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HomeMy WebLinkAbout1997.08.18 RESO 1997-0017EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL OF THE CITY OF HUGO, MINNESOTA HELD: August 18, 1997 Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Hugo, Washington County, Minnesota, was duly held at the City Hall in said City on Monday, the 18th day of August, 1997, at 7:00 o'clockP .M., for the purpose, in part, of authorizing the issuance of, and awarding the sale of, $320,000 Taxable General Obligation Tax Increment Bonds, Series 1997 of the City. The following members were present: Fran Miron, Andrew Goiffon, Deborah Johnson, and James Leroux and the following were absent: Debra Barnes Member Fran Mi ron introduced the following resolution and moved its adoption. RESOLUTION 97-1_ RESOLUTION AND PROVIDING FOR THE ISSUANCE AND SALE OF $320,000 TAXABLE GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 1997, AND PLEDGING FOR THE SECURITY THEREOF TAX INCREMENTS A. WHEREAS, on August 19, 1996, the City Council of the City of Hugo, Minnesota (the "City"), created Development District No. 1 (the "Development District") pursuant to the provisions of Minnesota Statutes, Sections 469.124 through 469.134, and approved a development program (the "Program") with respect to the Development District; and B. WHEREAS, on August 19, 1996, the Council also approved a tax increment financing plan (the "Plan") and designated Tax Increment Financing District No. 1-1, a "scattered site" redevelopment district within the Development District (the "Tax Increment District") under the provisions of Minnesota Statutes, Sections 469.174 through 469.179; and C. WHEREAS, pursuant to the provisions of the Program and the Plan, funds are to be expended within the Development District to provide money to finance the cost of land acquisition 360858.1 and certain planning costs associated with the development of the Bald Eagle Industrial Park within the Tax Increment District, constituting capital and administration costs of the Development District, as set forth in the Plan (hereinafter referred to as the "Project"); and D. WHEREAS, the City Council has heretofore determined and declared that it is necessary and expedient to issue $320,000 Taxable General Obligation Tax Increment Bonds, Series 1997 (the "Bonds") of the City, pursuant to Minnesota Statutes, Chapters 469 and 475, to finance the Project; and E. WHEREAS, it has been determined that the interest on the obligations is taxable and the requirements as to public sale referred to in Minnesota Statutes, Section 475.60, Subdivision 1 shall not apply as permitted by Minnesota Statutes, Section 475.60, Subdivision 2(6); and F. WHEREAS, it is in the best interests of the City that the Bonds be issued in book -entry form as hereinafter provided; and NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Hugo, Minnesota, as follows: 1. Acceptance of Offer. The offer of Dain Bosworth, Inc. (the "Purchaser"), to purchase the Bonds of the City (or individually, a "Bond"), in accordance with the terms established therefor and at the rates of interest hereinafter set forth, and to pay therefor the sum of $ 314,560.00 , plus interest accrued to settlement, is hereby accepted. 2. Title• Orictinal Issue Date: Denominations: Maturities. The Bonds shall be titled "Taxable General Obligation Tax Increment Bonds, Series 199711, shall be dated September 1, 1997, as the date of original issue and shall be issued forthwith on or after such date as fully registered bonds. The Bonds shall be numbered from R-1 upward in the denomination of $5,000 each or in any integral multiple thereof of a single maturity. The Bonds shall mature on February 1 in the years and amounts as follows: 360858.1 Year Amount Year Amount 2000-2001 $15,000 2009-2010 $30,000 2002-2005 20,000 2011 35,000 2006-2008 25,000 2012 40,000 All dates are inclusive. 2 3. Purpose. The Bonds shall provide funds to finance the Project. Pursuant to the Plan, tax increments derived from the Tax Increment District (the "Tax Increments") established pursuant to the Plan have been pledged to the payment of the Bonds and interest thereon. The estimated collection of Tax Increments exceeds twenty percent (20U of the cost of the Project. The total cost of the Project, which shall include all costs enumerated in Minnesota Statutes, Section 475.65, is estimated to be at least equal to the amount of the Bonds. Proceeds of the Bonds shall be expended on costs or uses permitted by Minnesota Statutes, Sections 469.174 through 469.179, including particularly Section 469.176, Subdivision 4, and shall not be expended on any costs or devoted to any other uses. 4. Interest. The Bonds shall bear interest payable semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date"), commencing February 1, 1998, calculated on the basis of a 360 -day year of twelve 30 -day months, at the respective rates per annum set forth opposite the maturity years as follows: Maturity Year 2000 2001 2002 2003 2004 2005 2006 Interest Rate 6.80 g 6.90 7.00 7.10 7.20 7.30 7.40 Maturity Year 2007 2008 2009 2010 2011 2012 Interest Rate 7.50 7.60 7.70 7.80 7.90 8.00 5. Redemption. All Bonds maturing in the years 2008 to 2012, both inclusive, shall be subject to redemption and prepayment at the option of the City on February 1, 2007, and on any date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the maturities and the principal amounts within each maturity to be redeemed shall be determined by the City; and if only part of the Bonds having a common maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar. Bonds or portions thereof called for redemption shall be due and payable on the redemption date, and interest thereon shall cease to accrue from and after the redemption date. Notice of redemption shall be given by certified mail to the paying agent and to each affected registered holder of the Bonds at least thirty (30) days prior to the date fixed for redemption at the address shown on the registration books. 