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#10 - 2025 Bonding
STAFF REPORT DATE: July 15, 2025 REGULAR TO: Mayor and Councilmembers FROM: Clarissa Hadler, Finance Director AGENDA ITEM: 2025 Bonding CORE STRATEGIES: ☐ Vibrant, inclusive, connected community ☐ Efficient, reliable, innovative services ☐ Responsive, transparent, adaptive governance ☒ Balanced Finances now and future ☐ Managed Growth BACKGROUND: Each year, the city determines how much money it would like to bond for to complete the capital projects it has planned. In 2024, staff received direction from the Council to begin to decrease the amount the city bonds for projects, so this year, of the approximately $6 Million in Infrastructure Capital Projects for 2025, only $2,185,000 $2,025,000 will come from bonding. The Council has previously approved the project we will be bonding for this year. The 2025 Street Improvements is considered a single construction project but encompasses improvements in five areas of the city; • 55th Street / 57th Street / Julep Way • Irish Court • Lake Elmo Vista Neighborhood (55th St) • Prairie Hamlet Neighborhood (59th St Ct N) • Teal Pass Estates Neighborhood (Jerome Ave N / Jasper Ave N / 49th St) At the June 17th meeting, Council approved the sale of the bonds. Staff participated in a bond rating call with Moody’s in June. The City’s bond rating has not changed and continues to stay at Aa1. That report is attached. ISSUE BEFORE COUNCIL: Should the Council authorize the issuance and sale of $2,185,000 $2,025,000 general obligation bonds? PROPOSAL DETAILS/ANALYSIS: The sale is scheduled to happen the morning of July 15th – the morning of this Council meeting. Tammy Omdahl from Northland will be at the Council meeting to provide the results, which will be used to update the resolution in your packet. FISCAL IMPACT: The estimated levy schedule can be found on page 7 of the finance plan from the June 17th meeting. The city is required to levy 105% of the general fund portion of the improvement (street) projects. REVISED MOTION OPTIONS: 1) Approve Resolution No. 2025-054 2) Amend and then Approve Resolution No. 2025-054 3) Do not authorize the issuance of bonds RECOMMENDATION: Motion to approve Resolution No. 2025-054: A Resolution Awarding the Sale of $2,025,000 General Obligation Improvement Bonds, Series 2025A; Fixing their Form and Specifications; Directing Their Execution and Delivery; and Providing for their Payment. ATTACHMENTS: • Resolution No 2025-054 • Moody’s Rating Report 1 4908-6676-6901.2 Extract of Minutes of Meeting of the City Council of the City of Lake Elmo, Minnesota Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Lake Elmo, Minnesota, was held at City Hall in the City on Tuesday, July 15, 2025, commencing at 7:00 P.M. The following members were present: and the following were absent: * * * * * * * * * The Mayor announced that the next order of business was consideration of the proposals which had been received for the purchase of the City’s $2,025,000 General Obligation Improvement Bonds, Series 2025A. The City Finance Director presented a tabulation of the proposals that had been received in the manner specified in the Notice of Sale for the Bonds. The proposals are summarized on Exhibit A attached hereto. The following resolution was introduced by Member ____________ who moved its adoption: 4908-6676-6901.2 CITY OF LAKE ELMO WASHINGTON COUNTY STATE OF MINNESOTA RESOLUTION NO. 2025 - 054 A RESOLUTION AWARDING THE SALE OF $2,025,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2025A; FIXING THEIR FORM AND SPECIFICATIONS; DIRECTING THEIR EXECUTION AND DELIVERY; AND PROVIDING FOR THEIR PAYMENT BE IT RESOLVED By the City Council of the City of Lake Elmo, Washington County, Minnesota (the “City”) as follows: Section 1. Background. 1.01 The City is authorized by Minnesota Statutes, Chapters 429 and Minnesota Statutes, Chapter 475, as amended (collectively, the “Act”) to provide financing for the City’s 2025 street improvement projects (the “Assessable Improvements”). 1.02 The City is authorized by Minnesota Statutes, Section 475.60, subdivision 2(9) to negotiate the sale of the Bonds if the City has retained an independent municipal advisor in connection with such sale. The City has retained Northland Securities, Inc. as its municipal advisor (the “Municipal Advisor”). The actions of the City staff and the City’s Municipal Advisor in negotiating the sale of the Bonds are ratified and confirmed in all aspects. Section 2. Sale of Bonds. 2.01 Authorization. It is hereby determined that it is necessary to provide financing for the Assessable Improvements to finance those improvements through the issuance of the City’s $2,025,000 General Obligation Improvement Bonds, Series 2025A (the “Bonds”). 2.02. Award to the Purchaser and Interest Rates. The proposal of Brownstone Investment Group, LLC, New York, New York (the “Purchaser”) to purchase the Bonds of the City described in the official statement thereof is found and determined to be the most favorable offer received and is hereby accepted, the proposal being to purchase the Bonds at a price of $2,158,663.85 (par amount of $2,025,000.00, plus a premium of $146,826.35 less underwriter’s discount of $13,162.50), for Bonds bearing interest as follows: 4908-6676-6901.2 Year of Maturity Interest Rate Year of Maturity Interest Rate 2027 5.00% 2032 5.00% 2028 5.00 2033 5.00 2029 5.00 2034 4.00 2030 5.00 2035 4.00 2031 5.00 2036 4.00 2.03. Purchase Contract. Any amount paid by the Purchaser over the minimum purchase price shall be credited to the Debt Service Fund hereinafter created, or deposited in the Construction Fund hereinafter created, as determined by the City Finance Director after consultation with the City’s municipal advisor. The City Finance Director is directed to retain the good faith deposit of the Purchaser, pending completion of the sale of the Bonds. The Mayor and City Clerk are authorized to execute a contract with the Purchaser on behalf of the City, if requested by the Purchaser. 2.04. Terms and Principal Amount of Bonds. The City will forthwith issue and sell the Bonds pursuant to the Act, in the total principal amount of $2,025,000, originally dated the date of delivery, in fully registered form and in the denominations of $5,000 each or any integral multiple thereof, numbered No. R-1 and upward, bearing interest as above set forth, and maturing serially on February 1 in the years and amounts as follows: Year Amount Year Amount 2027 $125,000 2032 $210,000 2028 175,000 2033 220,000 2029 180,000 2034 235,000 2030 190,000 2035 240,000 2031 200,000 2036 250,000 As may be requested by the Purchaser, one or more term Bonds (the “Term Bonds”) may be issued having mandatory sinking fund redemption and final maturity amounts conforming to the foregoing principal repayment schedule, and corresponding additions may be made to the provisions of the applicable Bond(s). 2.05. Optional Redemption. The City may elect on February 1, 2033, and on any day thereafter to prepay Bonds maturing on or after February 1, 2034. Redemption may be in whole or in part and if in part, at the option of the City and in such manner as the City will determine. If less than all Bonds of a maturity are called for redemption, the City will notify DTC (as defined in Section 7 hereof) of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant’s interest in such maturity to be redeemed and each participant 4908-6676-6901.2 will then select by lot the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a price of par plus accrued interest. Section 3. Registration and Payment. 