Loading...
HomeMy WebLinkAboutItem 07July 21, 2014 Item No. RESOLUTION AUTHORIZING ISSUANCE, AWARDING SALE, PRESCRIBING THE FORM AND DETAILS AND PROVIDING FOR THE PAYMENT OF $9,160,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2014A Proposed Action Move to approve the Resolution Authorizing Issuance and Sale of $9,160,000 General Obligation Improvement Bonds Series 2014A. Passage of this motion will result in the financing of the 2014 street reconstruction project. Overview The proposed bond issue will finance the 2014 street reconstruction project costs. Contracts for the improvements were approved by the City Council April 21. The debt will be repaid with a combination of property taxes, special assessments and water use fees. The City share of projects costs (approximately $4.115 million) will be repaid with property taxes amortized over a 10 year period commencing in 2015. Special assessments were levied to benefited properties (approximately $2.52 million); the special assessments will be repaid over a 20 year period. The water main replacements ($2.485 million) will be repaid with water use fees over a 10 year period. The bid opening for the bonds is at 10:00 a.m. on Monday July 21; results of the bid opening and recommendations will be presented to the City Council at its regular meeting that same night. Moody's Investor Service has assigned a favorable Aal bond rating. Primary Issues to Consider • Call provisions. Bonds maturing 2/1/2024 and thereafter are callable 2/1/2023 or thereafter. Supporting Information • Official Statement • Bond Rating — Moody's Investor Services Dennis Feller, ante Director Financial Impact: See attached Budgeted: Y Source: Taxes and Special Assessments Related Documents (CIP, ERP, etc.): Notes: CITY OF LAKEVILLE RESOLUTION Date July 21, 2014 Resolution No. Motion By Seconded By RESOLUTION AUTHORIZING ISSUANCE, AWARDING SALE, PRESCRIBING THE FORM AND DETAILS AND PROVIDING FOR THE PAYMENT OF $9,160,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2014A BE IT RESOLVED by the City Council of the City of Lakeville, Minnesota (the City), as follows: SECTION 1. AUTHORIZATION AND SALE 1.01. Authorization This Council, by resolution duly adopted on June 16, 2014, authorized the issuance and sale on the date hereof of its General Obligation Improvement Bonds, Series 2014A (the Bonds), pursuant to Minnesota Statutes, Chapters 429 and 475. Proceeds of the Bonds will be used to finance various improvement projects in the City (the Project). 1.02. Sale. Pursuant to the Terms of Proposal and the Official Statement prepared on behalf of the City by Springsted Incorporated, sealed proposals for the purchase of the Bonds were received at or before the time specified for receipt of proposals. The proposals have been opened, publicly read and considered, and the purchase price, interest rates and net interest cost under the terms of each proposal have been determined. The most favorable proposal received is that of in (the Purchaser), to purchase the Bonds at a price of $ plus accrued interest, if any, on all Bonds to the day of delivery and payment, on the further terms and conditions hereinafter set forth. 1.03. Award The sale of the Bonds is hereby awarded to the Purchaser, and the Mayor and City Clerk are hereby authorized and directed to execute a contract on behalf of the City for the sale of the Bonds in accordance with the Terms of Proposal. The good faith deposit of the Purchaser shall be retained by the City until the Bonds have been delivered and shall be deducted from the purchase price paid at settlement. SECTION 2. BOND TERMS, REGISTRATION; EXECUTION AND DELIVERY 2.01. Issuance of Bonds All acts, conditions and things which are required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed precedent to and in the valid issuance of the Bonds having been done, now existing, having happened and having been performed, it is now necessary for the City Council to establish the form and terms of the Bonds, to provide security therefor and to issue the Bonds forthwith. 2.02. Maturities; Interest Rates; Denominations and Payment The Bonds shall be originally dated as of August 20, 2014, shall be in the denomination of $5,000 each, or any integral multiple thereof, of single maturities, shall mature on February 1 in the years and amounts stated below, and shall bear interest from date of issue until paid or duly called for redemption, at the annual rates set forth opposite such years and amounts, as follows: Year Amount Rate Year Amount Rate 2016 $770,000 % 2026 $120,000 % 2017 770,000 2027 120,000 2018 765,000 2028 120,000 2019 775,000 2029 120,000 2020 785,000 2030 120,000 2021 795,000 2031 120,000 2022 805,000 2032 120,000 2023 815,000 2033 120,000 2024 830,000 2034 120,000 2025 850,000 2035 120,000 [REVISE MATURITY SCHEDULE FOR TERM BONDS] The Bonds shall be issuable only in fully registered form. The interest thereon and, upon surrender of each Bond at the principal office of the Registrar described herein, the principal amount thereof, shall be payable by check or draft issued by the Registrar described herein, provided that, so long as the Bonds are registered in the name of a securities depository, or a nominee thereof, in accordance with Section 2.08 hereof, principal and interest shall be payable in accordance with the operational arrangements of the securities depository. 