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HomeMy WebLinkAbout2013.02.25 RESO 2013-05EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL CITY OF HUGO, MINNESOTA HELD: February 25, 2013 Pursuant to due call and notice thereof, a regular or special meeting of the City Council of the City of Hugo, Washington County, Minnesota, was duly called and held at the City Hall on February 25, 2013, at 7:00 P.M., for the purpose, in part, of authorizing the issuance and awarding the sale of $5,835,000 General Obligation Refunding Bonds, Series 2013A. The following members were present: Bronk, Haas, Klein, Petryk, Weidt and the following were absent: None Member Petryk introduced the following resolution and moved its adoption: RESOLUTION 2013-5 ACCEPTING PROPOSAL ON THE SALE OF $5,835,000 GENERAL OBLIGATION REFUNDING BONDS, SERIES 2013A, AND LEVYING A TAX FOR THE PAYMENT THEREOF A. WHEREAS, the City Council of the City of Hugo, Minnesota (the "City"), hereby determines and declares that it is necessary and expedient to provide moneys for a crossover refunding of the City's (i) $2,560,000 original principal amount of General Obligation Capital Improvement Plan Bonds, Series 2004A, dated July 1, 2004 (the "Prior Capital Improvement Bonds"), which mature on and after February 1, 2016; and (ii) $7,920,000 original principal amount of General Obligation Tax Abatement Bonds, Series 2005A, dated May 1, 2005 (the "Prior Abatement Bonds", and together with the Prior Capital Improvement Bonds, the "Prior Bonds"); and B. WHEREAS, in connection with the Prior Abatement Bonds the City has heretofore established a tax abatement program (the "Program") pursuant to the provisions of Minnesota Statutes, Sections 469.1812 through 469.1815; and C. WHEREAS, in connection with the Program the City and Independent School District No. 624, White Bear Lake, Minnesota, (the "School District") have heretofore adopted resolutions (the "Abatement Resolutions"), providing for the abatement of property taxes for a period of fifteen years on various properties in the City, as described in the Abatement Resolutions and the property taxes to be abated are estimated to be at least equal to the principal amount of the Abatement Refunding Portion of the Bonds (as defined herein); and D. WHEREAS, the City has heretofore entered into a Joint Powers Agreement (the "Agreement") with the School District for the Prior Abatement Bonds for the purpose, in part, of determining the method for the School District to transfer to the City the School District's share of the property taxes payable in the years 2005 through 2019 derived from the increased market value resulting from development on the Tax Abatement Property (as defined in Exhibit A of the Agreement and in the Abatement Resolutions) (the "School District Abatements") which were pledged to the payment of the Prior Abatement Bonds and interest thereon together with the 5253945v] City's share of the property taxes payable in the years 2005 through 2019 derived from the increased market value resulting from development on the Tax Abatement Property (the "City Abatements", and together with the School District Abatements, the "Tax Abatements"); and E. WHEREAS, the amount of the property taxes abated are estimated to be at least equal to the principal amount of the Abatement Refunding Portion of the Bonds; and F. WHEREAS, $1,010,000 aggregate principal amount of the Prior Capital Improvement Bonds which mature or is subject to mandatory redemption on and after February 1, 2016, is callable on February 1, 2015 (the "Refunded Capital Improvement Bonds"), at a price of par plus accrued interest, as provided in the resolution adopted on June 7, 2004, authorizing the issuance of the Prior Capital Improvement Bonds (the "Prior Capital Improvement Resolution"); and G. WHEREAS, $4,665,000 aggregate principal amount of the Prior Abatement Bonds which mature or is subject to mandatory redemption on and after February 1, 2016, is callable on February 1, 2015 (the "Refunded Abatement Bonds" and together with the Refunded Capital Improvement Bonds, the "Refunded Bonds"), at a price of par plus accrued interest, as provided in the resolution adopted on April 18, 2005, authorizing the issuance of the Prior Abatement Bonds (the "Prior Abatement Bonds Resolution" and together with the Prior Capital Improvement Resolution, the "Prior Resolutions"); and H. WHEREAS, the crossover refunding of the Refunded Bonds on February 1, 2015 (the "Crossover Date") is consistent with covenants made with the holders thereof, and is necessary and desirable for the reduction of debt service cost to the City; and I. WHEREAS, the City Council hereby determines and declares that it is necessary and expedient to issue $5,835,000 General Obligation Refunding Bonds, Series 2013A (the "Bonds" or individually, a 'Bond"), pursuant to Minnesota Statutes, Chapter 475, to provide moneys for a crossover refunding of the Refunded Bonds; and J. WHEREAS, the City has retained Springsted Incorporated, in St. Paul, Minnesota ("Springsted"), as its independent financial advisor for the sale of the Bonds and was therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9) and proposals to purchase the Bonds have been solicited by Springsted; and K. WHEREAS, the proposals set forth on Exhibit A attached hereto were received by the Clerk, or designee, at the offices of Springsted at 10:30 a.m. this same day pursuant to the Terms of Proposal established for the Bonds; and L. 