3.01. Registered Form. The Bonds will be issued only in fully registered form. The interest thereon and, upon surrender of each Bond, the principal amount thereof is payable by check or draft issued by the Registrar described herein. 3.02. Dates; Interest Payment Dates. Each Bond will be dated as of the last interest payment date preceding the date of authentication to which interest on the Bond has been paid or made available for payment, unless (i) the date of authentication is an interest payment date to which interest has been paid or made available for payment, in which case the Bond will be dated as of the date of authentication, or (ii) the date of authentication is prior to the first interest payment date, in which case the Bond will be dated as of the date of original issue. The interest on the Bonds is payable on February 1 and August 1 of each year, commencing August 1, 2026, to the registered owners thereof of record as of the close of business on the 15th day of the immediately preceding month, whether or not that day is a business day. 3.03. Registration. The City will appoint, and will maintain, a bond registrar, transfer agent, authenticating agent and paying agent (the “Registrar”). The effect of registration and the rights and duties of the City and the Registrar with respect thereto are as follows: (a) Register. The Registrar will keep at its principal corporate trust office a bond register in which the Registrar provides 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 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 will 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 15th day of the month preceding each interest payment date and until that interest payment date. (c) Exchange of Bonds. Whenever any Bonds are surrendered by the registered owner for exchange the Registrar will authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity as requested by the registered owner or the owner’s attorney in writing. (d) Cancellation. All Bonds surrendered upon any transfer or exchange will be promptly cancelled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When a Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is 4908-6676-6901.2 satisfied that the endorsement on the Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar will 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 a Bond is at any time registered, as of the applicable record date, in the bond register as the absolute owner of such Bond, whether the Bond is 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 payments so made to a registered owner or upon the owner’s order will be valid and effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or sums so paid. (g) Taxes, Fees and Charges. The Registrar may impose a charge upon the owner thereof for a transfer or exchange of Bonds, sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to the transfer or exchange. (h) Mutilated, Lost, Stolen or Destroyed Bonds. If a Bond becomes mutilated or is destroyed, stolen or lost, the Registrar will deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of the 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 the Registrar that the Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar an appropriate bond or indemnity in form, substance and amount satisfactory to the Registrar and as provided by law, in which both the City and the Registrar must be named as obligees. Bonds so surrendered to the Registrar will be cancelled by the Registrar and evidence of such cancellation must 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 is not necessary to issue a new Bond prior to payment. (i) Redemption. In the event any of the Bonds are called for redemption, written notice thereof identifying the Bonds to be redeemed will be given by the Registrar by mailing a copy of the redemption notice by first class mail (postage prepaid) at least 30 days prior to the redemption date to the registered owner of each Bond to be redeemed at the address shown on the registration books kept by the Registrar and by publishing the notice if required by law. Failure to give notice by publication or by mail to any registered owner, or any defect therein, will not affect the validity of the proceedings for the redemption of Bonds. Bonds so called for redemption will cease to bear interest after the specified redemption date, provided that the funds for the redemption are on deposit with the place of payment at that time. 3.04. Appointment of Initial Registrar. The City appoints U.S. Bank Trust Company, National Association, St. Paul, Minnesota, as the initial Registrar. The Mayor and the City Clerk are authorized to execute and deliver, on behalf of the City, a contract with the Registrar. Upon 4908-6676-6901.2 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, the resulting corporation is 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 30 days’ notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar must deliver all cash and Bonds in its possession to the successor Registrar and deliver the bond register to the successor Registrar. On or before each principal or interest due date, without further order of this Council, the City Finance Director must transmit to the Registrar money sufficient for the payment of all principal and interest then due. 3.05. Execution, Authentication and Delivery. The Bonds will be prepared under the direction of the City Finance Director and executed on behalf of the City by the signatures of the Mayor and the City Clerk, provided that all signatures may be printed, engraved or lithographed facsimiles of the originals. If an officer whose signature or a facsimile of whose signature appears on the Bonds ceases to be such officer before the delivery of any Bond, that signature or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. Notwithstanding such execution, a Bond will not 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 a Bond is conclusive evidence that it has been authenticated and delivered under this Resolution. When the Bonds have been so prepared, executed and authenticated, the City Finance Director will deliver the same to the Purchaser thereof upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Purchaser is not obligated to see to the application of the purchase price. 3.06. Form of Bonds. The Bonds will be printed or typewritten in substantially the form set forth in Exhibit B attached hereto. 3.07. Approving Legal Opinion. The City Finance Director is authorized and directed to obtain a copy of the proposed approving legal opinion of Kutak Rock LLP, Minneapolis, Minnesota, which will be complete except as to dating thereof and to cause the opinion to be printed on or accompany each Bond. Section 4. Funds and Accounts; Security; Payment. 