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[06] Bond Issue
11 Council Agenda Item 6 MEETING DATE: October 3, 2016 AGENDA ITEM: Bond Sale - Monte Eastvold,Northland Securities, Inc. SUBMITTED BY: Finance BOARD/COMMISSION/COMMITTEE RECOMMENDATION: None PREVIOUS COUNCIL ACTION: Council let bids and ordered the improvements for Field Street. BACKGROUND INFORMATION: Monte Eastvold,Northland Securities, will be present to discuss the bond issue for the 2016B GO improvement bonds. The funding sources for the project include debt levy and special assessments. The MSAS funds applied to Field Street are not included in the bonded portion. Standards &Poors updated the City's bond rating. S&P reaffirmed the City's bond rating as AA- with a stable outlook. The rating is a testament of the financial decisions the Council has made in recent years committing to strong financial health. The AA-rating provides the City with more bond buyers bidding lower interest rates. The bond rating summary from S&P is attached. The most recent estimated amortization schedules are attached. Monte will provide updated schedules at the meeting. The interest rates remain favorable—near record lows. The resolutions reflect estimates for closing costs. Monte will also bring the updated resolutions to the meeting for the Council to adopt and sign. BUDGET/FISCAL IMPACT: S 735,000 General Obligation CIP Bonds ATTACHMENTS: Request for Council Action Resolution 2016-048 Authorize GO Bond Issue 2016B 2016B General Obligation Improvement Bond Schedule Standards &Poors Rating Summary REQUESTED COUNCIL ACTION: Authorize execution of Resolution 2016-048 providing for the issuance and sale of the S 735,000 Bonds, Series 2016B,pledging for the security thereof net revenues and levying a tax for the payment thereof. EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL OF THE CITY OF ST. JOSEPH, MINNESOTA Held: October 3, 2016 Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of St. Joseph, Stearns County, Minnesota, was duly held at the City Hall in said City on October 3, 2016, at 6:00 P.M., for the purpose, in part, of authorizing the issuance and awarding the sale of$735,000 General Obligation Improvement Bonds, Series 2016B. The following members were present: and the following were absent: Member introduced the following resolution and moved its adoption: RESOLUTION 2016-048 RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF $735,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2016B, AND PLEDGING SPECIAL ASSESSMENTS FOR THE SECURITY THEREOF AND LEVYING A TAX FOR THE PAYMENT THEREOF A. WHEREAS, the City Council of the City of St. Joseph, Minnesota(the "City") hereby determines and declares that it is necessary and expedient to issue $735,000 General Obligation Improvement Bonds, Series 2016B (the 'Bonds"), pursuant to Minnesota Statutes, Chapters 429 and 475, to finance street improvements within the City (the "Improvements"); and B. WHEREAS, the Improvements and all their components have been ordered prior to the date hereof, after a hearing thereon for which notice was given describing the Improvements or all their components by general nature, estimated cost, and area to be assessed; and C. WHEREAS, the City has retained PMA Financial Network, Inc., in Albertville, Minnesota, as its independent financial advisor for the sale of the Bonds and was therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9); and D. WHEREAS, it is in the best interests of the City that the Bonds be issued in book- entry form as hereinafter provided; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of St. Joseph, Minnesota, as follows: 7848770v1 1. Acceptance of Offer. The offer of Northland Securities, Inc. (the "Purchaser"), to purchase the Bonds, in accordance with the terms and at the rates of interest hereinafter set forth, and to pay therefor the sum of$ plus interest accrued to settlement, is hereby accepted. 2. Bond Terms. (a) Original Issue Date; Denominations; Maturities; Term Bond Option. The Bonds shall be dated November 1, 2016, as the date of original issue, be issued forthwith on or after such date in fully registered form, be numbered from R-1 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 December 15 in the years and amounts as follows: Year Amount Year Amount 2018 $50,000 2026 $50,000 2019 50,000 2027 50,000 2020 50,000 2028 50,000 2021 50,000 2029 50,000 2022 50,000 2030 45,000 2023 50,000 2031 45,000 2024 50,000 2032 45,000 2025 50,000 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"). 2 7848770v1 (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"). 3 7848770v1 (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. (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 carry 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. (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 4 7848770v1 such provisions are inconsistent with the other provisions of this resolution, the provisions in the Letter of Representation shall control. 3. Purpose. The Bonds shall provide funds to finance the Improvements. The total cost of the Improvements, 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. Work on the Improvements shall proceed with due diligence to completion. The City covenants that it shall do all things and perform all acts required of it to assure that work on the Improvements proceeds with due diligence to completion and that any and all permits and studies required under law for the Improvements are obtained. 