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: 2 5253945v1 I . Acceptance of Proposal. The proposal of United Bankers' Bank of Bloomington, Minnesota (the "Purchaser"), to purchase the Bonds in accordance with the Terms of Proposal established for the Bonds, at the rates of interest hereinafter set forth, and to pay therefor the sum of $5,807,283.75, plus interest accrued to settlement, is hereby found, determined and declared to be the most favorable proposal received and is hereby accepted, and the Bonds are hereby awarded to the Purchaser. The Clerk is directed to retain the deposit of the Purchaser and to forthwith return to the unsuccessful bidders their good faith checks or drafts. 2. Bond Terms. (a) Original Issue Date; Denominations; Maturities. The Bonds shall be dated as of the date of delivery, as the date of original issue, shall be issued forthwith on or after such date in fully registered form, shall be numbered from R -I upward in the denomination of $5,000 each or in any integral multiple thereof of a single maturity (the "Authorized Denominations") and shall mature on February 1 in the years and amounts as follows: Year Amount 2016 $1,060,000 2017 $1,115,000 2018 $1,160,000 2019 $1,220,000 2020 $1,280,000 As may be requested by the Purchaser, one or more term Bonds may be issued having mandatory sinking fund redemption and final maturity amounts conforming to the foregoing principal repayment schedule, and corresponding additions may be made to the provisions of the applicable Bond(s). (b) Book Entry Only System. The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York or any of its successors or its successors to its functions hereunder (the 'Depository") will act as securities depository for the Bonds, and to this end: (i) The Bonds shall be initially issued and, so long as they remain in book entry form only (the "Book Entry Only Period"), shall at all times be in the form of a separate single fully registered Bond for each maturity of the Bonds; and for purposes of complying with this requirement under paragraphs 5 and 10 Authorized Denominations for any Bond shall be deemed to be limited during the Book Entry Only Period to the outstanding principal amount of that Bond. (ii) Upon initial issuance, ownership of the Bonds shall be registered in a bond register maintained by the Bond Registrar (as hereinafter defined) in the name of CEDE & CO., as the nominee (it or any nominee of the existing or a successor Depository, the "Nominee"). 5253945x1 (iii) With respect to the Bonds neither the City nor the Bond Registrar shall have any responsibility or obligation to any broker, dealer, bank, or any other financial institution for which the Depository holds Bonds as securities depository (the "Participant") or the person for which a Participant holds an interest in the Bonds shown on the books and records of the Participant (the "Beneficial Owner"). Without limiting the immediately preceding sentence, neither the City, nor the Bond Registrar, shall have any such responsibility or obligation with respect to (A) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in the Bonds, or (B) the delivery to any Participant, any Owner or any other person, other than the Depository, of any notice with respect to the Bonds, including any notice of redemption, or (C) the payment to any Participant, any Beneficial Owner or any other person, other than the Depository, of any amount with respect to the principal of or premium, if any, or interest on the Bonds, or (D) the consent given or other action taken by the Depository as the Registered Holder of any Bonds (the "Holder"). For purposes of securing the vote or consent of any Holder under this Resolution, the City may, however, rely upon an omnibus proxy under which the Depository assigns its consenting or voting rights to certain Participants to whose accounts the Bonds are credited on the record date identified in a listing attached to the omnibus proxy. (iv) The City and the Bond Registrar may treat as and deem the Depository to be the absolute owner of the Bonds for the purpose of payment of the principal of and premium, if any, and interest on the Bonds, for the purpose of giving notices of redemption and other matters with respect to the Bonds, for the purpose of obtaining any consent or other action to be taken by Holders for the purpose of registering transfers with respect to such Bonds, and for all purpose whatsoever. The Bond Registrar, as paying agent hereunder, shall pay all principal of and premium, if any, and interest on the Bonds only to the Holder or the Holders of the Bonds as shown on the bond register, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. (v) Upon delivery by the Depository to the Bond Registrar of written notice to the effect that the Depository has determined to substitute a new Nominee in place of the existing Nominee, and subject to the transfer provisions in paragraph 10, references to the Nominee hereunder shall refer to such new Nominee. (vi) So long as any Bond is registered in the name of a Nominee, all payments with respect to the principal of and premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, by the Bond Registrar or City, as the case may be, to the Depository as provided in the Letter of Representations to the Depository