360858.1 3 To effect a partial redemption of Bonds having a common maturity date, the Bond Registrar prior to giving notice of redemption shall assign to each Bond having a common maturity date a distinctive number for each $5,000 of the principal amount of such Bond. The Bond Registrar shall then select by lot, using such method of selection as it shall deem proper in its discretion, from the numbers so assigned to such Bonds, as many numbers as, at $5,000 for each number, shall equal the principal amount of such Bonds to be redeemed. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided, however, that only so much of the principal amount of each such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar (with, if the City or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the City and Bond Registrar duly executed by the Holder thereof or his, her or its attorney duly authorized in writing) and the City shall execute (if necessary) and the Bond Registrar shall authenticate and deliver to the Holder of such Bond, without service charge, a new Bond or Bonds of the same series having the same stated maturity and interest rate and of any authorized denomination or denominations, as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered. 6. Bond Registrar. Firstar Bank of Minnesota, N.A., in St. Paul, Minnesota, is appointed to act as bond registrar and transfer agent with respect to the Bonds (the "Bond Registrar"), and shall do so unless and until a successor Bond Registrar is duly appointed, all pursuant to any contract the City and Bond Registrar shall execute which is consistent herewith. The Bond Registrar shall also serve as paying agent unless and until a successor paying agent is duly appointed. Principal and interest on the Bonds shall be paid to the registered holders (or record holders) of the Bonds in the manner set forth in the form of Bond and in paragraph 12 of this resolution. 7. Form of Bond. The Bonds, together with this Bond Registrar's Certificate of Authentication, the form of Assignment and the registration information thereon, shall be in substantially the following form: 360858.1 4 UNITED STATES OF AMERICA STATE OF MINNESOTA WASHINGTON COUNTY CITY OF HUGO R- $ TAXABLE GENERAL OBLIGATION TAX INCREMENT BOND, SERIES 1997 INTEREST MATURITY DATE OF RATE DATE ORIGINAL ISSUE CUSIP SEPTEMBER 1, 1997 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS KNOW ALL PERSONS BY THESE PRESENTS that the City of Hugo, Washington County, Minnesota (the "Issuer"), certifies that it is indebted and for value received promises to pay to the registered owner specified above, or registered assigns in the manner hereinafter set forth, the principal amount specified above, unless called for earlier redemption, on the maturity date specified above, and to pay interest thereon semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date"), commencing February 1, 1998, at the rate per annum specified above (calculated on the basis of a 360 -day year of twelve 30 -day months) until the principal sum is paid or has been provided for. This Bond will bear interest from the most recent Interest Payment Date to which interest has been paid or, if no interest has been paid, from the date of original issue hereof. The principal of and premium, if any, on this Bond are payable upon presentation and surrender hereof at the principal office of Firstar Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin 53202, Attention: Corporate Trust Services, Fifth Floor, as agent for Firstar Bank of Minnesota, N.A., in St. Paul, Minnesota (the "Bond Registrar"), acting as paying agent, or any successor paying agent duly appointed by the Issuer. Interest on this Bond will be paid on each Interest Payment Date by check or draft drawn on Firstar Trust Company and mailed to the person in whose name this Bond is registered (the "Holder" or "Bondholder") on the registration books of the Issuer maintained by the Bond Registrar and at the address appearing thereon at the close of business on the fifteenth day of the calendar month next preceding such Interest Payment Date (the "Regular Record Date"). Any interest not so timely paid shall cease to be payable to the person who is the Holder hereof as of the Regular Record Date, 360858.1 2 and shall be payable to the person who is the Holder hereof at the close of business on a date (the "Special Record Date") fixed by the Bond Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given to Bondholders not less than ten days prior to the Special Record Date. The principal of and premium, if any, and interest on this Bond are payable in lawful money of the United States of America. THE ISSUER HAS ELECTED TO ISSUE THIS BOND AS A TAXABLE OBLIGATION, AND ACCORDINGLY THE INTEREST ON THE BOND IS INTENDED TO BE INCLUDED IN GROSS INCOME FOR FEDERAL INCOME TAXATION PURPOSES AND, TO THE SAME EXTENT, IN BOTH GROSS INCOME AND TAXABLE NET INCOME FOR STATE INCOME TAXATION PURPOSES. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH HERE. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to happen and to be performed, precedent to and in the issuance of this Bond, have been done, have happened and have been performed, in regular and due form, time and manner as required by law, and that this Bond, together with all other debts of the Issuer outstanding on the date of original issue hereof and on the date of its issuance and delivery to the original purchaser, does not exceed any constitutional or statutory limitation of indebtedness. IN WITNESS WHEREOF, the City of Hugo, Washington County, Minnesota, by its City Council has caused this Bond to be executed on its behalf by the facsimile signatures of its Mayor and its Clerk -Treasurer the corporate seal of the Issuer having been intentionally omitted as permitted by law. 360858.1 3 Date of Registration: BOND REGISTRAR'S CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the Resolution mentioned within. Registrable by: FIRSTAR TRUST COMPANY, AS AGENT FOR FIRSTAR BANK OF MINNESOTA, N.A. Payable at: FIRSTAR TRUST COMPANY, AS AGENT FOR FIRSTAR BANK OF MINNESOTA, N.A. CITY OF HUGO, WASHINGTON COUNTY, MINNESOTA /s/ Facsimile Mayor /s/ Facsimile Clerk -Treasurer FIRSTAR BANK OF MINNESOTA, N.A. St. Paul, Minnesota Bond Registrar By Authorized Signature 360858.1 4 ON REVERSE OF BOND Redemption. All Bonds of this issue (the "Bonds") maturing in the years 2008 to 2012, both inclusive, are subject to redemption and prepayment at the option of the Issuer on February 1, 2007, and on any date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the maturities and the principal amounts within each maturity to be redeemed shall be determined by the Issuer; and if only part of the Bonds having a common maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar. Bonds or portions thereof called for redemption shall be due and payable on the redemption date, and interest thereon shall cease to accrue from and after the redemption date. Notice of redemption shall be given by certified mail to the paying agent and to each affected Holder of the Bonds at least thirty (30) days prior to the date fixed for redemption at the address shown on the registration books. Selection of Bonds for Redemption• Partial Redemption. To effect a partial redemption of Bonds having a common maturity date, the Bond Registrar shall assign to each Bond having a common maturity date a distinctive number for each $5,000 of the principal amount of such Bond. The Bond Registrar shall then select by lot, using such method of selection as it shall deem proper in its discretion, from the numbers assigned to the Bonds, as many numbers as, at $5,000 for each number, shall equal the principal amount of such Bonds to be redeemed. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided, however, that only so much of the principal amount of such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar (with, if the Issuer or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the Issuer and Bond Registrar duly executed by the Holder thereof or his, her or its attorney duly authorized in writing) and the Issuer shall execute (if necessary) and the Bond Registrar shall authenticate and deliver to the Holder of such Bond, without service charge, a new Bond or Bonds of the same series having the same stated maturity and interest rate and of any authorized denomination or denomina- tions, as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered. Issuance• Purpose• General Oblisation. This Bond is one of an issue in the total principal amount of $320,000, all of 360858.1 5 like date of original issue and tenor, except as to number, maturity, interest rate, denomination and redemption privilege, which Bond has been issued pursuant to and in full conformity with the Constitution and laws of the State of Minnesota and pursuant to a resolution adopted by the City Council of the Issuer on August 18, 1997 (the "Resolution"), for the purpose of providing money to finance the cost of land acquisition and certain planning costs associated with the development of the Bald Eagle Industrial Park within Development District No. 1. This Bond is payable out of the Taxable General Obligation Tax Increment Bonds, Series 1997 Fund of the Issuer. This Bond constitutes a general obligation of the Issuer, and to provide moneys for the prompt and full payment of its principal, premium, if any, and interest when the same become due, the full faith and credit and taxing powers of the Issuer have been and are hereby irrevocably pledged. Denominations: Exchange: Resolution. The Bonds are issuable solely as fully registered bonds in the denominations of $5,000 and integral multiples thereof of a single maturity and are exchangeable for fully registered Bonds of other authorized denominations