4.01. Debt Service Fund. For the convenience and proper administration of the moneys to be borrowed and repaid on the Bonds, and to provide adequate and specific security for the Purchaser and holders from time to time of the Bonds, there is hereby created a special fund to be designated the “General Obligation Improvement Bonds, Series 2025A Debt Service Fund (the “Debt Service Fund”). The Debt Service Fund shall be administered and maintained by the Finance Director as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. Amounts in Debt Service Fund are irrevocably pledged to the Bonds. To the Debt Service Fund hereby created, there is hereby pledged and irrevocably appropriated and there will be credited: (i) the proceeds of ad valorem property taxes herein or hereafter levied (the “Taxes”), 4908-6676-6901.2 and, subject to 4.02, special assessments levied or to be levied against the property specially benefited by the Assessable Improvements (the “Assessments”); (ii) capitalized interest financed from Bond proceeds, if any; (iii) the amount over the minimum purchase price paid by the Purchaser, to the extent designated for deposit in the Debt Service Fund in accordance with Section 2.03 hereof; (iv) all investment earnings on funds in the Debt Service Fund; and (v) any and all other moneys which are properly available and are appropriated by the City Council to the Debt Service Fund. The Debt Service Fund will be maintained in a manner herein specified until all of the Bonds and the interest thereon will have been fully paid. The Finance Director will report to the City Council any current or anticipated deficiency in the Debt Service Fund in the amount necessary to pay principal of and interest on all of the Bonds when due. If a payment of principal or interest on the Bonds becomes due when there is not sufficient money in the Debt Service Fund to pay the same, the City Finance Director is directed to pay such principal or interest from the other funds of the City, and such fund will be reimbursed for those advances out of the proceeds of Taxes and Assessments when collected. 4.02. Construction Fund. The City hereby creates the General Obligation Improvement Bonds, Series 2025A Construction Fund (the “Construction Fund”) to be administered and maintained by the City Finance Director as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. The proceeds of the Bonds, less appropriations made in Section 4.01 hereof, together with any other funds appropriated for the Assessable Improvements and the Assessments and Taxes collected during the construction of the Assessable Improvements, will be deposited in the Construction Fund to be used solely to defray expenses of the Assessable Improvements and the payment of principal of and interest on the Bonds prior to the completion and payment of all costs of the Assessable Improvements. Any balance remaining in the Construction Fund after completion of the Assessable Improvements and payment of the costs thereof may be used to pay the cost in whole or in part of any other improvement instituted under the Act under the direction of the City Council or may be used as provided in Minnesota Statutes, section 475.65, under the direction of the City Council. Thereafter, the Construction Fund is to be closed and any remaining balances therein and any subsequent collections of Assessments and Taxes for the Assessable Improvements are to be deposited in the Debt Service Fund. 4.03. Tax Levy. For the purpose of paying the principal of and interest on the Bonds, there is hereby levied a direct annual irrepealable ad valorem tax upon all of the taxable property in the City, which Taxes will be spread upon the tax rolls and collected with and as part of other general taxes of the City. Such Taxes will be credited to the Debt Service Fund above provided and will be in the years and amounts as set forth in Exhibit C. The tax levy herein provided will be irrepealable until all of the Bonds are paid, provided that the Finance Director may annually, at the time the City makes its tax levies, certify to the County Auditor of the County the amount available in the Debt Service Fund to pay principal and interest due during the ensuing year on the Bonds, and the County Auditor of the County will thereupon reduce the levy collectible during such year by the amount so certified. 4.04. City Covenants with Respect to the Bonds. It is hereby determined that the Assessable Improvements will directly and indirectly benefit abutting and other benefited property, and the City hereby covenants with the holders from time to time of the Bonds as follows: 4908-6676-6901.2 (a) The City has caused or will cause the Assessments for the Assessable Improvements to be promptly levied so that the first installment will be collectible not later than 2026 and will take all steps necessary to assure prompt collection, and the levy of the Assessments is hereby authorized. The City Council will cause to be taken with due diligence all further actions that are required for the construction of each Assessable Improvement financed wholly or partly from the proceeds of the Bonds, and will take all further actions necessary for the final and valid levy of the Assessments and the appropriation of any other funds needed to pay the Bonds and interest thereon when due. (b) In the event of any current or anticipated deficiency in Assessments and Taxes, the City Council will levy additional ad valorem taxes in the amount of the current or anticipated deficiency. (c) The City will keep complete and accurate books and records showing: receipts and disbursements in connection with the Assessable Improvements, Assessments and Taxes levied therefor and other funds appropriated for their payment, collections thereof and disbursements therefrom, monies on hand and, the balance of unpaid Assessments. (d) The City will cause its books and records to be audited at least annually and will furnish copies of such audit reports to any interested person upon request. (e) At least 20% of the cost to the City of the Assessable Improvements described herein has been or will be specially assessed against benefited properties. 4.05 Registration of Resolution. The City Finance Director is authorized and directed to file a certified copy of this resolution with the County Auditor of Washington County and to obtain the certificate required by Section 475.63 of the Act. 4.06. Debt Service Coverage. It is hereby determined that the estimated collection of the foregoing Taxes levied under Section 4.03 and the Assessments herein pledged will produce at least 5% in excess of the amount needed to pay when due, the principal and interest payments on the Bonds. 4.07. General Obligation Pledge. For the prompt and full payment of the principal of and interest on the Bonds, as the same respectively become due, the full faith, credit and taxing powers of the City will be and are hereby irrevocably pledged. If the balance in the Debt Service Fund is ever insufficient to pay all principal and interest then due on the Bonds and any other bonds payable therefrom, the deficiency will be promptly paid out of monies in the general fund of the City which are available for such purpose, and such general fund may be reimbursed with or without interest from the Debt Service Fund when a sufficient balance is available therein. Section 5. Authentication of Transcript. 