required by the Depository as a condition to its acting as book -entry Depository for the Bonds (said Letter of Representations, together with any replacement thereof or amendment or substitute thereto, including any standard procedures or policies referenced therein or applicable thereto respecting the procedures and other matters relating to the Depository's role as book -entry Depository for the Bonds, collectively hereinafter referred to as the "Letter of Representations"). n 5253945v1 (vii) All transfers of beneficial ownership interests in each Bond issued in book -entry form shall be limited in principal amount to Authorized Denominations and shall be effected by procedures by the Depository with the Participants for recording and transferring the ownership of beneficial interests in such Bonds. (viii) In connection with any notice or other communication to be provided to the Holders pursuant to this Resolution by the City or Bond Registrar with respect to any consent or other action to be taken by Holders, the Depository shall consider the date of receipt of notice requesting such consent or other action as the record date for such consent or other action; provided, that the City or the Bond Registrar may establish a special record date for such consent or other action. The City or the Bond Registrar shall, to the extent possible, give the Depository notice of such special record date not less than 15 calendar days in advance of such special record date to the extent possible. (ix) Any successor Bond Registrar in its written acceptance of its duties under this Resolution and any paying agency/bond registrar agreement, shall agree to take any actions necessary from time to time to comply with the requirements of the Letter of Representations. (x) In the case of a partial prepayment of a Bond, the Holder may, in lieu of surrendering the Bonds for a Bond of a lesser denomination, make a notation of the reduction in principal amount on the panel provided on the Bond stating the amount so redeemed. (c) Termination of Book -Entry Only System. Discontinuance of a particular Depository's services and termination of the book -entry only system may be effected as follows: (i) The Depository may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the City and discharging its responsibilities with respect thereto under applicable law. The City may terminate the services of the Depository with respect to the Bond if it determines that the Depository is no longer able to cavy out its functions as securities depository or the continuation of the system of book -entry transfers through the Depository is not in the best interests of the City or the Beneficial Owners. (ii) Upon termination of the services of the Depository as provided in the preceding paragraph, and if no substitute securities depository is willing to undertake the functions of the Depository hereunder can be found which, in the opinion of the City, is willing and able to assume such functions upon reasonable or customary terms, or if the City determines that it is in the best interests of the City or the Beneficial Owners of the Bond that the Beneficial Owners be able to obtain certificates for the Bonds, the Bonds shall no longer be registered as being registered in the bond register in the name of the Nominee, but may be registered in whatever name or names the Holder of the Bonds shall designate at that time, in accordance with paragraph 10. To the extent that the Beneficial Owners are designated as the transferee by the Holders, in accordance with paragraph 10, the Bonds will be delivered to the Beneficial Owners. 5253945vl (iii) Nothing in this subparagraph (c) shall limit or restrict the provisions of paragraph 10. (d) Letter of Representations. The provisions in the Letter of Representations are incorporated herein by reference and made a part of the resolution, and if and to the extent any such provisions are inconsistent with the other provisions of this resolution, the provisions in the Letter of Representations shall control. 3. Allocation of Bonds and Prepayments to Portions of Debt Service. The aggregate principal amount of $1,040,000 maturing in each of the years and amounts hereinafter set forth are issued to refund the Refunded Capital Improvement Bonds (the "Capital Improvement Refunding Portion"). The aggregate principal amount of $4,795,000 maturing in each of the years and amounts hereinafter set forth are issued to refund the Refunded Abatement Bonds (the "Abatement Refunding Portion"): If Bonds are prepaid, the prepayments shall be allocated to the portions of debt service (and hence allocated to the payment of Bonds treated as relating to a particular portion of debt service) as provided in this paragraph. If the source of prepayment is the general fund of the City, or other generally available source, the prepayment may be allocated to any of the portions of debt service in such amounts as the City shall determine. If the source of the prepayment is taxes levied for the Capital Improvement Refunding Portion, the prepayment shall be allocated to the Capital Improvement Refunding Portion of debt service. If the source of a prepayment is taxes abated and pledged to the Abatement Refunding Portion, the prepayment shall be allocated to the Abatement Refunding Portion of debt service. 