HomeMy WebLinkAbout#17 2017A BondingSTAFF REPORT
DATE: April 18, 2017
REGULAR
ITEM #: 17
AGENDA ITEM: 2017A Bonding
SUBMITTED BY: Kristina Handt, City Administrator
REVIEWED BY: Brian Swanson, Finance Director
BACKGROUND:
The City Council has included a number projects in the 2017-2021 CIP for this year with funding
proposed to come from bonding. The Council is in various stages of approval-feasibility study,
advertising for bids, approving purchases, etc. for the projects. Projects include the 2017 street projects,
Ideal Ave/CSAH 13 street and sewer project, Old Village Phase 3 Improvement Project, Dump Truck
with Plow, Pick Up Truck, Hudson Blvd Lift Station and the fourth and final payment to the Washington
County for Old Village Phase 2 Improvement Project.
ISSUE BEFORE COUNCIL:
Should the Council authorize the issuance and sale of $9,880,000 general obligation bonds?
PROPOSAL DETAILS/ANALYSIS:
Tammy Omdahl from Northland Securities will be at the meeting to go over the finance plan, which is
included in your packet, and answer any questions you may have.
The current proposed bond sizing is $9,880,000 but staff will lower that amount if possible after bids on
projects are received the first week of May.
FISCAL IMPACT:
Beginning on page 6 of the finance plan, the portion of the bond proceeds are broken down.
The improvement portion of the bonds of approximately $4.57 million covers the street costs. The
equipment portion of the bonds of approximately $280,000 covers the dump truck and pickup truck. These
two items will be paid back through the general fund debt. Annual payment will be around $563,000 before
reducing for special assessment revenue. Special assessment revenue should account for about a third of
the payment.
The sewer portion of the bonds of approximately $3.05 million covers the Old Village Phase 2 and 3
projects, CSAH 13 project and the Hudson Blvd lift station. Annual payments will be around $255,000
before reducing for special assessments. Special assessments will cover all projects except for the Hudson
Blvd lift station, which will be paid from sewer fund revenues.
The water portion covers the Old Village Phase 2 and 3 projects. Of the $1.8 million, being borrowed
nearly all of it will be paid from water revenue funds. The only exception being about $50,000 if water is
brought to the Westbrook building as part of Phase 3. Annual payments would be about $155,000.
The storm water portion of the bonds of approximately $155,000 is for Old Village Phase 2. The annual
payment of around $13,000 will be paid from storm water revenues.
OPTIONS:
1) Approve Resolution No. 2017-037
2) Amend and then Approve Resolution No 2017-037
3) Do not authorize the issuance of bonds
RECOMMENDATION:
Motion to approve Resolution No. 2017-037: A Resolution Authorizing Issuance and Sale of $9,880,000
General Obligation Bonds, Series 2017A
ATTACHMENTS:
• Finance Plan
• Resolution No 2017-037
• Municipal Advisory Services Agreement with Northland Securities, Inc.
Finance Plan
Lake Elmo, Minnesota
$9,880,000
General Obligation Bonds,
Series 2017A
April 18, 2017
45 South 7th Street, Suite 2000
Minneapolis, MN 55402
612-851-5900 800-851-2920
www.northlandsecurities.com
Member FINRA and SIPC
NorthlandSecurities,Inc.Page2
Contents
Executive Summary.............................................................................................................................................................3
Issue Overview .....................................................................................................................................................................2
Purpose ..........................................................................................................................................................................2
Authority ......................................................................................................................................................................3
Structure ........................................................................................................................................................................3
Security and Source of Repayment..................................................................................................................4
Plan Rationale.............................................................................................................................................................4
Issuing Process ...........................................................................................................................................................4
Attachment 1 – Preliminary Debt Service Schedules .............................................................................................5
Combined .....................................................................................................................................................................5
Improvement Portion .............................................................................................................................................6
Equipment Portion...................................................................................................................................................6
Sewer Revenue Portion..........................................................................................................................................7
Water Revenue Portion..........................................................................................................................................8
Storm Water Revenue Portion ...........................................................................................................................9
Attachment 2 – Estimated Levy Schedules ...............................................................................................................10
Improvement Portion ...........................................................................................................................................10
Equipment Portion.................................................................................................................................................10
Attachment 3 – Related Considerations ....................................................................................................................11
Bank Qualification .........................................................................................................................................11
Arbitrage Compliance..................................................................................................................................11
Continuing Disclosure .................................................................................................................................11
Premiums ...........................................................................................................................................................12
Rating ...................................................................................................................................................................12
Attachment 4 – Calendar of Events .............................................................................................................................13
Attachment 5 - Risk Factors ............................................................................................................................................14
NorthlandSecurities,Inc.Page3
Executive Summary
The following is a summary of the recommended terms for the issuance of $9,880,000 General
Obligation Bonds, Series 2017A (the “Bonds” or “2017A Bonds”). Additional information on
the proposed finance plan and issuing process can be found after the Executive Summary, in the
Issue Overview and Attachment 3 – Related Considerations.
Purpose Proceeds from the Bonds will be used to finance an
improvement project, the purchase of equipment, a sewer
project, a water project and a storm water project.
Security The Bonds will be a General Obligation of the City. The City
will pledge special assessments collected from benefitted
properties for payment on the Improvement Portion of the
Bonds, property tax levies for payment on the Equipment
Portion of the Bonds, and sewer, water and storm water
revenues on the Water, Sewer and Storm Water Portions of the
Bonds.
Repayment Term The Bonds will mature annually each January 15 in the years
2019 through 2033. Interest on the Bonds will be payable on
January 15, 2018 and semiannually thereafter on each July 15
and January 15.
Estimated Interest Rate Average coupon: 2.89%
True interest cost (TIC): 3.02%
Prepayment Option Bonds maturing on and after January 15, 2026 will be subject to
redemption on January 15, 2025 and any day thereafter at a
price of par plus accrued interest.
Rating A rating will be requested from Moody’s. The City’s general
obligation debt is currently rated "Aa2”by Moody’s.
Tax Status The Bonds will be tax-exempt, bank qualified obligations.
Risk Factors There are certain risks associated with all debt. Risk factors
related to the Bonds are discussed in Attachment 5.
Type of Bond Sale Public Sale – Competitive Bids
Proposals Received Tuesday, May 16, 2017 @ 10:30 A.M.
Council Consideration Tuesday, May 16, 2017 @ 7:00 P.M.
Northland Securities, Inc.Page 2
Issue Overview
Purpose
Proceeds from the Bonds will be used to finance the following projects (together, the “Projects”):
an improvement project, which includes North Tri Lakes, Ideal Ave CSAH 13 and Old
Village Phase 3 (the “Improvement Portion”),
an equipment purchase of a dump truck and plow pickup truck (the “Equipment
Portion”), and
a sewer project, which includes Ideal Ave CSAH 13, Old Village Phase 3, Hudson Blvd
Lift Station and Lake Elmo Ave/Downtown Project; a water project, which includes Old
Village Phase 3 and Lake Elmo Ave/Downtown Project; and a storm water project,
which includes the Lake Elmo Ave/Downtown Project (together, the “Revenue
Portion”).