4. Interest. The Bonds shall bear interest payable semiannually on June 15 and December 15 of each year (each, an "Interest Payment Date"), commencing June 15, 2017 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 Interest Maturity Interest Year Rate Year Rate 2018 1.0% 2026 2.0% 2019 1.0 2027 2.1 2020 1.1 2028 2.1 2021 1.1 2029 2.1 2022 2.0 2030 3.0 2023 2.0 2031 3.0 2024 2.0 2032 3.0 2025 2.0 5. Redemption. All Bonds maturing on December 15, 2024 and thereafter shall be subject to redemption and prepayment at the option of the City on December 15, 2023, 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. Mailed notice of redemption shall be given to the paying agent and to each affected registered holder of the Bonds not more than sixty (60) days and not fewer than thirty (30) days prior to the date fixed for redemption. To effect a partial redemption of Bonds having a common maturity date, the 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 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 the Bonds, as many numbers as, at $5,000 for each number, shall equal the principal amount of the 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 5 7848770v1 principal amount of each 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 Registrar(with, if the City or Registrar so requires, a written instrument of transfer in form satisfactory to the City and Registrar duly executed by the Holder thereof or the Holder's attorney duly authorized in writing) and the City shall execute (if necessary) and the Registrar shall authenticate and deliver to the Holder of the Bond, without service charge, a new Bond or Bonds having the same stated maturity and interest rate and of any Authorized Denomination or Denominations, as requested by the Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered. 6. Bond Re isg tray. Northland Trust Services Inc., in Minneapolis, 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 of this resolution. 7. 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: 6 7848770v1 UNITED STATES OF AMERICA STATE OF MINNESOTA STEARNS COUNTY CITY OF ST. JOSEPH R- $ GENERAL OBLIGATION IMPROVEMENT BOND, SERIES 2016B INTEREST MATURITY DATE OF RATE DATE ORIGINAL ISSUE CUSIP December 15, November 1, 2016 REGISTERED OWNER: CEDE& CO. PRINCIPAL AMOUNT: DOLLARS THE CITY OF ST. JOSEPH, STEARNS 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, unless called for earlier redemption, in the manner hereinafter set forth, the principal amount specified above, on the maturity date specified above, and to pay interest thereon semiannually on June 15 and December 15 of each year (each, an "Interest Payment Date"), commencing June 15, 2017, 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 office of Northland Trust Services Inc., Minneapolis, 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 of 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. 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. 7 7848770v1 Optional Redemption. The Bonds of this issue (the "Bonds") maturing December 15, 2024 and thereafter are subject to redemption and prepayment at the option of the Issuer on December 15, 2023, 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. Mailed notice of redemption shall be given to the paying agent and to each affected Holder of the Bonds at least 30 days prior to the date fixed for redemption. 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 the 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 the Holder's attorney duly authorized in writing) and the Issuer shall execute (if necessary) and the Bond Registrar shall authenticate and deliver to the Holder of the Bond, without service charge, a new Bond or Bonds having the same stated maturity and interest rate and of any Authorized Denomination or Denominations, as requested by the 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 Obligation. This Bond is one of an issue in the total principal amount of$735,000, all of 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 October 3, 2016 (the "Resolution"), for the purpose of providing money to finance street improvements within the jurisdiction of the Issuer. This Bond is payable out of the General Obligation Improvement Bonds, Series 2016B 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 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 8 7848770v1 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 (except as otherwise provided herein 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. 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. 9 7848770v1 IN WITNESS WHEREOF, the City of St. Joseph, Stearns 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 Administrator, the corporate seal of the Issuer having been intentionally omitted as permitted by law. Date of Registration: Registrable by: NORTHLAND TRUST SERVICES, INC. Payable at: NORTHLAND TRUST SERVICES, INC. BOND REGISTRAR'S CITY OF ST. JOSEPH, CERTIFICATE OF STEARNS COUNTY, MINNESOTA AUTHENTICATION This Bond is one of the Bonds described in the Resolution mentioned within. /s/Facsimile Mayor NORTHLAND TRUST SERVICES, INC. Minneapolis, Minnesota /s/Facsimile Bond Registrar Administrator By Authorized Signature 10 7848770v1 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 (Cust) (Minor) under the Uniform (State) 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-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.) 11 7848770v1 8. Execution. The Bonds shall be in typewritten form, shall be executed on behalf of the City by the signatures of its Mayor and Administrator 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. 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 the 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 November 1, 2016. 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. 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 7848770v1 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's 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 Administrator is hereby authorized to negotiate and execute the terms of said agreement. 