4. Purpose; Refunding Findings. The Bonds shall provide funds for a crossover refunding of the Refunded Bonds (the "Refunding"). It is hereby found, determined and declared that the Refunding is pursuant to Minnesota Statutes, Section 475.67, Subdivision 13, and as of the crossover date of the Bonds, shall result in a reduction of the present value of the dollar amount of the debt service to the City from a total dollar amount of $1,603,230.00 for the Prior Capital Improvement Bonds to a total dollar amount of $1,526,947.50 for the Capital Improvement Portion of the Bonds (as hereinafter defined), computed in accordance with the provisions of Minnesota Statutes, Section 475.67, Subdivision 12, and accordingly the dollar amount of such present value of the debt service for the Capital Improvement Portion of the Bonds is lower by at least three percent than the dollar amount of such present value of the debt service for the Prior Capital Improvement Bonds and as of the crossover date of the Bonds, shall result in a reduction of the present value of the dollar amount of the debt service to the City from 5253945v1 Capital Improvement Abatement Year Refunding Portion Refunding Portion Total 2016 $205,000 $855,000 $1,060,000 2017 $210,000 $905,000 $1,115,000 2018 $205,000 $955,000 $1,160,000 2019 $210,000 $1,010,000 $1,220,000 2020 $210,000 $1,070,000 $1,280,000 If Bonds are prepaid, the prepayments shall be allocated to the portions of debt service (and hence allocated to the payment of Bonds treated as relating to a particular portion of debt service) as provided in this paragraph. If the source of prepayment is the general fund of the City, or other generally available source, the prepayment may be allocated to any of the portions of debt service in such amounts as the City shall determine. If the source of the prepayment is taxes levied for the Capital Improvement Refunding Portion, the prepayment shall be allocated to the Capital Improvement Refunding Portion of debt service. If the source of a prepayment is taxes abated and pledged to the Abatement Refunding Portion, the prepayment shall be allocated to the Abatement Refunding Portion of debt service. 4. Purpose; Refunding Findings. The Bonds shall provide funds for a crossover refunding of the Refunded Bonds (the "Refunding"). It is hereby found, determined and declared that the Refunding is pursuant to Minnesota Statutes, Section 475.67, Subdivision 13, and as of the crossover date of the Bonds, shall result in a reduction of the present value of the dollar amount of the debt service to the City from a total dollar amount of $1,603,230.00 for the Prior Capital Improvement Bonds to a total dollar amount of $1,526,947.50 for the Capital Improvement Portion of the Bonds (as hereinafter defined), computed in accordance with the provisions of Minnesota Statutes, Section 475.67, Subdivision 12, and accordingly the dollar amount of such present value of the debt service for the Capital Improvement Portion of the Bonds is lower by at least three percent than the dollar amount of such present value of the debt service for the Prior Capital Improvement Bonds and as of the crossover date of the Bonds, shall result in a reduction of the present value of the dollar amount of the debt service to the City from 5253945v1 a total dollar amount of $7,057,650.00 for the Prior Abatement Bonds to a total dollar amount of $6,740,092.50 for the Abatement Refunding Portion of the Bonds (as hereinafter defined), computed in accordance with the provisions of Minnesota Statutes, Section 475.67, Subdivision 12, and accordingly the dollar amount of such present value of the debt service for the Abatement Refunding Portion of the Bonds is lower by at least three percent than the dollar amount of such present value of the debt service for the Prior Abatement Bonds all as required in Minnesota Statutes, Section 475.67, Subdivision 12. 5. Interest. The Bonds shall bear interest payable semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date"), commencing December 15, 2013, 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 Interest Rate 2016 0.50% 2017 0.65% 2018 0.85% 2019 1.00% 2020 1.15% 6. No Optional Redem tp ion. The Bonds are not subject to redemption and prepayment prior to their stated maturity dates. 7. Bond Registrar. U.S. Bank National Association, in Saint 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 paragraph 12. 8. Form of Bond. The Bonds, together with the Bond Registrar's Certificate of Authentication, the form of Assignment and the registration information thereon, shall be in substantially the following form: 7 5253945x1 UNITED STATES OF AMERICA STATE OF MINNESOTA WASHINGTON COUNTY CITY OF HUGO GENERAL OBLIGATION REFUNDING BOND, SERIES 2013A Interest Rate Maturity Date Date of Original Issue February 1, March 21, 2013 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: CUSIP 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, on the maturity date specified above, without option of prior redemption, and to pay interest thereon semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date"), commencing February 1, 2014, 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 U.S. Bank national Association, in Saint 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 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 first 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, 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. So long as this Bond is registered in the name of the Depository or its Nominee as provided in the Resolution hereinafter described, and as those terms are defined therein, payment of principal of, premium, if any, and interest on this Bond and notice with respect thereto shall be made as provided in the Letter of Representations, as defined in the Resolution, and surrender of this Bond shall not be required for payment of the redemption price upon a partial redemption of this Bond. Until termination of the book -entry only system pursuant to the Resolution, Bonds may only be registered in the name of the Depository or its Nominee. 