Proceeds will also be used to pay costs associated with issuing the Bonds. The Bonds have
been sized based on estimates provided by City Staff and the City engineer. The table below
contains the sources and uses of funds and preliminary estimated interest rates for the bond
issue. The Planned Equity Contribution will cover the interest payment due on January 15,
2018 for the Improvement Portion and the Equipment Portion.
Improvement
Portion
Equipment
Portion
Sewer
Portion
Water
Portion
Storm
Water
Portion
Issue
Summary
Sources Of Funds
Par Amount of Bonds $4,570,000.00 $280,000.00 $3,045,000.00 $1,830,000.00 $155,000.00 $9,880,000.00
Planned Issuer Equity contribution 67,547.28 4,003.95 - - - 71,551.23
Total Sources $4,637,547.28 $284,003.95 $3,045,000.00 $1,830,000.00 $155,000.00 $9,951,551.23
Uses Of Funds
Total Underwriter's Discount (1.000%) 45,700.00 2,800.00 30,450.00 18,300.00 1,550.00 98,800.00
Costs of Issuance 28,793.78 1,764.17 19,185.35 11,530.11 976.59 62,250.00
Deposit to Project Construction Fund 4,495,407.00 272,500.00 2,993,895.00 1,802,927.00 154,033.00 9,718,762.00
Deposit to Debt Service 67,547.28 4,003.95 - - - 71,551.23
Rounding Amount 99.22 2,935.83 1,469.65 (2,757.11) (1,559.59) 188.00
Total Uses $4,637,547.28 $284,003.95 $3,045,000.00 $1,830,000.00 $155,000.00 $9,951,551.23
Northland Securities, Inc.Page 3
Authority
The Bonds will be issued pursuant to the authority of Minnesota Statutes, Chapters 429, 444,
and 475 and Section 412.301.
Under Chapter 412.301, Capital Equipment includes, but is not limited to, road construction and
maintenance equipment, public safety equipment and computer hardware and software, which
must have a useful life at least as long as the term of the debt issued to finance the equipment.
The term of the Bonds cannot exceed 10 years from the date of issuance.
If the amount of the Equipment Portion of the Bonds exceeds 0.25% of the estimated market
value of the taxable property in the City, a reverse referendum provision applies. The City’s
estimated market value for taxes payable in 2017 is $1,377,844,600 ($1,377,844,600 x 0.0025 =
$3,444,612). Since the Equipment Portion of the Bonds does not exceed $3,444,612, the reverse
referendum provision does not apply.
Under Chapter 429, an Improvement means any type of improvement made under authority
granted by section 429.021, which includes, but is not limited to, improvements to streets and
sidewalks, storm and sanitary sewer systems, and street lighting systems.
Before issuing bonds under Chapter 429, the City must hold a public hearing on the
Improvements and the proposed bonds, and must then pass a resolution ordering the
improvements by at least a 4/5 majority. Public hearings have been held for the Improvement
Portion and all corresponding resolutions have passed with a 4/5 majority.
Structure
The Improvement Portion has been structured over 10 years, with relatively level annual debt
service payments. The Equipment Portion has been structured over 9 years with relatively level
annual debt service payments and based on the maximum term allowed, ten years from the
date of the Bonds. The Revenue Portions have been structured over 15 years, with relatively
level annual debt service payments.
The proposed structure for the bond issue and preliminary debt service projections are
illustrated in Attachment 1 and the estimated levies are illustrated in Attachment 2.
Date And Term Structure
Dated 6/08/2017
Delivery Date 6/08/2017
First available call date 1/15/2025
Call Price 100.000%
Yield Statistics
Bond Year Dollars $76,165.44
Average Life 7.709 Years
Average Coupon 2.8899530%
Net Interest Cost (NIC) 3.0196706%
True Interest Cost (TIC) 3.0160841%
All Inclusive Cost (AIC) 3.1111896%
Northland Securities, Inc.Page 4
Security and Source of Repayment
The Bonds will be general obligations of the City. The finance plan relies on the following
assumptions for the revenues used to pay debt service, as provided by City staff:
Special Assessments. The City is expected to levy special assessments against benefited
properties in the amount of $1,803,847 (40% of the Improvement Portion of the Bonds) for
the Improvement Portion of the Bonds. The assessments will be payable over 10 years,
with an interest rate of 2.00% over the average coupon on the Improvement Portion of the
Bonds (currently estimated to be 4.65%), and structured for level annual payments of
principal and interest. The plan assumes that the assessments will be levied in 2017 for
initial payment in 2018.
Utility Revenues. Net revenues of the City’s sewer, water and storm water utilities will be
pledged for payment of the Revenue Portions of the Bonds. The City will covenant to
adopt sewer, water and storm water rates and charges that are sufficient to produce net
revenues equal to at least 105% of the debt service requirements on the Revenue Portions
of the Bonds. In the event there is a deficiency in the amount of net revenues available for
payment of debt service, the City may levy taxes to cover the insufficiency, but only on a
temporary basis until rates are adjusted.
Property Taxes. The remaining revenues needed to pay debt service on the Bonds are
expected to come from property tax levies. The initial projections show an annual tax
levy is needed to produce the statutory requirement of 105% of debt service, after
accounting for assessments and utility revenues. The levy may be adjusted annually
based on actual special assessment collections and additional monies in the debt service
fund. The initial tax levy will be made in 2017 for taxes payable in 2018.
Given the timing of the initial revenue from assessments and taxes, the Bonds include a
Planned Issuer Equity Contribution to pay the interest due on January 15, 2018 for the
Improvement Portion and the Equipment Portion of the Bonds.
Plan Rationale
The Finance Plan recommended in this report is based on a variety of factors and information
provided by the City related to the financed project and City objectives, Northland’s knowledge
of the City and our experience in working with similar cities and projects. The issuance of
General Obligation Bonds provides the best means of achieving the City’s objectives and cost
effective financing. The City has successfully issued and managed this type of debt for previous
projects.
Issuing Process
Northland will receive bids to purchase the Bonds on Tuesday, May 16, 2017 at 10:30 AM.
Market conditions and the marketability of the Bonds support issuance through a competitive
sale. This process has been chosen as it is intended to produce the lowest combination of
interest expense and underwriting expense on the date and time set to receive bids. The
calendar of events for the issuing process can be found in Attachment 4.
