2-35 awarding the sale, prescribing the form and details and providing for the payment of the $4,090,000 General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A. . BACKCROtTND INFORMATION: The City Council authorized the issuance and sale of the S4.090,000 General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A on June 19, 2012. The attached paperwork needs to be completed to complete that transaction. RECOMMENDATION: It is recommended that the City Council approve processing the necessary paperwork related to $4,090,000 General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A. ATTACHMENTS: 1. Resolution 2012-35 2. Finance Plan Summary 2012A ...... ..... . .... .........._.... .... CERTIFICATION OF MINUTES RELATING TO $865,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2012B Issuer: City of Lake Elmo, Minnesota Governing Body: City Council Kind, date, time and place of meeting: A regular meeting held on July 17, 2012, at 7:00 p.m., at City Hall, Lake Elmo, Minnesota. Members present: Members absent: Documents Attached: Minutes of said meeting(including): RESOLUTION NO. 2012-35 RESOLUTION AUTHORIZING ISSUANCE,AWARDING SALE, PRESCRIBING THE FORM AND DETAILS AND PROVIDING FOR THE PAYMENT OF $865,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2012B I, the undersigned, being the duly qualified and acting recording officer of the public corporation issuing the bonds referred to in the title of this certificate, certify that the documents attached hereto, as described above, have been carefully compared with the original records of said corporation in my legal custody, from which they have been transcribed; that said documents are a correct and complete transcript of the minutes of a meeting of the governing body of said corporation, and correct and complete copies of all resolutions and other actions taken and of all documents approved by the governing body at said meeting, so far as they relate to said bonds; and that said meeting was duly held by the governing body at the time and place and was attended throughout by the members indicated above,pursuant to call and notice of such meeting given as required by law. WITNESS my hand officially as such recording officer this day of July, 2012. City Administrator It was reported that (__) sealed proposals for the purchase of$4,090,000 General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A were received prior to 10:30 a.m. on July 17,2012,pursuant to the Official Statement distributed to potential purchasers of the Bonds by Northland Securities, Inc., financial advisor to the City. The proposals have been publicly opened,read and tabulated and were found to be as follows: (See Attached) . ... .. ......... ... ...... ............................ ......... . ........ Councilmember introduced the following resolution and moved its adoption,which motion was seconded by Councilmember RESOLUTION NO. RESOLUTION RELATING TO $4,090,000 GENERAL OBLIGATION WATER REVENUE CROSSOVER REFUNDING BONDS, SERIES 2012A.; AUTHORIZING THE ISSUANCE,AWARDING SALE,PRESCRIBING THE FORM AND DETAILS AND PROVIDING FOR THE PAYMENT THEREOF BE IT RESOLVED by the City Council (the"City Council")of City of Lake Elmo (the "City"), as follows: Section 1. Authorization and Recitals. 1.01. Authorization of Bonds. The City owns and operates a municipal water system (the"Utility"). Pursuant to a resolution adopted by this Board on June 19, 2012,the City has determined it to be in its best interests to issue its General Obligation Water Revenue Crossover Refunding Bonds,Series 2012A,in the principal amount of$4,090,000 (the"Bonds"),pursuant to Minnesota Statutes, Chapter 475,to provide funds to be used to refinance, in a crossover refunding pursuant to Minnesota Statutes, Section 475.67, sub. 13, the 2016 through 2030 maturities of the City's General Obligation Water Revenue Bonds, Series 2005A, dated, as originally issued, as of August 1,2005, which maturities are presently outstanding in the principal amount of$3,775,000(the"Refunded Bonds"). December 1, 2015 (the"Crossover Date") is the earliest date upon which the Refunded Bonds may be redeemed without payment of premium. The refunding is being carried out for the purpose described in Minnesota Statutes, Section 475.67, subdivision 3, section (b)(2)(i) and in compliance with Minnesota Statutes, Chapter 475. 1.02. Sale and Award. Pursuant to the Notice of Sale and the Official Statement prepared on behalf of the City by Northland Securities, Inc., sealed proposals for the purchase of the Bonds were received at or before the time specified for receipt thereof. The proposals have been opened,publicly read and considered and the purchase price, interest rates and net interest cost under the terms of each proposal have been.determined. The most favorable proposal received is that of , in (the "Purchaser"),to purchase the Bonds at a price of$ plus accrued interest on all Bonds to the day of delivery and payment, on the further terms and conditions hereinafter set forth. The sale of the Bonds is hereby awarded to the Purchaser, and the Mayor and City Administrator are hereby authorized and directed to execute a contract on behalf of the City for the_sale._o f the Bonds in accordance with the. .................... ............................................................... ....... ... Purchaser shall be retained and deposited by the City until the Bonds have been delivered and shall be deducted from the purchase price paid at settlement. 1.03. Savings. It is hereby determined that: (a) by the issuance of the Bonds, the City will realize a substantial interest rate reduction, a gross savings of approximately$ and a present value savings (using the yield on the Bonds, computed in accordance with Section 148 of the Internal Revenue Code of 1986, as amended(the"Code"), as the discount factor) of approximately$ ; and (b) as of the Crossover Date,the sum of(i)the present value of the debt service on the Bonds, computed to their stated maturity dates, after deducting any premium,using the yield of the Bonds as the discount rate,plus (ii) any expenses of the refunding payable from a source other than the proceeds of the Bonds or investment earnings thereon,is lower by %than the present value of the debt service on the Refunded Bonds,exclusive of any premium, computed to their stated maturity dates,using the yield of the Bonds as the discount rate. Section 2. Terms; Registration; Execution and Delivery. 2.01. Issuance of Bonds. All acts, conditions and things which are required by the Constitution and laws of the State of Minnesota to be done,to exist,to happen and to be performed precedent to and in the valid issuance of the Bonds having been done,now existing, having happened and having been performed, it is now necessary for the Board to establish the form and terms of the Bonds,to provide security therefor and to issue the Bonds forthwith. 2.02. Maturities, Interest Rates, Denominations, Payment. The Bonds shall be dated, as originally issued, as of August 1,2012, shall be issued in the denomination of$5,000 each or any integral multiple thereof, of single maturities,shall mature on December 1 in the years and amounts stated below, and shall bear interest from their date of issue until paid or called for redemption, at the annual rates set forth opposite such years and amounts, as follows: Year Amount Rate Year Amount Rate 2016 $200,000 2024 $295,000 2017 200,000 2025 315,000 2018 220,000 2026 305,000 2019 215,000 2027 325,000 2020 210,000 2028 345,000 2021 205,000 2029 340,000 2.022 280,000 2030 335,000 2023 300,000 [REVISE MATURITY SCHEDULE FOR ANY TERM BONDS] The Bonds shall be issuable only in fully registered form. The interest thereon and,upon surrender of each Bond,the principal amount thereof shall be payable by check or draft issued by the Registrar described herein,provided that, so long as the Bonds are registered in the name of a securities depository,or a nominee thereof,in accordance with Section 2.07 hereof,principal and interest shadl b a payable in accordance with the operational-arr an-gernMU— of the securities...................................................................._........... depository. 2.03. Dates and Interest Payment Dates. Upon initial delivery of the Bonds pursuant.to Section 2.08 and upon any subsequent transfer or exchange pursuant to Section 2.06,the date of 2 authentication shall be noted on each Bond so delivered, exchanged or transferred. Interest on the Bonds shall be payable on each June 1. and December 1,commencing June 1,2013,to the owners of record thereof as of the close of business on the fifteenth day of the immediately preceding month,whether or not such day is a business day. Interest shall be computed on the basis of a 360-day year composed of twelve 30-day months. 2.04. Redemption. Bonds maturing in the years 2022 and thereafter shall each be subject to redemption and prepayment at the option of the City,in whole or in part and if in part,in such order as the City shall determine and within a maturity by lot as selected by the Registrar(or,if applicable,by the bond depository in accordance with its customary procedures),in multiples of $5,000, on December 1, 2021, and on any date thereafter, at a price equal to the principal amount thereof and accrued interest to the date of redemption. The City Administrator shall cause notice of the call for redemption thereof to be published if and as required by law and, at least thirty days prior to the designated redemption date, shall cause notice of call for redemption to be mailed,by first class mail,to the registered holders of any Bonds to be redeemed at their addresses as they appear on the bond register described in Section 2.06 hereof, provided that notice shall be given to any securities depository in accordance with its operational arrangements. No defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date,become due and payable at the redemption price therein specified and from and after such date(unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon partial redemption of any Bond, a new Bond or Bonds will be delivered to the registered owner without charge,representing the remaining principal amount outstanding. [COMPLETE THE FOLLOWING PROVISIONS IF THERE ARE TERM BONDS-- ADD ADDITIONAL PROVISIONS IF THERE ARE MORE THAN TWO TERM BONDS] [Bonds maturing on December 1, 20 and 20 (the Term Bonds) shall be subject to mandatory redemption prior to maturity pursuant to the sinking fund requirements of this Section 2.04 at a redemption price equal to the stated principal amount thereof plus interest accrued thereon to the redemption date, without premium. The Registrar shall select for redemption,by lot or other manner deemed fair, on February I in each of the following years the following stated principal amounts of such Bonds: Term Bonds Maturing December 1,20— Year Principal Amount .........................................................................._..................................................................._..... The remaining$ stated principal amount of such Bonds shall be paid at maturity on December 1, 20 3 Term.Bonds Maturing December 1.,20— Year Principal Amount The remaining$ stated principal amount of such Bonds shall be paid at maturity on December 1,20 Notice of redemption shall be given as provided in the preceding paragraph.] 2.05. Appointment of Initial Registrar. The City hereby appoints Northland Trust Services, Inc.,in Minneapolis,Minnesota, as the initial bond registrar,transfer agent and paying agent(the"Registrar"). The Mayor and City Administrator are authorized to execute and deliver,on behalf of the City, a contract with the Registrar. Upon merger or consolidation of the Registrar with another corporation,if the resulting corporation is a bank or trust company authorized by law to conduct such business, such corporation shall be authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove the Registrar upon thirty days' notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar shall deliver all cash and Bonds in its possession to the successor Registrar and shall deliver the bond register to the successor Registrar. 2.06. Registration. The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: (a) Re ig ster. The Registrar shall keep at its principal corporate trust office a bond register in which the Registrar shall provide for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. (b) Transfer of Bonds. Upon surrender to the Registrar for transfer of any Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing,the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees,one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may,however, close the books for registration of any transfer of any Bond or portion thereof selected or called for redemption. (c) Exchange of Bonds. Whenever any Bond is surrendered by the registered owner for exchange,the Registrar shall authenticate and deliver one or more new Bonds of a like aggregate principal amount, interest rate and maturity, as requested by the .................................................................................._.........._........ .............._._................__ ...._.._....... .. ... . ...... ... ... . registered**owner or the owner's..attorney duly author zed...in wr tiF g...................................................................................................................................... (d) Cancellation. All Bonds surrendered upon any transfer or exchange shall be promptly canceled by the Registrar and thereafter disposed of as directed by the City. 4 (e) Improper or Unauthorized Transfer. When any Bond is presented to the Registrar for transfer,the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar shall incur no liability for its refusal.,in good faith,to make transfers which it,in its judgment, deems improper or unauthorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name any Bond is at any time registered in the bond register as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of,the principal of and interest on such Bond and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the City upon such Bond to the extent of the sum or sums so paid. (g) Taxes,Fees and Charges. For every transfer or exchange of Bonds (except for an exchange upon the partial redemption of a Bond), the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. (h) Mutilated. Lost. Stolen or Destroyed Bonds. In case any Bond shall become mutilated or be lost,stolen or destroyed,the Registrar shall deliver a new Bond of like amount,number,maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any such Bond lost,stolen or destroyed,upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and,in the case of a Bond lost, stolen or destroyed,upon filing with the Registrar evidence satisfactory to it that such Bond was lost, stolen or destroyed, and of the ownership thereof, and upon furnishing to the _..._.... ..... . . ...- _ ....Registrar an appropriate-bond or indemnity in-form., substance and amount as-maybe required by law and as is satisfactory to the Registrar, in which both the City and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be canceled by it and evidence of such cancellation shall be given to the City. If the mutilated,lost, stolen or destroyed Bond has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Bond prior to payment. (i) Authenticating Agent. The Registrar is hereby designated authenticating agent for the Bonds,within the meaning of Minnesota Statutes, Section 475.55, Subdivision 1,as amended. 2.07. Securities Depository. ..........................................................................(a)...F.:or.purposes_of this_..section.the following._terms shall have the following meanings: _... "Beneficial Owner"shall mean,whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant,or such person's subrogee. 5 "Cede & Co." shall mean Cede&Co.,the nominee of DTC, and any successor nominee of DTC with respect to the Bonds. "DTC"shall mean The Depository Trust Company of New York,New York. "Participant" shall mean any broker-dealer,bank or other financial institution for which DTC holds Bonds as securities depository. "Representation Letter"shall mean the Representation Letter pursuant to which the sender agrees to comply with DTC's Operational Arrangements. (b) The Bonds shall be initially issued as separately authenticated fully registered bonds, and one Bond shall be issued in the principal amount of each stated maturity of the Bonds. Upon initial issuance, the ownership of such Bonds shall be registered in the bond register in the name of Cede&Co., as nominee of DTC. The Registrar and the City may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal of or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed,if any, giving any notice permitted or required to be given to registered owners of Bonds under this resolution,registering the transfer of Bonds, and for all other purposes whatsoever; and neither the Registrar nor the City shall be affected by any notice to the contrary. Neither the Registrar nor the City shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any Participant, or any other person which is not shown on the bond register as being a registered owner of any Bonds,with respect to the accuracy of any records maintained by DTC or any Participant,with respect to the payment by DTC or any Participant of any amount with respect to the principal of or interest on the Bonds, with respect to any notice which is permitted or required to be given to owners of Bonds under this resolution,with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or with respect to any consent given or other action taken by DTC as registered owner of the Bonds. So long as any Bond is registered in the name of Cede&Co., as nominee of DTC, the Registrar shall pay all principal of and interest on such Bond, and shall give all notices with respect to such.Bond, only to Cede&Co. in accordance with DTC's Operational Arrangements, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than DTC shall receive an authenticated Bond for each separate stated maturity evidencing the obligation of the City to make payments of principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede& Co.,the Bonds will be transferable to such new nominee in accordance with paragraph (e)hereof. (c) In the event the City determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bonds in the form of bond certificates,the City may notify DTC and - ---- the Registrar,whereupon..DTC.shall..-notify the.P.artieipauts of the.availability through DTC of .... ..................................................... Bonds in the form of certificates. In such event,the Bonds will be transferable in accordance with paragraph(e)hereof. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and.the Registrar and discharging its 6 responsibilities with respect thereto under applicable law. In such event the Bonds will be transferable in accordance with paragraph(e)hereof. (d) The execution and delivery of the Representation Letter to DTC by the Mayor or City Administrator is hereby authorized and directed. (e) In the event that any transfer or exchange of Bonds is permitted under paragraph(b) or(c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this resolution. In the event Bonds in the form of certificates are issued to owners other than Cede & Co., its successor as nominee for DTC as owner of all the Bonds,or another securities depository as owner of all the Bonds,the provisions of this resolution shall also apply to all matters relating thereto,including, without limitation,the printing of such Bonds in the form of bond certificates and the method of payment of principal of and interest on such Bonds in the form of bond certificates. 2.08. Execution, Authentication and Delivery. The Bonds shall be prepared under the direction of the City Administrator and shall be executed on behalf of the City by the signatures of the Mayor and the City Administrator, provided that the signatures may be printed, engraved or lithographed facsimiles of the originals. In case any officer whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of any Bond, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if he had remained in office until delivery. Notwithstanding such execution,no Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on each Bond shall be conclusive evidence that it has been authenticated and delivered under this Resolution. When the Bonds have been prepared, executed and authenticated,the City Administrator shall deliver them to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore executed, and the Purchaser shall not be obligated to see to the application of the purchase price. 2.09. Form of Bonds. The Bonds shall be prepared in substantially the following form: 7 UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF WASHINGTON CITY OF LAKE ELMO GENERAL OBLIGATION WATER REVENUE CROSSOVER REFUNDING BOND, SERIES 2012A No. R- $ Interest Rate Maturitv Date Date of Original Issue CUSIP % December 1, 20_ August 1, 2012 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: THOUSAND DOLLARS CITY OF LAKE ELMO,MINNESOTA(the"City"), acknowledges itself to be indebted and hereby promises to pay to the registered owner specified above, or registered assigns,the principal amount specified above on the maturity date specified above, with interest thereon from the date hereof or the most recent date to which interest hereon has been paid or duly provided for, at the annual rate specified above,payable on December 1 and June 1 in each year, commencing June 1, 2013,to the person in whose name this Bond is registered at the close of business on the fifteenth day(whether or not a business day) of the immediately preceding month, all subject to the provisions herein regarding prepayment of the Bonds. Interest hereon shall.be computed on the basis of a 360-day year composed of twelve 30-day months. The interest hereon and, upon presentation and surrender hereof,the principal hereof are payable in lawful money of the United States of America by check or draft by Northland Trust Services, Inc. in Minneapolis, Minnesota, as Bond Registrar, Transfer Agent and Paying Agent(the "Registrar"),or its designated successor under the Resolution described herein. For the prompt and full payment of such principal and interest as the same respectively become due,the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. This Bond is one of an issue in the aggregate principal amount of$4,090,000 (the "Bonds") issued pursuant to a resolution adopted by the City Council on July 17,2012 (the "Resolution")to refund outstanding general obligation bonds previously issued by the City. The Bonds are issued by authority of and in strict accordance with the provisions of the Constitution and laws of the State of Minnesota thereunto enabling, including Minnesota Statutes, Chapter 475. This Bond is payable primarily from the General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A Bond Fund (the`Bond Fund")of the City,but the City is required by law to pay maturing principal hereof and interest hereon from any available funds of ...........................................the-City...if..money-on.deposit..in..the.B.ond Fund..is._insuffic ent.therefpr. _The._Bonds_are._issuable ._.. . ...... only in fully registered form, in denominations of$5,000 or any multiple thereof,of.single maturities. 8 Bonds maturing in 2022 and later years shall be subject to redemption and prepayment at the option of the City, in whole or in part, in such order of maturity dates as the City may select and,within a maturity,by lot as selected by the Registrar(or,if applicable,by the bond depository in accordance with its customary procedures)in multiples of$5,000, on December 1, 2021, and on any date thereafter, at a price equal to the principal amount thereof and accrued interest to the date of redemption. The City shall cause notice of the call for redemption thereof to be published if and as required by law, and at least thirty(30)days prior to the designated. redemption date, shall cause notice of call for redemption to be mailed,by first class mail,to the registered holders of any Bonds, at the holders' addresses as they appear on the bond register maintained by the Registrar,but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall,on the redemption date,become due and payable at the redemption price therein specified and from and after such date(unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon partial redemption of any Bond, a new Bond or Bonds will be delivered to the owner without charge,representing the remaining principal amount outstanding. [COMPLETE THE FOLLOWING PROVISIONS IF THERE ARE TERM BONDS- ADD ADDITIONAL PROVISIONS IF THERE ARE MORE THAN TWO TERM BONDS] [Bonds maturing in the years 20 and 20 shall be subject to mandatory redemption, at a redemption price equal to their principal amount plus interest accrued thereon to the redemption date,without premium, on December 1 in each of the years shown below, in an amount equal to the following principal amounts: Term Bonds December in 20-- Term Bonds December in 20-- Sinking Fund Aggregate Sinking Fund Aggregate Payment Date Principal Amount Payment Date Principal Amount Notice of redemption shall be given as provided in the preceding paragraph.] As provided in the Resolution and subject to certain limitations set forth therein,this Bond is transferable upon the books of the City at the principal office of the Registrar,by the registered owner hereof in person or by the owner's attorney duly authorized in writing,upon surrender hereof together with a.written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or the owner's attorney, and may also be surrendered in exchange for Bonds of other authorized denominations. Upon any such transfer or exchange,the .......................................... City wilt cause a new-Bond-or Bonds to be issued.in the.name of the.transferee or.registered..................................................................._..... owner,of the same aggregate principal amount,bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with.respect to such transfer or exchange. 9 The City and the Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. Notwithstanding any other provisions of this Bond, so long as this Bond is registered in the name of Cede&Co., as nominee of The Depository Trust Company, or in the name of any other nominee of The Depository Trust Company or other securities depository, the Registrar shall pay all principal of and interest on this Bond,and shall give all notices with respect to this Bond, only to Cede & Co. or other nominee in accordance with the operational arrangements of The Depository Trust Company or other securities depository as agreed to by the City. The Bonds have been designated by the City as "qualified tax-exempt obligations" pursuant to Section 265 of the Internal Revenue Code of 1986,as amended. IT IS HEREBY CERTIFIED,RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist,to happen and to be performed precedent to and in the issuance of this Bond in order to make this Bond a valid and binding general obligation of the City according to its terms,have been done, do exist,have happened and have been performed in regular and due form as so required; that in and by the Resolution,the City has pledged to the payment of the principal of and interest on the Bonds net revenues of the municipal water system (the"System");that in and by the Resolution, the City has covenanted and agreed with the owner of the Bonds that it will impose and collect charges for the service,use and availability of the System at the time and in the amounts required to produce net revenues adequate to pay all principal of and interest on the Bonds and on all other bonds payable from net revenues of the System as such principal and .interest respectively become due; that if needed to pay the principal and interest on this Bond, ad valorem taxes will be levied upon all taxable property in the City without limitation as to rate or amount; and that the issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional or statutory limitation. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon shall have been executed by the Registrar by manual signature of one of its authorized representatives. IN WITNESS WHEREOF, the City of Lake Elmo,Minnesota,by its City Council,has caused this Bond to be executed on its behalf by the facsimile signatures of the Mayor and City Administrator. CITY OF LAKE ELMO, MINNESOTA. .. -- ..(Facsimile._Signature-�City..Administrator)............._.._..._ (Facsimile Suture Mayorj 10 CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. Date of Authentication: NORTHLAND TRUST SERVICES, INC., as Registrar By Authorized Representative The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to the applicable laws or regulations: TEN COM -as tenants in common UTMA ................... as Custodian for..................... (Gust) (Minor) TEN ENT- as tenants by the entireties under Uniform Transfers to Minors Act .............. (State) JT TEN -- as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used. ASSIGNMENT For value received,the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and does hereby irrevocably constitute and appoint attorney to transfer the said Bond on the books kept for registration of the within Bond, with full power of substitution in the premises. Dated: NOTICE: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever. ..... ... ............9 Si ature Guarant Signature(s)must be guaranteed by an "eligible guarantor institution"meeting the 11 requirements of the Bond Registrar, which requirements include membership or participation in.STAMP or such other "signature guaranty program"as may be determined by the Bond Registrar in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 19'K as amended. PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: [end of bond form] Section 3. Use of Proceeds. Upon payment for the Bonds by the Purchaser,the City Administrator shall apply the proceeds of the Bonds as follows: (a) the amount of$ shall be deposited in the Escrow Account established with Northland Trust Services, Inc. (the "Escrow Agent")under an Escrow Agreement (the"Escrow Agent")dated as of the date of original issuance of the Bonds,between the Escrow Agent and the City,the funds so deposited, together with funds of the City in such amount as may be required, to be invested in securities authorized for such purpose by Minnesota Statutes, Section 475.67, subdivision 13,maturing on such dates and bearing interest at such rates as are required to provide funds sufficient, with cash retained in the escrow account, (i)to pay all interest to become due on the Bonds to and including the Crossover Date; and(ii)to pay and redeem the outstanding principal of the Refunded Bonds on the Crossover Date; (c)the amount.of$ shall be used to pay issuance expenses of the Bonds; and (d) the amount of$ shall be deposited in the Bond Fund created pursuant to Section 4 hereof The Mayor and City Administrator are hereby authorized to enter into the Escrow Agreement, a form of which has been presented to this Council, with the Escrow Agent establishing the terms and conditions for the escrow account in accordance with Minnesota Statutes, Section 475.67. Section 4. General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A Bond Fund. The Bonds shall be payable from a separate General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A Bond Fund(the`Bond Fund") of the City, which Bond Fund the City agrees to maintain until the Bonds have been paid in full. If the money in the Bond Fund should at any time be insufficient to pay principal and interest due on the Bonds, such amounts shall be paid from other moneys on hand in other funds of the City, which other funds shall be reimbursed therefor when sufficient money becomes available in the Bond Fund. The moneys on hand in the Bond Fund from time to time shall be used only to pay .............._..........................:_the principal of and.interest on the Bonds. Into the Bond Fund shall be paid: (a)the amounts .................................................................................................................................._.............._._..... .................................................... appropriated thereto pursuant to the Escrow Agreement; (b) all receipts o principal aiicl interest on the investments held in the escrow account established pursuant to Section 3 to and including the Crossover Date(other than the sum of$3,775,000 received from maturing investments on the Crossover Date to be used to retire the Refunded Bonds); (c) all net revenues of the Utility levied 12 and collected in accordance with Section 5 hereof, and (d) any other funds appropriated by the Council for the payment of the Bonds. There are hereby established two accounts in the Bond Fund, designated as the"Debt Service Account" and the"Surplus Account." All money appropriated or to be deposited in the Bond Fund shall be deposited as received into the Debt Service Account. On each December I., the City Administrator shall determine the amount on hand in the Debt Service Account. If such amount is in excess of one-twelfth of the debt service payable from the Bond Fund in the immediately preceding 12 months, the City Administrator shall promptly transfer the amount in excess to the Surplus Account. The City appropriates to the Surplus Account any amounts to be transferred thereto from the Debt Service Account as herein provided and all income derived from the investment of amounts on hand in the Surplus Account. If at any time the amount on hand in the Debt Service Account is insufficient to meet the requirements of the Bond Fund,the City Administrator shall transfer to the Debt Service Account amounts on hand in the Surplus Account to the extent necessary to cure such deficiency. Section 5. Rate Covenant. Pursuant to Minnesota Statutes, Section 444.075,the City hereby agrees with the registered owners from time to time of the Bonds, that until the Bonds and the interest thereon are paid in full, or are discharged as provided in Section 7,the City will impose and collect reasonable charges for the service,use and availability of the Utility, according to schedules which will produce net revenues sufficient, together with.special assessments levied on property specially benefited by the improvement projects refinanced by the Bonds, ad valorem taxes heretofore or hereafter duly levied on all taxable property in the City which have been pledged and appropriated for this purpose,and any other fiends appropriated by the City, to pay all principal and interest when due on the Bonds and any other bonds or other obligations of the City to which said net revenues have been or may be pledged; and said net revenues,to the extent necessary, are hereby irrevocably pledged and appropriated to the payment of the principal of and interest on the Bonds and shall be credited to the Bond Fund as required. Nothing herein shall preclude the City from hereafter making further pledges and appropriations of the net revenues of the Utility for payment of additional bonds or other obligations of the City hereafter authorized if the Council determines before the authorization of such additional obligations that the estimated net revenues of the Utility will be sufficient, with any other sources pledged to the payment of the Bonds, for payment of the Bonds, any other outstanding obligations and such additional obligations. Such further pledges and appropriations of said net revenues may be made superior or subordinate to, or on a parity with,the pledge and appropriation of net revenues herein made. Section b. Pledge of Taxing Powers. For the prompt and full payment of the principal of and interest on the Bonds as such payments respectively become due, the full faith, credit and unlimited taxing powers of the City shall be and are hereby irrevocably pledged. The City estimates that the funds appropriated to the payment of the Bonds pursuant to Section 5 hereof shall be sufficient to pay the principal of and interest on the Bonds when due and therefore no tax of and mterest.on ...............................................l is re uired at this-time.-However--the City-covenants that-if-the-principal evy � , • any Bond is not paid in full when due,the City will levy an ad valorem tax upon all taxable property within its corporate limits in an amount sufficient to pay such principal and interest. 13 In the event that the amounts deposited in the Bond Fund are insufficient to pay debt service on the Bonds,the proceeds of tax levies pursuant to Section 6.01 shall be applied to make payments on the Bonds or to reimburse the City for amounts paid with respect to the Bonds, in. that order,and such funds shall not be deposited in the Bond Fund. Section 7. Defeasance. When all of the Bonds have been discharged as provided in this Section 7, all pledges,covenants and other rights granted by this resolution to the owners of the Bonds shall cease. The City may discharge its obligations with respect to any Bonds which are due on any date by irrevocably depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full; or, if any Bond should not be paid when due,the City may nevertheless be discharge its liability with respect thereto by depositing with the Registrar a sum sufficient for the payment thereof in.fail with interest accrued to the date of such deposit. The City may also discharge its obligations with respect to any prepayable Bonds called for redemption on any date when they are prepayable according to their terms,by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full,provided that notice of the redemption thereof has been duly given as provided in Section 2.04. The City may also at any time discharge its obligations with respect to any Bonds,.subject to the provisions of law now or hereafter authorizing and regulating such action,by depositing irrevocably in escrow, with a bank or trust company qualified by law as an escrow agent for this purpose, cash or securities which are general obligations of the United States or securities of United States agencies which are authorized by law to be so deposited, bearing interest payable at such times and at such rates and maturing on such dates as shall be required,without reinvestment,to pay all principal and interest to become due thereon to maturity or,if notice of redemption as herein required has been irrevocably provided for, to such earlier redemption date. Section 8. Certification of Proceedings and Payment of Expenses. 8.01. Registration of Bonds. The City Administrator is hereby authorized and directed to file a certified copy of this resolution with the County Auditor of Washington County, together with such additional information as the County Auditor shall require, and to obtain from the County Auditor a certificate that the Bonds have been duly entered upon the County Auditor's bond register. 8.02. Authentication of Transcript. The officers of the City and the County Auditor are hereby authorized and directed to prepare and furnish to the Purchaser and to Dorsey&Whitney LLP,the attorneys rendering an opinion as to the validity thereof, certified copies of all proceedings and records relating to the Bonds and such other affidavits, certificates and information as may be required to show the facts relating to the legality and marketability of the Bonds, as the same appear from the books and records in their custody and control or as otherwise known to them,and all such certified copies, affidavits and certificates,including any heretofore furnished, shall be deemed representations of the City as to the correctness of all statements contained therein. ............................ .......................................................... .... .............. ................................................ 8.03. Official Statement. The Preliminary Official Statement relating to the Bonds, dated June_, 2012,prepared and distributed by Northland Securities, Inc., is hereby approved. Northland Securities, Inc. is hereby authorized on behalf of the City to prepare and deliver within seven business days from the date hereof a final Official Statement listing the offering price,the 14 interest rates, selling compensation, delivery date,the underwriters and such other information relating to the Bonds required to be included in the Official Statement by Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934. The officers of the City are hereby authorized and directed to execute such certificates as may be appropriate concerning the accuracy, completeness and sufficiency of the Official Statement. Section 9. Tax Covenants; Arbitrage Matters and Continuing LDisclosure. 9.01. General Tax Covenant. The City covenants and agrees with the registered owners from time to time of the Bonds that it will not take,or permit to be taken by any of its officers, employees or agents,any actions that would cause interest on the Bonds to become includable in gross income of the recipient under the Code and applicable Treasury Regulations(the "Regulations"}, and covenants to take any and all actions within its powers to ensure that the interest on the Bonds will not become includable in gross income of the recipient under the Code and the Regulations. The City represents that the Utility is available to members of the general public on a substantially equal basis. The City will not enter into any lease, management agreement,use agreement,capacity agreement or other contract relating to the use of the Utility by any non-governmental person which would cause the Bonds to be"private activity bonds"or "private loan bonds"under the provisions of Section 141 of the Code. 9.02 Arbitrage Certification. The Mayor and.City Administrator being the officers of the City charged with the responsibility for issuing the Bonds pursuant to this Resolution,are authorized and directed to execute and deliver to the Purchaser a certificate in accordance with the provisions of Section 148 of the Code, and applicable Regulations, stating the facts, estimates and circumstances in existence on the date of issue and delivery of the Bonds which make it reasonable to expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be"arbitrage bonds"within the meaning of the Code and Regulations. 9.03. Arbitrage Rebate Exemption. (a)It is hereby found that: (i) the aggregate face amount of the Bonds allocated to the Refunded Bonds does not exceed$5,000,000; (ii) the Refunded Bonds were issued as part of an issue which was treated as meeting the requirements of paragraph (2) and (3)of Code Section 148(f)by reason of Code Section 148(f)(4)(D); (iii) the average maturity date of the Bonds is not later than the average maturity date of the Refunded Bonds; (iv) no Bond has a maturity date which is later than the date which is 30 years after the date the original bond refunded by such Bond was issued. Therefore;pursuant-Sect 6 148(f.)(4)(D)(v) of the Coded the City-shall not be required to comply with the arbitrage rebate requirements of paragraphs (2) and(3) of Section 148(f) of the Code. 15 (b) Notwithstanding the provisions of paragraph (a)of this Section 9.03,if the arbitrage rebate provisions of Section 148(f) of the Code apply to the Bonds, the City hereby covenants and agrees to make the determinations,retain records and rebate to the United States the amounts at the times and in the manner required by said Section 148(f) and applicable Regulations. 9.04. Qualified Tax-Exempt Obligations. The City Board hereby designates the Bonds as "qualified tax-exempt obligations"for purposes of Section 265(b)(3)of the Code relating to the disallowance of interest expense for financial institutions, and hereby finds that the reasonably anticipated amount of tax-exempt obligations (within the meaning of Section 265(b)(3)of the Code)which will be issued by the City and all subordinate entities during calendar year 2012 does not exceed$10,000,000. 9.05. Continuing Disclosure. (a) Pu ose and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit the Purchaser and other participating underwriters in the primary offering of the Bonds to comply with amendments to Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934(17 C.F.R. § 240.15c2-12),relating to continuing disclosure(as in effect and interpreted from time to time,the Rule),which will enhance the marketability of the Bonds, the City hereby makes the following covenants and agreements for the benefit of the Owners(as hereinafter defined) from time to time of the Outstanding Bonds. The City is the only obligated person in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. If the City fails to comply with any provisions of this section, any person aggrieved thereby, including the Owners of any Outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of any agreement or covenant contained in this section,including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder to the extent permitted by law. Notwithstanding anything to the contrary contained herein,in no event shall a default under this section constitute a default under the Bonds or under any other provision of this resolution. As used in this section,Owner or Bondowner means, in respect of a Bond,the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial Owner(as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, Beneficial Owner means,in respect of a Bond, any person or entity which (i)has the power,directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such.Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or(ii) is treated as the owner of the Bond for federal income tax purposes. (b) Information To Be Disclosed. The City will provide,in the manner set forth in subsection(c)hereof, either directly or indirectly through an agent designated by the City,the following information at the following times: ................................................... .....................I. (1) on or before 365 days after the end of each fiscal year cif the City,commencing with ................ _. the fiscal year ending December 31,2011,the following financial information and operating data in respect of the City(the Disclosure Information): 16 (A) the audited financial statements of the City for such fiscal year,prepared in. accordance with generally accepted accounting principles in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under Minnesota law, as in effect from time to time,or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City,noting the discrepancies therefrom and the effect thereof, and certified as to accuracy and completeness in all material respects by the fiscal officer of the City; and (B) to the extent not included in the financial statements referred to in paragraph(A) hereof,the information for such fiscal year or for the period most recently available of the type contained in the Official Statement under headings: Economic and Financial Information, Summary of Debt and Debt Statistics and General Information—"Major Employers." Notwithstanding the foregoing paragraph, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within 10 days after the receipt thereof,the City shall provide the audited financial statements. Any or all of the Disclosure Information may be incorporated by reference, if it is updated as required hereby, from other documents, including official statements, which have been filed with the SEC or have been made available to the public on the Internet Web site of the Municipal Securities Rulemaking Board(MSRB). The City shall clearly identify in the Disclosure Information each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect;provided,however,if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be described in paragraph(2)hereof,then, from and after such determination,the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this section is amended as permitted by this paragraph (b)(1)or subsection(d), then.the City shall include in the next Disclosure Information to be delivered hereunder, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information.or operating data provided. (2) In a timely manner not in excess of ten business days after the occurrence of the event,notice of the occurrence of any of the following events: (A) Principal and interest payment delinquencies; ............_.................................................. ............................................. .. Non-paymezxt ire ale defaults;if rriaterial; (C) Unscheduled draws on debt service reserves reflecting financial difficulties; (D) Unscheduled.draws on credit enhancements reflecting financial difficulties; (E) Substitution of credit or liquidity providers, or their failure to perform; 17 (F) Adverse tax opinions,the issuance by the Internal Revenue Service of proposed or final determinations of taxability,Notices of Proposed Issue(IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds,or other material events affecting the tax status of the Bonds; (G) Modifications to rights of security holders,if material; (H) Bond calls,if material, and tender offers; (1) Defeasances; (J) Release, substitution, or sale of property securing repayment of the securities, if material; (K) Rating changes; (L) Bankruptcy,insolvency,receivership or similar event of the City; (M) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business,the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (N) Appointment of a successor or additional trustee or the change of name of a trustee,if material. As used herein, for those events that must be reported if material, an event is"material"if it is an event as to which a substantial likelihood exists that a reasonably prudent investor would.attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed,would significantly alter the total information otherwise available to an investor from the Official Statement,information disclosed hereunder or information generally available to the public. Notwithstanding the foregoing sentence, an event is also "material"if it is an event that would be deemed material for purposes of the purchase,holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. For the purposes of the event identified in(L)hereinabove,the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. ....................................................................(3)......Ift...a..t i:4 triattirier;..notice of the occurrence-of any of the following events...or...._.... ..........._.................. conditions: 18 (A) the failure of the City to provide the Disclosure Information required under paragraph (b)(1) at the time specified thereunder; (B) the amendment or supplementing of this section pursuant to subsection(d), together with a copy of such amendment or supplement and any explanation provided by the City under subsection (d)(2); (C) the termination of the obligations of the City under this section pursuant to subsection(d); (D) any change in the accounting principles pursuant to which the financial statements constituting a portion of the Disclosure Information are prepared; and (E) any change in the fiscal year of the City. (c) Manner of Disclosure. (1) The City agrees to make available to the MSRB,in an electronic format as prescribed by the MSRB from time to time, the information described in subsection (b). (2) All documents provided to the MSRB pursuant to this subsection(c) shall be accompanied by identifying information as prescribed by the MSRB from time to time. (d) Term; Amendments;Interpretation. (1) The covenants of the City in this section shall remain in effect so long as any Bonds are Outstanding. Notwithstanding the preceding sentence,however,the obligations of the City under this section shall terminate and be without further effect as of any date on which the City delivers to the Registrar an opinion of Bond Counsel to the effect that,because of legislative action or final judicial or administrative actions or proceedings,the failure of the City to comply with the requirements of this section will not cause participating underwriters in the primary offering of the Bonds to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended,or any statutes or laws successory thereto or amendatory thereof. (2) This section (and the form and requirements of the Disclosure Information)maybe amended or supplemented by the City from time to time,without notice to(except as provided in paragraph(c)(3)hereof) or the consent of the Owners of any Bonds,by a resolution of this Council.filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel,who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that: (i) such amendment or supplement(a) is made in connection with a .change in circumstances-that arises from-a-change in law or regulation or a.change in the identity, nature or status of the City or the type of operations conducted by the City, or(b) is required by, or better complies with,the provisions of paragraph(b)(5) of the Rule; (ii)this section as so amended or supplemented would have complied with the requirements of paragraph(b)(5)of the Rule at the time of the primary 19 offering of the Bonds, giving effect to any change in circumstances applicable under clause(i)(a) and assuming that the Rule as in effect and interpreted at the time of the amendment or supplement was in effect at the time of the primary offering; and (iii) such amendment or supplement does not materially impair the interests of the Bondowners under the Rule. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect,if any, of the change in the type of financial information or operating data being provided hereunder. (3) This section is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so as to satisfy the requirements of paragraph(b)(S) of the Rule. 9.06. Authorization of Payment of Certain Costs of Issuance of the Bonds. The City Administrator is hereby authorized and directed on the date of issuance and delivery of the Bonds to pay or cause to be paid from the proceeds of the sale of the Bonds the fees and expenses incurred in connection with the issuance of the Bonds upon receipt by the City of a satisfactory statement therefor. 9.07. Redemption of Refunded Bonds. The City Administrator is hereby directed to advise Northland Trust Services,Inc., as paying agent for the Refunded Bonds, to call the Refunded Bonds for redemption and prepayment on the Crossover Date and to give notice of redemption in accordance with the resolution authorizing the issuance of the Refunded Bonds. Upon vote being taken thereon, the following voted in favor thereof: and the following voted against the sane: whereupon the resolution was declared duly passed and adopted. ....._... .............. ..................................................................... 20 WASHINGTON COUNTY AUDITOR'S CERTIFICATE AS TO REGISTRATION The undersigned,being the duly qualified and acting County Auditor of Washington County, Minnesota,hereby certifies that there has been filed in my office a certified copy of a resolution duly adopted on July 17,2012,by the City Council of City of Lake Elmo,Minnesota, setting forth the form and details of an issue of$4,090,000 General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A, dated, as originally issued, as of August 1,2012. 1 further certify that the issue has been entered on my bond register, as required by Minnesota Statutes, Section 475.63. WITNESS my hand and official seal on ,2012. County Auditor (SEAL) ......... _........ ......... ..__._.... . ....... ......... ................................ 