in equal aggregate principal amounts at the principal office of the Bond Registrar, but only in the manner and subject to the limitations provided in the Resolution. Reference is hereby made to the Resolution for a description of the rights and duties of the Bond Registrar. Copies of the Resolution are on file in the principal office of the Bond Registrar. Transfer. This Bond is transferable by the Holder in person or by his, her or its attorney duly authorized in writing at the principal office of the Bond Registrar upon presentation and surrender hereof to the Bond Registrar, all subject to the terms and conditions provided in the Resolution and to reasonable regulations of the Issuer contained in any agreement with the Bond Registrar. Thereupon the Issuer shall execute and the Bond Registrar shall authenticate and deliver, in exchange for this Bond, one or more new fully registered Bonds in the name of the transferee (but not registered in blank or to "bearer" or similar designation), of an authorized denomination or denominations, in aggregate principal amount equal to the principal amount of this Bond, of the same maturity and bearing interest at the same rate. Rees upon Transfer or Loss. The Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange of this Bond and any legal or unusual costs regarding transfers and lost Bonds. 360858.1 6 Treatment of Registered Owners. The Issuer and Bond Registrar may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided (except as otherwise provided on the reverse side hereof with respect to the Record Date) and for all other purposes, whether or not this Bond shall be overdue, and neither the Issuer nor the Bond Registrar shall be affected by notice to the contrary. Authentication. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security unless the Certificate of Authentication hereon shall have been executed by the Bond Registrar. Taxable Interest. The interest on this Bond is included in the gross income of the owner hereof for purposes of United States income tax and, to the same extent, in both gross income and taxable net income for purposes of State of Minnesota income tax. ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UTMA - as custodian for (Gust) (Minor) under the Uniform (State) Transfers to Minors Act Additional abbreviations may also be used though not in the above list. 360858.1 7 ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and does hereby irrevocably constitute and appoint attorney to transfer the Bond on the books kept for the registration thereof, 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: Signature(s) must be guaranteed by a national bank or trust company or by a brokerage firm having a membership in one of the major stock exchanges or any other "Eligible Guarantor Institution" as defined in 17 CFR 240.17 -Ad -15(a)(2). The Bond Registrar will not effect transfer of this Bond unless the information concerning the transferee requested below is provided. Name and Address: (Include information for all joint owners if the Bond is held by joint account.) 360858.1 8 8. Execution: Temporary Bonds. The Bonds shall be executed on behalf of the City by the signatures of its Mayor and Clerk -Treasurer and be sealed with the seal of the City; provided, however, that the seal of the City may be a printed facsimile; and provided further that both of such signatures may be printed facsimiles and the corporate seal may be omitted on the Bonds as permitted by law. In the event of disability or resignation or other absence of either such officer, the Bonds may be signed by the manual or facsimile signature of that officer who may act on behalf of such absent or disabled officer. In case either such officer whose signature or facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of the Bonds, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if he or she had remained in office until delivery. The City may elect to deliver, in lieu of printed definitive bonds, one or more typewritten temporary bonds in substantially the form set forth above, with such changes as may be necessary to reflect more than one maturity in a single temporary bond. Such temporary bonds may be executed with photocopied facsimile signatures of the Mayor and Clerk - Treasurer. Such temporary bonds shall, upon the printing of the definitive bonds and the execution thereof, be exchanged therefor and cancelled. 9. Authentication. No Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this resolution unless a Certificate of Authentication on such Bond, substantially in the form hereinabove set forth, shall have been duly executed by an authorized representative of the Bond Registrar. Certificates of Authentication on different Bonds need not be signed by the same person. The Bond Registrar shall authenticate the signatures of officers of the City on each Bond by execution of the Certificate of Authentication on the Bond and by inserting as the date of registration in the space provided the date on which the Bond is authenticated, except that for purposes of delivering the original Bonds to the Purchaser, the Bond Registrar shall insert as a date of registration the date of original issue, which date is September 1, 1997. The Certificate of Authentication so executed on each Bond shall be conclusive evidence that it has been authenticated and delivered under this resolution. 