2.03. Dates and Interest Payment Dates Upon initial delivery of the Bonds pursuant to Section 2.07 and upon any subsequent transfer or exchange pursuant to Section 2.06, the date of authentication shall be noted on each Bond so delivered, exchanged or transferred. Interest on the Bonds shall be payable on February 1 and August 1 in each year, commencing February 1, 2015, each such date being referred to herein as an Interest Payment Date, to the persons in whose names the Bonds are registered on the Bond Register, as hereinafter defined, at the Registrar's close of business on the fifteenth day of the month immediately preceding the Interest Payment Date, whether or not such day is a business day. Interest shall be computed on the basis of a 360 -day year composed of twelve 30 -day months. 2.04. Redem to ion Bonds maturing in 2024 and later years shall be subject to redemption and prepayment at the option of the City, in whole or in part, in such order of maturity dates as the City may select and, within a maturity, by lot as selected by the Registrar (or, if applicable, by the bond depository in accordance with its customary procedures) in multiples of $5,000, on February 1, 2023, and on any date thereafter, at a price equal to the principal amount thereof and accrued interest to the date of redemption. The City Clerk shall cause notice of redemption thereof to be published if and as required by law, and at least thirty and not more than 60 days prior to the designated redemption date, shall cause notice of redemption to be mailed, by first class mail, to the registered holders of any Bonds to be redeemed at their addresses as they appear on the bond register described in Section 2.06 hereof, but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon partial redemption of any Bond, a new Bond or Bonds will be delivered to the owner without charge, representing the remaining principal amount outstanding. [Bonds maturing on February 1, 20_ (the Term Bonds) shall be subject to mandatory redemption prior to maturity pursuant to the sinking fund requirements of this Section 2.04 at a redemption price equal to the stated principal amount thereof plus interest accrued thereon to the redemption date, without premium. The Registrar shall select for redemption, by lot or other manner deemed fair, on February 1 in each of the following years the following stated principal amounts of such Bonds: Term Bonds Maturing February 1. 20 Year Principal Amount The remaining $ stated principal amount of such Bonds shall be paid at maturity on February 1, 20_. Notice of redemption shall be given as provided in the preceding paragraph.] 2.05. Appointment of Initial Re igistrar The City hereby appoints U.S. Bank National Association, St. Paul, Minnesota, as the initial bond registrar, transfer agent and paying agent (the Registrar). The Mayor and City Clerk are authorized to execute and deliver, on behalf of the City, a contract with the Registrar. Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company organized under the laws of the United States or one of the states of the United States and authorized by law to conduct such business, such corporation shall be authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove the Registrar, effective upon not less than thirty days' written notice and upon the appointment and acceptance of a successor Registrar, in which event the predecessor Registrar shall deliver all cash and Bonds in its possession to the successor Registrar and shall deliver the Bond Register to the successor Registrar. 2.06. Registration The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: 3 (a) Register The Registrar shall keep at its principal corporate trust office a register (the Bond Register) in which the Registrar shall provide for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. The term Holder or Bondholder as used herein shall mean the person (whether a natural person, corporation, association, partnership, trust, governmental unit, or other legal entity) in whose name a Bond is registered in the Bond Register. (b) Transfer of Bonds Upon surrender for transfer of any Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until such interest payment date. (c) Exchange of Bonds Whenever any Bonds are surrendered by the registered owner for exchange the Registrar shall authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity, as requested by the registered owner or the owner's attorney in writing. (d) Cancellation All Bonds surrendered for payment, transfer or exchange shall be promptly canceled by the Registrar and thereafter disposed of The Registrar shall furnish the City at least once each year a certificate setting forth the principal amounts and numbers of Bonds canceled and destroyed. (e) Improper or Unauthorized Transfer When any Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar shall incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (f) Persons Deemed Owners The City and the Registrar may treat the person in whose name any Bond is at any time registered in the bond register as the absolute owner of the Bond, whether the Bond shall be overdue or not, for the purpose of receiving payment of or on account of, the principal of and interest on the Bond and for all other purposes, and all payments made to any registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability upon Bond to the extent of the sum or sums so paid. (g) Taxes. Fees and Charges For every transfer or exchange of Bonds (except for an exchange upon a partial redemption of a Bond), the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. 