Municipal Advisor:Northland Securities, Inc., Minneapolis, Minnesota
Bond Counsel:Dorsey & Whitney LLC, Minneapolis, Minnesota
Paying Agent:Northland Trust Services, Inc. Minneapolis, Minnesota
Northland Securities, Inc.Page 5
Attachment 1 – Preliminary Debt Service Schedules
Total Combined 2017A Bonds
Date Principal Coupon Interest Total P+I Fiscal Total
06/08/2017 - - - - -
01/15/2018 --156,360.55 156,360.55 156,360.55
07/15/2018 --129,700.00 129,700.00 -
01/15/2019 725,000.00 1.700%129,700.00 854,700.00 984,400.00
07/15/2019 --123,537.50 123,537.50 -
01/15/2020 740,000.00 1.900%123,537.50 863,537.50 987,075.00
07/15/2020 --116,507.50 116,507.50 -
01/15/2021 750,000.00 2.100%116,507.50 866,507.50 983,015.00
07/15/2021 --108,632.50 108,632.50 -
01/15/2022 770,000.00 2.250%108,632.50 878,632.50 987,265.00
07/15/2022 --99,970.00 99,970.00 -
01/15/2023 785,000.00 2.400%99,970.00 884,970.00 984,940.00
07/15/2023 --90,550.00 90,550.00 -
01/15/2024 805,000.00 2.550%90,550.00 895,550.00 986,100.00
07/15/2024 --80,286.25 80,286.25 -
01/15/2025 820,000.00 2.650%80,286.25 900,286.25 980,572.50
07/15/2025 --69,421.25 69,421.25 -
01/15/2026 845,000.00 2.750%69,421.25 914,421.25 983,842.50
07/15/2026 --57,802.50 57,802.50 -
01/15/2027 870,000.00 2.900%57,802.50 927,802.50 985,605.00
07/15/2027 --45,187.50 45,187.50 -
01/15/2028 855,000.00 3.050%45,187.50 900,187.50 945,375.00
07/15/2028 --32,148.75 32,148.75 -
01/15/2029 355,000.00 3.150%32,148.75 387,148.75 419,297.50
07/15/2029 --26,557.50 26,557.50 -
01/15/2030 370,000.00 3.250%26,557.50 396,557.50 423,115.00
07/15/2030 --20,545.00 20,545.00 -
01/15/2031 380,000.00 3.350%20,545.00 400,545.00 421,090.00
07/15/2031 --14,180.00 14,180.00 -
01/15/2032 395,000.00 3.450%14,180.00 409,180.00 423,360.00
07/15/2032 --7,366.25 7,366.25 -
01/15/2033 415,000.00 3.550%7,366.25 422,366.25 429,732.50
Total $9,880,000.00 - $2,201,145.55 $12,081,145.55 -
Northland Securities, Inc.Page 6
Improvement Portion
Equipment Portion
Date Principal Coupon Interest Total P+I Fiscal Total
06/08/2017 -----
01/15/2018 --67,547.28 67,547.28 67,547.28
07/15/2018 --56,030.00 56,030.00 -
01/15/2019 415,000.00 1.700%56,030.00 471,030.00 527,060.00
07/15/2019 --52,502.50 52,502.50 -
01/15/2020 420,000.00 1.900%52,502.50 472,502.50 525,005.00
07/15/2020 --48,512.50 48,512.50 -
01/15/2021 430,000.00 2.100%48,512.50 478,512.50 527,025.00
07/15/2021 --43,997.50 43,997.50 -
01/15/2022 440,000.00 2.250%43,997.50 483,997.50 527,995.00
07/15/2022 --39,047.50 39,047.50 -
01/15/2023 450,000.00 2.400%39,047.50 489,047.50 528,095.00
07/15/2023 --33,647.50 33,647.50 -
01/15/2024 460,000.00 2.550%33,647.50 493,647.50 527,295.00
07/15/2024 --27,782.50 27,782.50 -
01/15/2025 470,000.00 2.650%27,782.50 497,782.50 525,565.00
07/15/2025 --21,555.00 21,555.00 -
01/15/2026 480,000.00 2.750%21,555.00 501,555.00 523,110.00
07/15/2026 --14,955.00 14,955.00 -
01/15/2027 495,000.00 2.900%14,955.00 509,955.00 524,910.00
07/15/2027 --7,777.50 7,777.50 -
01/15/2028 510,000.00 3.050%7,777.50 517,777.50 525,555.00
Total $4,570,000.00 - $759,162.28 $5,329,162.28 -
Date Principal Coupon Interest Total P+I Fiscal Total
06/08/2017 -----
01/15/2018 --4,003.95 4,003.95 4,003.95
07/15/2018 --3,321.25 3,321.25 -
01/15/2019 30,000.00 1.700%3,321.25 33,321.25 36,642.50
07/15/2019 --3,066.25 3,066.25 -
01/15/2020 30,000.00 1.900%3,066.25 33,066.25 36,132.50
07/15/2020 --2,781.25 2,781.25 -
01/15/2021 30,000.00 2.100%2,781.25 32,781.25 35,562.50
07/15/2021 --2,466.25 2,466.25 -
01/15/2022 30,000.00 2.250%2,466.25 32,466.25 34,932.50
07/15/2022 --2,128.75 2,128.75 -
01/15/2023 30,000.00 2.400%2,128.75 32,128.75 34,257.50
07/15/2023 --1,768.75 1,768.75 -
01/15/2024 30,000.00 2.550%1,768.75 31,768.75 33,537.50
07/15/2024 --1,386.25 1,386.25 -
01/15/2025 30,000.00 2.650%1,386.25 31,386.25 32,772.50
07/15/2025 --988.75 988.75 -
01/15/2026 35,000.00 2.750%988.75 35,988.75 36,977.50
07/15/2026 --507.50 507.50 -
01/15/2027 35,000.00 2.900%507.50 35,507.50 36,015.00
Total $280,000.00 - $40,833.95 $320,833.95 -
Northland Securities, Inc.Page 7
Sewer Revenue Portion
Date Principal Coupon Interest Total P+I Fiscal Total
06/08/2017 -----
01/15/2018 --51,349.13 51,349.13 51,349.13
07/15/2018 --42,593.75 42,593.75 -
01/15/2019 170,000.00 1.700%42,593.75 212,593.75 255,187.50
07/15/2019 --41,148.75 41,148.75 -
01/15/2020 175,000.00 1.900%41,148.75 216,148.75 257,297.50
07/15/2020 --39,486.25 39,486.25 -
01/15/2021 175,000.00 2.100%39,486.25 214,486.25 253,972.50
07/15/2021 --37,648.75 37,648.75 -
01/15/2022 180,000.00 2.250%37,648.75 217,648.75 255,297.50
07/15/2022 --35,623.75 35,623.75 -
01/15/2023 185,000.00 2.400%35,623.75 220,623.75 256,247.50
07/15/2023 --33,403.75 33,403.75 -
01/15/2024 190,000.00 2.550%33,403.75 223,403.75 256,807.50
07/15/2024 --30,981.25 30,981.25 -
01/15/2025 195,000.00 2.650%30,981.25 225,981.25 256,962.50
07/15/2025 --28,397.50 28,397.50 -
01/15/2026 200,000.00 2.750%28,397.50 228,397.50 256,795.00
07/15/2026 --25,647.50 25,647.50 -