5253945v1 No Optional Redemption. All Bonds of this issue (the "Bonds") shall not be subject to redemption and prepayment prior to their stated maturity dates. Issuance; Purpose; General Obligation. This Bond is one of an issue in the total principal amount of $5,835,000, all of like date of original issue and tenor, except as to number, maturity, interest rate, redemption privilege and denomination, 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 on February 25, 2013 (the "Resolution"), for the purpose of providing funds sufficient for a crossover refunding on February 1, 2015, of the Issuer's General Obligation Capital Improvement Plan Bonds, Series 2004A, dated July 1, 2004, which mature on and after February 1, 2016, and the General Obligation Tax Abatement Bonds, Series 2005A, dated May 1, 2005, which mature on or after February 1, 2016. This Bond is payable out of the Escrow Account and the Debt Service Account established by the City pursuant to the Resolution. 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 in fully registered form in Authorized Denominations (as defined in the Resolution) 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 the Holder's 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. Fees 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. 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 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. 9 5253945v1 Qualified Tax -Exempt Obli ag tion. This Bond has been designated by the Issuer as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. 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 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, the corporate seal of the Issuer having been intentionally omitted as permitted by law. Date of Registration: Registrable by: U.S. BANK NATIONAL BOND REGISTRAR'S CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the Resolution mentioned within. U.S. Bank National Association Saint Paul, Minnesota Bond Registrar By Authorized Signature ASSOCIATION Payable at: U.S. BANK NATIONAL ASSOCIATION CITY OF HUGO, WASHINGTON COUNTY, MINNESOTA /s/ Facsimile Mayor /s/ Facsimile Clerk 10 5253945v1 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) under the (State) (Minor) Uniform Transfers to Minors Act Additional abbreviations may also be used though not in the above list. 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- I5(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: 11 5253945v1 9. Execution. The Bonds shall be in typewritten form, shall be executed on behalf of the City by the signatures of its Mayor and Clerk and be sealed with the seal of the City; provided, as permitted by law, both signatures may be photocopied facsimiles and the corporate seal has been omitted. In the event of disability or resignation or other absence of either officer, the Bonds may be signed by the manual or facsimile signature of the officer who may act on behalf of the absent or disabled officer. In case either 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, the signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. 10. 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 of the date of delivery. The Certificate of Authentication so executed on each Bond shall be conclusive evidence that it has been authenticated and delivered under this resolution. 11. 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. 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 canceled by the Bond Registrar and thereafter disposed of as directed by the City. 12 52539450 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 is hereby authorized to negotiate and execute the terms of said agreement. 12. 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. 13. 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 first 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 days prior to the Special Record Date. 14. 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) 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. 15. Delivery; Application of Proceeds. The Bonds when so prepared and executed shall be delivered by the Finance Director to the Purchaser upon receipt of the purchase price, and the Purchaser shall not be obliged to see to the proper application thereof. 