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 first day of the calendar month of 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 the 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, the Bond and for all other purposes whatsoever whether or not the 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 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. 15. Funds and Accounts. There is hereby created a special fund to be designated the "General Obligation Improvement Bonds, Series 2016B Fund" (the "Fund"), to be administered and maintained by the Finance Director as a bookkeeping account separate and apart from all other accounts maintained in the official financial records of the City. The Fund shall be 13 7848770v1 maintained in the manner herein specified until all of the Bonds and the interest thereon have been fully paid. There shall be maintained in the Fund two (2) separate accounts, to be designated the "Construction Account" and "Debt Service Account", respectively. (a) Construction Account. To the Construction Account there shall be credited the proceeds of the sale of the Bonds, less accrued interest received thereon, plus any special assessments levied with respect to the Improvements and collected prior to completion of the Improvements and payment of the costs thereof. From the Construction Account there shall be paid all costs and expenses of making the Improvements listed in paragraph 16, 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. Moneys in the Construction 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 date of commencement of the collection of taxes or special assessments herein levied or covenanted to be levied; and provided further that if upon completion of the Improvements there shall remain any unexpended balance in the Construction Account, the balance (other than any special assessments) shall be transferred by the Council to the Debt Service Account or the fund of any other improvement instituted pursuant to Minnesota Statutes, Chapter 429, and provided further that any special assessments credited to the Construction Account shall only be applied towards payment of the costs of the Improvements upon adoption of a resolution by the City Council determining that the application of the special assessments for such purpose will not cause the City to no longer be in compliance with Minnesota Statutes, Section 475.61, Subdivision 1. (b) Debt Service Account. There are hereby irrevocably appropriated and pledged to, and there shall be credited to, the Debt Service Account: (i) all collections of special assessments herein covenanted to be levied with respect to the Improvements and either initially credited to the Construction Account and not already spent as permitted above and required to pay any principal and interest due on the Bonds or collected subsequent to the completion of the Improvements and payment of the costs thereof, (ii) accrued interest received upon delivery of the Bonds; (iii) any collections of all taxes herein or hereafter levied for the payment of the Bonds and interest thereon; (iv) all funds remaining in the Construction Account after completion of the Improvements and payment of the costs thereof, not so transferred to the account of another improvement; (v) all investment earnings on funds held in the Debt Service Account; and (vi) any and all other moneys which are properly available and are appropriated 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. 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 (i) for a reasonable temporary period until such proceeds are needed for the purpose for which the Bonds were issued, and (ii) in addition to the above in an amount not greater than not greater than the lesser of five percent (5%) of the proceeds of the Bonds or $100,000. To this effect, any sums from time to time held in the Construction Account or Debt Service Account (or any other City fund or account which will be used to pay principal 14 7848770v1 or interest to become due on the bonds payable therefrom) in excess of amounts which under then-applicable federal arbitrage regulations may be invested without regard as to yield shall not be invested at a yield in excess of the applicable yield restrictions imposed by said 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 Internal Revenue Code of 1986, as amended (the "Code"). 16. Assessments. It is hereby determined that no less than twenty percent (20%) of the cost to the City of each Improvement financed hereunder within the meaning of Minnesota Statutes, Section 475.58, Subdivision 1(3), shall be paid by special assessments to be levied against every assessable lot,piece and parcel of land benefitted by any of the Improvements. The City hereby covenants and agrees that it will let all construction contracts not heretofore let within one year after ordering each Improvement financed hereunder unless the resolution ordering the Improvement specifies a different time limit for the letting of construction contracts. The City hereby further covenants and agrees that it will do and perform, as soon as they may be done, all acts and things necessary for the final and valid levy of such special assessments, and in the event that any such assessment be at any time held invalid with respect to any lot,piece or parcel of land due to any error, defect, or irregularity in any action or proceedings taken or to be taken by the City or the City Council or any of the City officers or employees, either in the making of the assessments or in the performance of any condition precedent thereto, the City and the City Council will forthwith do all further acts and take all further proceedings as may be required by law