5.01. City Proceedings and Records. The officers of the City are hereby authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records of the City relating to the Bonds and to the financial condition and affairs of the City, and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books and records in their custody and 4908-6676-6901.2 under their control, relating to the validity and marketability of the Bonds and such instruments, including any heretofore furnished, may be deemed representations of the City as to the facts and representations stated therein as it relates to the City. 5.02. Certification as to Official Statement. The Mayor, City Clerk, Finance Director and Administrator, or any of them, are authorized and directed to certify that they have examined the Official Statement prepared and circulated in connection with the issuance and sale of the Bonds and that to the best of their knowledge and belief the Official Statement is, as of the date thereof, a complete and accurate representation of the facts and representations made therein as of the date of the Official Statement as it relates to the City. 5.03. Other Certificates. The Mayor, City Clerk, Finance Director and Administrator, or any of them, are hereby authorized and directed to furnish to the Purchaser at the closing such certificates as are required as a condition of sale. Unless litigation shall have been commenced and be pending questioning the Bonds or the organization of the City or incumbency of its officers, at the closing the Mayor and City Clerk are, or either of them, shall also execute and deliver to the Purchaser a suitable certificate as to absence of material litigation, and the Clerk shall also execute and deliver a certificate as to payment for and delivery of the Bonds. 5.04. Electronic Signatures. The electronic signature of the Mayor, City Clerk, Finance Director and/or Administrator to this resolution and to any certificate authorized to be executed hereunder shall be as valid as an original signature of such party and shall be effective to bind the City thereto. For purposes hereof, (i) “electronic signature” means (a) a manually signed original signature that is then transmitted by electronic means or (b) a signature obtained through DocuSign or Adobe or a similarly digitally auditable signature gathering process; and (ii) “transmitted by electronic means” means sent in the form of a facsimile or sent via the internet as a portable document format (“pdf”) or other replicating image attached to an electronic mail or internet message. Section 6. Tax Covenants. 6.01 Tax-Exempt Bonds. The City covenants and agrees with the holders 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 which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. To that end, the City will comply with all requirements necessary under the Code to establish and maintain the exclusion from gross income of the interest on the Bonds under Section 103 of the Code, including without limitation requirements relating to temporary periods for investments, and limitations on amounts invested at a yield greater than the yield on the Bonds. 6.02. Rebate. 4908-6676-6901.2 (a) The City will comply with requirements necessary under the Code to establish and maintain the exclusion from gross income of the interest on the Bonds under Section 103 of the Code, including without limitation requirements relating to temporary periods for investments, limitations on amounts invested at a yield greater than the yield on the Bonds, and the rebate of excess investment earnings to the United States (unless the City qualifies for any exception from the rebate requirements based on timely expenditure of proceeds of the Bonds, in accordance with the Code and applicable Treasury Regulations). (b) For purposes of qualifying for the small-issuer exception to federal arbitrage rebate requirements, the City finds, determines and declares that the aggregate face amount of all tax-exempt bonds (other than private activity bonds) issued by the City (and all subordinate entities of the City) during the calendar year in which the Bonds are issued is not reasonably expected to exceed $5,000,000, within the meaning of Section 148(f)(4)(D) of the Code. 6.03. Not Private Activity Bonds. The City further covenants not to use the proceeds of the Bonds or the Assessable Improvements financed by the Bonds or to cause or permit them or any of them to be used, in such a manner as to cause the Bonds to be “private activity bonds” within the meaning of Sections 103 and 141 through 150 of the Code. 6.04. Bank Qualified Tax Exempt Obligations. In order to qualify the Bonds as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code, the City makes the following factual statements and representations: (a) the Bonds are not “private activity bonds” as defined in Section 141 of the Code; (b) the City hereby designates the Bonds as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than any private activity bonds that are not qualified 501(c)(3) bonds) which will be issued by the City (and all subordinate entities of the City) during calendar year 2025 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the City during calendar year 2025 have been designated for purposes of Section 265(b)(3) of the Code. 6.05. Procedural Requirements. The City will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. Section 7. Book-Entry System; Limited Obligation of City. 7.01. The Depository Trust Company. The Bonds will be initially issued in the form of a separate single typewritten or printed fully registered Bond for each of the maturities set forth in Section 2.04 hereof. Upon initial issuance, the ownership of each Bond will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee for The Depository 4908-6676-6901.2 Trust Company, New York, New York, and its successors and assigns (DTC). Except as provided in this section, all of the outstanding Bonds will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC. 7.02. Participants. With respect to Bonds registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, the City, the Registrar and the Paying Agent will have no responsibility or obligation to any broker dealers, banks and other financial institutions from time to time for which DTC holds Bonds as securities depository (the “Participants”) or to any other person on behalf of which a Participant holds an interest in the Bonds, including but not limited to any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person (other than a registered owner of Bonds, as shown by the registration books kept by the Registrar,) of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any Participant or any other person, other than a registered owner of Bonds, of any amount with respect to principal of, premium, if any, or interest on the Bonds. The City, the Registrar and the Paying Agent may treat and consider the person in whose name each Bond is registered in the registration books kept by the Registrar as the holder and absolute owner of such Bond for the purpose of payment of principal, premium and interest with respect to such Bond, for the purpose of registering transfers with respect to such Bonds, and for all other purposes. The Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to or on the order of the respective registered owners, as shown in the registration books kept by the Registrar, and all such payments will be valid and effectual to fully satisfy and discharge the City’s obligations with respect to payment of principal of, premium, if any, or interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner of Bonds, as shown in the registration books kept by the Registrar, will receive a certificated Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City Finance Director of a written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the words “Cede & Co.,” will refer to such new nominee of DTC; and upon receipt of such a notice, the City Finance Director will promptly deliver a copy of the same to the Registrar and Paying Agent. 