16. Fund and Accounts. There is hereby created a special fund designated the General Obligation Refunding Bonds, Series 2013A Fund (the "Fund"), to be administered and maintained by the Finance Director 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 13 5253945v1 manner herein specified until the Bonds and the interest thereon shall have been fully paid. In such records there shall be established and maintained the following separate accounts, for the purposes as follows: (a) Escrow Account. The Escrow Account shall be maintained as an escrow account with U.S. Bank National Association (the 'Escrow Agent"), in Saint Paul, Minnesota, which is a suitable financial institution within or without the State. $5,807,283.75 in proceeds of the sale of the Bonds shall be received by the Escrow Agent and applied to fund the Escrow Account or to pay costs of issuing the Bonds. Proceeds of the Bonds less proceeds used to pay costs of issuance and any proceeds returned to the City are hereby irrevocably pledged and appropriated to the Escrow Account, together with all investment earnings thereon. The Escrow Account shall be invested in securities maturing or callable at the option of the holder on such dates and bearing interest at such rates as shall be required to provide sufficient funds, together with any cash or other funds retained in the Escrow Account, (i) to pay when due the interest to accrue on the Bonds to and including the Crossover Date; and (ii) to pay when called for redemption on the Crossover Date, the principal amount of the Refunded Bonds. The Escrow Account shall be irrevocably appropriated to the payment of (i) all interest on the Bonds to and including the Crossover Date, and (ii) the principal of the Refunded Bonds due by reason of their call for redemption on the Crossover Date. The moneys in the Escrow Account shall be used solely for the purposes herein set forth and for no other purpose, except that any surplus in the Escrow Account may be remitted to the City, all in accordance with an agreement (the 'Escrow Agreement") by and between the City and Escrow Agent, a form of which agreement is on file in the office of the Clerk. Any moneys remitted to the City pursuant to the Escrow Agreement shall be deposited in the Debt Service Account. (b) Debt Service Account. There shall be maintained separate subaccounts in the Debt Service Account to be designated the Capital Improvement Debt Service Subaccount and the Abatement Debt Service Subaccount. There are hereby irrevocably appropriated and pledged to, and there shall be credited to the separate subaccounts of the Debt Service Account: (i) Capital Improvement Debt Service Subaccount. To the Capital Improvement Debt Service Subaccount there is hereby pledged and irrevocably appropriated and there shall be credited: (1) after the Crossover Date, all collections of all taxes heretofore levied for the payment of the Prior Capital Improvement Bonds which are not needed to pay the Prior Capital Improvement Bonds as a result of the Refunding; (2) any collections of all taxes herein or hereafter levied for the payment of the Capital Improvement Refunding Portion; (3) a proportionate share of accrued interest received upon delivery of the Bonds; (4) a proportionate share of any sums remitted to the City pursuant to the Escrow Agreement; (5) any balance remaining after the Crossover Date in the Debt Service Account created by the Prior Capital Improvement Resolution; (6) all investment earnings on funds in the Capital Improvement Debt Service Subaccount; and (7) any and all other moneys which are properly available and are appropriated by the governing body of the City to the Capital Improvement Debt Service Subaccount. The amount of any surplus remaining in the Capital Improvement Debt Service Subaccount when the Capital Improvement Refunding Portion and interest thereon are paid shall be used consistent with Minnesota Statutes, Section 475.61, Subdivision 4. 14 5253945x1 (ii) Abatement Debt Service Subaccount. To the Abatement Debt Service Subaccount there is hereby pledged and irrevocably appropriated and there shall be credited: (1) after the Crossover Date, Tax Abatements in the amount abated by the Abatement Resolutions and in the manner specified in the Agreement; (2) any collections of all taxes herein or hereafter levied for the payment of the Abatement Refunding Portion; (3) a proportionate share of accrued interest received upon delivery of the Bonds; (4) a proportionate share of any sums remitted to the City pursuant to the Escrow Agreement; (5) any balance remaining after the Crossover Date in the Debt Service Account created by the Prior Abatement Resolution; (6) all investment earnings on funds in the Abatement Debt Service Subaccount; and (7) any and all other moneys which are properly available and are appropriated by the governing body of the City to the Abatement Debt Service Subaccount. The amount of any surplus remaining in the Abatement Debt Service Subaccount when the Abatement Refunding Portion and interest thereon are paid shall be used consistent with Minnesota Statutes, Section 475.61, Subdivision 4. No portion of the proceeds of the Bonds shall be used directly or indirectly to acquire higher yielding investments or to replace funds which were used directly or indirectly to acquire higher yielding investments, except (a) for a reasonable temporary period until such proceeds are needed for the purpose for which the Bonds were issued, and (b) in addition to the above, in an amount not greater than the lesser of five percent of the proceeds of the Bonds or $100,000. To this effect, any proceeds of the Bonds and any sums from time to time held in the Fund (or any other City account which will be used to pay principal and interest to become due on the Bonds) in excess of amounts which under the applicable federal arbitrage regulations may be invested without regard as to yield shall not be invested in excess of the applicable yield restrictions imposed by the arbitrage regulations on such investments after taking into account any applicable "temporary periods" or "minor portion" made available under the federal arbitrage regulations. In addition, the proceeds of the Bonds and money in the Fund shall not be invested in obligations or deposits issued by, guaranteed by or insured by the United States or any agency or instrumentality thereof if and to the extent that such investment would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the federal Internal Revenue Code of 1986, as amended (the "Code"). 