10. Registration: Transfer: Exchange. The City will cause to be kept at the principal office of the Bond Registrar a bond register in which, subject to such reasonable regulations as the Bond Registrar may prescribe, the Bond Registrar shall provide for the registration of Bonds and the registration of transfers of Bonds entitled to be registered or transferred as herein provided. 360858.1 01 Upon surrender for transfer of any Bond at the principal office of the Bond Registrar, the City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of registration (as provided in paragraph 9) of, and deliver, in the name of the designated transferee or transferees, one or more new Bonds of any authorized denomination or denominations of a like aggregate principal amount, having the same stated maturity and interest rate, as requested by the transferor; provided, however, that no Bond may be registered in blank or in the name of "bearer" or similar designation. At the option of the Holder, Bonds may be exchanged for Bonds of any authorized denomination or denominations of a like aggregate principal amount and stated maturity, upon surrender of the Bonds to be exchanged at the principal office of the Bond Registrar. Whenever any Bonds are so surrendered for exchange, the City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of registration of, and deliver the Bonds which the Holder making the exchange is entitled to receive. All Bonds surrendered upon any exchange or transfer provided for in this resolution shall be promptly cancelled by the Bond Registrar and thereafter disposed of as directed by the City. All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general obligations of the City evidencing the same debt, and entitled to the same benefits under this resolution, as the Bonds surrendered for such exchange or transfer. Every Bond presented or surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, in form satisfactory to the Bond Registrar, duly executed by the Holder thereof or his, her or its attorney duly authorized in writing. The Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange of any Bond and any legal or unusual costs regarding transfers and lost Bonds. Transfers shall also be subject to reasonable regulations of the City contained in any agreement with the Bond Registrar, including regulations which permit the Bond Registrar to close its transfer books between record dates and payment dates. The Clerk -Treasurer is hereby authorized to negotiate and execute the terms of said agreement. 360858.1 10 11. Rights Upon Transfer or Exchange. Each Bond delivered upon transfer of or in exchange for or in lieu of any other Bond shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond. 12. Interest Payment: Record Date. Interest on any Bond shall be paid on each Interest Payment Date by check or draft mailed to the person in whose name the Bond is registered (the "Holder") on the registration books of the City maintained by the Bond Registrar and at the address appearing thereon at the close of business on the fifteenth (15th) day of the calendar month next preceding such Interest.Payment Date (the "Regular Record Date"). Any such interest not so timely paid shall cease to be payable to the person who is the Holder thereof as of the Regular Record Date, and shall be payable to the person who is the Holder thereof at the close of business on a date (the "Special Record Date") fixed by the Bond Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given by the Bond Registrar to the Holders not less than ten (10) days prior to the Special Record Date. 13. Treatment of Registered Owner. The City and Bond Registrar may treat the person in whose name any Bond is registered as the owner of such Bond for the purpose of receiving payment of principal of and premium, if any, and interest (subject to the payment provisions in paragraph 12 above) on, such Bond and for all other purposes whatsoever whether or not such Bond shall be overdue, and neither the City nor the Bond Registrar shall be affected by notice to the contrary. 14. Delivery: Application of Proceeds. The Bonds when so prepared and executed shall be delivered by the Clerk - Treasurer to the Purchaser upon receipt of the purchase price, and the Purchaser shall not be obliged to see to the proper application thereof. 15. Funds and Account. There is hereby created a special fund to be designated the "Taxable General Obligation Tax Increment Bonds, Series 1997 Fund" (the "Fund") to be administered and maintained by the Clerk -Treasurer as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. The Fund shall be maintained in the manner herein specified until all of the Bonds and any other general obligation tax increment bonds hereafter made payable from the Fund and issued for the Project, including any modifications or additions thereto, and the interest thereon have been fully paid and the City has been fully reimbursed from the pledge of Tax Increments for all of the principal and interest of such bonds paid by the City from taxes 360858.1 11 levied on property in the City other than the Tax Increment District. There shall be