77 FINANCE CLAN SUMMARY ...., FOR CITY OF LAKE ELMO, MINNESOTA 41090 f000 GENERAL OBLIGATION ION ATER REVENUE CROSSOVER REFUNDING BONDS, SERIES 2012A NORTHLAND SECURI 'IlES 45 South 71",Street Suite 2000 Minneapolis,MN 55402 612-851-5900 800-851-2920 uric-19�201:2 City of Lake Elmo, Minnesota S4,090,000 ObligationGeneral r ter Revenue Crossover Refunding Boma, Sense FINANCE PLAN OVERVIEW This finance plan provides for the public issuance of general obligation bonds through a competitive bid. process to advance refund certain maturities of the City's General Obligation Water Revenue Bonds, Series 2005A (the "Series 2005A Bonds") to lower the City's debt service costs. Based on current market information, the estimated net savings is $344,343 with a net present value of 272,613. The primary objectives of this finance plan include: • Maximize debt service cost savings - municipal interest rates are at historically low levels once again. Locking in low fixed rates in advance of the call date on the Series 2005A Bonds will reduce the City's future interest costs and help manage user rates and charges within the water enterprise fund. AUTHORITY&PURPOSE The Bonds will be issued pursuant to Minnesota Statutes 475 and 444. The proceeds will. be used to crossover refund on December 1, 2015 the December 1, 2016 through December 1, 2030 maturities of the City's Series 2005A Bonds an pay the costs of issuing the Bonds. The estimated source and uses of funds are as follows: Refunding Summan, Hated 08101120121 Delivered 0811612012 Sources Of Funds Par Amount of Bonds $4,090,000.00 Accrued Interest from 08101/2012 to 08,16/2012 3,502.60 Total Sources $4,093,502.60 Uses Of Funds Deposit to Crossover Escrow Fund 4,002,883.08 Costs of Issuance 49,700.00 .._Total Underwriter's-Discount (1.000%)-.... .............. .... ...... 40,900.00 Rounding Amount ... 19 52 Total Uses $4,093,502.60 Page 2 NOR,rHLANDO SECURITIES METHOD OF REFUNDING We recommend utilizing a "cr.ossover advance" refunding technique to achieve the refunding objective. A crossover advance refunding is required when one wishes to lock in current interest rates at least 90 days in advance of the call date on the old bonds. An advance refunding requires the proceeds of the new refunding bonds to be invested in government securities and held in. escrow until the call date. The funds in the escrow are used to pay interest on the new refunding bonds until the call date and then prepay the principal of the old bonds. Savings occurs after the call date of the bonds being refunded. A complete and detailed refunding analysis illustrating the preliminary structure of the refunding has been provided and reviewed with City staff. SAVINGS ANALYSIS The 2016 - 2030 maturities of the Series 2005A Bonds totaling $3,775,000 are currently outstanding at an average coupon of 4.27%. Given current market conditions, we estimate these maturities could be refunded with a new bond issue at an average interest rate of 2.26%. This interest rate spread, together with interest earnings on the new bond proceeds until the call date, would result in a total debt service cost savings of approximately $344,343 with a present value of $272,613. The savings is net of all costs and would be realized through the original term of the 2005A Bonds. The debt service comparison showing the scheduled debt service versus the new estimated combined debt service is illustrated below. The estimated combined. debt service for the new Series 2012A Bonds is shown as Exhibit A. ............... ......... ..._....... ....... ......... . . .... ... ......... ......... ._................................................... ..... ............. . M Page 3 NORTHLAND SECURITIES Debt Service Compans®n Date Total P+t PCF Existing D/S Net New D!S Old Net DIS Savings 12/01/2012 - - 87,512.50 87,492.98 87,512.50 19.52 12/01/2013 112,083.33 (112,083.33) 300,025.00 300,025.00 300,025.00 - 12/01/2014 84,062.50 (84,062.50) 320,650.00 320,650.00 320,650.00 12/01/2015 84,062.50 (3,859,062.50) 4,090,250.00 315,250.00 315,250.00 - 12/01/2016 284,062.50 - - 284,062.50 309,700.00 25,637.50 12/01/2017 282,462.50 - - 282,462.50 303,925.00 21,462,50 12/01/2018 300,462.50 - 300,462.50 323,150.00 22,687.50 12/01/2019 292,822.50 - - 292,822.50 316,150.00 23,327.50 12/01/2020 284,812.50 - - 284,812.50 309,150.00 24,337.50 12/01/2021 276,452.50 - - 276,452.50 301,931.26 25,478.76 12/01/2022 347,865.00 - - 347,865.00 369,712.50 21,847.60 12/01/2023 362,545.00 - - 362,545.00 384,087.50 21,542.50 12/01/2024 351,395.00 - - 351,395.00 372,400.00 21,005.00 12/01/2025 365,052.50 - 365,052.50 385,712,50 20,660.00 12/01/2026 347,807.50 - 347,807.50 372,812.50 25,005.00 12/01/2027 360,487.50 - 360,487.50 384,912.50 24,425.00 12/0112028 372,362.50 - 372,362.50 395,937.50 23,575.00 12/01/2029 358,392.50 - 358,392.50 380,625.00 22,232.50 12/01/2030 344,212.50 - 344,212.50 365,312.50 21,100.00 Total $5,211,403.33 (4,055,208.33) $4,798,437.50 $5,954,612.98 $6,298,956.26 $344,343.28 PV Analysis Summary(Net to Net) Gross PV Debt Service Savings..................... 272,594.35 Net P1/ Cashflow Savings @ 2.236%(Bond Yield)..... 272,594.35 Contingency or Rounding Amount.................... 19.52 Net Resent Value Benefit $272,613.87 Net PV Benefit 1$4,097,526.67 PV Refunded Debt Service 6.653% ...................... .. ......... ..._._._.._. ... ......... ......... ......... ..._..... Page 4 NOR`rHLAND'" . ;SECURI'I'.I..ES RELATED CONSIDERATIONS • Bank Qualified-because total.tax-exempt debt issued by the City in calendar year 2012 is expected to be less than $10.OM, the bonds will be designated as "bank qualified" obligations pursuant to Federal Tax Law. The impact of this designation may result in slightly lower interest rates. We have adjusted the estimated interest rates accordingly. • Arbitrage Compliance- o Project / Refunding Fund — All tax exempt issues are subject to federal rebate requirements which require all arbitrage earned to be rebated to the U.S. Treasury. Because the proceeds of the refunding bonds will be deposited into a. yield restricted escrow fund,arbitrage will not be generated. o Debt Service Fund—The City must maintain a bona fide debt service fund for the bonds or be subject to yield restriction in the debt service fund. A bona fide debt service fund involves an equal matching of revenues to debt service expense with a balance forward permitted equal to the greater of the investment earnings in the fund during that year or 1/12 of the debt service of that year. The City should become familiar with the various Arbitrage Compliance requirements for this bond issue. The Bond Resolution explains the requirements in greater detail. We are also available to assist the City in meeting these requirements. • Continuing Disclosure - Because this issue is greater than $1,000,000, and the City's outstanding debt exceeds $10.OM, it is subject to the Securities and Exchange Commission's continuing disclosure requirements. Northland Securities is prepared to assist the City in this capacity. Page 5 NO iT HLAND s E cuRi,r I E s .......... SUMMARY OF RECOMMENDED TERMS 1. Type of Bond Sale Public Sale—Competitive Bids 2. Public Sale Date Tuesday,July 1.7, 2012 @10:30 A.M. 3. Council Consideration Tuesday, July 17,2012 @ 7:00 P.M 4. Repayment Term The Bonds will mature annually each December 1, 2016 - 2030. Interest on the Bonds will be payable on June 1, 2013 and semiannually thereafter on each December 1 and June 1. 5. Security General Obligation of the City. In addition, the City will pledge net revenues of the water utility toward the payment on the Bonds 6. Prepayment Option The Bonds maturing on or after December 1, 2022 will be subject to prepayment on December 1, 2021 at a price of par plus accrued interest. 7. Tax Status Dorsey&Whiney, LLP,Minneapolis, Minnesota 8. Credit Enhancement We believe a credit rating will. be cost beneficial. The City's general obligation debt is currently rated Aa2 by Moody's Investors Service. ...................- .......... .. ........ ..................................................................................................................................... Page 6 NORTHLANLY, SECURITIES EXHIBIT A Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 08/16/2012 - - - _ 06/01/2013 - 70,052.08 70,052.08 - 12/01/2013 - - 42,031.25 42,031.25 112,083.33 06/01/2014 - - 42,031.25 42,031.25 - 12/01/2014 - - 42,031.25 42,031.25 84,062.50 06/01/2015 - - 42,031.25 42,031.25 - 12/01/2015 - - 42,031.25 42,031.25 84,062.50 06/01/2016 - - 42,031.25 42,031.26 - 12/01/2016 200,000.00 0.800% 42,031.25 242,031.25 284,062.50 06/01/2017 - - 41,231.25 41,231.25 - 12/01/2017 200,000.00 1.000% 41,231.25 241,231.25 282,462,50 06101/2018 - - 40,231.25 40,231.25 - 12/01/2018 220,000.00 1.200% 40,231.25 260,231.25 300,462.50 06/01/2019 - - 38,911.25 38,911.25 - 12/01/2019 215,000.00 1.400% 38,911.25 253,911.25 292,822.50 06/01/2020 - - 37,406.25 37,406.25 - 12/01/2020 210,000.00 1.600% 37,406.25 247,406.25 284,812.50 06/01/2021 - - 35,726,25 35,726.25 12/01/2021 205,000.00 1.750% 35,726.25 240,726.25 276,452.50 06/01/2022 - - 33,932.50 33,932.50 - 12/01/2022 280,000.00 1.900% 33,932.60 313,932.50 347,865.00 06/01/2023 - - 31,272.50 31,272.50 - 12/01/2023 300,000.00 2.050% 31,272.50 331,272.50 362,545.00 06/01/2024 - - 28,197.50 28,197,50 - 12/01/2024 295,000.00 2.150% 28,197.50 323,197.50 351,395.00 06/01/2025 - - 25,026.25 25,026.25 - 12/0112025 315,000.00 2.300% 25,026.26 340,026.25 365,052.50 06/01/2026 - - 21,403.75 21,403.75 - 12/01/2026 305,000.00 2.400% 21,403.75 326,403.75 347,807.50 06/01/2027 - - 17,743.75 17,743.76 - 12/01/2027 325,000.00 2.500% 17,743.75 342,743.75 360,487.50 06/01/2028 - - 13,681.25 13,681.26 - 12/01/2028 345,000.00 2.600% 13,681.25 358,681.25 372,362.50 06101/2029 - - 9,196.25 9,196.25 - 12/01/2029 340,000.00 2.700% 9,196.25 349,196.25 358,392.50 06/01/2030 - - 4,606.25 4,606.25 - 12101/2030 335,000.00 2.750% 4,606.25 339,606,25 344,212.50 Total $4,090,000.00 - $1,121,403.33 $5,211,403.33 - Average Coupon 2.2630420% Net Interest Cost(NIC) 2.3455801% True Interest Cost(TIC) _ 2.3307992% All Inclusive Cost(AIC) Y 2.4498551% Page 7 NORTHLAND SECURITIES LAKE ELMO ..,.r. MAYOR AND COUNCIL COMMUNICATION DATE: July 17, 2012 CONSENT ITEM#: 8 MOTION AGENDA ITEM: Authorization to enter into an escrow agreement with Northland Trust Services,Inc. related to the sale of$4,090,000 General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A SUBMITTED BY: Cathy Bendel,Finance Director THROUGHi Dean Zuleger, City Administrator REVIEWED BY: Dean Zuleger, City Administrator SUMMARY AND ACTION REQUESTED: The City Council is respectfully asked to consider the attached escrow agreement with Northland Trust Services, Inc. related to the $4,090,000 General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A. BACKGROUND INFORMATION: The City Council authorized the issuance and sale of the $4,090,000 General Obligation. Water Revenue Crossover Refunding Bonds, Series 2012A on June 19, 2012. Since this is a crossover bond, funds need to be available on the morning of the bond closing. An escrow account needs to be established to hold those funds ($81,800). RECOMMENDATION: It is recommended that the City Council approve the escrow agreement related to $4,090,000 General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A. ATTACHMENT: 1. Escrow Agreement .................................................... ESCROW AGREEMENT THIS ESCROW AGREEMENT,made and entered into by and between the City of Lake Elmo,Minnesota(the Issuer)and Northland Trust Services, Inc., in Minneapolis, Minnesota(the Agent); WITIvTESSETH, that the parties hereto recite and, in consideration of the mutual covenants and payments referred to and contained herein, covenant and agree as follows: 1. The Issuer has duly issued and presently has outstanding the following issue: .Original Principal Maturities Date of Principal Amount Escrowed and Payment Title Issue Amount Escrowed Redeemed Date General Obligation Water Revenue Bonds, Series 2005A (the Refunded Bonds) 8/1/2005 $4,600,000 $3,775,000 2016-2030 12/1/2015 and has issued its $4,090,000 General Obligation Water Revenue Crossover Refunding Bonds, Series 2012A, dated as of August 1,2012 (the Refunding Bonds). With respect to the Refunded Bonds,the December 1, 2015 payment date is referred to herein as the Crossover Date. 2. The Issuer has also, in accordance with a resolution adopted July 17,2012 (the Resolution), simultaneously with the execution of this Agreement, transmitted Refunding Bond proceeds in the amount of$ to the Agent to be used as follows: (a) $ to purchase an equivalent principal amount of federal securities as identified in Exhibit A attached hereto; and (b) $ to be deposited as a beginning cash balance in the Escrow Account hereinafter established; (c) $ to be deposited in the Bond Fund for the Refunding Bonds; and (d) $ to be applied to costs of issuance of the Refunding Bonds. In the opinion of[Grant Thornton LLP], certified public accountants, the federal securities designated in paragraph(a),together with the initial cash balance designated in paragraph(b),mature at such times and bear interest at such rates that the collections of principal and interest thereon will be sufficient to pay the interest to become due on the Refunding Bonds ..._......._........._................._.......................... to and including e Crossover Date amid_to pay and fedeeln the"outstanding pri -of-the- Refunded Bonds on the Crossover Date in accordance with the attached Exhibit B. 3. The Agent agrees to apply the funds received from the Issuer in the manner and for the purposes set forth in Section 2 hereof and this Section. The Agent acknowledges receipt of the cash and federal securities described in Section 2 and agrees that it will hold such cash and federal securities in a special.escrow account(the Escrow Account) in the name of the Issuer, and will collect and receive on behalf of the Issuer all payments of principal and interest on such securities and as paying agent for the Refunding Bonds, (a)will remit from the Escrow Account moneys sufficient for the payment of interest to become due on Refunding Bonds to and including the Crossover Date, and (b) will remit from the Escrow Account the suin of$3,775,000 to be applied to the payment of principal of the Refunded Bonds called for redemption on the Crossover Date. Any remaining funds in the Escrow Account after such transfer shall be remitted to the Issuer. The Agent will,not fewer than 30 days prior to the Crossover Date, cause the Notice of Redemption attached hereto as Exhibit C relating to the Refunded Bonds to be mailed to the holders of all Refunded Bonds to be redeemed on the Crossover Date. 4. In order to ensure continuing compliance with the Internal Revenue Code of 1986, as amended(the Code), and present Treasury Regulations promulgated thereunder(the Regulations),the Agent agrees that it will not reinvest any cash received in payment of the principal of and interest on the federal securities held in the Escrow Account. Said prohibition on reinvestment shall continue unless and until an opinion is received from.nationally recognized bond counsel that reinvestments in general obligations of the United States or obligations the principal of and interest on which are guaranteed as to payment by the United States, as specified in said opinion,may be made in a manner consistent with the Code and then existing Regulations. The federal securities described in Exhibit A hereto may, at the written direction of the Issuer, be replaced, in whole or in part,with general obligations of the United States or obligations the principal of and interest on which are guaranteed as to payment by the United States and which mature as to principal and interest in such amounts and at such times as will assure the availability of sufficient moneys to pay the interest on the Refunding Bonds prior to and the outstanding principal amount of the Refunded Bonds on the Crossover Date,provided, however,that concurrently with such written direction,the Issuer shall provide the Agent with (a) a certification of an independent certified public accountant as to the sufficiency of the federal securities to be subject to this Agreement following such replacement and as to the yields thereof, setting forth in reasonable detail the calculations underlying such certification, (b) an unqualified opinion of nationally recognized bond counsel to the effect that such replacement(1) will not cause the Refunded Bonds or the Refunding Bonds to be subjected to treatment as "arbitrage bonds"under Section 148 of the Code and(2) is otherwise in compliance with this Agreement. Any replacement authorized by this paragraph 4 shall be accomplished by sale, transfer,request for redemption or other disposition of all or a portion of the federal securities described in.Exhibit A hereto with the proceeds thereof being applied to the purchase of substitute federal securities, all as specified in the written direction.of the Issuer. 5. The Agent acknowledges that arrangements satisfactory to it for payment of its compensation for all services to be performed by it as Agent under this Agreement have been made. The Agent expressly waives any.lien upon or claim against the moneys and investments ........- _..... .._...... ............ -... ....._.... in the Escrow Account. 6. If at any time it shall appear to the Agent that the money in the Escrow Account will not be sufficient to make any payment due to the registered owners of any of the Refunded 2 Bonds or Refunding Bonds,the Agent shall immediately notify the Issuer. Upon receipt of such notice the Issuer shall forthwith transmit to the Agent for deposit in the Escrow Account from moneys on hand and legally available therefor, such additional moneys as may be required to make any such payment, and the Issuer recognizes its obligation to levy ad valorem taxes on all taxable property in the Issuer to the extent required to produce the moneys necessary for this purpose. 7. Within 60 days following the close of each fiscal year and close of the Escrow Account,the Agent shall submit to the Issuer a report covering all money it shall have received and all.payments it shall have made or caused to be made hereunder during the preceding fiscal year or portion thereof. 8. It is recognized that title to the federal securities and money held in the Escrow Account from time to time shall remain vested in the Issuer but subject always to the prior charge and lien thereon of this Agreement and the use thereof required to be made by the provisions of this Agreement. The Agent shall hold all such money and obligations in a special trust fund and account separate and wholly segregated from all other funds and securities of the Agent or deposited therein. It is understood and agreed that the responsibility of the Agent under this Agreement is limited to the safekeeping and segregation of the moneys and securities deposited with it in the Escrow Account, and the collection of and accounting for the principal and interest payable with respect thereto. 9. This Agreement is made by the Issuer for the benefit of the holders of the Refunded Bonds under and pursuant to Minnesota Statutes, Section 475.67, and is not revocable by the Issuer, and the investments and other funds deposited in the Escrow Account and all income therefrom have been irrevocably appropriated for the payment of outstanding principal of the Refunded Bonds on the Crossover Date, and to pay interest on the portion of the Refunding Bonds prior to and including the Crossover Date, in accordance with this Agreement. This Agreement may not be amended except to(i) sever any clause herein deemed to be illegal, (ii) provide for the reinvestment of funds or the substitution of securities as permitted by Section 4 hereof or(iii) cure any ambiguity or correct or supplement any provision herein which may be inconsistent with any other provision,provided that the Agent shall determine that any such amendment shall not adversely affect the owners of the Refunded Bonds or Refunding Bonds. In the event an amendment to this Agreement is proposed to be made pursuant to this Section 9, prior notice shall be given by first class mail,postage prepaid,to the following organization at the following address(or such other address as may be provided by the addressee) and shall be deemed effective upon receipt: Moody's Municipal Rating Desk/Refunded Bonds, 99 Church Street,New York,New York 1.0007. 10. This Agreement shall be binding upon and shall inure to the benefit of the Issuer and the Agent and their respective successors and assigns. In addition, this Agreement shall constitute a third party beneficiary contract for the benefit of the holders of the Refunding Bonds ........................................and..Refunded.B.onds,..as.their._interests-may...appear. Said..third.party.b.enefi.ciar e.s shall.be............................................................ ........................... entitled to enforce performance and observance by the Issuer and the Agent of the respective agreements and covenants herein contained as fiilly and completely as if said third party beneficiaries were parties hereto. 3 11. Upon merger or consolidation of the Agent, if the resulting corporation is a bank or trust company authorized by law to conduct such business,such corporation shall be authorized to act as successor Agent. Upon the resignation of the Agent, which shall be communicated in writing to the Issuer,or in the event the Agent becomes incapable of acting hereunder, the Issuer reserves the power to appoint a successor Agent. No resignation shall become effective until the appointment of a successor Agent by the Issuer. .........._.. 4 IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed by their duly authorized officers as of August 1,2012. CITY OF LAKE ELMO, MINNESOTA By: Mayor And: City Administrator [Signature Page to Escrow Agreement) ......... ........ .......... ..__..................... .... ... ....... .................................................. 5 NORTHLAND TRUST SERVICES, INC., as Agent By: Its: [Signature Page to Escrow Agreement] 6 EXHIBIT A ESCROW ACCOUNT CASH RECEIPTS FROM SLGS ALLOCATED TO THE REFUNDED BONDS PURCHASED WITH REFUNDING BOND PROCEEDS AND PROOF OF YIELD [insert relevant exhibit from Verification Report .................................................................................. ........................ EXHIBIT B ESCROW ACCOUNT CASH FLOW [insert relevant exhibit from."verification Report] ........................... ..__...... ......... ........ EXHIBIT C $4,600,000 General Obligation Water Revenue Bonds, Series 2005A Dated August 1,2005 City of Lake Elmo,Minnesota NOTICE IS HEREBY GIVEN THAT there have been called for redemption and prepayment on December 1, 2015, all outstanding Bonds of the above-referenced issue maturing on December 1 in the following years, principal amounts and having the interest rates and CUSIP numbers listed below: Maturity Amount Rate CUSIP No. 2017 $ 300,000 3.850% 509624 HA 3 2019 350,000 4.000 509624 HC 9 2021 350,000 4.125 509624 HE 5 2024 800,000 4.250 509624 HH 8 2027 925,000 4.300 509624 H.L 9 2030 1,050,000 4.375 509624 HP 0 The Bonds will be redeemed at a price of 100% of their principal amount plus accrued interest to the date of redemption. Holders of the Bonds should present them for payment to Northland Trust Services, Inc. at the following address:: Northland Trust Services, Inc. 45 South Seventh Street, Suite 2000 Minneapolis,MN 55402 In compliance with the Interest and Dividend Compliance Act of 1983 and Broker Reporting Requirements,the redeeming institutions are required to withhold 31%of the principal amount of your holdings redeemed unless they are provided with your social security number or federal employer identification number,properly certified. This requirement is fulfilled through the submitting of a W-9 Form,-which may be obtained at a bank or other financial institution. Additional information may be obtained from the undersigned or from Northland Securities, Inc., 45 South 7"' Street, Suite 2000, Minneapolis, Minnesota (612-851-5900), financial consultant to the City. Dated: , 20_. BY ORDER OF THE CITY COUNCIL OF THE CITY OF LAKE ELMO, MINNESOTA .... .................................................................................................................................................................................................................... /s/ City Administrator w TI I F CITY C7F " LADE ELMO MAYOR AND COUNCIL COMMUNICATION DATE: July 17, 2012 CONSENT ITEM##: 9 MOTION AGENDA ITEM: Authorization for sale of$865,000 General Obligation Improvement Bonds, Series 2012B SUBMITTED BY: Cathy Bendel, Finance Director THROUGH: Dean Zuleger, City Administrator REVIEWED BY: Dean Zuleger, City Administrator SUMMARY AND ACTION REQUESTED: The City Council is respectfully asked to consider Resolution 2012-36 awarding the sale, prescribing the form and details and providing for the payment of the$865,000 General Obligation Improvement Bonds, Series 2012B. BACKGROUND INFORMATION: The City Council authorized the issuance and sale of the $865,000 General Obligation Improvement Bonds, Series 2012B on June 19, 2012. The attached paperwork needs to be completed to complete that transaction. RECOMMENDATION: It is recommended that the City Council approve processing the necessary paperwork related to $865,000 General Obligation Improvement Bonds, Series 2012B. ATTACHMENTS: 1. Resolution 2012-36 2. Finance Plan Summary 2012B ................._......_....................................................................................... CERTIFICATION OF MINUTES RELATING TO $4,090,000 GENERAL OBLIGATION WATER REVENUE CROSSOVER REFUNDING BONDS, SERIES 2012A Issuer: City of Lake Elmo, Minnesota Governing Body: City Council Kind,date, time and place of meeting: A regular meeting held July 17, 2012, at 7:00 o'clock p.m. at the City Hall, Lake Elmo,Minnesota. Members present: Members absent: Documents Attached: Minutes of said meeting(including): RESOLUTION NO. 2012-36 RESOLUTION RELATING TO$4,090,000 GENERAL OBLIGATION WATER REVENUE CROSSOVER REFUNDING BONDS, SERIES 2012A; AUTHORIZING THE ISSUANCE, AWARDING SALE, PRESCRIBING THE FORM AND DETAILS AND PROVIDING FOR THE PAYMENT THEREOF I, the undersigned, being the duly qualified and acting recording officer of the public corporation issuing the bonds referred to in the title of this certificate, certify that the documents attached hereto, as described above, have been carefully compared with the original records of said corporation in my legal custody, from which they have been transcribed; that said documents are a correct and complete transcript of the minutes of a meeting of the governing body of said corporation, and correct and complete copies of all resolutions and other actions taken and of all documents approved by the governing body at said meeting, so far as they relate to said bonds; and that said meeting was duly held by the governing body at the time and place and was attended.throughout by the members indicated above,pursuant to call and notice of such meeting given as required by law. WITNESS my hand officially as such recording officer on July, 2012. ..........City Administrator....... ....._................._... .................................._............. ............._............_. It was reported that (__) sealed proposals for the purchase of$865,000 General Obligation Improvement Bonds, Series 2012B were received prior to 10:30 a.m. on July 17, 2012, pursuant to the Official Statement distributed to potential purchasers of the Bonds by Northland Securities, Inc.,financial advisor to the City. The proposals have been publicly opened,read and tabulated and were found to be as follows: (See Attached) ............................................................................ 2 Councilmember introduced the following resolution and moved its adoption,which motion was seconded by Councilmember RESOLUTION NO. RESOLUTION AUTHORIZING ISSUANCE,AWARDING SALE, PRESCRIBING THE FORM AND DETAILS AND PROVIDING FOR THE PAYMENT OF$865.000 GENERAL OBLIGATION IMPROVEMENT BONDS,SERIES 2012B BE IT RESOLVED by the City Council, City of Lake Elmo, Minnesota (the City), as follows: SECTION 1. AUTHORIZATION AND SALE. 1.01. Authorization. This Council,by resolution duly adopted on June 19, 2012, authorized the issuance and sale on the date hereof of its General Obligation Improvement Bonds, Series 2012B (the Bonds),pursuant to Minnesota Statutes, Chapters 429 and 475. Proceeds of the Bonds will be.used to finance improvement projects in the City(the Project). 