7.03. Representation Letter. The City has heretofore executed and delivered to DTC a Blanket Issuer Letter of Representations (the “Representation Letter”) which will govern payment of principal of, premium, if any, and interest on the Bonds and notices with respect to the Bonds. Any Paying Agent or Registrar subsequently appointed by the City with respect to the Bonds will agree to take all action necessary for all representations of the City in the Representation Letter with respect to the Registrar and Paying Agent, respectively, to be complied with at all times. 7.04. Transfers Outside Book-Entry System. In the event the City, by resolution of the City Council, determines that it is in the best interests of the persons having beneficial interests in the Bonds that they be able to obtain Bond certificates, the City will notify DTC, whereupon DTC will notify the Participants, of the availability through DTC of Bond certificates. In such event the City will issue, transfer and exchange Bond certificates as requested by DTC and any other registered owners in accordance with the provisions of this Resolution. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and discharging its responsibilities with respect thereto under applicable law. In such event, 4908-6676-6901.2 if no successor securities depository is appointed, the City will issue and the Registrar will authenticate Bond certificates in accordance with this resolution and the provisions hereof will apply to the transfer, exchange and method of payment thereof. 7.05. Payments to Cede & Co. Notwithstanding any other provision of this Resolution to the contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC, payments with respect to principal of, premium, if any, and interest on the Bond and notices with respect to the Bond will be made and given, respectively in the manner provided in DTC’s Operational Arrangements, as set forth in the Representation Letter. Section 8. Continuing Disclosure. 8.01. City Compliance with Provisions of Continuing Disclosure Certificate. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this Resolution, failure of the City to comply with the Continuing Disclosure Certificate is not an event of default with respect to the Bonds; however, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this section. 8.02. Execution of Continuing Disclosure Certificate. “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate executed by the Mayor and City Clerk and dated the date of issuance and delivery of the Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. Section 9. Defeasance. When the Bonds and all accrued interest thereon have been discharged as provided in this section, all pledges, covenants and other rights granted by this resolution to the holders of the Bonds will cease, except that the pledge of the full faith and credit of the City for the prompt and full payment of the principal of and interest on the Bonds will remain in full force and effect. The City may discharge the 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 by depositing irrevocably in escrow, with a suitable institution qualified by law as an escrow agent for this purpose, cash or securities which are backed by the full faith and credit of the United States of America, or any other security authorized under Minnesota law for such purpose, bearing interest payable at such times and at such rates and maturing on such dates and in such amounts as shall be required and sufficient, subject to sale and/or reinvestment in like securities, to pay said obligation(s), which may include any interest payment on such Bond and/or principal amount due thereon at a stated maturity (or if irrevocable provision shall have been made for permitted prior redemption of such principal amount, at such earlier redemption date). 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 interest accrued to the date of such deposit. Section 10. Effective Date. This resolution shall be in full force and effect from and after its passage. 4908-6676-6901.2 The motion for the adoption of the foregoing resolution was duly seconded by member _____________ and, after full discussion thereof and upon a vote being taken thereon, the following voted in favor thereof: and the following voted against the same: Approved this 15th day of July, 2025, by the City Council of the City of Lake Elmo, Minnesota. CITY OF LAKE ELMO, MINNESOTA _________________________________ Mayor ATTEST: ________________________________ City Clerk A-1 4908-6676-6901.2 EXHIBIT A PROPOSALS TABULATION OF BIDS CITY OF LAKE ELMO, MINNESOTA $2,025,000† GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2025A AWARD: BROWNSTONE INVESTMENT GROUP, LLC DATE OF SALE: TUESDAY, JULY 15, 2025 MOODY’S UNDERLYING RATING Aa1 BIDDER PURCHASE PRICE NET INTEREST COST TRUE INTEREST COST (TIC) Brownstone Investment Group, LLC $2,329,173.20 $475,577.49 3.3079189% New York, NY Robert W. Baird & Co., Inc. $2,343,405.05 $481,658.98 3.3342029% Milwaukee, WI Piper Sandler & Co. $2,386,196.85 $489,733.01 3.3351939% Minneapolis, MN TD Securities $2,361,107.30 $487,616.45 3.3531825% New York, NY HilltopSecurities $2,340,720.67 $484,343.36 3.3553474% Dallas, TX Stifel, Nicolaus & Co., Inc. $2,311,638.20 $493,112.49 3.4471939% Birmingham, AL Raymond James & Associates, Inc. $2,301,007.20 $503,743.49 3.5323394% Dallas, TX † Par amount decreased from $2,025,000 to $2,025,000. For Brownstone Investment Group, LLC, the adjusted purchase price is $2,158,663.85, plus accrued interest from the date of issue to the date of delivery, and the adjusted TIC is 3.3165198%. 4908-6676-6901.2 B-1 EXHIBIT B FORM OF BOND No. R-_____ UNITED STATES OF AMERICA $__________ STATE OF MINNESOTA COUNTY OF WASHINGTON CITY OF LAKE ELMO GENERAL OBLIGATION IMPROVEMENT BOND, SERIES 2025A Rate Maturity Date Date of Original Issue CUSIP February 1, 20____ August 14 , 2025 Registered Owner: Cede & Co. The City of Lake Elmo, Minnesota, a duly organized and existing municipal corporation in Washington County, 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 sum set forth above on the Maturity Date specified above, unless called for earlier redemption, with interest thereon from the date hereof at the annual Rate specified above (calculated on the basis of a 360-day year of twelve 30-day months), payable February 1 and August 1 in each year, commencing August 1, 2026, to the person in whose name this Bond is registered at the close of business on the 15th day (whether or not a business day) of the immediately preceding month. 