to make the assessments a valid and binding lien upon such property. The special assessments have heretofore been authorized. Subject to such adjustments as are required by conditions in existence at the time the assessments are levied, it is hereby determined that the assessments shall be payable in equal, consecutive, annual installments, with general taxes for the years shown below and with interest on the declining balance of all such assessments at the rates per annum not less than the rate per annum set forth opposite the collection years specified below: Levy Collection Improvement Designation Amount Years Years Rate 2016 Field Street Improvements $300,000 2016-2030 2017-2031 % At the time the assessments are in fact levied the City Council shall, based on the then- current estimated collections of the assessments, make any adjustments in any ad valorem taxes required to be levied in order to assure that the City continues to be in compliance with Minnesota Statutes, Section 475.61, Subdivision 1. 17. Tax Levy; Coverage Test. To provide moneys for payment of the principal and interest on the Bonds 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: 15 7848770v1 Year of Tax Year of Tax Levy Collection Amount See Attached Schedule The tax levies are such that if collected in full they, together with estimated collections of special assessments and other revenues herein pledged for the payment of the Bonds, will produce at least five percent (5%)in excess of the amount needed to meet when due the principal and interest payments on the Bonds. The tax levies shall be irrepealable so long as any of the Bonds 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. 18. 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. 19. Compliance With Reimbursement Bond Regulations. The provisions of this paragraph are intended to establish and provide for the City's compliance with United States Treasury Regulations Section 1.150-2 (the "Reimbursement Regulations") applicable to the "reimbursement proceeds" of the Bonds, being those portions thereof which will be used by the City to reimburse itself for any expenditure which the City paid or will have paid prior to the Closing Date (a"Reimbursement Expenditure"). The City hereby certifies and/or covenants as follows: (a) Not later than 60 days after the date of payment of a Reimbursement Expenditure, the City (or person designated to do so on behalf of the City) has made or will have made a written declaration of the City's official intent (a "Declaration") which effectively (i) states the City's reasonable expectation to reimburse itself for the payment of the Reimbursement Expenditure out of the proceeds of a subsequent borrowing; (ii) gives a general and functional 16 7848770v1 description of the property, project or program to which the Declaration relates and for which the Reimbursement Expenditure is paid, or identifies a specific fund or account of the City and the general functional purpose thereof from which the Reimbursement Expenditure was to be paid (collectively the "Project"); and (iii) states the maximum principal amount of debt expected to be issued by the City for the purpose of financing the Project;provided, however, that no such Declaration shall necessarily have been made with respect to: (i) "preliminary expenditures" for the Project, defined in the Reimbursement Regulations to include engineering or architectural, surveying and soil testing expenses and similar prefatory costs, which in the aggregate do not exceed 20% of the "issue price" of the Bonds, and (ii) a de minimis amount of Reimbursement Expenditures not in excess of the lesser of$100,000 or 5% of the proceeds of the Bonds. (b) Each Reimbursement Expenditure is a capital expenditure or a cost of issuance of the Bonds or any of the other types of expenditures described in Section 1.150-2(d)(3) of the Reimbursement Regulations. (c) The "reimbursement allocation" described in the Reimbursement Regulations for each Reimbursement Expenditure shall and will be made forthwith following (but not prior to) the issuance of the Bonds and in all events within the period ending on the date which is the later of 3 years after payment of the Reimbursement Expenditure or one year after the date on which the Project to which the Reimbursement Expenditure relates is first placed in service. (d) Each such reimbursement allocation will be made in a writing that evidences the City's use of Bond proceeds to reimburse the Reimbursement Expenditure and, if made within 30 days after the Bonds are issued, shall be treated as made on the day the Bonds are issued. Provided, however, that the City may take action contrary to any of the foregoing covenants in this paragraph upon receipt of an opinion of its Bond Counsel for the Bonds stating in effect that such action will not impair the tax-exempt status of the Bonds. 20. Continuing Disclosure. The City is the sole obligated person with respect to the Bonds. The City hereby agrees, in accordance with the provisions of Rule 15c2-12 (the "Rule"), promulgated by the Securities and Exchange Commission (the "Commission")pursuant to the Securities Exchange Act of 1934, as amended, and a Continuing Disclosure Undertaking (the "Undertaking") hereinafter described to: (a) Provide or cause to be provided to the Municipal Securities Rulemaking Board (the "MSRB") by filing at www.emma.msrb.org in accordance with the Rule, certain annual financial information and operating data in accordance with the Undertaking. The City reserves the right to modify from time to time the terms of the Undertaking as provided therein. (b) Provide or cause to be provided to the MSRB notice of the occurrence of certain events with respect to the Bonds in not more than ten (10) business days after the occurrence of the event, in accordance with the Undertaking. (c) Provide or cause to be provided to the MSRB notice of a failure by the City to provide the annual financial information with respect to the City described in the Undertaking, in not more than ten (10) business days following such occurrence. 