01/15/2027 205,000.00 2.900%25,647.50 230,647.50 256,295.00
07/15/2027 --22,675.00 22,675.00 -
01/15/2028 210,000.00 3.050%22,675.00 232,675.00 255,350.00
07/15/2028 --19,472.50 19,472.50 -
01/15/2029 215,000.00 3.150%19,472.50 234,472.50 253,945.00
07/15/2029 --16,086.25 16,086.25 -
01/15/2030 225,000.00 3.250%16,086.25 241,086.25 257,172.50
07/15/2030 --12,430.00 12,430.00 -
01/15/2031 230,000.00 3.350%12,430.00 242,430.00 254,860.00
07/15/2031 --8,577.50 8,577.50 -
01/15/2032 240,000.00 3.450%8,577.50 248,577.50 257,155.00
07/15/2032 --4,437.50 4,437.50 -
01/15/2033 250,000.00 3.550%4,437.50 254,437.50 258,875.00
Total $3,045,000.00 - $848,569.13 $3,893,569.13 -
Northland Securities, Inc.Page 8
Water Revenue Portion
Date Principal Coupon Interest Total P+I Fiscal Total
06/08/2017 -----
01/15/2018 --30,881.81 30,881.81 30,881.81
07/15/2018 --25,616.25 25,616.25 -
01/15/2019 100,000.00 1.700%25,616.25 125,616.25 151,232.50
07/15/2019 --24,766.25 24,766.25 -
01/15/2020 105,000.00 1.900%24,766.25 129,766.25 154,532.50
07/15/2020 --23,768.75 23,768.75 -
01/15/2021 105,000.00 2.100%23,768.75 128,768.75 152,537.50
07/15/2021 --22,666.25 22,666.25 -
01/15/2022 110,000.00 2.250%22,666.25 132,666.25 155,332.50
07/15/2022 --21,428.75 21,428.75 -
01/15/2023 110,000.00 2.400%21,428.75 131,428.75 152,857.50
07/15/2023 --20,108.75 20,108.75 -
01/15/2024 115,000.00 2.550%20,108.75 135,108.75 155,217.50
07/15/2024 --18,642.50 18,642.50 -
01/15/2025 115,000.00 2.650%18,642.50 133,642.50 152,285.00
07/15/2025 --17,118.75 17,118.75 -
01/15/2026 120,000.00 2.750%17,118.75 137,118.75 154,237.50
07/15/2026 --15,468.75 15,468.75 -
01/15/2027 125,000.00 2.900%15,468.75 140,468.75 155,937.50
07/15/2027 --13,656.25 13,656.25 -
01/15/2028 125,000.00 3.050%13,656.25 138,656.25 152,312.50
07/15/2028 --11,750.00 11,750.00 -
01/15/2029 130,000.00 3.150%11,750.00 141,750.00 153,500.00
07/15/2029 --9,702.50 9,702.50 -
01/15/2030 135,000.00 3.250%9,702.50 144,702.50 154,405.00
07/15/2030 --7,508.75 7,508.75 -
01/15/2031 140,000.00 3.350%7,508.75 147,508.75 155,017.50
07/15/2031 --5,163.75 5,163.75 -
01/15/2032 145,000.00 3.450%5,163.75 150,163.75 155,327.50
07/15/2032 --2,662.50 2,662.50 -
01/15/2033 150,000.00 3.550%2,662.50 152,662.50 155,325.00
Total $1,830,000.00 - $510,939.31 $2,340,939.31 -
Northland Securities, Inc.Page 9
Storm Water Revenue Portion
Date Principal Coupon Interest Total P+I Fiscal Total
06/08/2017 -----
01/15/2018 --2,578.38 2,578.38 2,578.38
07/15/2018 --2,138.75 2,138.75 -
01/15/2019 10,000.00 1.700%2,138.75 12,138.75 14,277.50
07/15/2019 --2,053.75 2,053.75 -
01/15/2020 10,000.00 1.900%2,053.75 12,053.75 14,107.50
07/15/2020 --1,958.75 1,958.75 -
01/15/2021 10,000.00 2.100%1,958.75 11,958.75 13,917.50
07/15/2021 --1,853.75 1,853.75 -
01/15/2022 10,000.00 2.250%1,853.75 11,853.75 13,707.50
07/15/2022 --1,741.25 1,741.25 -
01/15/2023 10,000.00 2.400%1,741.25 11,741.25 13,482.50
07/15/2023 --1,621.25 1,621.25 -
01/15/2024 10,000.00 2.550%1,621.25 11,621.25 13,242.50
07/15/2024 --1,493.75 1,493.75 -
01/15/2025 10,000.00 2.650%1,493.75 11,493.75 12,987.50
07/15/2025 --1,361.25 1,361.25 -
01/15/2026 10,000.00 2.750%1,361.25 11,361.25 12,722.50
07/15/2026 --1,223.75 1,223.75 -
01/15/2027 10,000.00 2.900%1,223.75 11,223.75 12,447.50
07/15/2027 --1,078.75 1,078.75 -
01/15/2028 10,000.00 3.050%1,078.75 11,078.75 12,157.50
07/15/2028 --926.25 926.25 -
01/15/2029 10,000.00 3.150%926.25 10,926.25 11,852.50
07/15/2029 --768.75 768.75 -
01/15/2030 10,000.00 3.250%768.75 10,768.75 11,537.50
07/15/2030 --606.25 606.25 -
01/15/2031 10,000.00 3.350%606.25 10,606.25 11,212.50
07/15/2031 --438.75 438.75 -
01/15/2032 10,000.00 3.450%438.75 10,438.75 10,877.50
07/15/2032 --266.25 266.25 -
01/15/2033 15,000.00 3.550%266.25 15,266.25 15,532.50
Total $155,000.00 - $41,640.88 $196,640.88 -
Northland Securities, Inc.Page 10
Attachment 2 – Estimated Levy Schedules
Improvement Portion
Equipment Portion
Date Total P+I
Les: Issuer
Contribution: 105% Levy Revenue*
Issuer Net
Levy Levy Year
Collection
Year
01/15/2018 67,547.28 67,547.28 - - -
01/15/2019 527,060.00 - 553,413.00 230,105.96 323,307.04 2017 2018
01/15/2020 525,005.00 - 551,255.25 230,105.96 321,149.29 2018 2019
01/15/2021 527,025.00 - 553,376.25 230,105.96 323,270.29 2019 2020
01/15/2022 527,995.00 - 554,394.75 230,105.97 324,288.78 2020 2021
01/15/2023 528,095.00 - 554,499.75 230,105.97 324,393.78 2021 2022
01/15/2024 527,295.00 - 553,659.75 230,105.97 323,553.78 2022 2023
01/15/2025 525,565.00 - 551,843.25 230,105.95 321,737.30 2023 2024
01/15/2026 523,110.00 - 549,265.50 230,105.97 319,159.53 2024 2025
01/15/2027 524,910.00 - 551,155.50 230,105.96 321,049.54 2025 2026
01/15/2028 525,555.00 - 551,832.75 230,105.95 321,726.80 2026 2027
Total $5,329,162.28 $67,547.28 $5,524,695.75 $2,301,059.62 $3,223,636.13
*Special assessment revenue is based on assessments totaling $1,803,847 assessed at an estimated rate of 4.65%
(2% over the average coupon), with equal annual payments.