17. Covenants Relating to the Capital Improvement Refunding Portion. (a) Tax Lew; Coverage Test; Cancellation of Certain Tax Levies. To provide moneys for payment of the principal and interest on the Capital Improvement Refunding Portion there is hereby levied upon all of the taxable property in the City a direct annual ad valorem tax which shall be spread upon the tax rolls and collected with and as part of other general property taxes in the City for the years and in the amounts as follows: Years of Tax Lew Years of Tax Collection Amount 2014-2018 2015-2019 See attached schedule The tax levies are such that if collected in full they, together with estimated collections of any other revenues herein pledged for the payment of the Capital Improvement Refunding 15 5253945v1 Portion and sums held in the Escrow Account, will produce at least five percent in excess of the amount needed to meet when due the principal and interest payments on the Capital Improvement Refunding Portion. The tax levies shall be irrepealable so long as any of the Capital Improvement Refunding Portion are outstanding and unpaid, provided that the City reserves the right and power to reduce the levies in the manner and to the extent permitted by Minnesota Statutes, Section 475.61, Subdivision 3. Upon payment of the Prior Capital Improvement Bonds, the uncollected taxes levied in the Prior Capital Improvement Resolution authorizing the issuance of the Prior Capital Improvement Bonds which are not needed to pay the Prior Capital Improvement Bonds as a result of the Refunding shall be canceled. (b) General Obligation Pledge. For the prompt and full payment of the principal of and interest on the Capital Improvement Refunding Portion 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 Escrow Account or Capital Improvement Debt Service Subaccount is ever insufficient to pay all principal and interest then due on the Capital Improvement Refunding Portion payable therefrom, the deficiency shall be promptly paid out of any other accounts of the City which are available for such purpose, and such other funds may be reimbursed without interest from the Escrow Account or Capital Improvement Debt Service Subaccount when a sufficient balance is available therein. 18. Covenants Relating to the Abatement Refunding Portion. (a) Coverage Test. The Tax Abatements are such that if collected in full they will produce at least five percent in excess of the amount needed to meet when due the principal and interest payments on the Abatement Refunding Portion of the Bonds. Consequently, no taxes are levied at the present time. (b) Pledge of Abated Taxes; General Obligation Pledge. The City hereby pledges and appropriates the Tax Abatements to the payment of the principal and interest on the Abatement Refunding Portion of the Bonds. For the prompt and full payment of the principal and interest on the Abatement Refunding Portion of 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 Abatement Debt Service Subaccount is ever insufficient to pay all principal and interest then due on the Abatement Refunding Portion of 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 Abatement Debt Service Subaccount when a sufficient balance is available therein. 19. Securities; Escrow Agent. Securities purchased from moneys in the Escrow Account shall be limited to securities set forth in Minnesota Statutes, Section 475.67, Subdivision 8, and any amendments or supplements thereto. Securities purchased from the Escrow Account shall be purchased simultaneously with the delivery of the Bonds. The City Council has investigated the facts and hereby finds and determines that the Escrow Agent is a suitable financial institution to act as escrow agent. 16 5253945vl 20. Escrow Apreement. On or prior to the delivery of the Bonds the Mayor and Clerk shall, and are hereby authorized and directed to, execute on behalf of the City an Escrow Agreement. The Escrow Agreement is hereby approved and adopted and made a part of this resolution, and the City covenants that it will promptly enforce all provisions thereof in the event of default thereunder by the Escrow Agent. 21. Purchase of SLGS or Open Market Securities. The Escrow Agent, as agent for the City, is hereby authorized and directed to purchase on behalf of the Council and in its name the appropriate United States Treasury Securities, State and Local Government Series and/or open market securities as provided in paragraph 19, from the proceeds of the Bonds and, to the extent necessary, other available funds, all in accordance with the provisions of this resolution and the Escrow Agreement and to execute all such documents (including the appropriate subscription form) required to effect such purchase in accordance with the applicable U.S. Treasury Regulations. 