17 7848770v1 (d) The City agrees that its covenants pursuant to the Rule set forth in this paragraph and in the Undertaking is intended to be for the benefit of the Holders of the Bonds and shall be enforceable on behalf of such Holders;provided that the right to enforce the provisions of these covenants shall be limited to a right to obtain specific enforcement of the City's obligations under the covenants. The Mayor and Administrator or any other officer of the City authorized to act in their place (the "Officers") are hereby authorized and directed to execute on behalf of the City the Undertaking in substantially the form presented to the City Council subject to such modifications thereof or additions thereto as are (i) consistent with the requirements under the Rule, (ii) required by the Purchaser of the Bonds, and (iii) acceptable to the Officers. 21. General Obligation 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 irrevocably pledged. If the balance in the Debt Service Account is ever insufficient to pay all principal and interest then due on the Bonds 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 Debt Service Account when a sufficient balance is available therein. 22. Certificate of Registration. A certified copy of this resolution is hereby directed to be filed with the County Auditor of Stearns County, Minnesota, together with such other information as the County Auditor shall require, and there shall be obtained from the County Auditor a certificate that the Bonds have been entered in the County Auditor's Bond Register and the tax levy required by law has been made. 23. 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. 24. Negative Covenant as to Use of Proceeds and Improvements. The City hereby covenants not to use the proceeds of the Bonds or to use the Improvements, or to cause or permit them to be used, or to enter into any deferred payment arrangements for the cost of the Improvements, 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. 25. Tax-Exempt Status of the Bonds; Rebate. The City shall comply with requirements necessary under the Code to establish and maintain the exclusion from gross income under Section 103 of the Code of the interest on the Bonds, including without limitation (a) requirements relating to temporary periods for investments, (b) limitations on amounts invested at a yield greater than the yield on the Bonds, and (c) the rebate of excess investment earnings to the United States. The City expects to satisfy the twenty four month expenditure 18 7848770v1 exemption for gross proceeds of the Bonds as provided in Section 1.148-7(d)(1) of the Regulations. If any elections are available now or hereafter with respect to arbitrage or rebate matters relating to the Bonds, the Mayor, the Finance Director, or either of them, are hereby authorized and directed to make such elections as they deem necessary, appropriate or desirable in connection with the Bonds, and all such elections shall be, and shall be deemed and treated as, elections of the City. 26. 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 2016 will not exceed $10,000,000; (e) not more than $10,000,000 of obligations issued by the City during this calendar year 2016 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. 27. Official Statement. The Official Statement relating to the Bonds prepared and distributed by the Purchaser is hereby approved and the officers of the City are authorized in connection with the delivery of the Bonds to sign such certificates as may be necessary with respect to the completeness and accuracy of the Official Statement. 28. 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. 29. 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. 30. Payment of Issuance Expenses. The City Authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses to the Bond Registrar on the closing date for further distribution as directed by the Purchaser. 19 7848770v1 The motion for the adoption of the foregoing resolution was duly seconded by member and, after a full discussion thereof and upon a vote being taken thereon, the following voted in favor thereof: and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. 20 7848770v1 STATE OF MINNESOTA COUNTY OF STEARNS CITY OF ST. JOSEPH I, the undersigned, being the duly qualified and acting Administrator of the City of St. Joseph, 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 and awarding the sale of, $735,000 General Obligation Improvement Bonds, Series 2016B of said City. WITNESS my hand on October 3, 2016. Administrator 21 7848770v1 1 7848770vl Field StOption U CITY OF ST.JOSEPH, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS OF2018 kk Est Total statutoly Special Est. Annual (72-75) Interest Debt 5.00396 cap. MSA Assessment Tax Suiplusl Cumulative Year Principal Rate Interest Payment Coverage Interest Revenues Income Lev .y Deficit Balance 2016 0 0.000% 2,383 2,383 2,383 0 21000 1,188 0 804 804 2017 0 0.000% 14,300 14,300 14,300 0 34,250 0 19,950 20,754 2018 50,000 1.000% 14,300 64,300 67,515 0 33,300 14,000 -20,215 539 2019 50,000 1.000% 13,800 63,800 66,990 0 32,350 35,000 360 899 2020 50,000 1.100% 13,300 63,300 66,465 0 31,400 35,000 -65 834 2021 50,000 1.100% 12,750 62,750 65,888 0 30,450 35,000 -438 397 2022 50,000 2.000% 12,200 62,200 65,310 0 29,500 36,000 190 587 2023 50,000 2.000% 11,200 61,200 64,260 0 28,550 36,000 290 877 2024 50,000 2.000% 10,200 60,200 63,210 0 27,600 35,000 -610 267 2025 50,000 2.000% 9,200 59,200 62,160 0 26,650 36,000 490 757 2026 50,000 2.000% 8,200 58,200 61,110 0 25,700 35,000 -410 347 2027 50,000 2.100% 7,200 57,200 60,060 0 24,750 35,000 -310 37 2028 50,000 2.100% 6,150 56,150 58,958 0 23,800 36,000 843 879 2029 50,000 2.100% 5,100 55,100 57,855 0 22,850 35,000 -5 874 2030 45,000 3.000% 4,050 49,050 51,503 0 21,900 29,000 -603 272 2031 45,000 3.000% 2,700 47,700 50,085 0 20,950 29,00 -135 137 2032 45,000 3.000% 1,350 46,350 48,668 0 0 48,600 -68 69 735,000 148,383 883,383 926,718 0 2,000 415,188 509,600 69 pro plicatonioffund Field Street Improvement Project(A) 2.365.793 Construction 1.513,838 Lamxr M3AChntributin, -1,635.616 Lighting (included) Less. m,n,fe,-Ing -12,507 Contingency 203.800 Total Hard Costs 697.