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Presale Report City of St. Anthony, Minnesota March 22, 2016 Page 2 Term/Call Feature: The 2016A Bonds are being issued for a 16-year term. Principal on the Bonds will be due on February 1 in the years 2018 through 2032. Interest is payable every six months beginning February 1, 2017. The 2016B Bonds are being issued for a 10-year term. Principal on the Bonds will be due on February 1 in the years 2017 through 2026. Interest is payable every six months beginning February 1, 2017. The Bonds maturing on and after February 1, 2025 will be subject to prepayment at the discretion of the City on February 1, 2024 or any date thereafter. Bank Qualification: Because the City is expecting to issue no more than $10,000,000 in tax exempt debt during the calendar year, the City will be able to designate the Bonds as “bank qualified” obligations. Bank qualified status broadens the market for the Bonds, which can result in lower interest rates. Rating: The City’s most recent bond issues were rated “AA” by Standard & Poor’s. The City will request a new rating for the Bonds. If the winning bidder on the Bonds elects to purchase bond insurance, the rating for the issue may be higher than the City’s bond rating in the event that the bond rating of the insurer is higher than that of the City. Basis for Recommendation: Based on our knowledge of your situation, your objectives communicated to us, our advisory relationship as well as characteristics of various municipal financing options, we are recommending the issuance of general obligation bonds as a suitable financing option for the following reasons: - These are viable options available to finance these types of projects under state law. - This is the most overall cost effective option that still maintains future flexibility for the repayment of debt. - This coincides with the City’s past practices to finance these types of projects with this type of debt issue Method of Sale/Placement: In order to obtain the lowest interest cost to the City, we will competitively bid the purchase of the Bonds from local and national underwriters/banks. We have included an allowance for discount bidding equal to 1.20000% of the principal amount of the issue. The discount is treated as an interest item and provides the underwriter with all or a portion of their compensation in the transaction. If the Bonds are purchased at a price greater than the minimum bid amount (maximum discount), the unused allowance may be used to lower your borrowing amount. Premium Bids: Under current market conditions, most investors in municipal bonds prefer “premium” pricing structures. A premium is achieved when the coupon for any maturity (the interest rate paid by the issuer) exceeds the yield 23