1.2. Sale and Award. Pursuant to the Notice of Sale and the Official Statementt prepared on behalf of the City by Northland Securities, Inc., sealed proposals for the purchase of the Bonds were received at or before the time specified for receipt thereof. The proposals have been opened,publicly read and considered and the purchase price,interest rates and net interest cost under the terms of each proposal have been determined. The most favorable proposal received is that of ,in (the "Purchaser"), to purchase the Bonds at a price of$ plus accrued interest on all Bonds to the day of delivery and payment, on the further terms and conditions hereinafter set forth. The sale of the Bonds is hereby awarded to the Purchaser, and the Mayor and City Administrator are hereby authorized and directed to execute a contract on behalf of the City for the sale of the Bonds in accordance with the Notice of Sale. The good faith deposit of the Purchaser shall be retained and deposited by the City until the Bonds have been delivered and shall be deducted from the purchase price paid at settlement. SECTION 2. BOND TERMS: REGISTRATION• EXECUTION AND DELIVERY. 2.01. Issuance of Bonds. All acts, conditions and things which are required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed precedent to and in the valid issuance of the Bonds having been done,now existing, having happened and having been performed, it is now necessary for the City Council to _................_................_......_. ......_establish the form and terms of the Bonds,to provide security therefor and to issue the Bonds forthwith. _.............. _........._....._.._......__. ..._............. 2.02. Maturities, Interest Rates; Denominations and Payment. The Bonds shall be originally dated as of August 1, 2012, shall be in the denomination of$5,000 each, or any integral.multiple thereof, of single maturities, shall mature on February 1 in the years and amounts stated below, and shall bear interest from their date of issue until paid or duly called for redemption, at the annual rates set forth opposite such years and amounts, as follows: Year Amount Rate Year Amount Rate 2014 $75,000 2019 $85,000 201.5 80,000 2020 90,000 2016 85,000 2021 90,000 2017 85,000 2022 95,000 2018 85,000 2023 95,000 [REVISE MATURITY SCHEDULE FOR ANY TERM BONDS] The Bonds shall be issuable only in fully registered form. The interest thereon and,upon surrender of each Bond,the principal amount thereof, shall be payable by check or draft issued by the Registrar described herein,provided that,so long as the Bonds are registered in the name of a securities depository, or a nominee thereof, in accordance with Section.2.08 hereof,principal and interest shall be payable in accordance with the operational arrangements of the securities depository. 2.03. Dates and Interest Payment Dates. Upon initial delivery of the Bonds pursuant to Section 2.07 and upon any subsequent transfer or exchange pursuant to Section 2.06,the date of authentication shall be noted on each Bond so delivered, exchanged or transferred. Interest on the Bonds shall be payable on February 1. and August 1 in each year, commencing August 1, 2013, each such date being referred to herein as an Interest Payment Date,to the persons in whose names the Bonds are registered on the Bond Register, as hereinafter defined, at the Registrar's close of business on the fifteenth day of the month immediately preceding the Interest Payment Date, whether or not such day is a business day. Interest shall be computed on the basis of a 360-day year composed of twelve 30-day months. 2.04. Redemption. Bonds maturing in 2021 and later years shall be subject to redemption and prepayment at the option of the City, in whole or in part, in such order of maturity dates as the City may select and,within a maturity,by lot as selected by the Registrar (or, if applicable,by the bond depository in accordance with its customary procedures)in multiples of$5,000, on February 1,2020, and on any date thereafter, at a price equal to the principal amount thereof and accrued interest to the date of redemption. The City Administrator shall cause notice of the call for redemption thereof to be published if and as required by law, and at least thirty and not more than 60 days prior to the designated redemption date, shall cause notice of call for redemption to be mailed,by first class mail, to the registered holders of any Bonds to be redeemed at their addresses as they appear on the bond register described in Section 2.06 hereof,but no defect in or failure to give such mailed notice of redemption shall affectt the validity of proceedings for the redemption of any Bond not affected by such.defect or failure. .......Official notice-of redemption having been given as aforesaid;the Bonds or portions.of.Bonds so....... .. .......................... to be redeemed shall,on the redemption date,become due and payable at the redemption price therein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon partial 2 redemption of any Bond, a new Bond or Bonds will be delivered to the owner without charge, representing the remaining principal amount outstanding. [COMPLETE THE FOLLOWING PROVISIONS IF THERE ARE TERM BONDS- ADD ADDITIONAL PROVISIONS IF THERE ARE MORE THAN TWO TERM BONDS] [Bonds maturing on February 1, 20 and 20 (the Term Bonds)shall be subject to mandatory redemption prior to maturity pursuant to the sinking fund requirements of this Section 2.04 at a redemption price equal to the stated principal amount thereof plus interest accrued thereon to the redemption date,without premium. The Registrar shall select for redemption,by lot or other manner deemed fair, on February 1 in each of the following years the following stated principal amounts of such Bonds: Term Bonds Maturing February 1, 20--- Year Principal A Mount The remaining$ stated principal amount of such Bonds shall be paid at maturity on February 1, 20 Term Bonds Maturing December 1, 20— Year Principal Amount The remaining$ stated principal amount of such Bonds shall be paid at maturity on February 1, 20 Notice of redemption shall be given as provided in the preceding paragraph.] 2.05. Appointment of Initial Registrar. The City hereby appoints Northland Trust Services, Inc., Minneapolis,Minnesota, as the initial bond registrar,transfer agent and paying agent(the Registrar). The Mayor and City Administrator are authorized to execute and deliver, on behalf of the City, a contract with the Registrar. Upon merger or consolidation of the Registrar with another corporation,if the resulting corporation is a bank or trust company organized under the laws of the United States or one of the states of the United States and authorized by law to conduct such business, such corporation shall be authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove the Registrar, effective-upon not less than-thirty days'written-notice.and upon.the.appointment..and._acepptance.. of a successor Registrar,in which event the predecessor Registrar shall deliver all cash and Bonds in its possession to the successor Registrar and shall deliver the Bond Register to the successor Registrar. 2.06. Registration. The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: (a) Register. The Registrar shall keep at its principal corporate trust office a register(the Bond Register)in which the Registrar shall provide for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered,transferred or exchanged. The term Holder or Bondholder as used herein shall mean the person(whether a natural person, corporation, association,partnership, trust, governmental unit,or other legal entity)in whose name a Bond is registered in the Bond Register. (b) Transfer of Bonds. Upon surrender for transfer of any Bond duly endorsed by the Holder thereof or accompanied by a written instrument of transfer,in form satisfactory to the Registrar, duly executed by the Holder thereof or by an attorney duly authorized by the Holder in writing, the Registrar shall authenticate and deliver,in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may,however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until such interest payment date. (c) Exchange of Bonds. At the option of the Holder of any Bond in a denomination greater than$5,000,such Bond may be exchanged for other Bonds of authorized denominations, of the same maturity and a like aggregate principal amount, upon surrender of the Bond to be exchanged at the office of the Registrar. Whenever any Bond is so surrendered for exchange the City shall execute and the Registrar shall authenticate and deliver the Bonds which the Bondholder making the exchange is entitled to receive. (d) Cancellation. All Bonds surrendered for payment,transfer or exchange shall be promptly canceled by the Registrar and thereafter disposed of as directed by the City. (e) lmproper or Unauthorized Transfer. When any Bond is presented to the Registrar for transfer,the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar shall incur no liability for the refusal, in good faith, to make transfers which it, in its judgment,deems improper or unauthorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name any Bond is at any time registered in the Bond.Register as the absolute owner of the Bond,whether the Bond shall be overdue or not, for the purpose of receiving payment of or on account of the principal of and interest on the Bond and for ...................... .. ............... all._..other.purposes.,_.and.._all payments_made to or upon the order of such Holder shall be _....._..._.. valid and effectual to satisfy and discharge the liability upon such Bond to the extent pf.... ................ the sum or sums so paid. 4 (g) Taxes, Fees and Charges. For every transfer or exchange of Bonds (except for an exchange upon a partial redemption of a Bond),the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. (h) Mutilated, Lost, Stolen or Destroyed Bonds. In case any Bond shall become mutilated or be destroyed, stolen or lost,the Registrar shall deliver a new Bond of like amount,number,maturity date and tenor in exchange and substitution.for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any Bond destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith, and, in the case of a Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance and amount satisfactory to it, in which both the City and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be canceled by it and evidence of such cancellation shall be given to the City. If the mutilated,destroyed, stolen or lost Bond has already matured or been called for redemption in accordance with its terms it shall not be necessary to issue a new Bond prior to payment. (i) Authenticating Agent. The Registrar is hereby designated authenticating agent for the Bonds, within the meaning of Minnesota Statutes, Section 475.55, Subdivision 1, as amended. 0) Valid Obligations. All Bonds issued upon any transfer or exchange of Bonds shall be the valid obligations of the City, evidencing the same debt, and entitled to the same benefits under this Resolution as the Bonds surrendered upon such transfer or exchange. 2.07. Execution,Authentication and Delivery. The Bonds shall be prepared under the direction of the City Administrator and shall be executed on behalf of the City by the signatures of the Mayor and the City Administrator, provided that the signatures may be printed, engraved or lithographed facsimiles of the originals. In case any officer whose signature or a facsimile of whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until the date of delivery of such Bond. Notwithstanding such execution,no Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication on the Bond, substantially in the form provided in Section 2.09,has been executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on any Bond shall be conclusive evidence that it has been duly authenticated and. ....................delivered under this-Resolution. When the Bonds have been.prepared,executed..and........................................................................................................ _... authenticated, the City Administrator shall deliver them to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore executed, and the Purchaser shall not be obligated to see to the application of the purchase price. 5 2.08. Securities Depository. (a) For purposes of this section the following terms shall have the following meanings: "Beneficial Owner" shall mean, whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant, or such person's subrogee. "Cede& Co."shall mean Cede& Co., the nominee of DTC, and any successor nominee of DTC with respect to the Bonds. "DTC" shall mean The Depository Trust Company of New York,New York. "Participant" shall mean any broker-dealer,bank or other financial institution for which DTC holds Bonds as securities depository. "Representation Letter" shall mean the Representation Letter pursuant to which the City agrees to comply with DTC's Operational Arrangements. (b) The Bonds shall be initially issued as separately authenticated fully registered bonds, and one Bond shall be issued in the principal amount of each stated maturity of the Bonds. Upon initial issuance,the ownership of such Bonds shall be registered in the bond register in the name of Cede &Co., as nominee of DTC. The Registrar and the City may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal of or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed,if any, giving any notice permitted or required to be given to registered owners of Bonds under this resolution,registering the transfer of Bonds, and for all other purposes whatsoever, and neither the Registrar nor the City shall be affected by any notice to the contrary. Neither the Registrar nor the City shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any Participant, or any other person which is not shown on the bond register as being a registered owner of any Bonds,with respect to the accuracy of any records maintained by DTC or any Participant, with respect to the payment by DTC or any Participant of any amount with respect to the principal of or interest on the Bonds,with respect to any notice which is permitted or required to be given to owners of Bonds under this resolution, with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or with respect to any consent given or other action taken by.DTC as registered owner of the Bonds. So long as any Bond is registered in the name of Cede&Co., as nominee of DTC, the Registrar shall pay all principal of and interest on such Bond, and shall give all notices with respect to such Bond,only to Cede& Co. in accordance with DTC's Operational Arrangements, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and interest on the Bonds to the extent of the sum.or sums so paid. No person other than DTC shall receive an authenticated Bond for each separate stated maturity--evidencing the obligation_of_the_City__to.. ake.payents ofprincipal and interest.. .......................................... Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede& Co., the Bonds will be transferable to such new nominee in accordance with paragraph(e)hereof. 6 (c) In the event the City determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bonds in the form of bond certificates, the City may notify DTC and the Registrar,whereupon DTC shall notify the Participants of the availability through DTC of Bonds in the form of certificates. In such event,the Bonds will be transferable in accordance with paragraph(e)hereof. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and the Registrar and discharging its responsibilities with respect thereto under applicable law. In such event the Bonds will be transferable in accordance with paragraph(e) hereof. (d) The execution and delivery of the Representation Letter to DTC,if not previously filed with DTC,by the Mayor or City Administrator is hereby authorized and directed. (e) In the event that any transfer or exchange of Bonds is permitted under paragraph(b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this resolution. In the event Bonds in the form of certificates are issued to owners other than Cede& Co.,its successor as nominee for DTC as owner of all the Bonds, or another securities depository as owner of all the Bonds,the provisions of this resolution shall also apply to all matters relating thereto, including, without limitation, the printing of such Bonds in the form of bond certificates and the method of payment of principal of and interest on such Bonds in the form of bond certificates. 2.09. Form of Bonds. The Bonds shall be prepared in substantially the following form: UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF WASHINGTON CITY OF LAKE ELMO GENERAL OBLIGATION IMPROVEMENT BOND, SERIES 2012E No. R- $ Interest Rate Maturity Date Date of Original Issue CUSIP No. % February 1, 20_ August 1, 2012 REGISTERED OWNER: CEDE&CO. PRINCIPAL AMOUNT: THOUSAND DOLLARS CITY OF LAKE ELMO, State of Minnesota(the City) acknowledges itself to be indebted and for value received hereby promises to pay to the registered owner specified above, or registered assigns,the principal amount specified above on the maturity date specified above and promises to pay interest thereon from the date of original issue specified above or from the 7 most recent Interest Payment Date(as hereinafter defined)to which interest has been paid or duly provided for, at the annual interest rate specified above,payable on February 1 and August 1 in each year, commencing August 1,2013 (each such date, an Interest Payment Date), all subject to the provisions referred to herein with respect to the redemption of the principal of this Bond before maturity. The interest so payable on any Interest Payment Date shall be paid to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a business day) of the calendar month immediately preceding the Interest Payment Date. Interest hereon shall be computed on the basis of a 360-day year composed of twelve 30-day months. The interest hereon and,upon presentation and surrender hereof at the principal office of the Registrar described below,the principal hereof are payable in lawful money of the United States of America by check or draft drawn on Northland Trust Services, Inc., Minneapolis,Minnesota, as bond registrar,transfer agent and paying agent, or its successor designated under the Resolution described herein(the Registrar). For the prompt and full payment of such principal and interest as the same respectively become due, the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. This Bond is one of an issue(the Bonds)in the aggregate principal amount of$865,000 issued pursuant to a resolution adopted by the City Council on July 17, 2012 (the Resolution),to finance various improvement projects in the City and is issued pursuant to and in full conformity with the Constitution and laws of the State of Minnesota thereunto enabling, including Minnesota Statutes, Chapters 429 and 475. The Bonds are issuable only in fully registered form, in the denomination of$5,000 or any integral multiple thereof, of single maturities. Bonds maturing in 2021 and later years shall be subject to redemption and prepayment at the option of the City, in whole or in part, in such order of maturity dates as the City may select and, within a maturity,by lot as selected by the Registrar(or,if applicable,by the bond depository in accordance with its customary procedures) in multiples of$5,000, on February 1, 2020, and on any date thereafter, at a price equal to the principal amount thereof and accrued interest to the date of redemption. The City shall cause notice of the call for redemption thereof to be published if and as required by law, and at least thirty and not more than 60 days prior to the designated redemption date, shall cause notice of call for redemption to be mailed,by first class mail,to the registered holders of any Bonds, at the holders' addresses as they appear on the bond register maintained by the Registrar,but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date,become due and payable at the redemption price therein specified and from and after such date(unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon partial redemption of any Bond, a new Bond or Bonds will be delivered to the owner without charge, representing the remaining principal amount outstanding. [COMPLETE THE FOLLOWING PROVISIONS IF THERE ARE TERM BONDS-- D' ITIONAL PROVISIONS-IF THERE ARE MORE THAN TWO TERM BONDS]......_ [Bonds maturing in the years 20 and 20 shall be subject to mandatory redemption, at a redemption price equal to their principal amount plus interest accrued thereon to 8 the redemption date, without premium, on February 1 in each of the years shown below, in an amount equal to the following principal amounts: Term Bonds February in 20-- Tenn Bonds February in 20-- Sinking Fund Aggregate Sinking Fund Aggregate Payment Date Principal Amount Payment Date Principal Amount Notice of redemption shall be given as provided in the preceding paragraph.] As provided in the Resolution and subject to certain limitations set forth therein,this Bond is transferable upon the books of the City at the principal office of the Registrar,by the registered owner hereof in person or by the owner's attorney duly authorized.in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner or the owner's attorney, and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City will.cause a new Bond or Bonds to be issued in the name of the designated transferee or registered owner, of the same aggregate principal amount,bearing interest at the same rate and maturing on the same date; subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to any such.transfer or exchange. The Bonds have been designated as "qualified tax-exempt obligations"pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. The City and the Registrar may deem and treat the person.in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment as herein provided and for all other purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. Notwithstanding any other provisions of this Bond, so long as this Bond is registered in the name of Cede&Co., as nominee of The Depository Trust Company,or in the name of any other nominee of The Depository Trust Company or other securities depository,the Registrar shall pay all principal of and interest on this Bond, and shall give all notices with respect to this Bond,only to Cede &Co. or other nominee in accordance with the operational arrangements of The Depository Trust Company or other securities depository as agreed to by the City. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist,to happen and to be performed prior to and in the issuance of this Bond in order to make it_a...valid and binding_general_obligation of the City in accordance with its terms,have been done, do exist,have happened and have been performed as so required;that,prior to the issuance - - hereof, the City Council has by the Resolution covenanted and agreed to levy ad valorem taxes upon all taxable property in the City and special assessments upon property specially benefited by the local improvements financed by the Bonds, which taxes and special assessments will be 9 collectible for the years and in amounts sufficient to produce sums not less than five percent in excess of the principal of and interest on the Bonds when due,and has appropriated such special assessments and taxes to its General Obligation Improvement Bonds, Series 2012B Bond Fund for the payment of principal and interest; that if necessary for payment of principal and interest, additional ad valorem taxes are required to be levied upon all taxable property in the City, without limitation as to rate or amount and that the issuance of this Bond,together with all.other indebtedness of the City outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the City to exceed any constitutional or statutory limitation of indebtedness. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon shall have been executed by the Registrar by manual signature of one of its authorized representatives. IN WITNESS WHEREOF,the City has caused this Bond to be executed on its behalf by the facsimile signatures of its Mayor and City Administrator. CITY OF LAKE ELMO,MINNESOTA (facsimile signature—Mayor) (facsimile signature—City Administrator) CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. Date of Authentication: NORTHLAND TRUST SERVICES, INC., as Registrar By Authorized Representative The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to the applicable laws or regulations: TEN COM - as tenants in common UTMA ................... as Custodian for ..................... ................. .. ust............._................ ........................................... ...(Minor) .......... TEN ENT- as tenants by the entireties under Uniform Transfers to Minors Act .............. (State) JT TEN-- as joint tenants with right of survivorship and not as tenants in common. 