22. Redemption of Prior Bonds. The Prior Bonds shall be redeemed and prepaid in accordance with the terms and conditions set forth in the Notices of Call for Redemption, in the forms attached to the Escrow Agreement, which terms and conditions are hereby approved and incorporated herein by reference. The Notices of Call for Redemption shall be given pursuant to the Escrow Agreement. 23. Prior Bonds; Security. Until retirement of the Prior Bonds, all provisions theretofore made for the security thereof shall be observed by the City and all of its officers and agents. 24. Supplemental Resolution. The Prior Resolution is hereby supplemented to the extent necessary to give effect to the provisions of this resolution. 25. 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 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. 26. Certificate of Registration. The Clerk 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 the County Auditor shall require, and to obtain the County Auditor's 17 5253945v1 Certificate that the Bonds have been entered in the County Auditor's Bond Register and that the tax levy required by law has been made. 27. Records and Certificates. The officers of the City are hereby authorized and directed to prepare and furnish to 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. 28. Negative Covenant as to Use of Proceeds and Project. The City hereby covenants not to use the proceeds of the Bonds or to use the Project financed by the Prior Bonds, or to cause or permit them to be used, or to enter into any deferred payment arrangements for the cost of the Project, in such a manner as to cause the Bonds to be "private activity bonds" within the meaning of Sections 103 and 141 through 150 of the Code. 29. Tax -Exempt Status of the Bonds; Rebate. The City is subject to the rebate requirement imposed by Section 148(f) of the Code by reason of issuing (together with all subordinate entities thereof, and all entities treated as one issuer with the City) more than $5,000,000 of tax-exempt governmental obligations during this calendar year as provided in Section 148(f)(4)(D) of the Code and Section 1.148-8 of the Regulations. 30. Designation of Qualified Tax -Exempt Obligations. In order to qualify the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, the City hereby makes the following factual statements and representations: (a) the Bonds are issued after August 7, 1986; (b) the Bonds are not "private activity bonds" as defined in Section 141 of the Code; (c) the City hereby designates the Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code; (d) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds, treating qualified 501(c)(3) bonds as not being private activity bonds) which will be issued by the City (and all entities treated as one issuer with the City, and all subordinate entities whose obligations are treated as issued by the City) during this calendar year 2013 will not exceed $10,000,000; (e) not more than $10,000,000 of obligations issued by the City during this calendar year 2013 have been designated for purposes of Section 265(b)(3) of the Code; and (f) the aggregate face amount of the Bonds does not exceed $10,000,000. The City shall use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designation made by this paragraph. M 5253945x1 31. Governmental Bonds Post -Issuance Compliance Policies and Procedures The City hereby approves the Governmental Bonds Post -Issuance Compliance Policies and Procedures in substantially the form presented to the City Council. 32. 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. 33. 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. 19 5253945v1 The motion for the adoption of the foregoing resolution was duly seconded by member Bronk and, after a full discussion thereof and upon a vote being taken thereon, the following voted in favor thereof: Bronk, Petryk, Klein, Haas, Weidt and the following voted against the same: None whereupon the resolution was declared duly passed and adopted. 20 5253945v1 STATE OF MINNESOTA COUNTY OF WASHINGTON CITY OF HUGO I, the undersigned, being the duly qualified and acting Clerk 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, duly called and held on the date therein indicated, insofar as such minutes relate to providing for the issuance and sale of $5,835,000 General Obligation Refunding Bonds, Series 2013A. WITNESS my hand on February 25, 2013. Clerk 21 5253945v1 FINAL 1,040,000 City of Hugo, Minnesota General Obligation Capital Improvement Refunding Bonds, Series 2013A Crossover Refunding of Series 2004A Post -Sale Tax Levies Date Principal Coupon Interest Total P+l Escrow Pa menu 105%Overlevy Levy Amount Levy/Collect Vear 02/01/2014 - - 7,446.46 7,446.46 7,446.46 - - 2012/2013 02/01/2015 - - 8,647.50 8,647.50 8,647.50 - - 2013/2014 02/01/2076 205,000.00 0.500% 8,647.50 213,647.50 - 224,329.88 224,329.88 2014/2015 02/01/2017 210,000.00 0.650% 7,622.50 217,622.50 - 228,503.63 228,503.63 2015/2016 02/01/2018 205,000.00 0.850% 6,257.50 211,257.50 - 221,820.38 221,820.38 2016/2017 02/01/2019 210,000.00 1.000% 4,515.00 214,515.00 - 225,240.75 225,240.75 2017/2016 02/01/2020 210,000.00 1.150% 2,415.00 212,415.00 - 223,035.75 223,035.75 2018/2019 Total $1,040,000.00 $45,551.46 $1,085,551,46 $16,093.96 $1,122,930.38 $1,122,930.38 #rke901F re/1004A.1 / ki 2019&&2X0 l 212.512019 l 12:59PN Springsted 5253945vl