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RESOLUTION AUTHORIZING <br />THE EXECUTION AND DELIVERY OF A <br />GROUND LEASE AGREEMENT, LEASE WITH OPTION <br />TO PURCHASE AGREEMENT AND CONTINUING <br />DISCLOSURE UNDERTAKING; AND ALLOCATING <br />SMALL ISSUER REBATE EXCEPTION AUTHORITY <br />A. WHEREAS, unless an exception is available, bonds <br />which are tax-exempt are subject to the federal arbitrage <br />requirement of rebating earnings in excess of the bond yield on <br />certain investments; and <br />B. WHEREAS, ordinarily bonds are subject to rebate if <br />issued by a governmental unit that lacks general taxing powers, <br />such as the Economic Development Authority of the City of Hugo, <br />Minnesota (the "Authority"); and <br />C. WHEREAS, if the Authority issues bonds on behalf <br />of a governmental unit with general taxing powers, such as the <br />City of Hugo, Minnesota (the "City"), it will be treated as <br />having general taxing powers if the bonds do not exceed the <br />lesser of $5,000,000 or such amount of the $5,000,000 small <br />issuer limitation as a governmental unit with general taxing <br />powers may allocate to the Authority; and <br />D. WHEREAS, the City is a governmental unit with <br />general taxing powers; and <br />E. WHEREAS, the City is also an obligated person <br />under the provisions of Rule 15c2-12 (the "Rule") promulgated by <br />the Securities and Exchange Commission (the "Commission") <br />pursuant to the Securities Exchange Act of 1934, as amended, and <br />is therefore subject to continuing disclosure requirements under <br />the Rule (the "Disclosure Requirements"): <br />NOW, THEREFORE, BE IT RESOLVED by the Council of the <br />City of Hugo, Minnesota, as follows: <br />1. Authority. The City is authorized pursuant to <br />Minnesota Statutes, Section 465.71, to enter into a Lease With <br />Option to Purchase Agreement with the Authority to construct a <br />municipal building in the City (the "Project"). <br />2. Authorization of Bonds: Documents Presented. The <br />Authority proposes to issue its $1,165,000 Public Project Revenue <br />Bonds, Series 1998 (City of Hugo Lease With Option to Purchase <br />Project) (the "Bonds") payable from rental payments to be made <br />under the Lease. Forms of the following documents relating to <br />the Bonds and the Project have been submitted to the City Council <br />and are now on file in the office of the Clerk -Treasurer: <br />965985.1 <br />