Date Total P+I
Less: Issuer
Contribution:
Issuer Net
Levy Levy Year
Collection
Year
01/15/2018 4,003.95 4,003.95 -
01/15/2019 36,642.50 38,474.63 2017 2018
01/15/2020 36,132.50 37,939.13 2018 2019
01/15/2021 35,562.50 37,340.63 2019 2020
01/15/2022 34,932.50 36,679.13 2020 2021
01/15/2023 34,257.50 35,970.38 2021 2022
01/15/2024 33,537.50 35,214.38 2022 2023
01/15/2025 32,772.50 34,411.13 2023 2024
01/15/2026 36,977.50 38,826.38 2024 2025
01/15/2027 36,015.00 37,815.75 2025 2026
Total $320,833.95 $4,003.95 $332,671.50
Northland Securities, Inc.Page 11
Attachment 3 – Related Considerations
Bank Qualification
We understand the City (in combination with any subordinate taxing jurisdictions or debt
issued in the City’s name by 501(c)3 corporations) anticipates issuing $10,000,000 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 Compliance
The Bonds are expected to qualify for the “18 month spending exception” related to arbitrage
rebate.
Other aspects of arbitrage regulations will apply to the investment of bond proceeds and the
debt service fund.
Project/Construction Fund. All tax-exempt bond issues are subject to federal rebate
requirements which require all arbitrage earned to be rebated to the U.S. Treasury. A rebate
exemption the City expects to qualify for is the “18 month spending exemption.”
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 Resolution for the Bonds prepared by Bond Counsel explains the requirements
in greater detail.
Continuing Disclosure
Type: Full
Dissemination Agent: Northland Securities
The requirements for continuing disclosure are governed by SEC Rule 15c2-12. The primary
requirements of Rule 15c2-12 actually fall on underwriters. The Rule sets forth due diligence
needed prior to the underwriter’s purchase of municipal securities. Part of this requirement is
obtaining commitment from the issuer to provide continuing disclosure. The document
describing the continuing disclosure commitments (the “Undertaking”) is contained in the
Official Statement that will be prepared to offer the Bonds to investors.
The City has more than $10,000,000 of outstanding debt and is required to undertake “full”
continuing disclosure. Full disclosure requires annual posting of the audit and a separate
continuing disclosure report, as well as the reporting of certain “material events.” Material
events set forth in the Rule, including, but not limited to, bond rating changes and call notices,
must be reported within ten days of occurrence. The report contains annual financial
information and operating data that “mirrors” material information presented in the Official
Statement. The specific contents of the annual report will be described in the Undertaking that
appears in the appendix of the Official Statement. Northland currently serves as dissemination
agent for the City, assisting with the annual reporting. The information for the Bonds will be
incorporated into our reporting.
Northland Securities, Inc.Page 12
Premiums
In the current market environment, it is likely that bids received from underwriters will include
premiums. A premium bid occurs when the purchaser pays the City an amount in excess of the
par amount of a maturity in exchange for a higher coupon (interest rate). The use of premiums
reflects the bidder’s view on future market conditions, tax considerations for investors and
other factors. Ultimately, the true interest cost (“TIC”) calculation will determine the lowest bid,
regardless of premium.
A premium bid produces additional funds that can be used in several ways:
The premium means that the City needs less bond proceeds and can reduce the size of
the issue by the amount of the premium.
The premium can be deposited in the Construction Fund and used to pay additional
project costs, rather than used to reduce the size of the issue.
The premium can be deposited in the Debt Service Fund and used to pay principal and
interest.
Northland will work with City staff prior to the sale day to determine use of premium (if any).
A consideration for use of premium is the bank qualification of the Bonds.
Rating
A rating will be requested from Moody’s. The City’s general obligation debt is currently rated
"Aa2" by Moody’s. The rating process will include a conference call with the rating analyst.
Northland will assist City staff in preparing for and conducting the rating call.
Northland Securities, Inc.Page 13
Attachment 4 – Calendar of Events
Date Action Responsible Party
March 20, 2017 City confirms project costs to be financed and source of
payment and not to exceed amount for bond size
Northland, City Staff
April 11, 2017 Set Sale Resolution Sent to City for Council Packets
Finance Plan Sent to the City
Northland, Bond
Counsel
April 18, 2017 Set Sale Resolution for Bonds Adopted (Set Sale to be
Based on Not to Exceed Amount)
City Council Action,
Northland, Bond
Counsel
April 19, 2017 Preliminary Official Statement Sent to City for Sign Off
and to Rating Agency (Moody’s)
Northland, City
April 20, 2017 Bids for Lift Station Received City
Week of April 24,
2017
Rating Conference Call Northland, City,
Rating Agency
May 4, 2017 Bids for DT Village Received City
May 5, 2017 Final Bond Issuance Sizing Before Northland to Release
to Potential Bidders
Northland, City
May 8, 2017 Rating Received Rating Agency, City,
Northland
May 16, 2017 Bond Sale – 10:30 a.m.
Authorizing Resolution Adopted – 7:00 p.m.
City Council Action,
Northland,Bond
Counsel
June 8, 2017 Closing on the Bonds (Proceeds available) Northland, City Staff,
Bond Counsel
February 2017 March 2017
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 1 2 3 4
5 6 7 8 9 10 11 5 6 7 8 9 10 11
12 13 14 15 16 17 18 12 13 14 15 16 17 18
19 20 21 22 23 24 25 19 20 21 22 23 24 25
26 27 28 26 27 28 29 30 31
April 2017 May 2017
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 1 2 3 4 5 6
2 3 4 5 6 7 8 7 8 9 10 11 12 13
9 10 11 12 13 14 15 14 15 16 17 18 19 20
16 17 18 19 20 21 22 21 22 23 24 25 26 27
23 24 25 26 27 28 29 28 29 30 31
30
Northland Securities, Inc.Page 14
Attachment 5 - Risk Factors
Property Taxes: Property tax levies shown in this Finance Plan are based on projected debt
service and other revenues. Final levies will be set based on the results of sale. Levies should be
reviewed annually and adjusted as needed. The debt service levy must be included in the
preliminary levy for annual Truth in Taxation hearings. Future Legislative changes in the
property tax system, including the imposition of levy limits and changes in calculation of
property values, would affect plans for payment of debt service. Delinquent payment of
property taxes would reduce revenues available to pay debt service.