10 Additional abbreviations may also be used. ASSIGNMENT For value received,the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and does hereby irrevocably constitute and appoint attorney to transfer the said Bond on the books kept for registration of the within Bond,with full power of substitution in the premises. Dated: NOTICE: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever. Signature Guaranteed: Signature(s)must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in STAMP or such other "signature guaranty program" as may be determined by the Registrar in addition to or in substitution for STAMP,all in accordance with the Securities Exchange Act of 1934, as amended. PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: [end of bond form) SECTI4K3. GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 20-12B CONSTRUCTION FUND. There is hereby established on the official books and records of the City a separate fund designated the General Obligation Improvement Bonds, Series 2012B Construction.Fund (the Construction Fund). To the Construction Fund there shall be credited from the proceeds of the Bonds, exclusive of unused discount, accrued and capitalized interest,if 11 any, an amount equal to the estimated cost of the Project. There shall also be credited to the Construction Fund all special assessments collected with respect to the Project until all costs of the Project have been fully paid. All proceeds of the Bonds deposited in the Construction Fund will be expended solely for the payment of the costs of the Project. To the extent required by Minnesota Statutes, Section 429.091,subdivision 4,the City shall maintain a separate account within the Construction Fund to record expenditures for each improvement. The City Administrator shall maintain the Construction Fund until all costs and expenses incurred by the City in connection with the construction of the improvements have been paid. All special assessments on hand in the Construction Fund when terminated or thereafter received, and any Bond proceeds not so transferred, shall be credited to the General Obligation Improvement Bonds, Series 2012B Bond Fund. SECTION 4. GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 2012B BOND FUND. There is hereby established on the official books and records of the City a separate fiend designated the General Obligation Improvement Bonds, Series 2012B Bond Fund(the Bond Fund). Into the Bond Fund shall be paid (a) the amounts specified in Section 3 above, (b) capitalized interest, accrued interest and unused bond discount,if any,received from the Purchaser upon delivery of the Bonds, (c) any special assessments and.taxes collected pursuant to Sections S or 6 hereof, except as otherwise provided in Section 3 hereof and(d) any other fiends appropriated by the City Council for the payment of the Bonds. The money on hand in the Bond Fund from time to time shall be used only to pay the principal of and interest on the Bonds. If the balance on hand in the Bond Fund is at any time insufficient to pay principal and interest then due on the Bonds, such amounts shall be paid from other money on hand in other funds of the City, which other funds shall be reimbursed therefor when sufficient money becomes available in the Bond Fund. The Bond Fund shall be maintained until the City has paid,or made provision for the payment of, all of the principal of and interest on the Bonds. There are hereby established two accounts in the Bond Fund, designated as the"Debt Service Account" and the "Surplus Account." There shall initially be deposited into the Debt Service Account upon the issuance of the Bonds the amount set forth in (b) above. Thereafter, during each Bond Year (i.e., each twelve month period commencing on February 1 and ending on the following January.31), as monies are received into the Bond Fund, the City Administrator shall first deposit such monies into the Debt Set vice Account until an amount has been appropriated thereto sufficient to pay all principal and interest due on the Bonds through the end of the Bond Year. All subsequent monies received in the Bond Fund during the Bond Year shall be appropriated to the Surplus Account. If at any time the amount on hand in the Debt Service Account is insufficient for the payment of principal and interest then due,the City Administrator shall transfer to the Debt Service Account amounts on hand in the Surplus Account to the extent necessary to cure such deficiency. Investment earnings (and losses) on amounts from.time to time held in the Debt Service Account and Surplus Account shall be credited or charged to said accounts. ...... _If the aggregate balance in the Bond Fund-is-at any time insufficient to pay-all.interest ..._... . ............. ..... and principal then due on all Bonds payable therefrom, the payment shall be made from any fund of the City which is available for that purpose, subject to reimbursement from the Surplus Account in the Bond Fund when the balance therein.is sufficient, and the City Council covenants and agrees that it will each year levy a sufficient amount of ad valorem taxes to take care of any 12 accumulated or anticipated deficiency,which levy is not subject to any constitutional or statutory limitation. In order to ensure compliance with the Code and applicable Regulations (all as defined in Section 8.01 hereof),the Finance Director, upon allocation of any funds to the Bond Fund, shall ascertain the balance then on hand in the Bond Fund. If it exceeds the amount of principal and interest on the Bonds to become due and payable through the next following February 1,plus a reasonable carryover equal to 1/12th of the debt service due in the following bond year, the excess shall(unless an opinion is received from bond counsel stating that another use shall not interfere with the tax exemption of the bonds)be used to prepay or purchase Bonds,or be invested at a yield which does not exceed the yield on the Bonds calculated in accordance with Section 148 of the Code. SECTION 5. SPECIAL ASSESSMENTS. The City hereby covenants and agrees that, for the payment of the costs of the Project, the City has done or will do and perform all acts and things necessary for the final and valid levy of special assessments in an amount not less than 20%of the cost of the Project financed by the Bonds. The City estimates it has levied or will levy special assessments in the original aggregate principal amount of$300,000. It is estimated that the principal and interest on such special assessments will be levied beginning in 2012 and collected in the years 2013-22 in the amounts shown on Appendix I attached hereto. The principal of the special assessments shall be made payable in annual installments,with interest as established by this City Council in accordance with law on installments thereof from time to time remaining unpaid. In the event any special assessment shall at any time be held invalid with respect to any lot or tract of land, due to any error, defect or irregularity in any action or proceeding taken or to be taken by the City or by this City Council or by any of the officers or employees of the City, either in the making of such special assessment or in the performance of any condition precedent thereto,the City hereby covenants and agrees that it will forthwith do all such further things and take all such further proceedings as shall be required by law to make such special assessment a valid and binding lien upon said property. SECTION 6. PLEDGE OF TAXING POWERS. For the prompt and full payment of the principal of and interest on the Bonds as such payments respectively come due, the full faith, credit and unlimited taxing powers of the City shall be and are hereby irrevocably pledged. In order to produce aggregate amounts which,together with the collections of special assessments as set forth in Section 5, will produce amounts not less than 5%in excess of the amounts needed to meet when due the principal and interest payments on the Bonds, ad valorem taxes are hereby levied on all taxable property in the City. The taxes will be levied and collected in years and amounts shown on the attached levy computation. Said taxes shall be irrepealable as long as any of the Bonds are outstanding and unpaid,provided that the City reserves the right and power to reduce said levies in accordance with the provisions of Minnesota Statutes, Section 475.61. SECTION 7. DEFEASANCE. When all of the Bonds have been discharged as provided in this ......... _Secton;-a ...pledges;covenants-an -other rights-granted-by.thi.s..Resolution to.._the..Ho ders_o_......._e.............................................. Bonds shall cease. The City may discharge its obligations with respect to any Bonds which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full; or, if any Bond should not be paid when due,it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with 13 interest accrued from the due date to the date of such deposit. The City may also discharge its obligations with respect to any prepayable Bonds called for redemption on any date when they are prepayable according to their terms by depositing with the Registrar on or before that date an amount equal to the principal,interest and redemption premium,if any,which are then due, provided that notice of such redemption has been duly given as provided herein. The City may also at any time discharge its obligations with respect to any Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action,by depositing irrevocably in escrow, with the Registrar or with a bank or trust company qualified by law to act as an escrow agent for this purpose,cash or securities which are authorized by law to be so deposited for such purpose, bearing interest payable at such times and at such rates and maturing or callable at the holder's option on such dates as shall be required to pay all principal and interest to become due thereon to maturity or, if notice of redemption as herein required has been irrevocably provided for,to an earlier designated redemption date, provided, however, that if such deposit is made more than ninety days before the maturity date or specified redemption date of the Bonds to be discharged, the City shall have received a written opinion of Bond Counsel to the effect that such deposit does not adversely affect the exemption.of interest on any Bonds from federal income taxation and a written report of an accountant or investment banking firm verifying that the deposit is sufficient to pay when due all of the principal.and interest on the Bonds to be discharged on and before their maturity dates or earlier designated redemption date. SECTION 8. TAX COVENANTS,• ARBITRAGE MATTERS AND CONTINUING DISCLOSURE. 8.01. General Tax Covenant. The City agrees with the registered owners from time to time of the Bonds that it will not take, or permit to be taken by any of its officers, employees or agents, any action that would cause interest on the Bonds to become includable in gross income of the recipient under the Internal Revenue Code of 1986, as amended(the Code)and applicable Treasury Regulations(the Regulations), and agrees to take any and all actions within its powers to ensure that the interest on the Bonds will not become includable in gross income of the recipient under the Code and the Regulations. All proceeds of the Bonds deposited in the Construction Fund will be expended solely for the payment of the costs of the Project. The Project is and will be owned and maintained by the City and available for use by members of the general public on a substantially equal basis. The City shall not enter into any lease, management contract,use agreement, capacity agreement or other agreement with any non- governmental person relating to the use of the Project,or any portion thereof or security for the payment of the Bonds which might cause the Bonds to be considered "private activity bonds"or "private loan bonds"pursuant to Section 141 of the Code. 8.02. Arbitrage Certification. The Mayor and City Administrator being the officers of the City charged with the responsibility for issuing the Bonds pursuant to this Resolution, are authorized and directed to execute and deliver to the Purchaser a certificate in accordance with Section 148 of the Code, and applicable Regulations,,stating the facts, estimates and circumstances in exisferice on a ..ate of tme anct delivery-ofthe Bonds w nc make-it - - reasonable to expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be"arbitrage bonds"within the meaning of the Code and Regulations. 14 8.03. Arbitrage Rebate. It is hereby found that the City has general taxing powers,that no Bond is a"private activity bond"within the meaning of Section 141 of the Code,that 95%or more of the net proceeds of the Bonds are to be used for local governmental activities of the City, and that the aggregate face amount of all tax-exempt obligations (other than private activity bonds)issued by the City and all subordinate entities thereof during the year 2012 is not reasonably expected to exceed $5,000,000. Therefore,pursuant to Section 148(f)(4)(D) of the Code,the City shall not be required to comply with the arbitrage rebate requirements of paragraphs (2) and(3) of Section 148(f)of the Code. 8.04. Reimbursement. The City certifies that the proceeds of the Bonds will not be used by the City to reimburse itself for any expenditure with respect to the Project which the City paid or will have paid more than 60 days prior to the issuance of the Bonds unless,with respect to such prior expenditures,the City shall have made a declaration of official intent which complies with the provisions of Section 1.150-2 of the Regulations, provided that this certification shall not apply(i) with respect to certain de minimis expenditures, if any,with respect to the Project meeting the requirements of Section 1.1 50-2(f)(1) of the Regulations, or(ii)with respect to "preliminary expenditures"for the Project as defined in Section 1.150-2(f)(2)of the Regulations, including engineering or architectural expenses and similar preparatory expenses,which in the aggregate do not exceed 20%of the "issue price"of the Bonds. 8.05. .Oualified Tax-Exempt Obligations. The Bonds are hereby designated as"qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code relating to the disallowance of interest expense for financial institutions, and the City hereby finds that the reasonably anticipated amount of tax-exempt obligations which will be issued by the City and all subordinate entities during calendar year 2012 does not exceed $10,000,000. 8.06. Continuing Disclosure. (a) PMMse and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit the Purchaser and other participating underwriters in the primary offering of the Bonds to comply with amendments to Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934(17 C.F.R. § 240.15c2-12),relating to continuing disclosure(as in effect and interpreted from time to time, the Rule), which will enhance the marketability of the Bonds,the City hereby makes the following covenants and agreements for the benefit of the Owners (as hereinafter defined) from time to time of the Outstanding Bonds. The City is the only obligated person in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. if the City fails to comply with any provisions of this section, any person aggrieved thereby, including the Owners of any Outstanding Bonds,may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of any agreement or covenant contained in this section,including ............. .._........ .._an action for a writ of mandamus or specific performance. Direct indirect, consequential and unitive damages shall.riof be recoverable for ari_ default hereunder�tz�-the-extent permitted b P g y - p- y ...__...... law. Notwithstanding anything to the contrary contained herein,in no event shall a default under this section constitute a default under the Bonds or under any other provision of this resolution. As used in this section, Owner or Bondowner means, in respect of a Bond,the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial 15 Owner(as hereinafter defined)thereof,if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein,Beneficial. Owner means,in respect of a Bond, any person or entity which (i)has the power, directly or indirectly,to vote or consent with respect to, or to dispose of ownership of, such Bond(including persons or entities holding Bonds through nominees, depositories or other intermediaries),or(ii) is treated as the owner of the Bond for federal income tax purposes. (b) Information To Be Disclosed. The City will provide, in the main-ier set forth in subsection(c) hereof, either directly or indirectly through an agent designated by the City,the following information at the following times: (1) on or before 365 days after the end of each fiscal year of the City, commencing with the fiscal year ending December 31,2011,the following financial information and operating data in respect of the City(the Disclosure Information): (A) the audited financial statements of the City for such fiscal year,prepared in accordance with generally accepted accounting principles in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under Minnesota law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City,noting the discrepancies therefrom and the effect thereof, and certified as to accuracy and completeness in all material respects by the fiscal officer of the City; and (B) to the extent not included in the financial statements referred to in paragraph(A) hereof, the information for such fiscal year or for the period most recently available of the type contained in the Official Statement under headings: Economic and Financial Information, Summary of Debt and Debt Statistics and General Information—"Major Employers." Notwithstanding the foregoing paragraph,if the audited financial statements are not available by the date specified,the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within 10 days after the receipt thereof,the City shall provide the audited financial statements. Any or all of the Disclosure Information may be incorporated by reference, if it is updated as required hereby, from other documents,including official statements,which have been filed with the SEC or have been made available to the public on the Internet Web site of the Municipal Securities Rulemaking Board(MSRB). The City shall clearly identify in the Disclosure Information each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially ............... .. _-_.. changed or been discontinued,such'Disclosure Information need-no Ionger be provided ifthe- City includes in the Disclosure Information a statement to such effect;provided,however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City detennines that certain specified data regarding such replacement operations would be described in paragraph(2)hereof,then, from and after such 16 determination,the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this section is amended as permitted by this paragraph(b)(1) or subsection(d),then the City shall include in the next Disclosure Information to be delivered hereunder, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner not in excess of ten business days after the occurrence of the event, notice of the occurrence of any of the following events: (A) Principal and interest payment delinquencies; (B) Non-payment related defaults, if material; (C) Unscheduled draws on debt service reserves reflecting financial difficulties; (D) Unscheduled draws on credit enhancements reflecting financial difficulties; (E) Substitution of credit or liquidity providers, or their failure to perform; (F) Adverse tax opinions,the issuance by the Internal Revenue Service of proposed or final determinations of taxability,Notices of Proposed Issue(IRS Form 5701-TEB)or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (G) Modifications to rights of security holders,if material; (H) Bond calls,if material, and tender offers; (I) Defeasances; (J) Release, substitution, or sale of property securing repayment of the securities, if material; (K) Rating changes; (L) Bankruptcy, insolvency,receivership or similar event of the City; (M) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms,if material; and (N) Appointment of a successor or additional trustee or the change of naive of a trustee, if material. As used herein, for those events that must be reported if material, an event.is "material"if it is an event as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement,information disclosed hereunder or information generally available to the public. _....... Notwithstanding_the._foregoing._seAtcnce, an event is also "material"if it is an event that would be ...... .......... ......... deemed material or purposes of the purchase,holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. 17 For the purposes of the event identified in(L)hereinabove,the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information required under paragraph(b)(1) at the time specified thereunder; (B) the amendment or supplementing of this section pursuant to subsection(d), together with a copy of such amendment or supplement and any explanation provided by the City under subsection(d)(2); (C) the termination of the obligations of the City under this section pursuant to subsection(d); (D) any change in the accounting principles pursuant to which the financial statements constituting a portion of the Disclosure Information are prepared; and (E) any change in the fiscal year of the City. (c) Manner of Disclosure. (1) The City agrees to make available to the MSRB,in an electronic format as prescribed by the MSRB from time to time, the information described in subsection (b)- (2) All documents provided to the MSRB pursuant to this subsection(c) shall be accompanied by identifying information as prescribed by the MSRB from time to time. (d) Tenn. Amendments: Inte retation. (1) The covenants of the City in this section.shall remain in effect so long as any Bonds are Outstanding. Notwithstanding the preceding sentence,however,the obligations of the City under this section shall terminate and be without further effect as of any .......... .......... date on which the City delivers to the Registrar an opinion of Bond.Counsel to the effect that,because of legislative action or final judicial or-administrative actions-or - proceedings,the failure of the City to comply with the requirements of this section will not cause participating underwriters in the primary offering of the Bonds to be in violation of the Rule or other applicable requirements of the Securities Exchange 18 Act of 1934, as amended, or any statutes or laws successory thereto or amendatory thereof. (2) This section(and the form and requirements of the Disclosure Information)may be amended or supplemented by the City from time to time,without notice to (except as provided in paragraph (c)(3)hereof) or the consent of the Owners of any Bonds,by a resolution of this Council filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that: (i) such amendment or supplement(a)is made in connection with a change in circumstances that arises from a change in law or regulation or a change in the identity, nature or status of the City or the type of operations conducted by the City, or(b)is required by, or better complies with, the provisions of paragraph(b)(5) of the Rule; (ii)this section as so amended or supplemented would have complied with the requirements of paragraph(b)(5) of the Rule at the time of the primary offering of the Bonds, giving effect to any change in circumstances applicable under clause(i)(a) and assuming that the Rule as in effect and interpreted at the time of the amendment or supplement was in effect at the time of the primary offering; and(iii) such amendment or supplement does not materially impair the interests of the Bondowners under the Rule. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) This section is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so as to satisfy the requirements of paragraph (b)(5) of the Rule. SECTION 9. CERTIFICATION OF PROCEEDINGS. 9.01. Registration of Bonds. The City Administrator is hereby authorized and directed to file a certified copy of this resolution with the County Auditor of Washington County and obtain a certificate that the Bonds and the taxes levied pursuant hereto have been duly entered upon the Auditor's bond register. 9.02. Authentication of Transcript. The officers of the City and the County Auditor are hereby authorized and directed to prepare and furnish to the Purchaser and to Dorsey&Whitney LLP,Bond Counsel,certified copies of all proceedings and records relating to the Bonds and such other affidavits,certificates and information as may be required to show the facts relating to the legality and marketability of the Bonds, as the same appear from the books and records in ............................................................_................ ._._ ._ their custody and codfroI_or as otherwise known Mthem;and all such certi-feed.copies;affidavits._............................................ and certificates, including any heretofore furnished, shall be deemed representations of the City as to the correctness of all statements contained therein. 19 9.03. Official Statement. The Preliminary Official Statement relating to the Bonds, dated June ,2012,prepared and distributed by Northland Securities, Inc.,is hereby approved. Northland Securities, Inc. is hereby authorized on behalf of the City to prepare and deliver within seven business days from the date hereof a final Official Statement listing the offering price,the interest rates, selling compensation,delivery date,the underwriters and such other information relating to the Bonds required to be included in the Official Statement by Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934. The officers of the City are hereby authorized and directed to execute such certificates as may be appropriate concerning the accuracy, completeness and sufficiency of the Official Statement. 9.04. Authorization of Payment of Certain Costs of Issuance of the Bonds. The City authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses to the Bond Registrar on the closing date for further distribution as directed by Northland Securities, Inc. Upon vote being taken thereon, the following voted in favor thereof.- and the following voted against the same: whereupon the Resolution was declared duly passed and adopted. ........ .............................._..... ......... 20 APPENDIX I City of Lake Elmo, Minnesota General Obligation Improvement Bonds, Series 2012B Payments on Special Assessments Year of Collection Principal Interest Total 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ....................._.................................._ ................................... PROJECTED TAX LEVIES Year of Collection i&-V 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total $ .. ............. .... ...... ..... .. . WASHINGTON COUNTY AUDITOR'S CERTIFICATE AS TO REGISTRATION AND TAX LEVY The undersigned,being the duly qualified and acting County Auditor of Washington County,Minnesota,hereby certifies that there has been filed in my office a certified. copy of a resolution duly adopted on July 17, 2012,by the City Council of the City of Lake Elmo,Minnesota, setting forth the form and details of an issue of$865,000 General Obligation Improvement Bonds, Series 2012B, dated as of August 1, 2012 and levying taxes for their payment. I further certify that the issue has been entered on my bond register and the tax required by law for their payment has been levied and filed as required by Minnesota Statutes, Sections 475.61 to 475.63. WITNESS my Band officially this day of ,2012. Washington County Auditor (SEAL) t W-,, FINANCE PLAN SUMMARY FOR CITY OF LADE ELMO, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS., SERIES 2012B NORTHLAND SECURITIES 45 South 7fl,Street Suite 2000 Minneapolis,MN 55402 612-951-5900 800-851-2920 June 19,2012 its of Lake Elmo, Minnesota, $865,000 Ge-neral Obligation Improvement Bonds, Se es2017-B, FINANCING OVERVIEW This Finance Plan Summary describes the recommended terms and process for the issuance of the following bond issue: 0 $865,000 General Obligation Improvement Bonds,Series 2012B PURPOSE Proceeds from the Bonds will be used to fund public infrastructure improvements related to DeMontreville Highlands Area Street Improvement Project. The total cost of the improvements is estimated by the City to be $1,000,000. We understand the City intends to contribute available funds of approximately $185,000 to reduce the financing requirement to $865,000. A detailed illustration of the expected sources and uses of funds is illustrated below. Sources & Uses Dated 08/0112012 I Delivered 081011202 Sources Of Funds Par Amount of Bonds $865,000.00 Planned Issuer Equity contribution 185'omoo Total Sources $1,050,000.00 Uses Of Funds Total Underwriter's Discount (1.750%) 15,137.50 Costs ofIssuance 32,640.00 Deposit to Project Construction Fund 1,66500-66- Rounding Amount 2,222.50 Total Uses $1,050,000.00 STATUTORY AUTHORITY The Bonds will be issued pursuant to the authority of Mi-imescita Statutes Chapter 475 and Chapter 429. ........................................................................................................ Page 2 Nf 0 kTH L A N F) F(7 R I F S DEBT SERVICE STRUCTURE The debt structure reflects a level annual requirement over a term of ten years for the purpose of matching the term of the related assessments. The illustration below assumes an average interest rate on the bonds of 2.31%and an all inclusive cost of 3.30%. Debt Se -ice Se edule Date Principal Coupon interest Total P+i Fiscal Total 08/01/2012 - - _ 08/01/2013 - 17,632.50 17,632.50 - 02/01/2014 75,000.00 1.050%. 8,816.25 83,816.25 101,448.75 08/01/2014 - - 8,422.50 8,422.50 - 02/01./2015 80,000.00 1.250% 8,422.50 88,422.50 96,845.00 08/01/2015 - - 7,922.50 7,922.50 02/01/2016 85,000.00 1.450% 7,922.50 92,922.50 100,845.00 08/01/2016 - - 7,306.25 7,306.25 02/01/2017 85,000.00 1.700% 7,306.25 92,306.25 99,612.50 08/01/2017 - - _6,583.75 6,583.75 02/01/2018 �- 85,000.00- 1.950% 6,583.75 91,583.75 98,167.50- 09/01/2018 - - 5,755.00 5,755.00 - 02/01/2019 85,000.00 2.150% 5,755.00 90,755,00 96,510.00 08/01/2019 - - 4,841.25 4,841.25 - 02/01/2020 90,000.00 2,350% 4,841.25 94,841.25 99,682.50 OS%01�2020 - -� 3,783.75�W�___. __ 3.783.75 - 02/01/2021 90,000.00 2.550% 3,783.75 93,783.75 97,567.50 08/01/2021 - - 2,636.25 2,636.25 - 02/0112022 95,000.00 2.700% 2,636.25 97,636.25 1.00,272.50 08/01/2022 _ - - 1,353.75_ 1,353.75 02/01/2023 TT95,000.00 '.5�0'-� 1,353.75 ����96,353.75 97,707.50 Total $865,000.00 $123,658.75 $988,658.75 - .................................................._............................ ...._...................................................................._................................................................_...................... Page 3 NORTHLAND t SF,C, 1 i'i F. SECURITY& SOURCE OF REPAYMENT The Bonds will be a general obligation of the City of Lake Elmo. In addition, the City will pledge special assessments of approximately $300,000 to the repayment of the debt service. We understand the balance of the debt service will be paid from property tax collections. An illustration of the projected debt service fund cash flow is below. Revenue vs D/S Less: Scheduled Assessment Equals: Levy Collection Cate P+1 105%Levy Revenues* City Levy Year Year 02/0112013 - - - - 02/01/2014 101,448.75 106,521.19 37,739.33 68,781.85 2012 2013 02/01/2015 96,845.00 101,687.25 37,739.79 63,947.46 2013 2014 02/01/2016 100,845.00 105,887.25 37,739.80 68,147.45 2014 201.5 02/01/2017 99,612.50 _ 104,593.13 37,739.03 _66,854.09 2015 2016 02/01/2018 98,167.50 103,075.98 __- 37,739.47 65,336.40 T� 20i6 2017 02/01/2019 96.510.00 101,335.50 37,738.93 63,596.57 2017 2018 02/01/2020 99,682.50 104,666.63 37,739.20 66,927.42, 2018 2019 02/01/2021 97,567.50 102,445.88 37,739.93 64,705.94 2019 2020 02/01/2022 100.272.50 105,286.13 37,739.67 67,546.46 2020 2021 02/01/2023 97,707.50 102,592.88 37,739.91 64,852.96 2021 2022� Total $988,658.75 $1,038,091.69 $377,395.07 $660,696.62 "Assessments assume$300,000 fora period of 90years ata rate of4.30%(2%overthe rate on the Bonds.) ....... ................. .