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 U.S. Bank Trust Company, National Association, St. Paul, Minnesota, as Registrar, Authenticating Agent, Transfer Agent and Paying Agent, 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 $2,025,000, all of like original issue date and tenor, except as to number, maturity date, denomination, redemption privilege, and interest rate, all issued pursuant to a resolution adopted by the City Council on July 15, 2025 (the “Resolution”), for the purpose of providing monies in part for various street improvements pursuant to and in full conformity with the Constitution, laws of the State of Minnesota, including Minnesota Statutes, Chapters 429 and 475. The principal hereof and interest hereon are payable from certain special assessments against property specially benefited by local improvements, and from ad valorem taxes, as set forth in the Resolution to which reference is made for a full statement of rights and powers thereby conferred. The full faith and credit of the City are irrevocably pledged for payment of this Bond and the City Council has obligated itself to levy additional ad valorem taxes on all taxable property in the City in the event of any deficiency in special assessments, net revenues and ad valorem taxes pledged, which additional taxes may be levied 4908-6676-6901.2 B-2 without limitation as to rate or amount. The Bonds of this series are issued only as fully registered Bonds in denominations of $5,000 or any integral multiple thereof of single maturities. The City may elect on February 1, 2033, and on any date thereafter to prepay Bonds due on or after February 1, 2034. Redemption may be in whole or in part and if in part, at the option of the City and in such manner as the City will determine. If less than all Bonds of a maturity are called for redemption, the City will notify the Depository Trust Company (“DTC”) of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant’s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a price of par plus accrued interest. The City Council has designated the Bonds as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”) relating to disallowance of interest expense for financial institutions and within the $10 million limit allowed by the Code for the calendar year of issue. 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 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. 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 will be affected by any notice to the contrary. 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 preliminary 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 in regular and due form, time and manner, that prior to the issuance of this bond the City Council of the City has provided funds for the payment of principal and interest on the bonds of this issue as the same become due, but the full faith and credit of the City is pledged for their payment and additional taxes will be levied, if required for such purpose, without limitation as to the rate of amount; and that this bond, together with all other indebtedness of the City outstanding on the date of its issuance, does not exceed any constitutional or statutory limitation of indebtedness. 4908-6676-6901.2 B-3 This Bond is not valid or obligatory for any purpose or entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon has been executed by the Registrar by manual signature of one of its authorized representatives. IN WITNESS WHEREOF, the City of Lake Elmo, Washington County, Minnesota, by its City Council, has caused this Bond to be executed on its behalf by the facsimile or manual signatures of the Mayor and City Clerk and has caused this Bond to be dated as of the date set forth below. Dated: August 14, 2025 CITY OF LAKE ELMO, MINNESOTA City Clerk Mayor CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION By Its Authorized Representative 4908-6676-6901.2 B-4 ________________________ The following abbreviations, when used in the inscription on the face of this Bond, will be construed as though they were written out in full according to applicable laws or regulations: TEN COM – as tenants UNIF GIFT MIN ACT _____ Custodian _______ in common (Cust) (Minor) TEN ENT – as tenants under Uniform Gifts or Transfers to by entireties Minors JT TEN – as joint tenants with right of Act…………………….. survivorship and (State) not as tenants in common Additional abbreviations may also be used though not in the above list. 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 any change whatever. Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the Securities Transfer Agent Medallion Program (“STAMP”), the Stock Exchange Medallion Program (“SEMP”), the New York Stock Exchange, Inc. Medallion Signatures Program (“MSP”) or other such “signature guarantee program” as may be determined by the Registrar in addition to, 4908-6676-6901.2 B-5 or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange Act of 1934, as amended. The Registrar will not effect transfer of this Bond unless the information concerning the assignee requested below is provided. Name and Address: (Include information for all joint owners if this Bond is held by joint account) Please insert social security or other identifying number of assignee PROVISIONS AS TO REGISTRATION The ownership of the principal of and interest on the within Bond has been registered on the books of the Registrar in the name of the person last noted below. Date of Registration Registered Owner Signature of Registrar August 14, 2025 Cede & Co. Federal ID #13-2555119 4908-6676-6901.2 C-1 EXHIBIT C TAX LEVY Date Total P+I 105% Levy Less: Special Assessment Revenue*Net Levy Levy Year Collection Year 02/01/2026 ---- 02/01/2027 262,605.56 275,735.84 63,182.22 212,553.62 2025 2026 02/01/2028 262,750.00 275,887.50 63,182.22 212,705.28 2026 2027 02/01/2029 259,000.00 271,950.00 63,182.23 208,767.77 2027 2028 02/01/2030 260,000.00 273,000.00 63,182.22 209,817.78 2028 2029 02/01/2031 260,500.00 273,525.00 63,182.22 210,342.78 2029 2030 02/01/2032 260,500.00 273,525.00 63,182.23 210,342.77 2030 2031 02/01/2033 260,000.00 273,000.00 63,182.23 209,817.77 2031 2032 02/01/2034 264,000.00 277,200.00 63,182.23 214,017.77 2032 2033 02/01/2035 259,600.00 272,580.00 63,182.23 209,397.77 2033 2034 02/01/2036 260,000.00 273,000.00 63,182.22 209,817.78 2034 2035 02/01/2037 -- 63,182.23 -2035 2036 02/01/2038 -- 63,182.23 -2036 2037 02/01/2039 -- 63,182.23 -2037 2038 02/01/2040 -- 63,182.22 -2038 2039 02/01/2041 -- 63,182.22 -2039 2040 Total $2,608,955.56 $2,739,403.34 $947,733.38 $2,107,581.09 *Special assessment revenue is based on assessments totaling $630,000 assessed at a rate of 5.50% (1% over the average coupon, rounded up to the nearest 0.25%), spread over 15 years with equal annual payments. 