$70 Engineering Fees 387.800 A old. Issuance Expenses Gmotooh. |ovexdgodon 0 Em. Underwriter's Discount @1.86o6 14.406 Constr. Mat. Investigation 35.000 Est. Capitalized Interest(0Months) O e'O+wxcquioitiun 201.855 Est. Pricing Opinion 1.000 Local Legal, Administration 24,000 Eut. Wiac. 100 Es,. Bond Counsel Fee 8.000 Total Eat. Improvement Costs: 2.365.793 Est. Rating Fee 9.000 Est. CnuntyAuditnc/Wixo. 250 Registrar/Paying Agent Fee 5,000 Total 735,428 Bonds Dated: 10/1/2016 Less., Investment Income '6O0BondxMatm u, 12/15/18 Through 12/15/32 ----------- Interest Payments: 6/15/17 &Semiannually Each l2/l6 & 6/lSThereafter. Rounded For Issuance Call Option: Callable l2/l5/2O2S@Par Plus Accrued Interest. Registrao'PuyA8ent: Northland Trust Services 1.11H1111 I Purchase Price: $720.594 Est.Average Coupon: 2.2322% Par Amount of Bond Issue: $733'000 Net Effective Rate: 2.4488% Percentage ofProject Assessed: 40.82% Bond Sale Date: October 3, Z016. Interest Rate onAssessments: 4J5% Bond Closing Date: October 2a, 2V16. First Installment Collection: 2017 Bond Counsel: Briggs &MurQmnn Number ofAnnual Installments: 15 Start Date ofAssessments: 11/30/2018 Monte Eannvo|d, V.P, Northland 5nouhtioo' Inc. Dated: 9/30/2016 Field St Option II CITY OF ST.JOSEPH, MINNESOTA ASSESSMENT INCOME Field Street Assessments Estimated Estimated Assessment Interest Assessment Assessment Interest Assessment Year Principal 4.7596 Income Principal 0.0096 Income 2016 0 1,188 11188 0 0 0 2017 20,000.00 14,250 34,250 0.00 0 0 2018 20,000.00 13,300 33,300 0.00 0 0 2019 20,000.00 12,350 32,350 0.00 0 0 2020 20,000.00 11,400 31,400 0.00 0 0 2021 20,000.00 10,450 30,450 0.00 0 0 2022 20,000.00 9,500 29,500 0.00 0 0 2023 20,000.00 8,550 28,550 0.00 0 0 2024 20,000.00 7,600 27,600 0.00 0 0 2025 20,000.00 6,650 26,650 0.00 0 0 2026 20,000.00 5,700 25,700 0.00 0 0 2027 20,000.00 4,750 24,750 0.00 0 0 2028 20,000.00 3,800 23,800 0.00 0 0 2029 20,000.00 2,850 22,850 0.00 0 0 2030 20,000.00 1,900 21,900 0.00 0 0 2031 20,000.00 950 20,950 0.00 0 0 2032 0.00 0 0 0.00 0 0 300,000.00 115,188 415,188 0.00 0 0 Tax Impact Analysis:. . . . ....... Annual Tax Residential Market Value Est. Tax Capacity Capacity $100,000 $150,000 $200,000 Tax Value Incr. Rate Net Tax Capacity Year Levy 1.0096 Increase $778 $1,263 . $1,808 2016 0 3,664,663 2017 0 3,701,310 0.00% 0.00 0.00 0.00 2018 14,000 3,738,323 0.37% 2.69 4.73 6.77 2019 35,000 3,775,706 0.93% 6.66 11.71 16.76 2020 35,000 3,813,463 0.92% 6.59 11.59 16.59 2021 35,000 3,851,598 0.91% 6.52 11.48 16.43 2022 36,000 3,890,114 0.93% 6.64 11.69 16.73 2023 36,000 3,929,015 0.92% 6.58 11.57 16.57 2024 35,000 3,968,305 0.88% 6.33 11.14 15.95 2025 36,000 4,007,988 0.90% 6.45 11.34 16.24 2026 35,000 4,048,068 0.86% 6.21 10.92 15.63 2027 35,000 4,088,549 0.86% 6.15 10.81 15.48 2028 36,000 4,129,434 0.87% 6.26 11.01 15.76 2029 35,000 4,170,728 0.84% 6.03 10.60 15.17 2030 29,000 4,212,436 0.69% 4.94 8.69 12.45 2031 29,000 4,254,560 0.68% 4.89 8.61 12.32 2032 48,6001 4,297,106 1.13% 8.12 14.28 20.45 509,600 Average Annual Incr: $6.07 $10.68 $15.29 Average Monthly Incr: $0.51 $0.89 $1.27 Monte Eastvold,V.P., Northland Securities, Inc. Dated: 9/30/2016 P Global, Ratings ............................................................................................................. Suixiiin.iiiialry Minnesota;St. Joseph, Obligation Primary Credit Analyst: Cora Bruemmer,Chicago(312)233-7099;cora.bruemmer@spglobal.com Secondary Contact: Blake E Yocom,Chicago(1)312-233-7056;blake.yocom@spglobal.com T able Of Contents ............................................................................................................. Rationale Outlook Related Criteria And Research WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 27,2016 1 172558 1 362533361 S't 'II 111i'n.lialr St. Joseph, Minnesota; GeneralObligation pi US$1.465 mil GO imp buds ser 2016B dtd 11/01/2016 due 12/15/2032 Long Term Rating AA-/Stable New St.Joseph GO Long Term Rating AA-/Stable Affirmed Rationale S&P Global Ratings assigned its 'AA-'long-term rating to St. Joseph, Minn.'s 2016B general obligation(GO) improvement bonds.At the same time,we affirmed our'AA-'rating on the city's outstanding GO bonds.The outlook is stable. A pledge of the city's full faith, credit, and resources and an agreement to levy ad valorem property taxes without limitation as to rate or amount secure the series 2016B bonds. The city also pledges special assessment revenue,but we rate to the city's GO pledge. Several of the city's outstanding GO bonds are also secured by additional revenue pledges,but we rate all of the bonds based on its GO pledge. Bond proceeds for the 2016B series will be used to finance street improvements. The long-term rating reflects our assessment of the following factors for the city,including its: • Adequate economy,with projected per capita effective buying income(EBI)at 66.1%and market value per capita of $49,639,though that benefits from access to a broad and diverse