______................... ...................__..__.................................................................. Page 4 NORTHLAND S E C U RT'T1ES RELATED CONSIDERATIONS • Bank Oualification - We understand the City (in combination with. any subordinate taxing jurisdictions or debt issued in the City's name by 501c3 corporations) anticipates issuing $10.OM or less in tax-exempt debt during this calendar year. Therefore the bonds will be designated as "bank qualified" obligations pursuant to Federal Tax Law. • Arbitrage and Rebate - Because the City will have issued more than $5.OM in tax- exempt bonds in. calendar year 2012 the City will elect the Two Year Expenditure Exemption in order to exempt the Series 2012B proceeds from rebate. This exemption from rebate does not eliminate the need to comply with other arbitrage regulations governing the investment of bond proceeds and debt service funds. In particular, the City should become familiar with the requirements for maintaining a "bona fide" debt service fund. These requirements will be explained in the bond transcript following closing. • Continuing Disclosure - Because this issue is greater than $1,000,000, and the City's outstanding debt exceeds $10.OM, it is subject to the Securities and Exchange Commission's continuing disclosure requirements. Northland Securities is prepared to assist the City in this capacity. _..._._..__........................_.____._.................... _.__..___.._................... Page 5 NORTHLAND SECURIT .Eti SUMMARY OF RECOMMENDED TERMS L Type of Bond Sale Public Offering—Sealed Bids 2. Proposals Received Tuesday,July 17,201.2 @ 10:30 A.M. 3. Council Consideration Tuesday,July 17,2012 CA)7:00 P.M 4. Statutory Authority The Bonds are being issued pursuant to Minnesota Statutes 475 and 429. 5. Repayment Term The Bonds will mature annually each February 1, 2014 - 2023. Interest on the Bonds will be payable on August 1, 2013 and semiannually thereafter on each February 1 and August 1. 6. Security General Obligation of the City. In. addition, the City will pledge special assessment revenues collected from benefitted properties. 7. Prepayment Option The Bonds maturing February 1,2021—2023 will be subject to prepayment on February 1, 2020 at a price of par plus accrued interest. 8. Tax Status Dorsey and Whitney,LLP Minneapolis,Minnesota, 9, Credit Enhancement We believe a credit rating will be cost beneficial.. The City's general obligation debt is currently rated Aa2 by Moody's Investors Service. .. .................................................................. .................................................... Page 6 NORTHLAND SECURITIES �T i EE CITY OF /� L,C�� KE ELlV O MAYOR AND COUNCIL COMMUNICATION DATE: July 17, 2012 REGULAR ITEM##: 10 RESOLUTION 2012-34 AGENDA ITEM: 2012. Street& Water Quality Improvements—Approve Resolution Accepting Bids and Awarding Contract SUBMITTED BY: Jack Griffin, City Engineer THROUGH: Dean A. Zuleger, City Administrator REVIEWED BY: Ryan Stempski, Assistant City Engineer Cathy Bendel, Finance Director SUMMARY AND ACTION REQUESTED: The City Council is respectfully requested to consider approving a Resolution to accept bids and award a contract for the 2012 Street& Water Quality Improvements. BACKGROUND INFORMATION: The City Council approved the Plans and Specifications for the 2012 Street & Water Quality Improvements on June 5, 2012, and authorized staff to advertise the Project for bids. The Project was advertised on QuestCDN.com, Finance and Commerce, and in the Oakdale-Lake Elmo Review in accordance with the Minnesota Competitive Bidding requirements. STAFF REPORT: Bids were received, publicly opened, and read aloud on July 10, 2012. The City Engineer has prepared and attached the Tabulation of Bids and a Letter of Recommendation for the Award of the Contract. The City received three (3) bids for this project, with Hardrives, Inc. providing the lowest bid in the amount of $849,736.79. The Engineer's post-design construction cost estimate for the project was $840,247,45. Although the post-design construction cost is higher than the Feasibility Report estimate, the total project cost, and therefore proposed unit assessment amount, remains on budget due to a savings realized in engineering fees. The City Engineer is recommending that the Council award the contract to the lowest responsible bidder, Hardrives, Inc., as outlined in the attached letter. .._............R.ECOMMENDATION: Based upon the above staff report, it is recommended that the City Council consider approving Reso ution No. 2012-34, accepting the bids and awarding a-C htraa ................................... to Hardrives, Inc., for the 2012 Street & Water Quality Improvements project, in the amount of $849,736.79. The recommended motion for this action is as follows: "Move to approve Resolution No. 2012-34, Accepting the Bids and Awarding a Contract to Ilardrives, Inc.,for the 2012 Street and Water Quality Improvements Project, in the amount of $849,736.79." ATTACHMENTS: 1. Resolution No. 2012-34 2, Engineer's Letter of Recommendation and Tabulation of Bids ...... CITY OF LADE ELMO WASHINGTON COUNTY STATE OF MINNESOTA RESOLUTION NO. 2012-34 A RESOLUTION ACCEPTING THE FBI DS AND AWARDING A CONTRACT FOR THE 2012. STREET AND WATER QUALITY IMPROVEMENTS WHEREAS, pursuant to an advertisement for bids for the 2012 Street and Water Quality Improvements project, bids were received, opened, and tabulated according to law, and bids were received complying with the advertisement; and WHEREAS, bids were tabulated, checked and summarized to verify that all requirements of the submittals were met; and WHEREAS, the City Engineer reviewed the bids and. has provided a letter recommending the award of the contract to the lowest responsible bidder, Hardrives, Inc., in the amount of$849,736.79; NOW, THEREFORE, BE IT RESOLVED, 1. That the Mayor and City Clerk are hereby authorized and directed to enter into a Contract in the accordance with the above ordered Project, in the amount of the Contractor's lowest responsible bid, and according to the plans and specifications thereof approved by the City Council. 2. The City Clerk is hereby authorized and directed to return forthwith to all bidders the deposits made with their bids, except that the deposits of the successful bidder and the next two lowest bidders shall be retained until a contract has been signed. Date: , 2012 CITY OF LAKE ELMO By: Dean A. Johnston Mayor ATTEST: .. Dean.A..L..uleger..................... ........_........ . City Administrator Resolution No. 2012-34 1 CERTIFICATION 1 hereby certify that the foregoing Resolution is a true and correct copy of a resolution presented to and adopted by the Council of the City of bake Elmo at a duly authorized meeting thereof held on the 17th day of July 2012, as shown by the minutes of said meeting in my possession. Sandie Thone City Clerk (Seal) Resolution No. 2012-34 2 FOCUS ENGINEERING, inc. Cara Geheren,P.E. 651.300.4261 July 11,2012 Jack G riff In,P.E. 651.300.4264 Ryan Stempski,P.E. 651.300,4267 Honorable Mayor and City Council City of Lake Elmo, Minnesota 2012 Street&Water Quality lmpravements City of Lake Elmo, Minnesota FOCUS Project No, 2012.123 Dear Mayor and City Council: Bids for the 2012 Street and Water Quality Improvements were received on July 10, 2012,at 2:00 PM. A complete Tabulation of Bids is enclosed for your information. The Bid results are summarized as follows: Contractor Bid Hardrives, Inc. $949,736,79 T.A.Schifsky&Sons,Inc. $910,412.65 Valley Paving,Inc. $911,542.25 Engineer's Estimate $840,247AS We recommend that you award the Contract to the lowest responsible bidder, Hardrives, Inc.,for their bid of$849,736.79, Hardrives, Inc. is an experienced and qualified contractor for this type of project. They completed the 2009 and 2011 street improvement projects for the City of Lake Elmo. Sincerely, po n (Jack)W. 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FF- �:�Cw~wwwm, � O<i mbmU QJz� y,?..> CUS 2 U�.Gm mCC,m'' � � W w W 6 o. m U 4 gO V CqF"Z 2.7 f W Ixi:U° �w xw W 1nN W(7ITT 3:TTws 67C U,yF� 1nmu:v;!g,pzz6RFE-�� OQpm< Q ?i P w �: m¢ ¢Q p. ¢ F W W p p w ¢¢ g g�g m m U U U W iJ m_.''Ci u7 U a•Q w¢C ri 0}i z �_ 1 a E- enWG ¢°uogLL��ww jWw¢mZ1nO�sc� m v�Vm mmmmmaz OOM w m z �7�3Q c7Q o_ rc�w >}• yc� C: F••• - UUUUU OODm UUz7 Z�z '� Zl Ir Z ...................... .......... _' ..........................................._......_-W i-¢ U_C O O C D'w w-+U g U V 4 a Q Q Q V U U U U Z Z z Q D ¢ y�4 o m g' �3�g...g�Jm wdl .c�- -�.2U _r >�aN O ti ry�U ¢ nU a N"a wa�O�wa�w0 in iva¢Q.p..op..a..�...W.w_a_�..U..Uc �'.::.._w_¢.,S...u;...a.�.y..-x�d�rwuCa..,�.1.,a r ___.. ........... xrad m m m m w m U U N s a c r -.-.-VU'vaa6N emmd mm m mmmu�¢-WOO Ow m m m g�WT ....°.... THE CITY OF LAKE ELMO MAYOR AND COUNCIL COMMUNICATION DATE: July 17, 2012 REGUALR ITEM #: 1.1 MOTION AGENDA ITEM: Keats Avenue N. MSA Street Improvements—Engineer's Update on Proposed Improvements and Authorize Report Revisions SUBMITTED BY: Jack Griffin, City Engineer THROUGH: Dean A. Zuleger, City Administrator REVIEWED BY: Ryan Stempski, Assistant City Engineer SUMMARY AND ACTION REQUESTED: The City Council is respectfully requested to receive an update from the City Engineer for the Keats Avenue North MSA Street Improvements project, and Authorize the Engineer to revise the Feasibility Report. BACKGROUND INFORMATION AND STAFF REPORT: The City Council approved the Feasibility Report for the Keats Avenue N. MSA Street and Trunk Watermain Improvements on February 8, 2012. The Public Improvement Hearing was opened on March 6, 2012, and adjourned to be continued on August 21, 2012. Staff was directed to seek a variance from the State Aid Office for the proposed roadway improvements, and to review options regarding the location of the trunk watermain. On March 22, 2012, the City Engineer presented a Variance Request to the State Aid Office Variance Committee, requesting an allowance for ll-foot drive lanes (12-ft standard), 5-foot shoulders (6-foot standard), and a Clear Zone of 15 feet (30-foot standard). The Variance Request was denied and the City Engineer was directed by the Variance Committee to work with the District State Aid Engineer to review viable reconstruction/reconditioning options for the project that would remain consistent with Municipal State Aid Standards. Through subsequent meetings and communications with the District State Aid Engineer, the City Engineer has identified three improvement options meeting MSA standards for consideration by the City, with one option being more cost effective than the others. This improvement option includes an urban section design using concrete curb and gutter in lieu of a rural section roadway. The City Engineer_will...present the...find ngs.of._t11i ._rc_v..iev.... n...gr_eater_deta l._at.the council meeting. RECOMMENDATION: Based upon the above staff report, it is recommended that the City Council direct the City Engineer to revise the Feasibility Report for the Keats Avenue North MSA Street and Trunk Watermain Improvements. The recommended motion for this action is as follows: " for,,e to direct the City Engineer to revise the Feasibility Report for the Keats Avenue North MSA Street and Trunk Watermain Improvements in preparation of the continuance of the Public Improvement Hearing on August 21, 2012." ATTACHMENTS: L None THE CETY OF SAKE ELMO MAYOR AND COUNCIL COMMUNICATION DATE: July 17, 2012 REGUALR ITEM#: 12 MOTION AGENDA ITEM: Old Village Area Municipal Sanitary Sewer—Initiate Preliminary Study SUBMITTED BY: Jack Griffin, City Engineer THROUGH: Dean A. Zuleger, City Administrator REVIEWED BY: Ryan Stempski, Assistant City Engineer SUMMARY AND ACTION REQUESTED: The City Council is respectfully requested to consider initiating the engineering work for the Old Village Area Municipal Sanitary Sewer project by authorizing FOCUS Engineering, Inc. to prepare a Preliminary Study in the estimated amount o#'$16,500. BACKGROUND INFORMATION AND STAFF REPORT: On May 8, 2012 the City Council held a Workshop on Utilities and Growth. The Workshop addressed the capital infrastructure projects needed to provide municipal utilities to the various growth areas, the general phasing of the proposed growth, and reviewed the process for implementing large infrastructure projects. In addition, the City Council was recently presented the results of the Village Area Sewer Survey indicating a need and desire for Municipal Sanitary Sewer Service from existing property owners. The first step to initiate this project is to authorize the City Engineer to conduct a preliminary layout (Preliminary Study) for the proposed improvements to identify the gravity sanitary sewer route alternatives throughout the Village together with a logical phasing and implementation strategy. The preliminary work elements for this study will include a property by property site review to identify sewer service connection locations; available right-of-way and easement corridors; and to review and determine other improvements that could or should be made in conjunction with this project (i.e. watermain replacement work, street and sidewalk improvements, streetscape amenities, etc.). Once the Preliminary Study is completed it will be presented to the City Council. 0 owing e Preltmh-71 Study, a Feasibility Report will nee-d-to be corriin7ssioned to-complete _ a more detailed cost analysis and to address the proposed project assessments to any benefitting properties, consistent with the requirements of Chapter 429 for Public Improvement projects. RECOMMENDATION: Based upon the above staff report, it is recommended that the City Council consider initiating the engineering work for the Old Village Area Municipal Sanitary Sewer project by authorizing FOCUS Engineering, Inc. to prepare a Preliminary Study in the estimated amount of $16,500, The recommended motion for this action is as follows: "Move to direct the City Engineer to initiate the Preliminary Study for the Old [pillage Area Municipal Sanitary Sewer project in the estimated amount of$16,500." ATTACHMENTS: 1. Exhibit—Old Village Municipal Sanitary Sewer �p Nl 3a rJ ca t i � r Segmental Existing 0E0 Village �- $1.Omillion S gsi w ui Village Pkwy e �o ,a".M . 17 ek �w Sever and Wafer [Utility Expansions.- Village Area (Option Legend 6 450 900 1,800 Feet MO Ll c a # Area to be Served City of Lake Elmo / by Segment#2 Proposed Gravity Sewer 5-8-12 Lift Station Proposed Forcemain Sewer Data Source: p i Washington County,MN $ Well#1as Proposed Watermain _ THEW CITY O Lam.K F ELMO MAYOR AND COUNCIL COMMUNICATION DATE: July 17, 2012 REGUALR ITEM#: 13 MOTION AGENDA ITEM: Inwood Avenue Trunk Watermain and Booster Station—Initiate Preliminary Study SUBMITTED BY: Jack Griffin, City Engineer THROUGH: Dean A. Zuleger, City Administrator REVIEWED BY: Ryan Stempski, Assistant City Engineer SUMMARY AND ACTION REQUESTED: The City Council is respectfully requested to consider initiating the engineering work for the Inwood Avenue Trunk Watermain and Booster Station project by authorizing FOCUS Engineering, Inc. to prepare a Preliminary Study in the estimated amount of$6,800. BACKGROUND INFORMATION AND STAFF REPORT: On May 8, 2012 the City Council held a Workshop on Utilities and Growth. The Workshop addressed the capital infrastructure projects needed to provide municipal utilities to the various growth areas, the general phasing of the proposed growth, and reviewed the process for implementing large infrastructure projects. The Inwood Avenue Trunk Watermain and Booster Station project is needed to provide Municipal Water Service to the Phase 1: I94 West Corridor(Inwood to Keats). In order to be in a position to construct this project in 2013, it is necessary to begin the preliminary engineering report work at this time. The first step to initiate this project is to authorize the City Engineer to conduct a preliminary layout (Preliminary Study) for the proposed improvements to identify the watermain route alternatives along the corridor; available right-of-way and easements; location and land availability for the Booster Station; and to identify potential properties that may be served along the route. Once the Preliminary Study is completed it will be presented to the City Council. ........................_Coneurrentwith this study,-the City...Engineer.will.....be._working_w:ith.a.-Water.System..Consultant.to................_..... ......................... evaluate the water system network and hydraulic capabilities to verify waterniain pipe sizing, pumping requirements, and overall system integrity as the system is built out. Following the Preliminary Study, a Feasibility Report will need to be commissioned to complete a more detailed cost analysis and to address the proposed project assessments to any benefitting properties, consistent with the requirements of Chapter 429 for Public Improvement projects. RECOMMENDATION: Based upon the above staff report, it is recommended that the City Council consider initiating the engineering work for the Inwood Avenue Trunk Watermain and Booster Station project by authorizing FOCUS Engineering, Inc. to prepare a Preliminary Study in the estimated amount of$6,800. The recommended motion for this action is as follows: "Move to direct the City Engineer to initiate the Preliminary Study for the .Inwood Avenue Trunk Watermain and Booster Station project in the estimated amount of$6,800." ATTACHMENTS: 1. Exhibit—Inwood Avenue Trunk Watermain and Booster Station project ...................................................._..............._.................................................._................................................_..............._..............._...................._ 1 r Segment#1 "_ Ni �r Booster Pump S> �¢ $610,000 Segment 92 16"Trunk Watermam I {r $1.580,000 R�' 4 , 4" a k- ' ` A' 't lz Segment#3 Segment#3wz" 16"Trunk " r... A]ter natiue Watermain $780,000 ' Sewer/Water Connections for Azure Properties ' Sewer/Water Connections t Segment#4 F Contiguous East = Lift Station&Trunk Forcemain !q M.", - 1 5900 000 k Segment#5 i �M Segment#6 Trunk MA Replace Lift Station&Forcemain ; Discharge to MCES W.O.N.F, ,r ; ,=` `?96,OOG I ..,.,N..0 w.s...sf�w"... . 6o IS.S B an q a Water Utility Expansions: Western @m H H 0 '+ orr r Leg _�. '`i\ O iS!1 i,5::1 3,oVU fuel Lift Station m" Segment#3 Alternative City o#Lake Elmo 5-8-12 - Existing Watermain Proposed Gravity Sewer Data Source: :Existing Sewer Proposed Forcemain Sewer Washington County,MN u.U m Proposed Watermain THE CITY OF SAKE ELMOMAYOR & COUNCIL COMMUNICATION DATE: July 17, 2012 REGULAR ITEM #: 14 MOTION AGENDA ITEM: Administrator's Report: Organized Collection Feasibility& Proposed 201.4 Plan of Work Schedule SUBMITTED BY: Dean Zuleger, City Administrator THROUGH: Mayor Johnston REVIEWED BY: Dean Zuleger, City Administrator SUMMARYAND AC TION REQUESTED: To approve a schedule to commence planning to Lake transition the City of -__.. Elmo from open collection of residential solid waste to organized collection of solid waste in FY 2014, BACI{GROUND INFORMATION: Currently the City of Lake Elmo is served by (5) different residential licensed trash haulers and (2) additional commercial trash haulers based on individual or homeowner's association preference / choice. Each of these trash haulers also provides varying degrees of recycling services to their customers. In an effort to understand the impact of multiple haulers, the City of Lake Elmo began exploring the possibility of organized collection in 2011 through the acquisition of data, observation of the City of Maplewood's transition from open source to organized collection (the only MN municipality to convert in 20 years), and taxpayer/HOA input. The reasons for the investigation were four-fold; 1. Reduce the impact/maintenance costs on the local road system; 2. Provide a cost savings to Lake Elmo Residents; 3. Environmental Stewardship; and 4. Improved trash collection and recycling. After further review, a fifth reason emerged in the form of liability protection / indemnification of the individual waste generator(homeowner). STAFF REPORT: Since early 2012, City staff has been concentrating specifically on the structural impact open source collection has on Lake Elmo's road system. It is generally reported in the literature (MN DOT) that one garbage truck is the equivalent of 1,000 car trips on a roadway....per..day_.-Add....in_recycling-trucks..and:_.tbe. i.WW....ga ._he as much as.. �500 car rips Per ....... . ........................................................... ay. In some neighborhoods, where haulers are on local streets (5) days per week this is an extra 5,000-6,500 car trips per week or 260,000 -380,000 per year. Recent studies conducted by neighboring Roseville notes that organized collection would add an estimated Five to ten years in --page 1 -- City Council Meeting Regular Agenda Item 14 July 17,2012 the useful life of a street and potentially save up to $376,000 in street maintenance cost per year, subsequently saving taxpayers $20-$40 per year (MPCA, Feb. 2012). Similarly, Oakdale's engineering staff projects that reducing the number of haulers from five to one hauler would conservatively reduce street maintenance costs by 4 percent per year. With Lake Elmo's street system lagging in general maintenance, the impact of five haulers on road conditions could be exponentially higher. In recent weeks, analysis and data gleaned from communities using open source collection vs. organized collection have shown considerable savings to the average resident in an organized community. The Maplewood experience has yielded a $1.6 million in city-wide residential savings or over a 50% decrease in annual costs to residents — including recycling fees. Based on MPCA analysis presented at the recent League of Minnesota Cities Annual Conference (June 2012), residents can expect to see a 30-35% reduction in their monthly fee by switching to organized collection. Staff has recently begun to analyze the environmental benefits and collection / recycling improvements that result from organized collection, so no general conclusions can be made at this time. On the issue of hold harmless liability protection or indemnification, staff has just begun an evaluation of each hauler's terms of agreement. RECOMMENDATION: Based on preliminary data analysis, the City Administrator believes that there are significant potential benefits and cost savings in switching from an open source collection system to an organized system. Therefore, it is recommended that the City of Lake Elmo adopt the following schedule (per MN State Statutes)to transition to organized collection: I. Report on Impacts of Organized Collection on City Road. System --- February 2014 p p g tY Y Y 2. Economic Analysis on Taxpayer Benefits to Organized Collection - May 2014 3. Recycling/Environmental Analysis—July 2014 4. Adoption of Resolution (per State Statute)to begin Official Planning Process for Reviewing Options for Trash Collection— September 2014 5. Determination of Method of Organized Collection (universal vs. sector based organized collection, separate recycling providers et al)—November 2014 6. RFP Development and Distribution—December 2014 (90 day response period) 7. Selection of Organized Collection Purveyors—March 2015 ATTACHIVIENTS: Analysis of Waste Collection Service Arrangements, MPCA, June 2009 The Benefits of Organized Collection, MPCA, February 2012 SUGGESTED ORDER OF BUSINESS: t-_........__ .............._......... -::.Cit Administrator e ratio...uet�ari of ItEm _.... ,. - Report/Presentation................................................City Administrator - Questions from Council to Staff.................. 1 ...........................Mayor Facilitates s --page 2-- City Council Meeting Regular Agenda Item 14 July 17,2012 - Public Input, if Appropriate.................................................... Mayor Facilitates - Call for Motion ...............................................................Mayor& City Council - Discussion....................................................................... Mayor& City Council - Action on Motion.................................................................... Mayor Facilitates a r ...__...._ --page') -- ReportExecutive u Analysi's of Waste Collection ArrangementsService Project ioo, coal Minnesota Pollution Control Agency Saint Paul, Minnesota Jute 2009 Minnesota Pollution Control _ kB 11wvOth C.� ' _. .Y- Analysis f Waste Collection ServiceArrangements Project ID: 08MO81 Prepared for Minnesota Pollution Control Agency 520 LaFayette Road St. Paul,MN 551.55 Prepared by Fogs Infrastructure & Environment, LL Warren Shuros, Senior Project Manager (651) 288-8596 wshuros@fotb..com June 2009 REUSE OF DOCUMENTS This document has been developed for a specific application and not for general use;therefore,it may not be used without the written approval of Folk Unapproved use is at dte sole responsibility of the unauthorized user. Copyrig t0, Path I frastruc—t re & Environment, LLC 2009 Eagle Point 11•8550 Hudson,Blvd.Nottr:, Suite 105-Lake Elmo,MN 55042 a(651)288-8550 6 Fax:(651)288-8551 SUMMARY This summary provides several conclusions and/or observations developed during this project. With each is a summary of some of the associated information from the study. PREvALeNcr The survey completed as part of this study and surveys from two prior studies cited in the literature review showed the prevalence of open garbage collection systems in Minnesota to range from 65% to 80%. There are fewer open recycling collection systems in Minnesota with the range shown to be approximately 44%to 50%. There are other areas of the U.S.where open collection systems are in place. A study identified in Colorado indicated that 59%of the Colorado cities had open cot- lection systems. However,the prevalence of open versus organized collection systems nationally appears to have an opposite trend. A survey Organized collection of 700 cities across the U.S.and Canada found approximately is more common than 72%of the cities classified as organized for garbage collection open cotlection out- and approximately 67%organized for recycling collection. The side of Minnesota. Colorado study noted that a 1997 survey of the 100 largest cities in the U.S.found that 80%have organized systems. loth contacts in other states such as Iowa found the prevalence of organized collection statewide in Iowa to be approximately 84%and in the Des Moines metropolitan area to be 86%orga- nized for garbage and 100%organized for recycling collection. Foth was unable to identify any other states that have a compa- rable state statute prescribing the process a city or county must Tt�e Minnesota Organized follow to change from an open collection system to an organized Collection statute itself system. NSWMA was not aware of any other states with a simi- appears to be very unique, lar Organized Collection state statute. ......................... . USE OF THE ORGANIZED COLLECTION STATUTE Various Minnesota cities and counties have followed the statu- tory process outlined in the Organized Collection statute to at least evaluate implementing an organized collection system in their respective communities. Although this study did not con- Recent city and county tact every city and county in the state,to the best of our knowl- experience following edge,no city or county in Minnesota has changed from an open the statutory process garbage collection system to an organized garbage collection has resulted in none system since approximately 1991,shortly after the passage and to very limited success refinements to the Organized Collection statute. in implementing fully organized systems. 1 pical Process followed The"typical process"has involved the cities or counties citing various goals they believe they could achieve via organized col- lection. These have commonly included: q t: .........