4908-6676-6901.2 STATE OF MINNESOTA COUNTY AUDITOR’S CERTIFICATE AS TO TAX COUNTY OF WASHINGTON LEVY AND REGISTRATION I, the undersigned County Auditor of Washington County, Minnesota, hereby certify that a certified copy of a resolution adopted by the governing body of the City of Lake Elmo, Minnesota, on July 15, 2025, levying taxes for the payment of General Obligation Improvement Bonds, Series 2025A, in the amount of $2,025,000, dated August 14, 2025 has been filed in my office and said bonds have been registered on the register of obligations in my office and that such tax has been levied as required by law. WITNESS My hand and official seal this _____ day of _______, 2025. County Auditor Washington County, Minnesota (SEAL) Deputy U.S. Public Finance CREDIT OPINION 2 July 2025 Contacts Umar Farooq +1.312.706.9959 Associate Lead Analyst umar.farooq@moodys.com Gera M. McGuire +1.312.706.9977 Associate Managing Director gera.mcguire@moodys.com CLIENT SERVICES Americas 1-212-553-1653 Asia Pacific 852-3551-3077 Japan 81-3-5408-4100 EMEA 44-20-7772-5454 City of Lake Elmo, MN Update to credit analysis Summary Lake Elmo (City of) MN's (Aa1) credit profile is characterized by its strong economic metrics and robust financial position. These strengths are balanced against the city's long-term leverage which will remain elevated given the city’s plans for annual borrowing over the next several years. Credit strengths »Very strong financial position »Full value per capita and resident income levels exceed the median for similarly rated peers nationally Credit challenges »Elevated leverage and fixed costs Rating outlook We do not assign outlooks to local government issuers with this amount of debt. Factors that could lead to an upgrade »Sustained moderation of long-term liabilities ratio below 250% fixed costs ratio around 15% Factors that could lead to a downgrade »Decline in available fund balance or liquidity approaching 50% of revenue »Increase in long-term liabilities ratio approaching 500% Moody's Ratings U.S. Public Finance Key indicators Exhibit 1 Lake Elmo (City of) MN 2021 2022 2023 2024 Aa Medians Economy Resident income ratio (%)223.4%205.2%186.9%N/A 114.1% Full Value ($000)$2,207,110 $2,603,158 $3,073,351 $3,427,499 $2,888,367 Population 11,237 11,861 12,504 N/A 22,430 Full value per capita ($)$196,415 $219,472 $245,789 N/A $125,640 Annual Growth in Real GDP 5.8%2.0%2.0%N/A 2.0% Financial Performance Revenue ($000)$14,369 $25,548 $20,787 $20,560 $52,335 Available fund balance ($000)$28,781 $33,690 $30,304 $30,539 $29,526 Net unrestricted cash ($000)$51,587 $48,884 $43,921 $46,109 $41,432 Available fund balance ratio (%)200.3%131.9%145.8%148.5%57.1% Liquidity ratio (%)359.0%191.3%211.3%224.3%79.6% Leverage Debt ($000)$51,166 $61,076 $61,945 $61,824 $37,305 Adjusted net pension liabilities ($000)$5,835 $5,304 $4,035 $3,932 $45,496 Adjusted net OPEB liabilities ($000)$94 $64 $84 $54 $4,376 Other long-term liabilities ($000)$114 $133 $148 $243 $1,726 Long-term liabilities ratio (%)398.1%260.6%318.5%321.3%210.2% Fixed costs Implied debt service ($000)$2,571 $3,589 $4,266 $4,303 $2,477 Pension tread water contribution ($000)$159 $174 $269 N/A $1,199 OPEB contributions ($000)$1 $2 $7 $7 $179 Implied cost of other long-term liabilities ($000)$10 $8 $9 $10 $115 Fixed-costs ratio (%)19.1%14.8%21.9%22.3%9.6% For definitions of the metrics in the table above please refer to the US Cities and Counties Methodology or see the Glossary in the Appendix below. Metrics represented as N/A indicate the data were not available at the time of publication. The medians come from our most recently published US Cities and Counties Median Report. The real GDP annual growth metric cited above is for the Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area. Sources: US Census Bureau, Lake Elmo (City of) MN’s financial statements and Moody’s Ratings, US Bureau of Economic Analysis Profile The City of Lake Elmo is located in Washington County in southeastern Minnesota and is an eastern suburb within the Minneapolis-St. Paul metro area. The city serves a population of over 12,000 residents. Detailed credit considerations Lake Elmo benefits from a robust financial position with ample reserves and liquidity across governmental and business-type funds. Over the last decade, the city's population has steadily grown and full valuations have increased driven by both ongoing construction and rising residential property values. As a result, full value per capita has increased to over $280,000. Management is proactive in addressing capital needs related to growth and maintains a ten-year capital plan. Year-to-date results for fiscal 2025 (year-end Dec. 31) indicate fund balance will remain near 150% of total annual revenue. The city has accumulated reserves in utility funds in part to cash finance future capital, though management has no plans at this time for significant draws. The city's fund balance policy of maintaining between 50%-60% extends to utility funds, so even with a major draw utility cash balances will remain very healthy. Currently, the city is issuing nearly $2.2 million for street improvements which will result in long-term liabilities being over 330% of 2024 revenues, which is higher compared to peers. Leverage will continue to be elevated because of further annual borrowing plans to improve the city's infrastructure. This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the issuer/deal page on https://ratings.moodys.com for the most updated credit rating action information and rating history. 2 2 July 2025 City of Lake Elmo, MN: Update to credit analysis Moody's Ratings U.S. Public Finance Economy Exhibit 2 Resident incomes have remained strong compared to median despite some decline Median household income ($)Resident income ratio (%)Aa median resident income ratio (%) 2017 2018 2019 2020 2021 2022 2023 $0 $50,000 $100,000 $150,000 120% 140% 160% 180% 200% 220% Source: Moody's Ratings Financial operations Exhibit 3 Available fund balance continues to be robust and stable General fund($000)Other governmental funds($000)Internal service funds($000) Business-type activities($000)Available fund balance ratio (%) Aa median available fund balance ratio (%) 2021 2022 2023 2024 $0 $20,000 100% 200% Source: Moody's Ratings 3 2 July 2025 City of Lake Elmo, MN: Update to credit analysis Moody's Ratings U.S. Public Finance ESG considerations Lake Elmo (City of) MN's ESG credit impact score is CIS-1 Exhibit 4 ESG credit impact score Source: Moody's Ratings Lake Elmo's ESG Credit Impact Score is positive (CIS-1), reflecting strong demographic, labor force and education trends as well as excellent budget management with little governance risk. Exposure to environmental risks is neutral-to-low. Exhibit 5 ESG issuer profile scores Source: Moody's Ratings Environmental The city's overall environmental issuer profile score is neutral-to-low (E-2), reflecting relatively little risk from physical climate, carbon transition, water, natural capital, and pollution. Notably, the city has faced some exposure to PFAS chemicals in groundwater, but management has been active in ensuring safe water for residents. Officials decommissioned an impacted well several years ago and received settlement funds from 3M to fund necessary modifications to the water system. Social The social issuer profile score is positive (S-1). The city's population has grown substantially over the past decades, will likely continue growing from ongoing residential construction. Unemployment generally tracks below the state and national rate. The city's median family income is strong at over 200% of the national figure. Educational attainment is above-average compared to the nation, and health and safety measures also compare favorably to the US. Governance Lake Elmo's governance profile score is positive (G-1). The city has a strong institutional structure and a history of conservative budget management with maintenance of strong reserves. Property taxes comprise about half of Lake Elmo's operating revenue. The city does not receive any local government aid from the state; therefore, it is subject to minimal risk associated with any potential budgetary pressures at the state. Revenue-raising flexibility is moderate as Minnesota cities generally benefit from unlimited levying authority, except during years in which the state has imposed limits. Levy limits are not currently in place for cities. ESG Issuer Profile Scores and Credit Impact Scores for the rated entity/transaction are available on Moodys.com. In order to view the latest scores, please click here to go to the landing page for the entity/transaction on MDC and view the ESG Scores section. 