Special Assessments: Special assessments for the financed project have not been levied at this
time. This Finance Plan is based on the assumptions listed earlier in this report. Changes in the
terms and timing for the actual assessments will alter the projected flow of funds for payment of
debt service on the Bonds. Also, special assessments may be prepaid. It is likely that the income
earned on the investment of prepaid assessments will be less than the interest paid if the
assessments remained outstanding. Delinquencies in assessment collections would reduce
revenues needed to pay debt service. The collection of deferred assessments, if any, has not
been included in the revenue projections. Projected assessment income should be reviewed
annually and adjusted as needed.
Utility Revenues: The City pledges the net revenues of the sewer, water and storm water
utilities to the payment of principal and interest on the Bonds. The failure to adjust rates and
charges as needed and the loss of significant customers will affect available net revenues. If the
net revenues are insufficient, the City is required to levy property taxes or use other revenues to
cover the deficiency. Property taxes can only be used on a temporary basis and may not be an
ongoing source of revenue to pay debt service.
General: In addition to the risks described above, there are certain general risks associated with
the issuance of bonds. These risks include, but are not limited to:
Failure to comply with covenants in bond resolution.
Failure to comply with Undertaking for continuing disclosure.
Failure to comply with IRS regulations, including regulations related to use of the proceeds
and arbitrage/rebate. The IRS regulations govern the ability of the City to issue its bonds as
tax-exempt securities and failure to comply with the IRS regulations may lead to loss of tax-
exemption.
RESOLUTION NO.2017-037
RESOLUTION AUTHORIZING ISSUANCE AND SALE OF GENERAL OBLIGATION BONDS,
SERIES 2017A
BE IT RESOLVED by the City Council of the City of Lake Elmo, Minnesota (the “City”), as follows:
Section 1. Authorization; Purpose. It is hereby determined to be in the best interests of the City to issue
its General Obligation Bonds, Series 2017A, in the approximate principal amount of $9,880,000 (the
“Bonds”), as authorized pursuant to Minnesota Statutes, Chapters 475, 444, 429 and 412.301, for the
purpose of (a) financing various improvements in the City, (b) financing various water, stormwater, and
sewer improvements in the City, (c) financing various items of capital equipment and (d) funding costs
of issuance of the Bonds.
Section 2. Notice of Sale. Northland Securities, Inc., municipal advisor to the City, has presented to
this Council a form of Notice of Sale for the Bonds which is attached hereto and hereby approved and
which shall be placed on file by the City Administrator. Each and all of the provisions of the Notice of
Sale are hereby adopted as the terms and conditions of the Bonds and of the sale thereof. Northland
Securities, Inc. is hereby authorized to solicit bids for the Bonds on behalf of the City on a competitive
basis.
Section 3. Adjustment of Principal Amount of Bonds. The principal amount of the Bond issue shall be
adjusted in accordance with staff recommendations upon receipt of bids for the financed projects,
provided that the principal amount shall not exceed $9,880,000.
Section 4. Award and Sale. The City Council shall meet at the times and places shown in the Notice of
Sale for the purpose of considering sealed bids for the purchase of the Bonds and of taking such action
thereon as may be in the best interest of the City.
Upon vote being taken thereon, the following members voted in favor thereof:
and the following members voted against the same:
APPROVED by the Lake Elmo City Council on this 4th day of April, 2017.
By: __________________________
Mike Pearson
Mayor
ATTEST:
________________________________
Julie Johnson
City Clerk
NOTICE OF SALE
$9,880,000 *
GENERAL OBLIGATION BONDS, SERIES 2017A
CITY OF LAKE ELMO, MINNESOTA
(Book-Entry Only)
NOTICE IS HEREBY GIVEN that these Bonds will be offered for sale according to the following terms:
TIME AND PLACE:
Proposals will be opened by the City’s Administrator, or designee, on Tuesday, May 16, 2017, at 10:30 A.M., CT,
at the offices of Northland Securities, Inc., 45 South 7th Street, Suite 2000, Minneapolis, Minnesota 55402.
Consideration of the Proposals for award of the sale will be by the City Council at its meeting at the City Offices
beginning Tuesday, May 16, 2017, at 7:00 P.M., CT.
SUBMISSION OF PROPOSALS
Proposals may be:
a) submitted to the office of Northland Securities, Inc.,
b) faxed to Northland Securities, Inc. at 612-851-5918,
c) for proposals submitted prior to the sale, the final price and coupon rates may be submitted to Northland
Securities, Inc. by telephone at 612-851-5900 or 612-851-4945, or
d) submitted electronically.
Notice is hereby given that electronic proposals will be received via PARITY™, or its successor, in the manner
described below, until 10:30 A.M., CT, on Tuesday, May 16, 2017. Proposals may be submitted electronically via
PARITY™ or its successor, pursuant to this Notice until 10:30 A.M., CT, but no Proposal will be received after the
time for receiving Proposals specified above. To the extent any instructions or directions set forth in PARITY™, or
its successor, conflict with this Notice, the terms of this Notice shall control. For further information about
PARITY™, or its successor, potential bidders may contact Northland Securities, Inc. or i-Deal at 1359 Broadway,
2nd floor, New York, NY 10018, telephone 212-849-5021.
Neither the City nor Northland Securities, Inc. assumes any liability if there is a malfunction of PARITY™ or its
successor. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder
and the City to purchase the Bonds regardless of the manner in which the Proposal is submitted.
BOOK-ENTRY SYSTEM
The Bonds will be issued by means of a book-entry system with no physical distribution of bond certificates made
to the public. The Bonds will be issued in fully registered form and one bond certificate, representing the aggregate
principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of
Depository Trust Company (“DTC”), New York, New York, which will act as securities depository of the Bonds.
* The City reserves the right to increase or decrease the principal amount of the Bonds. Any such increase or decrease will be made in
multiples of $5,000 and may be made in any maturity. If any maturity is adjusted, the purchase price will also be adjusted to maintain the
same gross spread.
Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a
single maturity through book entries made on the books and records of DTC and its participants. Principal and
interest are payable by the City through Northland Trust Services, Inc. Minneapolis, Minnesota (the “Paying
Agent/Registrar”), to DTC, or its nominee as registered owner of the Bonds. Transfer of principal and interest
payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to
beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial
owners. The successful bidder, as a condition of delivery of the Bonds, will be required to deposit the bond
certificates with DTC. The City will pay reasonable and customary charges for the services of the Paying
Agent/Registrar.
