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City of St. Anthony, Minnesota <br /> February 22, 2001 <br /> property taxes. Each year's first-half <br /> collection of assessments and taxes will be <br /> used to pay the interest payment due August <br /> 1 in the year of collection. Second-half <br /> collections of assessments and taxes plus <br /> surplus first-half collections will be used to <br /> pay the February 1 principal and interest <br /> payment due in the following year. Because <br /> the August 1, 2001 and February 1, 2002 <br /> interest payments will come due prior to <br /> receipt of any taxes or assessments, the <br /> proceeds of the Bonds include capitalized <br /> interest sufficient to make those payments. <br /> 8. Prepayment Provisions The City may elect on February 1, 2010 and <br /> on any date thereafter, to prepay the Bonds <br /> due on or after February 1, 2011, at a price <br /> of par plus accrued interest. <br /> 9. Credit Rating Comments An application will be made to Moody's <br /> Investors Service for a rating on the Bonds. <br /> The City's current general obligation credit <br /> rating is "Al". <br /> 10. Federal Treasury Regulations Concerning <br /> Tax-Exempt Obligations <br /> (a) Bank Qualification Under Federal Tax Law, financial institutions <br /> cannot deduct from income for federal income <br /> tax purposes, expense that is allocable to <br /> carrying and acquiring tax-exempt bonds. <br /> There is an exemption to this for"bank <br /> qualified" bonds, which can be so designated <br /> if the issuer does not issue more than $10 <br /> million of tax exempt bonds in a calendar year. <br /> Issues that are bank qualified generally <br /> receive slightly lower interest rates than issues <br /> that are not bank qualified. This issue is <br /> designated as bank qualified. <br /> (b) Rebate Requirements All tax-exempt issues are subject to the <br /> federal arbitrage and rebate requirements, <br /> which require all excess earnings created by <br /> the financing to be rebated to the U.S. <br /> Treasury. The requirements generally cover <br /> two categories: bond proceeds and debt <br /> service funds. There are exemptions from <br /> rebate in both of these categories. <br /> However, since the City expects to issue less <br /> than $5 million of tax exempt obligations in <br /> 2001, the City qualifies as a "small issuer" and <br /> will be exempt from rebating excess earnings <br /> on Bond proceeds to the federal government. <br /> Page 2 <br />