metropolitan statistical area(MSA) and a local stabilizing institutional influence; • Strong management,with"good"financial policies and practices under our financial management assessment (FMA)methodology; • Adequate budgetary performance,with an operating surplus in the general fund but an operating deficit at the total governmental fund level in fiscal 2015; • Very strong budgetary flexibility,with an available fund balance in fiscal 2015 at 74%of operating expenditures; • Very strong liquidity,with total government available cash at 116.6%of total governmental fund expenditures and 3.6x governmental debt service, as well as access to external liquidity we consider strong; • Weak debt and contingent liability position,with debt service carrying charges at 32.7%of expenditures and net direct debt at 419.3%of total governmental fund revenue,but rapid amortization,with 71.8%of debt scheduled to be retired in 10 years; and • Strong institutional framework score. Adequate economy We consider St. Joseph's economy adequate. The city,with an estimated population of 6,614,is in Stearns County about eight miles west of St. Cloud in the St. Cloud MSA,which we consider to be broad and diverse. It also benefits, in our view,from a stabilizing institutional influence. The city has a projected per capita EBI of 66.1%of the national WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 27,2016 2 172558 1 362533361 Summary:St.Joseph, Minnesota; General Obligation level and per capita market value of$49,639. Overall,market value grew by 1.7%over the past year to$328.3 million in 2016.The county unemployment rate was 3.6%in 2015. The city's residents benefit from their participation in the nearby St. Cloud MSA economy with many residents commuting there for employment opportunities.The large student population at the College of St. Benedict(1,943 students),located in the city, suppresses income levels somewhat. In our view,the college acts as a stabilizing institution that we believe adds to the city's credit strength. Management has indicated that there has been significant development in residential,retail, and industrial sectors within city limits. Management expects market value to continue increasing, and is planning to annex an adjacent industrial park during 2018,which would add an estimated $111,000 to the city's net tax capacity. Due to the development in the city as well as the planned annexation,we believe continued growth is likely. Strong management We view the city's management as strong,with"good"financial policies and practices under our FMA methodology, indicating financial practices exist in most areas,but that governance officials might not formalize or monitor all of them on a regular basis. The city uses three years of historical trends and considers current economic conditions when making revenue and expenditure assumptions in its budget. Management provides the council with a monthly budget-to-actual report and quarterly investment holdings reports. The city does not have a long-term financial plan but has a five-year capital improvement plans that is updated annually and identifies funding sources for the projects. It has its own investment and debt management policies. The city's reserve policy requires a minimum general fund reserve of four to six months of the next year's budgeted expenditures in the general fund(excluding the fire department)for cash flow purposes. Adequate budgetary performance St. Joseph's budgetary performance is adequate,in our opinion. The city had surplus operating results in the general fund at 9.6%of expenditures,but a deficit result across all governmental funds at negative 6.6%in fiscal 2015. The city recorded general fund surpluses in the last three fiscal years as a result of higher-than-expected building permit revenues and favorable variances to budget for expenditures due to conservative budgeting practices. It has adopted a break-even budget for fiscal 2016.Year to date,revenues are tracking slightly better than budget,and management expects to end the year with another small general fund surplus. The preliminary fiscal 2017 budget is also balanced.We expect that the city will maintain at least balanced general fund operations, and may show drawdowns in total governmental funds. Very strong budgetary flexibility St. Joseph's budgetary flexibility is very strong,in our view,with an available fund balance in fiscal 2015 at 74%of operating expenditures, or$2.0 million.We expect the available fund balance to remain above 30%of expenditures for the current and next fiscal years,which we view as a positive credit factor. We expect the city will maintain very strong budgetary flexibility as it has a formal policy of maintaining between four and six months of general fund expenditures in reserve and is expecting a surplus in 2016. Its water and sewer WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 27,2016 3 1725458 1 362533364 Summary:St.Joseph, Minnesota; General Obligation enterprise funds are weak, and in fiscal 2015,the funds reported negative unrestricted net asset positions of negative $92,382 and negative$194,976,respectively. The enterprises have relied on transfers from the general fund to support debt service;however,these transfers have not had an effect on the available general fund balance. The general fund does not have any outstanding receivables from the enterprise funds. Very strong liquidity In our opinion, St. Joseph's liquidity is very strong,with total government available cash at 116.6%of total governmental fund expenditures and 3.6x governmental debt service in 2015. In our view,the city has strong access to external liquidity if necessary. Based on past issuance of debt,we believe that the issuer has strong access to