•................ Typical goals of organized collection The study did not identify ® Reducing the amount of truck traffic with anticipated a city or county in Minne- reductions in street repair and maintenance,reducing the sota that has changed from risk of accidents,reducing truck emissions,and noise. open to organized garbage o Reducing the cost per household per month due to collection since 1991, improved efficiencies and competitive bidding for the contract. ® Improving and standardizing service levels. o Improving management of municipal solid waste accord- ing to county solid waste plans and the solid waste man- agement hierarchy. Better overall control of the decisions regarding solid waste and recycling. Often times staff are assigned and a committee has been estab- lished to study the advantages and disadvantages of various options. Surveys may be completed to gather data. Discussion ••••..................•....... with the existing waste haulers occurs about the perceived issues A change to organized collec- for the city or county. The staff and/or committee may complete tion could resuff in a significant a study report with recommendations. loss of business for a hauler. Mauler Participation Waste hauling companies The waste hauling industry representatives understandably have are experienced in address- opposed organized efforts as the organizing process has the potential to negatively impact their business. Haulers grow their ing the issues raised by staff collection business based upon the existing regulations and mar- and committees and as noted ket characteristics. by industry representatives, Community residents become active in the political process with they will"rally the troops." city councils and county boards. Often prompted by a coordi- `°"""`°"°""°°`""""' nated hauler campaign,residents send letters and entails as well as attend council or board meetings indicating their strong desire to maintain the ability to choose their garbage hauler. This groundswell of opposition to organized collection causes the councils or boards to decide against organizing collection. Cities and Counties are Reluctant to Proceed This process has occurred repeatedly with minor variations from community to community. There is now a history of similar experiences among cities and counties and a growing reluctance to make another attempt to organize collection by cities who have already gone through the process. The study found that as city administration officials move from a job with one community who has gone through the process to another cornrnunity,they bring their experiences with these to the new employer. The staff will attempt to dissuade their new employer from even considering organized collection, rr 2 City of Minneapolis Experience Hennepin County District The city of Minneapolis has continuously been involved in some Court ruling in a case involy- form of city-wide organized collection since 1902. In the early ing MRI and the City may 1970's,the City developed a split system with half the City affect procedures used by serviced by municipal crews and the other half serviced by a organized cities in the future. contractor. Minneapolis Refuse Inc.(MRI)was formed as a con- sortium of haulers and was awarded a contract to service half the City. These actions were taken long before the Organized Col- lection Act was adopted by the Minnesota Legislature in 1987. Over the years,the City and MRI continued to negotiate exten- sions to the collection contract. In 2005,the City developed a Business Plan for Solid Waste and Recycling Services that included a competitive procurement process for purchasing this service as a prudent public policy. .The ruling in favor of g A Request for Proposals(KFP)was issued by the City in March, MRI causing the City to be 2006. MRI filed a lawsuit seeking to enjoin the RFP process on required to follow the Qrga- the grounds that the City had not followed the Organized Collec- E. tion statute process that requires the 180 day planning and dis- -nized Collection process even cussion period. The City claimed that they were not required to though the City believed they follow that process since they had become organized well before had been organized in the 1987. same manner since 1971. The judge's ruling indicated that the choice made by the City in ..............°`...•....'. 1971 does not govern in perpetuity. The ruling indicated that the City's argument that it is not required to follow the Organized Collection statutory process because this was "not an initial organization but a re-organization is erroneous because a re- organization significantly changes the structure of collection, which is exactly what the Organized Collection Act aimed to control." This court case and ruling seems to indicate that for any city to ............... make a change in their existing organized collection structure, The ruling further provided that they are required to go through the Organized Collection statute the City`s powers to provide process. For example,arguably a city that has a contract for garbage removal'throughout service with an existing hauling company,but desires to seek competitive proposals at the end of the contract term rather than the City and to enter into cots- negotiate a contract extension would be required to go through tracts for that removal do not the Organized Collection statute process. Faced with going control"the process by which through the Organized Collection statute process,the city may choose to simply negotiate a contract extension. organization of waste collec- tion is done. That process The Hennepin County District Court decision does not apply to the rest of Minnesota,only in Hennepin County. However,it is the specific strbjeet matter may be used to broaden the conditions under which the Orga- of Minn. Stat, 115A.94." nized Collection statute must be used. 3 A report was prepared on organized collection in 1993 by the Attorney General's Office,Antitrust Division. The report con- cluded that municipalities that have organized collection should regularly go through a procurement process to increase chances of getting better rates for residents. It found"used on the aver- age adjusted per-household monthly rates for 30-32 gallon, 60-64 gallon,90—96 gallon and unlimited collection services, the surveyed communities that continued relationships with local haulers were paying between 17.6 and 48.5 percent more than communities that had competitively selected haulers." WASTE HAuLr:R PERSPECTIVE Waste haulers oppose orga- Waste hauling companies have built their collection businesses nixed collection to protect based on the existing regulatory and market characteristics in- their business interests place in Minnesota. There are some basic differences between and are effective at repre- the companies ranging from the relatively large,national,pub- senting their posifions. licly traded companies that also'own disposal facilities,to large independents that own transfer stations allowing them to reach out-of-state disposal options,to smaller size independents that are only involved in collection related services. The)haulers are profes- Small haulers believe they can compete in a number of ways in sional business people work- open systems that allow them to differentiate their service. Com- petitive measures include: ing in a competitive field, ♦ Providing quality customer service; ♦ Niche marketing(providing specific,limited services and not trying to be"all things to all people"); ♦ Maintaining long-terra customer relationships; and ♦ Appealing to customer preferences for supporting locally- All are uniformly opposed to owned independent businesses. changing from open collection Organized Collections Limits Growth systems to organized col- All the haulers cite growth opportunities—Open systems allow lection system. 7'hey face a haulers to pursue new customers and grow their business easier than bidding for contracts in organized systems. As an example, risk of loss of customers and one hauling company noted this comparison. He prefers having hence financial impacts. an open city system where he currently has 5,000 customers out ................. of a total of 20,000 over an organized city of 15,000 customers with a seven(7)year contract. The reasoning is that he can grow ..... the customer base in the city with 20,000 customers and he will keep the existing 5,000 customers for twenty(20)years. Haulers believe customers Company Value are more focused on service The value of a company is based upon annual revenues. If haul- and maintaining freedom ers lose customers due to a public entity organizing collection, of choice than their cost their annual_revenues_will decline,decreasing the price received when selling. Some haulers use the proceeds from the sale of their company as their retirement fund. 4 Some companies have purchased other hauling companies and note the fact that they will be making payments on the purchase price well into the future. Losing accounts to organized collec- tion will reduce the revenue needed to pay off the debt. ".rust Compensation"and"Inverse Condemnation" NSWMA also brings up the issue of"just compensation"and ..... . ...,••••••••••• "inverse condemnation." They are strong in their belief that Haulers are very effective in haulers should be financially compensated for business lost due their communications with to organized collection. city representatives,commit- Hauler Effectiveness Opposing Organized Collection tees,their customers,and the NSWMA noted that of all the cities that had considered orga- elected officials in countering nized collection over the last several years,none had elected to implement organized collection. The cities and counties cited by efforts to organize collection. NSWMA included: # Arden Hills k Carver * Lauderdale * Prior Lake 4 Coon Rapids t Fine Island Greenwood St.Michael 4 Hanover * Albertville St.Anthony Over the course of the last 4 Falcon Heights several years, all of these cities & Ramsey County R Washington County :. and counties considered but i Olmsted County failed to organize collection. a, Sartell Lino Lakes t, Crystal 4, New Hope girl Hauler sited advantages for customers in open systems a Freedorn of choice-households are free to choose their hauler based on their preferences, ® Maintaining a direct relationship between hauler and cus- tomer leads to better service and the freedom to shop and change. None to very limited administrative burden for cities. Haulers to compete and to grow their business. PURLic AaENcY AssmcwrioNs Various public agency associa- Each of the following has written policies supporting maintain- tions have consistent positions ing or improving the ability of cities and counties to organize relative to maintaining the collection. Several also have written positions opposing legisia- ability for cities and counties tive efforts to authorize inverse condemnation related to orga- to organize collection and nized collection. oppose inverse condemnation. + The League of Minnesota Cities + Minnesota Inter-County Association o Association of Minnesota Counties + Minnesota Solid Waste Administrators Association + Solid Waste Management Coordinating Board COST While there are exceptions and cost related issues can be very Organized collection can complex, residents in organized collection systems can and do be more cost effective pay less than residents of open collection systems. Cost issues than open collection. were covered from a number of approaches in this study includ- ing the literature review,municipal surveys, and the in-depth analysis. Literature Review Provided Historical Comparisons The literature review collected information from some previous surveys and cost comparisons. These provide some historical perspective of the comparison of costs between the different sys- tems. Below is a rate comparison from the city of Falcon Heights Organized Collection Study: Final Report. FALCON HgIGHys RATE SuRwy BuRiNG ` HeIR STUDY city Type of Collection 30 allon 60 gallon 90 gallon Falcon Heights(average of 6 companies companiesj Open $13.59 $15.56 $17.17 Roseville(average of 7 companies) Open $12.85 $14.90 $16.84 Maplewood(average of 9 haulers Open $12.19 $14.11 $16.08 North St. Paul,2003 O anized $6.07 $8.86 $10.39 Shakopee,2004-2005 Organized $8.60 $10.65 $12.24 Little Canada,2002 most recent rates listed Organized $8.29 $9.77 $11.29 White Bear Lake Or anized $7.50 $11.00 $16.00 Stillwater,3 years ending 12/31105 O anized $8.16 $10.06 $12.03 The data above are from approximately 2003 and 2004, The rates cover garbage and recycling and do not include taxes,yard waste, or special offers. The cities are in relative close proximity and served by many of the same hauling companies. The organized cities consistently show a lower cost per month across 30 to 90 gallon levels of service. Efforts were taken to"compare apples to apples" for the rates. It is also interesting to note that the city of White Bear Lake had intentionally struc- tured rates to encourage recycling and waste reduction via increasing the differential prices between 30 gallons to 650 gallons to 90 gallons. 6 r ......I................. City 6of Oakdale staff in 2001 2001 CITY OF ®AKi3ALE LITERATURE REviEw surveyed 14 cities with a Averages Small Medium La e variety of collection systems. Municipal system(1) $11.00 $13.23 Contract-Single Hauler(5) $QA0 $11.08 $12,90 Rates were tabulated for small Contract--Mlultple Hauler(3) $10.96 $12.72 $14.81 (30-gallon)medium(60-93110n), Open System(5) $13.87 s15.80 $17.fi3 Oakdale 1 $19.57 $16.56 1 $17.66 and large(90-gallon)service, including recycling. Other Municipal Survey Conducted in the Study services,such as yard waste Rate information was sought as part of the municipal sur- vey. This included requests to receive an actual billing pickup, and special rates,such statement from haulers to compare residential MSW and as for seniors, were excluded recycling service costs between cities.The billing survey so that the data are compara- requested the breakdown of costs (garbage service,taxes, ble. The results show that the surcharges,recycling,yard wastes,bulky wastes and other) associated with.MSW and recycling services at the partici- pant's hoarse. Cost data was also obtained from municipal �v. aged lower costs than the open contracts,websites and follow-up discussions. system cities including Oakdale which has an open system. It should be noted that this survey methodology was not a scientific process with random sampling. Also, there are many variables that affect pricing. Even so, the survey results provided interesting data. The following table shows the average monthly costs asso- ciated with open versus organized collection systems.These average costs include garbage service,taxes, surcharges and recycling service fees as provided by the survey par- The average cost per household ticipants,city websites, contracts and discussions with city k per month for organized MSW contacts. ~' collection service was less than open MSW collection service AVERAGE MONTHLY SERvicE RATES C14ARGED TO for all levels of service(30, 60 RESIDENTS FROM BILLING SURVEY, CONTRACTS, ETC. and 90 gallon containers). The Collection Average Monthly Rate IF average difference between System 30 gallon 60 gallon 90 gallon the organized system charges Organized MSW $14.83 $16.98 $22.23 r: to residents for each service Open MSW $22.64 $25.46 $26.50 level(30, 60 and 90 gallons) Difference $7.81 1 $8.48 1 $4.27 and the open system charges % Change +53% +so% I +19% is 19%to 53%higher in open systems for each service level. _. ........................ ...... Rates Actually Paid to Haulers Charges to residents on hauler or city utility bills do not equate to the rates actually paid to haulers. There are taxes paid to haulers that must be remitted by haulers to the state and counties. When cit- ies handle billing,they oftentimes recover administrative costs and funds for other related municipal services(e.g.,drop-off sites and road maintenance). The table below shows the average monthly amounts credited to the haulers in open versus organized systems as reported in this survey. Gener- ally in an open system city,the rate credited to the hauler is the rate charged to residents less any taxes. Payments to haulers are higher in open versus organized systems. AVERAGE MONTHLY SERVICE RATES CREDITED To HAULERS Goilection System Average Monthly Rate 30 ern 60 gallon 90 gallon Organized MSW(contract prices) $91.72 $13.22 $16.70 Open MSW(mrithout taxes) ( $19.25 $20.94 $21.99 % Change +64% +58% +32% Rates Vary Widely in St.Paull A city with an open MSW collection system usually has multiple haulers that charge residents a range in rates for the same basic service, For example,45 surveys were received from residents in the city of St.Paul(open MSW collection system and an organized recyclable material collection system). Of the 45 surveys completed for the city of St.Paul, 13 of the 17 different MSW haulers reported to have residential accounts are represented and each hauler charges a different rate for the different levels of garbage service. The table below shows a sample of monthly rates charged to residents for garbage collection services from.each hauler reported in St.Paul. These rates include taxes,solid waste fees and surcharges paid to the haulers as provided by the participants. RESIDENTIAL Mowmy GARBAGE RAvES FROM VARIOUS HAULERS IN ST. >PAUL f MSS Hauler all Gall on 60 Callon 90 Gallon Mauler A -- $22.76 -- Hauler 8 $16.34 _ _ Hauler C -- $17.84 -- Hauler D -- $22.49 -- Hassler E $21.75 $27.60 -- Hauler F $22.38 $20.60 -_ Hauler G -- -- $26.99 Hauler H $16.00 -- Hauler l $26.73 -- $34.91 Hauler i $15.15 -- .......................................................................................................................... hauler li $41.00 $46 51 $36.83 Hauler L $22.83 $30.72 $26.18 f. Rates Charged by a Hauler Vary within a City In addition to the inconsistencies in rates between haulers for the same level of service,there are inconsistencies between rates charged to residents by the same hauler for the same level of service within the same city as recorded in this survey. The table below summarizes five haulers that provide residential MSW collection services in Eagan, St.Paul and Woodbury. The rates provided in the table were provided by different residents of the cities. These rates include taxes,solid waste fees and surcharges as provided by the participants($2.25 added to St.Paul for organized recycling because the recycling cost is included in the other cities). RANGE OF RESIDENTIAL MONTHLY RATES FROM SAME HAULER IN SAME OPEN CITY MSW Hauler 30 Gallon 60 Gallon 90 Gallon Eagan Hauler - $16.98 Hauler A — $30.06 -- St.Paul r Hauler B $24.63 -- -- Hauler B $29.80 -- - St Paul A resident reported paying Hauler C $39.24 $47.76 $39.08 $7.35 per month{$2.25 per Hauler C $22.87 -- $29.75 Hauler C $21.50 -- month for recyciing,brings the Hauler C -- $48.32 total to$9.F0 per month). In Hauler C $43.25 -- follow-up,this resident noted Hauler C -- $18.29 _- he had a"teaser rate"which St.Paul Hauler D $25.08 $32.97 will increase next year. Hauler D -- $9.60 -- ....................... Woodbury Hauler F -- $18.12 $25.22 Hauler F -- 1 $13.92 1 $21.18 ....................................................I........ A comparison of average rates in St.Paul compared to aver- age rates in organized cities in this study indicated that St.Paul households may pay six million dollars more on an annual basis than a comparable number of households in organized cities. E.-. ....•♦....................................................... 9 Factors Affecting Rates As noted, there can be many variables included or not included in "monthly rates." One of the most critical can be the potential impact of variable charges for the"additional services"such as bulky waste collection and yard waste collection. In some instances in open systems,haulers choose not to charge extra for additional waste set out along-side the cart because the customer is free to choose a different hauler if the customer does not lute The monthly rates paid by the"extra charge"even though warranted. The same may or Robbinsdale to b contras- may not be the case for bulky wastes such as a couch or other for in 2008 are as follows: piece of furniture. In addition,some organized systems include Garbage separate rate schedules that specify these charges which are 32 gallon service=$7.09 fairly high. 64 gallon service=$8.52 There are also examples of organized systems that have managed 96 gallon service=$9.94 this situation very well and have controlled these extra costs within the fixed monthly rate paid to the hauler. Following are Yard Waste summaries of the Robbinsdale and Minneapolis systems which 2008=$263 control these extra costs within base rates. 2009=$2.60 Robbinsdale Organized System 2010=$2.67 Robbinsdale has a contract for MS W and recyclable material col- 2011=$275 lection with Waste Management. Their rate structure with Waste Management in their new contract beginning January 1,2008 2012=$2.83 and their utility billing structure used with their residents pro- vides a good example of the potential efficiencies provided by Single-sort Recycling having an organized system. 2008=$2.57 The Robbinsdale contract provides for weekly collection of 2009=$2.64 garbage;every other week collection of recyclables in a single- 2010=$2.71 stream;unlimited collection of yard wastes from April 15th 2011=$2.79 through November I Sth;disposal of one Christmas tree per year; and collection of large items such as furniture and appliances. 2012=$2.87 The contract also provides for collection at six City-owned facili- ties at no additional cost to the City(City Hall,Police&Fire Station,etc.). The hauler pays all disposal costs. In 2008,the monthly cost to Robbinsdale to service a household with a 64-gallon garbage cart was$13.62(S8.52 plus$2.53,plus $2.57-see sidebar). This cost covers recycling,garba1a e, unlimited yard waste, one Christmas tree and typical balky items. I(3 Fuel Adjustment The contract has a built in adjustment for diesel fuel prices. Thus,if the fuel price was above$3.50 for a month,the total Diesel Fuel Fuel paid per household to Waste Management for 64 gallon refuse Price.Per Gallon SUTAuT service with recycling and yard waste is$14.44 per month. 4 <$3.00 0 percent 4 $3.00 to$3.24 2 percent ® $3.25 to$3:49 4 percent 2008 City of Robbinsdale Utility Rates ♦ $3.50 and up 6 percent The City bills households for the solid waste collection service on the City utility bills. The monthly rates for 2008 are as fol- lows. e 32 ).taxes gallon incl =$19.19 g { 4 64 gallon(incl.taxes)_$21.81 Highlights of the city of Robinsdale 4 96 gallon.(incl.taxes)_$24.61 organized collection system include: 4 Very cost effective base rates for The City also sells stickers to residents to allow residents to dis- o Weekly garbage collection pose of large items that do not fit in the cart. The stickers are inathree-fiervoiume-based $1.00 each with the following schedule applicable to sticker use: rate schedule 4 Unlimited yard waste collec- 4 1 sticker—Bag or box bundle or item under 30 pounds tion during spring,summer and fall beyond what the cart holds 4 Every other week recy- ® 5 stickers—Non-appliance items(small furniture,full size ciables collection mattress,door,sink,etc.) a Bulky item collection 4 10 stickers—Nan-appliance items(large furniture,sofa, 4 City utility based fee collection queen mattress,water softener,bathtub,etc.) system that allows the City to a 35 stickers—Appliances(stove,washer, microwave,air generate revenues to cover road conditioner,refrigerator,etc.) maintenance costs attributed by the City to solid waste collection The City keeps the sticker revenue except for appliances. trucks. The only bulky itermm)moted in the contract that Waste Man- e Management othee solid wastes agemmment is paid extra for are the appliances for which they by receiving monthly reports and receive S35.. directing refuse to the Hennepin County facility. Using the 64 gallon service again for comparison purposes,the 4 No additional cost of services to total cost to the City with the fuel surcharge was estimated at the City buildings. $14.44 per month versus the monthly payment collected on the City utility bill of$21.91 per month(a difference of$7.37 per 4 Contracted rate increases for month—approximately S0%). The additional funds cover: yard waste and recycling to control cost increases over Me 4 State taxes,county taxes and billing costs five year term of the contract 4 Operation of a drop-off facility available to residents Annual cost increase set atless than 3%per year. ® Code enforcement related to solid wastes 4 Payment to the annual capital improvement plan(C1P)for 4 Buifl in,step-based,fuel adjust road improvements and re-development. ment clause to control cost increases associated with rising The City noted that garbage trucks contribute to road damage in diesel fuel prices: parcentaga increase capped of 6%, alleys and some streets,especially problems with some alley cor- ners. They make a transfer from the solid waste enterprise fund to the general fund to cover the additional costs for road main- tenance they associate with the collection of the solid wastes. A transfer of$150,000 is planned for 2008. 13 ............................. City City of Minneapolis Organized System Provides Minneapolis Refuse,Inc,(URI) Comprehensive Service contract with Minneapolis. Residents may choose from two levels of service including a The service required of MRI 22 gallon service or a 94 gallon service. Both levels of service Include curbside collection of MSW,recyclable materials,bulky includes curbside collection waste(up to two large burnable items each week and up to two ofMSW,recyclable materials, metal items/appliances every other week)and seasonal collection bulky waste(up to two lame of yard waste. Residents may also dispose of up to two addi- tional boxed,bundled or bagged materials outside of their cart. burnable items each week and in addition,residents are provided six vouchers per year to drop up to two metal ffems/appli- off additional materials at the Minneapolis Transfer Station and ances every other week)and two vouchers per year to drop off tires. This City also has drop- off locations to bring yard waste during the off-season for a fee. seasonal collection of yard Collection services are provided by MRI and city staff. waste. Residents may also As with the other organized cities in the in-depth group,the rate dispose of up to two additional paid to the contractor(MRI)is less than the rate residents pay boxed,bundled or bagged to the City. In the new contract with MRI,the City pays MRI materials outside the cart. $10.49 per household per month. For the households with City collection,the City retains the total amount charged to residents less the taxes($15.00 far the 22 gallon service and$20.00 for the 94 gallon service—if residents recycle). The City funds all the carts,education,disposal tipping fees,HHW,administration, billing,pilot projects and even ally snow plowing and graffiti removal with the remaining funds. Fuel Cost Adjustments Vary Fuel prices have fluctuated greatly over the course of the last year. Haulers have requested adjustments in payment to cover the fuel cost increases. In organized cities,the hauler works with the cities via the contract to seek adjustments. If the contract is silent on fuel escalation,the contractor may work with the city to reach a satisfactory adjustment. The city of Robbinsdale has it built directly into the contract and the increase is capped at 6%. For a 60 gallon service,the monthly adjustment for 2008 calcu- lates to approximately$0.82 per month. There was a wide range in the amount of the monthly fuel sur- charge reported in the survey. Where fuel surcharges were reported in open systems,the lowest reported amount was$0.59 per month. The highest reported amount in an open system per month on an actual hauler invoice was$6.04 per month. 