maintained in the Fund two (2) separate accounts to be designated the "Capital Account" and "Debt Service Account", respectively. (i) Capital Account. To the Capital Account there shall be credited the proceeds of the sale of the Bonds, less accrued interest received thereon, and less capitalized interest in the amount of $ 33,420.87 ( together with interest earnings thereon and subject to such other adjustments as are appropriate to provide sufficient funds to pay interest due on the Bonds on or before February 1, 1999 ) . From the Capital Account there shall be paid all costs and expenses of the Project, including the cost of any construction contracts heretofore let and all other costs incurred and to be incurred of the kind authorized in Minnesota Statutes, Section 475.65; and the moneys in said account shall be used for no other purpose except as otherwise provided by law; provided that the proceeds of the Bonds may also be used to the extent necessary to pay interest on the Bonds due prior to the anticipated receipt of Tax Increments. (ii) Debt Service Account. To the Debt Service Account, there shall be credited (a) all accrued interest received upon delivery of the Bonds; (b) capitalized interest in the amount of $33,420.87 (together with interest earnings thereon and subject to such other adjustments as are appropriate to provide sufficient funds to pay interest due on the principal and interest' on the Bonds on or before Fe"bruaryl­ . 1, 199 9 ) ; (c) Tax Increments, in an amount sufficient, together with other sums herein pledged, to pay the annual principal and interest payments on the Bonds; (d) any collections of all taxes which may hereafter be levied in the event that the Tax Increments and other sums herein pledged to the payment of the Bonds are insufficient therefor; (e) all funds remaining in the Capital Account after completion of the Project and payment of the costs thereof; (f) all investment earnings on funds held in the Debt Service Account; and (g) any and all other moneys which are properly available and are appropriate by the governing body of the City to the Debt Service Account. The Debt Service Account shall be used solely to pay the principal and interest and any premiums for redemption of the Bonds and any other general obligation bonds of the City hereafter issued by the City and made payable from said account as provided by law. 16. Tax Increments: Use of Tax Increments. The County Auditor of Washington County has certified the original net tax capacity of property in the Tax Increment District. The County Auditor shall determine in each year if the then -current net tax capacity of property in the Tax Increment District exceeds the original net tax capacity, and shall calculate, in the manner 360858.1 12 provided in Minnesota Statutes, Section 469.177, Subdivision 3, the captured net tax capacity (as defined therein) attributable to the Tax Increment District. The City hereby determines to retain 1001 of the captured tax capacity for purposes of tax increment financing. The County Auditor shall, in -3ach such year, compute the local tax rate to be extended against the captured net tax capacity in the manner provided in Minnesota Statutes, Section 469.177, Subdivision 3, and the tax generated thereby shall constitute the Tax Increments for the year in which it is received. The City hereby appropriates the Tax Increments to the Debt Service Account, which appropriation shall continue until all of the Bonds and any additional bonds payable from the Debt Service Account, are paid or discharged. The City hereby expressly reserves the right to use the Tax Increments to finance costs set forth in the Plan not financed hereby or to finance costs of other projects to be undertaken from time to time within the Development District in accordance with the Program and the Plan, as they may from time to time be amended. 17. Reservation of Rights. Notwithstanding any provisions herein to the contrary, the City reserves the right to terminate, reduce, or apply to other lawful purposes the Tax Increments herein pledged to the payment of the Bonds and interest thereon to the extent and in the manner permitted by law. 18. Coverage Test. The Tax Increments herein pledged to the payment of the Bonds are such that if collected in full they, together with other revenues herein pledged for the payment of the Bonds, will produce at least five percent (SU in excess of the amount needed to meet when due the principal and interest payments on the Bonds. 19. Future Tax Levies. On or before October 10 of each year, the Clerk -Treasurer shall certify to the County Auditor of Washington County the amount of Tax Increments and any other funds appropriated to and then held in the Debt Service Account and the estimated collections of Tax Increments to be received in the next succeeding year. In the event that it is anticipated that the aggregate of said sums will not be sufficient to pay the principal and interest on the Bonds to become due in the first calendar year thereafter and the first six (6) months of the succeeding calendar year, the City Council shall pass a resolution requesting the County Auditor of Washington County to levy an ad valorem tax in an amount as is necessary, together with the aforementioned funds then held in the Debt Service Account and said estimated collections of Tax Increments, to pay the principal and interest on the Bonds to become due during said period. 