4 2 July 2025 City of Lake Elmo, MN: Update to credit analysis Moody's Ratings U.S. Public Finance Rating methodology and scorecard factors The US Cities and Counties Methodology includes a scorecard, which summarizes the rating factors generally most important to city and county credit profiles. Because the scorecard is a summary, and may not include every consideration in the credit analysis for a specific issuer, a scorecard-indicated outcome may or may not map closely to the actual rating assigned. Exhibit 6 Lake Elmo (City of) MN Measure Weight Score Economy Resident income ratio 186.9%10.0%Aaa Full value per capita 281,226 10.0%Aaa Economic growth metric -0.8%10.0%Aa Financial Performance Available fund balance ratio 148.5%20.0%Aaa Liquidity ratio 224.3%10.0%Aaa Institutional Framework Institutional Framework Aaa 10.0%Aaa Leverage Long-term liabilities ratio 321.3%20.0%A Fixed-costs ratio 22.3%10.0%Baa Notching factors Potential for significant change in leverage 0.5 Scorecard-Indicated Outcome Aa2 Assigned Rating Aa1 The Economic Growth metric cited above compares the five-year CAGR of real GDP for Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area to the five-year CAGR of real GDP for the US. Sources: US Census Bureau, Lake Elmo (City of) MN’s financial statements and Moody’s Ratings 5 2 July 2025 City of Lake Elmo, MN: Update to credit analysis Moody's Ratings U.S. Public Finance Appendix Exhibit 7 Key Indicators Glossary Definition Typical Source* Economy Resident income ratio Median Household Income (MHI) for the city or county, adjusted for Regional Price Parity (RPP), as a % of the US MHI MHI: US Census Bureau - American Community Survey 5-Year Estimates RPP: US Bureau of Economic Analysis Full value Estimated market value of taxable property in the city or county State repositories; audited financial statements; continuing disclosures Population Population of the city or county US Census Bureau - American Community Survey 5-Year Estimates Full value per capita Full value / population Economic growth metric Five year CAGR of real GDP for Metropolitan Statistical Area or county minus the five-year CAGR of real GDP for the US Real GDP: US Bureau of Economic Analysis Financial performance Revenue Sum of revenue from total governmental funds, operating and non- operating revenue from total business-type activities, and non- operating revenue from internal services funds, excluding transfers and one-time revenue, e.g., bond proceeds or capital contributions Audited financial statements Available fund balance Sum of all fund balances that are classified as unassigned, assigned or committed in the total governmental funds, plus unrestricted current assets minus current liabilities from the city's or county's business- type activities and internal services funds Audited financial statements Net unrestricted cash Sum of unrestricted cash in governmental activities, business type activities and internal services fund, net of short-term debt Audited financial statements Available fund balance ratio Available fund balance (including net current assets from business- type activities and internal services funds) / Revenue Liquidity ratio Net unrestricted cash / Revenue Leverage Debt Outstanding long-term bonds and all other forms of long-term debt across the governmental and business-type activities, including debt of another entity for which it has provided a guarantee disclosed in its financial statements Audited financial statements; official statements Adjusted net pension liabilities (ANPL)Total primary government's pension liabilities adjusted by Moody's to standardize the discount rate used to compute the present value of accrued benefits Audited financial statements; Moody’s Ratings Adjusted net OPEB liabilities (ANOL)Total primary government's net other post-employment benefit (OPEB) liabilities adjusted by Moody's to standardize the discount rate used to compute the present value of accrued benefits Audited financial statements; Moody’s Ratings Other long-term liabilities (OLTL)Miscellaneous long-term liabilities reported under the governmental and business-type activities entries Audited financial statements Long-term liabilities ratio Debt + ANPL + ANOL + OLTL / Revenue Fixed costs Implied debt service Annual cost to amortize city or county's long-term debt over 20 years with level payments Audited financial statements; official statements; Moody’s Ratings Pension tread water contribution Pension contribution necessary to prevent reported unfunded pension liabilities from growing, year over year, in nominal dollars, if all actuarial assumptions are met Audited financial statements; Moody’s Ratings OPEB contribution City or county's actual contribution in a given period Audited financial statements Implied cost of OLTL Annual cost to amortize city or county's other long-term liabilities over 20 years with level payments Audited financial statements; Moody’s Ratings Fixed-costs ratio Implied debt service + Pension tread water + OPEB contributions + Implied cost of OLTL / Revenue *Note: If typical data source is not available then alternative sources or proxy data may be considered. For more detailed definitions of the metrics listed above please refer to the US Cities and Counties Methodology . Source: Moody's Ratings 6 2 July 2025 City of Lake Elmo, MN: Update to credit analysis Moody's Ratings U.S. Public Finance © 2025 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved. CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED OR OTHERWISE MADE AVAILABLE BY MOODY’S (COLLECTIVELY, “MATERIALS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. 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For the purposes of this disclaimer, “PRC” refers to the mainland of the People’s Republic of China, excluding Hong Kong, Macau and Taiwan. 7 2 July 2025 City of Lake Elmo, MN: Update to credit analysis Moody's Ratings U.S. Public Finance REPORT NUMBER 1451030 8 2 July 2025 City of Lake Elmo, MN: Update to credit analysis Moody's Ratings U.S. Public Finance Contacts Umar Farooq +1.312.706.9959 Associate Lead Analyst umar.farooq@moodys.com Gera M. McGuire +1.312.706.9977 Associate Managing Director gera.mcguire@moodys.com CLIENT SERVICES Americas 1-212-553-1653 Asia Pacific 852-3551-3077 Japan 81-3-5408-4100 EMEA 44-20-7772-5454 9 2 July 2025 City of Lake Elmo, MN: Update to credit analysis