DATE OF ORIGINAL ISSUE OF BONDS
Date of Delivery (Estimated to be June 8, 2017)
AUTHORITY/PURPOSE/SECURITY
The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429, 444 and 475 and Section 412.301.
Proceeds will be used to finance an improvement project, an equipment purchase, a water project, a sewer project,
a storm water project, and to pay the costs associated with the issuance of the Bonds. The Bonds are payable from
special assessments against benefited property, sewer, water and storm water revenues, and additionally secured by
ad valorem taxes on all taxable property within the City. The full faith and credit of the City is pledged to their
payment and the City has validly obligated itself to levy ad valorem taxes in the event of any deficiency in the debt
service account established for this issue.
INTEREST PAYMENTS
Interest is due semiannually on each January 15 and July 15, commencing January 15, 2018, to registered owners
of the Bonds appearing of record in the Bond Register as of the close of business on the first day (whether or not a
business day) of the calendar month of such interest payment date.
MATURITIES
Principal is due annually on January 15, inclusive, in each of the years and amounts as follows:
Year Amount Year Amount Year Amount
2019 $725,000 2024 $805,000 2029 $355,000
2020 740,000 2025 820,000 2030 370,000
2021 750,000 2026 845,000 2031 380,000
2022 770,000 2027 870,000 2032 395,000
2023 785,000 2028 855,000 2033 415,000
Proposals for the Bonds may contain a maturity schedule providing for any combination of serial bonds and term
bonds, subject to mandatory redemption, so long as the amount of principal maturing or subject to mandatory
redemption in each year conforms to the maturity schedule set forth above.
INTEREST RATES
All rates must be in integral multiples of 1/20th or 1/8th of 1%. Rates must be in level or ascending order. All Bonds
of the same maturity must bear a single uniform rate from date of issue to maturity.
ADJUSTMENTS TO PRINCIPAL AMOUNT AFTER PROPOSALS
The City reserves the right to increase or decrease the principal amount of the Bonds. Any such increase or decrease
will be made in multiples of $5,000 and may be made in any maturity. If any maturity is adjusted, the purchase
price will also be adjusted to maintain the same gross spread. Such adjustments shall be made promptly after the
sale and prior to the award of Proposals by the City and shall be at the sole discretion of the City. The successful
bidder may not withdraw or modify its Proposal once submitted to the City for any reason, including post-sale
adjustment. Any adjustment shall be conclusive and shall be binding upon the successful bidder.
OPTIONAL REDEMPTION
Bonds maturing on January 15, 2026 through 2033 are subject to redemption and prepayment at the option of the
City on January 15, 2025 and any date thereafter, at a price of par plus accrued interest. Redemption may be in
whole or in part of the Bonds subject to prepayment. If redemption is in part, the maturities and principal amounts
within each maturity to be redeemed shall be determined by the City and if only part of the Bonds having a common
maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond
Registrar.
CUSIP NUMBERS
If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the
failure to print such numbers on any Bond nor any error with respect thereto shall constitute cause for a failure or
refusal by the successful bidder thereof to accept delivery of and pay for the Bonds in accordance with terms of the
purchase contract. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be
paid by the successful bidder.
DELIVERY
Delivery of the Bonds will be within forty days after award, subject to an approving legal opinion by Dorsey &
Whitney LLC, Bond Counsel. The legal opinion will be paid by the City and delivery will be anywhere in the
continental United States without cost to the successful bidder at DTC.
TYPE OF PROPOSAL
Proposals of not less than $9,781,200 (99.00%) and accrued interest on the principal sum of $9,880,000 must be
filed with the undersigned prior to the time of sale. Proposals must be unconditional except as to legality. Proposals
for the Bonds should be delivered to Northland Securities, Inc. and addressed to:
A good faith deposit (the “Deposit”) in the amount of $197,600 in the form of a federal wire transfer (payable to
the order of the City) is only required from the apparent winning bidder, and must be received within two hours
after the time stated for the receipt of Proposals. The apparent winning bidder will receive notification of the wire
instructions from the Municipal Advisor promptly after the sale. If the Deposit is not received from the apparent
winning bidder in the time allotted, the City may choose to reject their Proposal and then proceed to offer the Bonds
to the next lowest bidder based on the terms of their original proposal, so long as said bidder wires funds for the
Deposit amount within two hours of said offer.
Kristina Handt, City Administrator
Lake Elmo City Hall
3800 Laverne Ave. N.
Lake Elmo, Minnesota 55042
The City will retain the Deposit of the successful bidder, the amount of which will be deducted at settlement and
no interest will accrue to the successful bidder. In the event the successful bidder fails to comply with the accepted
Proposal, said amount will be retained by the City. No Proposal can be withdrawn after the time set for receiving
Proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to
another date without award of the Bonds having been made.
AWARD
The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC)
basis. The City’s computation of the interest rate of each Proposal, in accordance with customary practice, will be
controlling. In the event of a tie, the sale of the Bonds will be awarded by lot. The City will reserve the right to: (i)
waive non-substantive informalities of any Proposal or of matters relating to the receipt of Proposals and award of
the Bonds, (ii) reject all Proposals without cause, and (iii) reject any Proposal which the City determines to have
failed to comply with the terms herein.
INFORMATION FROM SUCCESSFUL BIDDER
The successful bidder will be required to provide, in a timely manner, certain information relating to the initial
offering price of the Bonds necessary to compute the yield on the Bonds pursuant to the provisions of the Internal
Revenue Code of 1986, as amended.
OFFICIAL STATEMENT
By awarding the Bonds to any underwriter or underwriting syndicate submitting a Proposal therefor, the City agrees
that, no more than seven business days after the date of such award, it shall provide to the senior managing
underwriter of the syndicate to which the Bonds are awarded, the Final Official Statement in an electronic format
as prescribed by the Municipal Securities Rulemaking Board (MSRB).
FULL CONTINUING DISCLOSURE UNDERTAKING
The City will covenant in the resolution awarding the sale of the Bonds to provide, or cause to be provided, annual
financial information, including audited financial statements of the City, and notices of certain material events, as
required by SEC Rule 15c2-12.
BANK QUALIFICATION
The City will designate the Bonds as qualified tax-exempt obligations for purposes of Section 265(b)(3) of the
Internal Revenue Code of 1986, as amended.
BOND INSURANCE AT UNDERWRITER’S OPTION
If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option
of the successful bidder, the purchase of any such insurance policy or the issuance of any such commitment shall
be at the sole option and expense of the successful bidder of the Bonds. Any increase in the costs of issuance of the
Bonds resulting from such purchase of insurance shall be paid by the successful bidder, except that, if the City has
requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating
agency fees shall be the responsibility of the successful bidder. Failure of the municipal bond insurer to issue the
policy after the Bonds have been awarded to the successful bidder shall not constitute cause for failure or refusal
by the successful bidder to accept delivery on the Bonds.