capital markets to provide for liquidity needs if necessary.We anticipate that liquidity will remain very strong as the city will likely add to its reserves at the end of fiscal 2016 and expects balanced operations in 2017. The majority of the city's investments are held in CDs, so we do not consider its use of investments aggressive. Management reports no contingent liquidity risks from financial instruments with payment provisions that change on the occurrence of certain events. Weak debt and contingent liability profile In our view, St. Joseph's debt and contingent liability profile is weak. Total governmental fund debt service is 32.7%of total governmental fund expenditures, and net direct debt is 419.3%of total governmental fund revenue. Approximately 71.8%of the direct debt is scheduled to be repaid within 10 years,which is,in our view, a positive credit factor. The city expects to issue approximately$500,000 of new debt in fiscal 2017 for street projects,but does not have any other significant debt plans. Recently,its water and sewer enterprise revenue has not been sufficient to support debt service payments, and the city has relied on debt service levies and transfers from governmental funds to cover debt payments. It transferred$93,000 from the debt service relief fund in 2015 to assist in paying debt service. The city hired a consultant to review the water and sewer funds'rates, and it has approved a 30%water rate increase and 24% sewer rate increase for 2016.The city expects the rate increases will reduce its reliance on the property tax levy and transfers for debt service on its GO water and sewer debt. St. Joseph's combined required pension and actual other postemployment benefit(OPEB)contributions totaled 2.8% of total governmental fund expenditures in 2015. The city made its full annual required pension contribution in 2015. It participates in cost-sharing multiemployer defined-benefit pension plans administered by the Public Employees Retirement Association of Minnesota(PERA). PERA administers the General Employees Retirement Fund(GERF)and the Public Employees Police and Fire Fund(PEPFF). The city's annual required pension contribution to both GERF and PEPFF is determined by state statute and based on a percentage of payroll. It also participates in the City of St. Joseph Volunteer Fire Department Relief Association, a single-employer retirement system maintained for firefighters. The city received$52,164 in on-behalf payments from the State of Minnesota in fiscal 2015 for the plan.The plan did not require any additional contribution from the city. Using updated reporting standards in accordance with Governmental Accounting Standard Board(GASB)Statement Nos. 67 and 68,the city's net pension liability as of 2015 was$1.4 million. The funded ratios of the plans,which are calculated as the plan fiduciary net position as a percent of the total pension liability,were 78.2%for GERF and 86.6% WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 27,2016 4 172558 1 362533361 Summary:St.Joseph, Minnesota; General Obligation for PEPFF in fiscal 2015. The city has only an implicit liability for OPEBs because retirees can stay on the city's health insurance plan until the age of 65 if they pay the entire premium. Strong institutional framework The institutional framework score for Minnesota cities with a population greater than 2,500 is strong. Outlook The stable outlook reflects our view that the city will maintain its very strong budgetary flexibility and liquidity profile. We do not anticipate changing the rating within the two-year outlook period. Upside scenario If the debt profile moderates significantly while the city maintains very strong budgetary flexibility or if economic indicators improve significantly,we could raise the rating. Downside scenario A lower rating is possible if the budgetary flexibility falls to a level we feel is not consistent with similarly rated peers. Related Criteria And Researcl�i • S&P Public Finance Local GO Criteria: How We Adjust Data For Analytic Consistency, Sept. 12, 2013 • Incorporating GASB 67 And 68: Evaluating Pension/OPEB Obligations Under Standard& Poor's U.S. Local Government GO Criteria, Sept. 2, 2015 ilial, , �Ua =111w, 11,11111111111'1,1@„1' Iu,,,,iii o„,,,,, ,n,,,,,„�o„,n I„„Mill. ilii, St.Joseph GO buds ser 2013A dtd 09/01/2013 due 12/01/2014-2020 2022-2024 2026 2028 Long Term Rating AA-/Stable Affirmed St.Joseph GO buds ser 2015A dtd 08/01/2015 due 12/01/2025 Long Term Rating AA-/Stable Affirmed St.Joseph GO cap imp plan rfdg buds Long Term Rating AA-/Stable Affirmed St.Joseph GO imp buds ser 2010B dtd 09/01/2010 due 12/01/2011-2020 2023 2025 Long Term Rating AA-/Stable Affirmed St.Joseph GO tax abatement buds ser 2015B dtd 08/01/2015 due 12/01/2030 Long Term Rating AA-/Stable Affirmed St.Joseph GO wtr rev crossover rfdg buds ser 2012A dtd 04/01/2012 due 12/01/2016-2025 2028 Long Term Rating AA-/Stable Affirmed St.Joseph GO(AGM) Unenhanced Rating AA-(SPUR)/Stable Affirmed Many issues are enhanced by bond insurance. Certain terms used in this report,particularly certain adjectives used to express our view on rating relevant factors, WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 27,2016 5 172558 1 362533364 Summary:St.Joseph, Minnesota; General Obligation have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com.All ratings affected by this rating action can be found on the S&P Global Ratings'public website at www.standardandpoors.com. Use the Ratings search box located in the left column. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 27,2016 6 1725458 1 362533364 Copyright©2016 by S&P Global Market Intelligence,a division of S&P Global Inc.All rights reserved. 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