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City of Saint Anthony, Minnesota February 5, 1990 Page 2 • receipt of first-half collection of taxes which the City expects to receive in June, 1991. Thereafter, each August 1 interest payment will be made from first-half collections of taxes with the February 1 principal and interest payment made from second-half tax collections, together with surplus first-half collections. This cycle will continue for the life of the certificates. Included in the principal amount of the issue is a provision for discount bidding in the amount of $2,363. The discount provides the underwriters with all or part of their profit and/or working capital for purchasing the issue. Since the underwriter is allowed his expenses and profit from the discount, he is likely to bid more favorable interest rates than if he must sell the certificates to investors at a premium price in order to meet expenses. The discount represents $7.50 per bond, and we recommend its use here as a successful marketing tool. The City has a long-term rating of "A," and we recommend making a rating application to Moodys Investor's Service, Inc. to maintain that rating. We will make the rating application on the City's behalf and supply Moody's with the necessary data. The Tax Reform Act of 1986 established certain arbitrage reporting and rebate requirements for issuers of tax-exempt obligations. In essence, an issuer must report on and rebate the amount of reinvestment income which exceeds the income which would have been earned'if the same amount had been invested at a rate on the certificates. There are several exemptions to the reporting and rebate requirements involving small issuers who issue less than $5,000,000 of government purpose bonds in any calendar year, or issues for which 100% of proceeds are expended within six months of issuance. • We understand the City does not intend to issue more than $5,000,000 of debt in calendar year 1990 and therefore we are of the opinion this issue will be exempt from the requirements and you will not have to maintain investment records and rebate any arbitrage profit to the U.S. Treasury. Our opinion is based on our review of your reasonable expectations at this time and is subject to change in the event subsequent actions by you cause the loss of exemption from the requirements. We are recommending this Issue.be offered for sale on Tuesday, March 13, 1990 with bids to be received in the offices of Springsted Incorporated at 11:30 A.M. Bids will be opened, verified for accuracy, and presented to the Council at its 7:30 P.M. meeting that evening. A representative of Springsted Incorporated will be present to provide recommendations as to the acceptability of the bids received. Respectfully submitted, SPRINGSTED Incorporated cjp Page 2