12 POTENTIAL KEY3 FOR SUCCESS There may be some lessons This study found only two cities that successfully implemented teamed from cities that suc- organized garbage collection using the Organized Collection cessfull y transitloned from statute process as prescribed in M.S. 115A.94.The city of V4d- open to organized garbage naffs Heights and the city of Elk River both implemented their collection systems that provide new organized collection contracts in approximately 1991. potential keys for success. Interviews with staff from the cities of Vadnais Heights and Elk River were conducted to attempt to understand some of the local conditions and unique circumstances.The following are possible observations that may be drawn from their organized collection experiences: The municipal intentions and program objectives as to why the change is desired for the"pub- lic good"should be clearly stated in writing.This statement of municipal intent should include policy goals such as: • Improving recycling programs; * Reducing truck traffic to reduce noise, improve safety,reduce road wear and tear,improve energy efficiency and reduce environmental impacts; ` Increasing cost-effectiveness of collection operations that may lead to reduced costs for residents and enhanced revenue potential for related municipal solid waste programs and services;andlor . Improved integrated MS W system management including contract provisions for designa- tion ofMSW/recyolabie disposal/recovery destinations;volume based garbage rates to improve financial incentives for residents to reduce and recycle more; and overall program �. communications. The municipality should fully anticipate a lengthy and very elaborate planning and citizen par- ticipation process.The entire organized collection process can take two to three years from the time of initial discussion and concept planning through implementation and shakedown of the new collection contract(s). e Any city considering the change to organized collection should expect and plan for hauler and citizen opposition.The haulers have sophisticated and well-organized opposition campaigns that are time-tested to be effective in stopping such municipal initiatives. m Given the coordinated hauler opposition and citizen outcries,municipalities will need effective civic leadership to persevere through the entire organized collection process.If such effective leadership is not clearly and visibly evident,city staff should not attempt the process. ® Clear and accurate legal counsel will be needed throughout the process.The city staff team should include municipal legal counsel from the beginning through the very end of implemen- tation, Cities should fully embrace the potential"compromise"option of contracting with the exist- ing haulers through an umbrella"consortium"structure(i.e.,rather than the city selecting one "winner"via a single contract with one firm). 13 POSITIVE IMPACT ON RECYCLING Organized collection has a The Solid Waste Management Coordinating Board has con- posdive impact on recycling tracted for on-line recycling data management services known program effectiveness. as Re-TRAC'`M. The objective of Re-TRACT'is to provide a convenient,standardized data base so that counties and cities can store and retrieve their recycling program performance data for later comparative analysis. Foth analyzed the recycling performance data from the Re- TRAC system to determine if there is any significant difference between communities within three different collection system categories: + Open MSW/Open Recycling + Open MSW/Organized Recycling + Organized MSW/Organized Recycling There is a significant increase in recycling pounds per household C"recovery rate")in SWMCB cities with organized recycling col- lection programs. This data indicates that the three categories of collection systems have average recovery rates as follows: o Open MSW/Open Recycling. 510 pounds per household per year;(40 cities) + Open MSW/Organized Recycling; 583 pounds per house- hold per year;(41 cities) + Organized MSW/Organized Recycling; 573 pounds per household peryear; (29 cities) If the last two categories of organized recycling communities are combined the resulting average recovery rate is: + Organized Recycling;579 pounds per household per year (Both Open/Organized MSW);(70 cities) Another important consideration is the improvement in GHG emissions associated with the process of recycling more mate- rials instead of landfilling if cities were to change from open recycling to organized recycling collection programs. Using the difference noted above(579—510=69 pounds per household per year),applied to the 41 open recycling communities,another 11,000 tons of recyclables may be recovered from these cities in the Twin Cities Metropolitan Area. This is the equivalent of about 32,000 metric tons of CO2C less per year of GHG emis- sions. 14 bw ` MEETING PUBLIC POLICY GOALS Organized collection allows In addition to potentially improved recycling,organized collec- for more comprehensive tion systems tend to have more comprehensive program manage- overall pfogram manage- meat in other elements of integrated waste management service ment toward the public delivery. policy goals associated with These other elements include: solid waste management. o Organized collection systems have the ability to designate the disposal facility via contracts. ® Cities with organized garbage collection are more likely to mandate that ail households have garbage collection service.Open systems may allow residents to self-haul. Organized collection systems have greater ability to monitor households that do not have col- lection service.This oversight and monitoring allows cities to better police illegal dumping (e.g.,midnight dumping into commercial dumpsters)and other forms of service theft. s Organized collection systems often require the municipality to cover the costs of bad debt (e.g.,unpaid accounts past due).Cities can place this bad debt onto the real estate taxes of the offending parcel. ♦ Overall program performance(e.g.,tons of MSW,tons of recyclables,recycling participation, costs,revenues, etc.)can more easily be monitored and reported.Therefore, iterative and con- tinuous improvements through planning and management controls are enhanced with organized collection. s Organized collection systems have a greater ability to monitor service performance.Central- ized management under municipal contracts can provide for more uniform oversight and enforcement(e.g.,liquidated damages provisions;termination clauses due to lack of perfor- rnance or breach of contract; etc.). Such enforcement actions are rare and seldom utilized. `- Early and regular communications between the city and its contract hauler(s)usually resolve any such performance issues before it escalates into more serious legal action. Such standard- ized performance monitoring and enforcement is not possible in open collection systems. G' 15 IMPACT ON ROADS Concerts for the impact on Concern for the impact of heavy garbage trucks on residential residential streets is com- roads and alleys is a commonly stated concern for municipalities mon, but specific data with open collection systems. Most of the concern was noted in documenting the problem general statements by city engineers and/or public works direc- was not readily available. tors. However,they generally have not conducted studies spe- cific to the concern in their city to fully document the problem. This study did notlocate much documented information avail- able that provides actual,quantifiable data regarding the issue on actual residential streets in Minnesota. There are common concerns especially for residential alleys which are typically not constructed to carry as heavy vehicles as the residential streets. Relative Impacts There is information related to a garbage truck relative to other types of vehicles. The term Equivalent Single Axle Load (ESAL)is used to compare the road impact of one type of i he relative impact of gar- vehicle to another. An ESAL factor of 1.0 is applied to a truck bage trucks is likely variable with 18,000 pounds per axle. A typical passenger car is reported to have an ESAL factor of 0.0007 to 0.0008. A garbage truck based on the type of street can have an ESAL factor as high as 1.6 or 2,286 cars. However, and the relative amount most references are lower and the Minnesota Department of of garbage truck traffic. Transportation uses a formula providing one garbage truck is ... .................... equivalent to 1,000 car trips. The city of Falcon Heights developed estimates of the percentage of road impacts due to garbage trucks versos typical car traffic in a range of streets with different traffic frequencies. A heavily traveled area with only one garbage truck provided only an esti- mated 7.79%of impact from a garbage truck. In a"low traffic alley"with five garbage trucks using the alley,the percentage of road impacts attributable to garbage trucks was estimated as high as 8596%. The design load of residential streets is likely an important fac- tor. An engineering firm prepared a memorandum for the city of Arden Hills during their organized collection review. The streets in Arden Hills were noted to be designed for nine ton loads. Part of the memorandum concluded: "Reducing the number of heavy truck loadings should have positive effects on the lifespan and quality of local streets how- ever, environmental factors are generally responsible for the majority of pavement wear and deterioration for Arden Hills streets and therefore significant extensions of pavement life are unlikely." 16 Improvements in the design of garbage trucks mitigate some of the impacts on roads. Automated trucks loading from the side should distribute weight more evenly than rear-loaded vehicles. Additional truck axles also help distribute the weight. The city of Robbinsdale alto- Cost Estimates cated$150,000 from their Some data was available regarding estimated annual cost impacts for road maintenance. The city of Roseville estimated road solid waste enterprise fund maintenance attributable to garbage truck traffic cost atypical to their CIP budget to fund homeowner$20 to$40 each per year. For the city of Rosedale, road maintenance in 2008. this represented a cost of$188,000 to$376,000 per year. The ........................... city of Oakdale reported an estimate associated with garbage truck trade of$120,000 to over$300,000 per year. RUNHOUSE GAs Emisstoem Open collection systems Background result in higher fuel use Identifying and analyzing overlapping collection service areas in than a single hauler col- open systems along with the associated route miles traveled and letting every household. fuel consumed that contributes to GHG emissions was an impor- tant part of this study. Fuel consumption data for collection operations was necessary ............................... to determine GHG emissions and any projected GHG emissions To develop accurate estimates reductions. For this project,basing GHG emission solely on of existing fuel use in the van- miles per gallon rate for collection vehicles would not accurately portray emissions. Projected efficiencies, specifically fuel con- sumption gained through organized collection must be calculated conducted to gather fuel con- using two key factors—fuel consumption while driving between stops and deadheading(driving time)and fuel consumption sum..... data while on a route, while idling(loading materials). 'These two consumption values combined provide the fuel use for collection services while actu- . ally on a collection route. .............P................. As the percentage of the num- The data collected for haulers in each in-depth open city include ber of households collected a sample of route miles driven,total time on route which is divided into two portions, driving time and loading time. Data increases,theta is greater was also collected on the total number of households served and efficiency in collection and less total households driven past during the field work. CIL` drive-by time. This translates With fuel consumption averages and the above mentioned data, into fuel savings and reduces one can determine the amount of fuel used per household col- GHG emissions associ- lected. With the data collected from field work along with mar- ated with collection of waste/ ket share data research, Foth determined the relative GHG emis- sions for existing, open collection systems versus an organized recyciables per household. collection system. Field trial Data Collection In order to develop a standardized data set that eliminates the variability of collection vehicles used in the industry,a standard 17 fuel economy factor was created. The baseline data for this report was established by actual field test results. To replicate actual field activities,a 20 cubic yard,tandem axle, packer col- lection vehicle was used to collect fuel economy information, This vehicle was equipped with an engine management system capable of monitoring and reporting the following parameters: ® Fuel consumption with accuracy of 0.01 gallons; ® Time;and ® Number of occasions of brake use. The engine management system of the vehicle was set to zero and a specific set of field conditions were tested. The vehicle was driven a set distance,brought to a complete stop and imme- diately driven that distance again, This process was repeated at the selected intervals for distances from 1.6 to 3.7 miles. After a period of time driving a specific distance interval,the engine management system data was collected and logged. This process was repeated at all of the specified distances and the data was collected. The different distance increments measured were 100,220,330,500 and 660 feet. In order to account for the fuel consumption for the loading oper- ation,the fuel consumption data was obtained by measuring the vehicle fuel consumption rate of the same vehicle used for the field trials at idle. For this report,it is assumed that all collec- tion vehicles are outfitted with automated lifting devices that are designed to be operated with the engine at idle(.most common operation). Again,the engine management system was reset to zero. The vehicle was stopped with the engine running at idle with the power-take off engaged for 30 minutes. After this time period,the engine data was collected. This idle fuel consump- tion rate was measured in 0.1 gallons per hour and ultimately converted into ounces of fuel consumed per stop. 18 This figure Summa- FIELD TRIAL FUEL CONSUMPTION rizes the ounces of fuel consumed based 6 on different distances between stops deter- s - C mined by the field trial U 4 data collection. As the I a distance increases,the 2 amount of fuel consumed a increases,however the ' increase in not linear. o ...................... a $ c g o v in r Feet pee stop M Fief Work Field observations conducted A Foth representative visited the in-depth cities, After contacting the hauling companies that operate in the cities,the Foth repre- of haulers in the in-depth sentative met the drivers on their routes, Once contact with the open collection system cities hauler was made,the starting mileage of the collection vehicle was noted and the collection vehicle was followed through the showed that the average dis- collection areas. While monitoring the collection activities,total tance driven per stop ranged household counts and the number of households serviced were from 275 feet to 586 feet The gathered. After having the actual distances and household counts for a particular area/community,comparisons were made to the, actual distance measured per field trial data. household(all households that could have been serviced Market Share Research Market shares of the number of households in each in-depth open while the truck was driving by) city were researched and an estimate of market shares developed ranged from 83 feet to f23 feet, for haulers in each city. By applying the market share for haulers to the total number of households provides number of house- holds served. Using the various average distances between all households in a city,the distance between stops for each hauler was calculated, The distance between stops plotted with fuel use at different distances provides the estimate of fuel use for each hauler's share of the market. Totaling these,and comparing to the total if one hauler collected all households,provided the dif- ference in projected fuel use between the existing open system and a system with a single hauler(organized system). _ Frei Use Differences The table below provides a summary of the analysis from the perspective of the relative percentage difference in fuel used 19 between each city's existing MSW system and the fuel used with a single hauler serving the city. Increased Fuel Use—Existing System vs. a Single Hauler for MSW c' Eagan- Duluth Rochester Woodbury St Paul %More F % 294% 250% 355% 437% The results show a range of extra fuel use in the five open in- depth cities in the study from 216%to 437%. The percentages follow what may be intuitively observed. The city of Eagan has a hauler with a market share over 60%and has the lowest rela- tive additional fuel use. The city of St. Paul has the most haulers active with relatively lower market shares. The highest market share for a hauler in St.Paul was reported at less than 25%. Greenhouse Gas Differences The differences in projected fuel use between the various scenar- ios were calculated. The total savings of metric tons of CO2e if the five open,in-depth cities converted to single hauler systems was calculated as follows: + MSW = 2,347 metric tons of CO,, � + Recycling 998 metric tons of CO2e + TOTAL = 3,345 metric tons of COze Calculating an estimate of the differences on a household basis and applying this to the 30 municipal survey cities with open systems yields an estimated savings of 6,070 additional.metric tons of CO,,,per year. A total savings of 9,415 metric tons from the five in-depth cities and 30 additional cities with a population over 10,000 in Minnesota could be achieved if all 35 cities con- verted from an open system to a single hauler. 20 The Benefits of Organized Collection .� �, Minnesota Pollution Waste Collection Service Arrangements W_ Control Agency February 2012 Overview In 2009,the Minnesota Pollution Control Agency(MPCA) commissioned a study to develop quantifiable information comparing open and organized municipal solid waste (MSW) and recycling collection systems.The analysis revealed that organized collection systems consistently result in lower overall costs to consumers. In addition, recycling capture rates are typically higher in organized systems.Organized collection also reduces noise pollution, road wear, air emissions and fuel consumption. In an open collection system, individual customers choose their own waste hauler. In an organized system, waste hauling services are coordinated by a public entity through a competitive bidding process. Nearly 30 percent of the communities in Minnesota have organized MSW and recycling collection systems compared to 72 percent nationally. Following is a brief summary of the findings. A copy of the complete report, entitled Analysis of Waste Collection Service Arrangements is available on the MPCA website at\AAAI% i, pc;; ctatP mn tic Economic benefits Lower residential service rates The report found consumers in organized MSW Average Monthly Rate collection cities experience reduced rates compared to Collection System 30 60 90 non-organized residents. A resident can save as much as Gallon Gallon Callon $100 per year by living in a city with organized collection. Open MSW $22.64 S25.46 S25.46 For example, the city of Maplewood expects its residents Organized MSW S14.83 $1.6.98 $22.23 to save $1.6 million city-wide per year after a recent switch to an organized system.The average Maplewood Difference $7.81 $8.48 $3.23 household will see a 50 percent decrease in trash % Change +34.5% +33.3% +12.7% hauling bills compared to the open collection system. The averages in the table to the right include garbage service, taxes, surcharges and recycling service fees. Road wear Reducing the impact on roads and alleys, by reducing the number of heavy duty vehicles traveling on them is a benefit and goal of municipalities interested in moving from an open to an organized collection system. Organized cities typically have one truck traveling a particular route compared to two to eight trucks per route in an open system. Nearly 86 percent of the road wear in alleys and eight percent of the road wear in high traffic areas is due to garbage trucks. The potential economic impact of road maintenance costs associated with garbage trucks has been estimated by some city officials. For example,the city of Roseville estimates the cost to reconstruct one mile of seven-ton street at approximately$500,000, Roseville engineering staff believe the city's streets would last an estimated five to ten years longer if garbage truck traffic was limited.The reduced road maintenance could potentially save each of Roseville's 9,400 single family households$20 to$40 per year.This represents a savings of$188,000 to $376,000 per year. Similarly, the city of Oakdale has estimated that reducing the number of MSW haulers from five down to one traveling down an alley would conservatively result in a more than four percent reduction in street maintenance costs per year. With an annual street maintenance budget of$3 million, Oakdale could save $120,000 to more than $300,000 per year. Organized Collection • leg-12sy1-06 - February 2012 Minnesota Pollution Page 1 of 2 control Agency Environmental benefits Recycling rates Cities with organized recycling collection founds recycled systems have a higher rate of recycled materials Collection System materials collected per collected per-household. Reasons include: household per year • Cities with organized recycling have more control over the details of the system Open MSW and recycling 510 (e.g. materials collected, sorting Open MSW / organized recycling 583 instructions for residents, collection days and frequency). Organized MSW and recycling 573 • Organized cities also have more control over public education tools and message Average for organized recycling 579 content—recycling public education campaigns are more cost-effective if outreach tools are consistent in message and design and available in several formats (brochures, web pages, public service announcements, etc.). • Cities with both organized MSW and recycling have the opportunity to reach the same residential audience with multiple service messages. Contacts with residents can address both MSW and recycling issues. Reduced fuel consumption and emissions Creating efficiencies in waste collection activities can reduce both fuel consumption and emissions. Fuel consumption during collection activities in cities with open collection systems is typically much higher than that of cities with organized systems.The numbers below signify the percentage of additional fuel used in these open cities than if they were to switch to an organized system. • Eagan 216% • Duluth 294% • Rochester 250% • Woodbury 355% • St. Paul 437% The number of haulers and their market share can affect overall fuel consumption and emissions. in an open system, trucks from many haulers travel the same alley. In an organized system there may be the same number of haulers, but only one truck travels down each alley, resulting in lower fuel use. Even open cities with one hauler having more than 60 percent of the market share (e.g. Eagan) would see a significant reduction in fuel use by switching to an organized system. A city with many haulers each having a smaller market share (e.g. St. Paul)would realize even greater savings. Fewer vehicle miles traveled also result in less air pollutant emissions from heavy duty waste/recycling collection vehicles. Public concern has increased regarding human health and environmental impacts of particulate matter and nitrogen oxides which are emitted in large amounts from heavy duty vehicles. Myths of organized collection Organized collection means that there will only be one hauler in the community. There are many examples of cities that have organized and chosen to use a group of haulers instead. In this situation, the city is zoned to maximize collection efficiency, but each hauler retains a certain market share. Small haulers will never win the contract. This depends upon the values of the city. If a city chooses to promote local and/or small businesses as criteria in their request for proposal, small haulers have an advantage. Organized collection creates a monopoly. The most effective method of keeping rates low is to consistently re-bid waste services through and open and competitive process. At the end of the contract period,the public entity reopens the competitive bidding process, to ensure that residents continue to receive the lowest rates available. Effective collection arrangements prevent monopolies and price gouging. Organized Collection . leg-12sy1-06 • February 2012 Minnesota Pollution Page 2 of 2 Control Agency Ti1E CITY OF rz LAKE ELMO � � �� �a �� pqMA ¢ Qa s a a.a C �° '�.�a�A . '4' N DATE: July 17, 2012 CONSENT ITEM#: 1.5 MOTION AGENDA ITEM: Library Board Appointments SUBMITTED BY: Dean Zuleger,City Administrator THROUGH: Mayor Dean A. Johnston REVIEWED BY: Dean Zuteger, City Administrator SUMMARY AND ACTION REQUESTED: To take applications for two board member positions for the Lake Elmo Library Board and create a pool of prospective library board members and interested volunteers. BACKGROUND INFORMATION: The Library Board is made up of five regular Board members and three alternates. The Board is recommended by the Mayor and approved by the City Council (per MN State Statutes) using the staggered term system. Presently there are two o three-year terms up for appointment in November of 2012. Current Library Board members who will be completing their one-year term of service are Steve DeLapp (President) and Sarah Lindner. STAFF REPORT: In the fall of 2011,the City of Lake Elmo (tinder the authority of MN State Statutes) constituted a Library Board for the express purpose of establishing policies and procedures for the new Lake Elmo Library. Last year's process relied heavily on establishing a Board that had interest in maintaining a local library, library experience and advocacy through organizations like the Friends of Lake Elmo Library. In addition, the City Council for communication / synergy / fiduciary accountability purposes added a member of the City Council to the Library Board. To ensure the sustainability of the library, it has been suggested that the City Council take application on an annual basis for the Library Board far in advance (90 days) of the term lapse to allow for appropriate resume review and possible transition time for new members. RECOMMENDATION: Based upon the background information presented, the staff recommends that the City of Lake Elmo City Council is requested: ......._. .._..._....... ...................................................... .... ................................................................... ...._. Motion: To advertise beginning August 1, 2012 via city website, ne-*vsletter, cable access television and other news outlets for candidates to fill two board positions on the Lake Elmo Library Board. The application process will close September 30, __page 1 -- City Council Meeting (Consent Agenda Item 151 July 17,2012 2012. The library board nomination committee will consist of the Mayor, one Council Member,the Lake Elmo Librarian and the City Administrator. a SUGGESTED ORDER OF BUSINESS: } - Introduction of Item.............................................................. City Administrator - Report/Presentation................................................ inns City Administrator t - Questions from Council.to Staff..............................................Mayor Facilitates Public Input, if Appropriate.....................................................Mayor Facilitates Call for Motion...............................................................Mayor & City Council. Discussion.......................................................................Mayor& City Council - Action on Motion.....................................................................Mayor Facilitates --page 2