360858.1 13 20. Defeasance. When all Bonds have been discharged as provided in this paragraph, all pledges, covenants and other rights granted by this resolution to the registered holders of the Bonds shall, to the extent permitted by law, cease. The City may discharge its obligations with respect to any Bonds which are due on any date by irrevocably depositing with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full; or if any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Bond Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. The City may also discharge its obligations with respect to any prepayable Bonds called for redemption on any date when they are prepayable according to their terms, by depositing with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full, provided that notice of redemption thereof has been duly given. The City may also at any time discharge its obligations with respect to any Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a suitable banking institution qualified by law as an escrow agent for this purpose, cash or securities described in Minnesota Statutes, Section 475.67, Subdivision 8, bearing interest payable at such times and at such rates and maturing on such dates as shall be required, without regard to sale and/or reinvestment, to pay all amounts to become due thereon to maturity or, if notice of redemption as herein required has been duly provided for, to such earlier redemption date. 21. General Obliqation Pledge. For the prompt and full payment of the principal and interest on the Bonds as the same respectively become due, the full faith, credit and taxing powers of the City shall be and are hereby irrevocably pledged. If the balance in the Debt Service Account is ever insufficient to pay all principal and interest then due on the Bonds and any other bonds payable therefrom, the deficiency shall be promptly paid out of any other funds of the City which are available for such purpose, and such other funds may be reimbursed with or without interest from the Debt Service Account when a sufficient balance is available therein. 22. Certificate of Registration. The Clerk -Treasurer is hereby directed to file a certified copy of this resolution with the County Auditor of Washington County, Minnesota, together with such other information as he or she shall require, and to obtain the County Auditor's certificate that the Bonds have been entered in the County Auditor's Bond Register. 23. Records and Certificates. The officers of the City are hereby authorized and directed to prepare and furnish to 360858.1 14 the Purchaser, and to the attorneys approving the legality of the issuance of the Bonds, certified copies of all proceedings and records of the City relating to the Bonds and to the financial condition and affairs of the City, and such other affidavits, certificates and information as are required to show the facts relating to the legality and marketability of the Bonds as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the facts recited therein. 24. Taxable Status of the Bonds. It is hereby determined that the Bonds are to be issued as fully taxable obligations, and all interest received on the Bonds is.to be included in the gross income of the Holder of any Bond for federal income taxation purposes and, to the same extent, in both gross income and taxable net income for state income taxation purposes. 25. g&yment of Issuance Expenses. The City authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses to Resource Bank & Trust Company, Minneapolis, Minnesota on the closing date for further distribution as directed by the City's financial advisor, Ehlers and Associates, Inc. 26. Severability. If any section, paragraph or provision of this resolution shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this resolution. 27. Headings. Headings in this resolution are included for convenience of reference only and are not a part hereof, and shall not limit or define the meaning of any provision hereof. The motion for the adoption of the foregoing resolution was duly seconded by member James Leroux and, after a full discussion thereof and upon a vote being taken thereon, the following voted in favor thereof: Fran Miron, Andrew Goiffon, and James Leroux and the following voted against the same: Deborah Johnson 360858.1 15 Whereupon said resolution was declared duly passed and adopted. /s/ Fran Miron Fran Miron, Mayor ATTEST: /s/ Mary Ann Creaser Mary Ann Creager City Clerk -Treasurer 360858.1 16 STATE OF MINNESOTA COUNTY OF WASHINGTON CITY OF HUGO I, the undersigned, being the duly qualified and acting Clerk -Treasurer of the City of Hugo, Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on file in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council of said City, duly called and held on the date therein indicated, insofar as such minutes relate to authorizing the issuance of, and awarding the sale of, $320,000 Taxable General Obligation Tax Increment Bonds, Series 1997 of said City. WITNESS my hand this 18th day of August, 1997. Clerk- easurer 360858.1 17