The City reserves the right to reject any and all Proposals, to waive informalities and to adjourn the sale.
Dated: April 18, 2017 BY ORDER OF THE LAKE ELMO CITY COUNCIL
/s/ Kristina Handt
City Administrator
Additional information may be obtained from:
Northland Securities, Inc.
45 South 7th Street, Suite 2000
Minneapolis, Minnesota 55402
Telephone No.: 612-851-5900
MUNICIPAL ADVISORY SERVICE AGREEMENT
BY AND BETWEEN
THE CITY OF LAKE ELMO, MINNESOTA
AND
NORTHLAND SECURITIES, INC.
This Agreement made and entered into by and between the City of Lake Elmo, Minnesota
(hereinafter "City")andNorthland Securities,Inc., of Minneapolis, Minnesota(hereinafter "NSI").
WITNESSETH
WHEREAS, the City desires to have NSI provide it with advice on the structure, terms, timing and
other matters related to the issuance of the General Obligation Bonds, Series 2017A (the “Debt”)
serving in therole of municipal(financial) advisor,and
WHEREAS, NSIisa registered municipal advisor(registration # 866-00082-00),and
WHEREAS, NSI will act as municipal advisor in accordance with the duties and responsibilities of
Rule G-42 ofthe Municipal Securities RulemakingBoard, and
WHEREAS, the City and NSI are entering into this Agreement to define the municipal advisory
relationship at the earliest opportunity related to the inception of the municipal advisory relationship
for the Debt, and
WHEREAS, NSIdesires to furnish servicesto the City ashereinafter described,
NOW, THEREFORE, itisagreed byandbetween the partiesasfollows:
SERVICESTOBEPROVIDEDBYNSI
NSI shall provide the City with services necessary to analyze, structure, offer for sale and close the
Debt. The serviceswill betailoredto meet theneedsof thisengagementandmay include:
PlanningandDevelopment
1.Assist City officialsto define thescopeandthe objectivesfor the Debt.
2.Investigate andconsider reasonably feasiblefinancing alternatives.
3.Assist the City in understanding the material risks, potential benefits, structure and other
characteristics of the recommended plan for the Debt, including issue structure, estimated debt
service payments, projected revenues, method of issuance, bond rating, sale timing, and call
provisions.
4.Prepare aschedule ofevents relatedto theissuanceprocess.
5.Coordinatewith bondcounsel any actionsneeded toauthorize theissuanceofthe Debt.
6.Attend meetings of the City Council and other project andbondissue relatedmeetings asneeded
and as requested.
MunicipalAdvisory ServiceAgreement
2
BondSale
1.Assist the City with the preparation, review and approval of the preliminary official statement
(POS).
2.Assist the City and bond counsel with preparing and publishing the Official Notice of Sale if
requiredby law.
3.Prepare and submit application for bond rating(s) and assist the City with furnishing the rating
agency(s) with any additional information required to conduct the rating review. Assist the City
with preparingand conducting the rating callor other presentation.
4.Assist the City in receiving the bids, compute the accuracy of the bids received, and recommend
to theCitythe mostfavorablebidfor award.
5.Coordinatewith bondcounsel the preparation ofrequired contracts and resolutions.
PostSaleSupport
1.Assist the Citywith the preparation of final official statement, distribution to the underwriter and
posting on EMMA.
2.Coordinate the bond issue closing, including making all arrangements for bond printing,
registration, and delivery.
3.Furnish totheCitya complete transcript of thetransaction,if not provided bybondcounsel.
Therearenospecificlimitationsonthescopeofthisagreement.
COMPENSATION
For providing these services with respect to the Debt, NSI shall be paid a lump sum of $31,500. The
fee due to NSI shall be payableby the City upon theclosingoftheBonds.
NSI agrees topay thefollowing expensesfromitsfee:
Out-of-pocket expensessuch as travel,long distancephone, andcopy costs.
Production anddistribution of materialto ratingagenciesand/or bondinsurance companies.
Preparation ofthebond transcript.
The City agrees to pay for all other expenses related to the processing of the bond issue(s) including,
but notlimitedto, thefollowing:
Engineeringand/orarchitecturalfees.
Publication oflegalnotices.
Bond counsel andlocal attorneyfees.
Fees forvariousdebtcertificates.
The cost of printing Official Statements,ifany.
City staff expenses.
Airfare and lodging expenses of one NSI official and City officials when and if traveling for
rating agencypresentations.
Rating agencyfees, if any.
Bondinsurance fees,ifany.
Accounting and other related fees.
It is expressly understood that there is no obligation on the part of the City under the terms of this
Agreement to issue the Debt. If the Debt is not issued, NSI agrees to pay its own expenses and
receivenofeeforanyservicesithas rendered.
MunicipalAdvisory ServiceAgreement
3
CONFLICTSOFINTEREST
NSI is not aware of any material conflicts of interest that could reasonably be anticipated to impair
NSI’s ability to provide advice to or on behalf ofthe City in accordance with the standards ofconduct
for municipaladvisors.
The compensation for services provided in this Agreement is customary in the municipal securities
market, but may pose a conflict of interest. Since the fee is payable at closing and only if the Debt is
issued, NSI may have an incentive to encourage issuance. Compensation linked to the size of the
transaction may provide incentive to increase the amount of the Debt. Compensation considerations
will not impair NSI’s ability to provide unbiased and competent advice or to fulfill its fiduciary duty
to the City. In executing this Agreement, the City acknowledges and accepts the potential conflicts of
interest posed bythe compensation to NSI.
Northland Capital Holdings is the parent company of NSI. Another subsidiary of Northland Capital
Holdings is Northland Trust, Inc. Northland Trust provides paying agent services to issuers of
municipal bonds. The City is solely responsible for the decision on the source of paying agent
services. Any engagement of Northland Trust is outside the scope of this Agreement. No
compensation paidto NorthlandTrust issharedwith NSI.
NSI does not provide executive search, organizational development, compensation systems or other
management consulting services that may directly or indirectly affect City staff that recommend the
engagement of municipaladvisor servicesandmaypose a conflict of interest.
LEGALANDDISCIPLINARYACTIONS
There are no legal or disciplinary events reported by the Securities and Exchange Commission
contained in FormMA orForm MA-I. The City can findinformation aboutthese formsandaccessing
information related to NSIat www.sec.gov/municipal.
SUCCESSORSORASSIGNS
The terms and provisions of this Agreement are binding upon and inure to the benefit of the City
and NSIand their successors or assigns.
TERMOFTHISAGREEMENT
This Agreement may be terminated by thirty (30) days written notice by either the City or NSI and it
shall terminatesixty(60) days following theclosingdate related tothe issuance of the Debt.