0 (h) Mutilated, Lost, Stolen or Destroyed Bonds In case any Bond shall become mutilated or be destroyed, stolen or lost, the Registrar shall deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any Bond destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith, and, in the case of a Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance and amount satisfactory to it, in which both the City and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be canceled by it, and evidence of such cancellation shall be given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Bond prior to payment. (i) Authenticating Agent The Registrar is hereby designated authenticating agent for the Bonds, within the meaning of Minnesota Statutes, Section 475.55, Subdivision 1, as amended. 0) Valid Obligations. All Bonds issued upon any transfer or exchange of Bonds shall be the valid obligations of the City, evidencing the same debt, and entitled to the same benefits under this Resolution as the Bonds surrendered upon such transfer or exchange. 2.07. Execution, Authentication and Delivery The Bonds shall be prepared under the direction of the City Clerk and shall be executed on behalf of the City by the signatures of the Mayor and the City Clerk, provided that the signatures may be printed, engraved or lithographed facsimiles of the originals. In case any officer whose signature or a facsimile of whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until the date of delivery of such Bond. Notwithstanding such execution, no Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication on the Bond, substantially in the form provided in Section 2.09, has been executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on any Bond shall be conclusive evidence that it has been duly authenticated and delivered under this Resolution. When the Bonds have been prepared, executed and authenticated, the City Clerk shall deliver them to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore executed, and the Purchaser shall not be obligated to see to the application of the purchase price. 2.08. Securities Depository (a) For purposes of this section the following terms shall have the following meanings: "Beneficial Owner" shall mean, whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant, or such person's subrogee. "Cede & Co." shall mean Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Bonds. "DTC" shall mean The Depository Trust Company of New York, New York. "Participant" shall mean any broker - dealer, bank or other financial institution for which DTC holds Bonds as securities depository. "Representation Letter" shall mean the Representation Letter pursuant to which the City agrees to comply with DTC's Operational Arrangements. (b) The Bonds shall be initially issued as separately authenticated fully registered bonds, and one Bond shall be issued in the principal amount of each stated maturity of the Bonds. Upon initial issuance, the ownership of such Bonds shall be registered in the bond register in the name of Cede & Co., as nominee of DTC. The Registrar and the City may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal of or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed, if any, giving any notice permitted or required to be given to registered owners of Bonds under this resolution, registering the transfer of Bonds, and for all other purposes whatsoever, and neither the Registrar nor the City shall be affected by any notice to the contrary. Neither the Registrar nor the City shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any Participant, or any other person which is not shown on the bond register as being a registered owner of any Bonds, with respect to the accuracy of any records maintained by DTC or any Participant, with respect to the payment by DTC or any Participant of any amount with respect to the principal of or interest on the Bonds, with respect to any notice which is permitted or required to be given to owners of Bonds under this resolution, with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or with respect to any consent given or other action taken by DTC as registered owner of the Bonds. So long as any Bond is registered in the name of Cede & Co., as nominee of DTC, the Registrar shall pay all principal of and interest on such Bond, and shall give all notices with respect to such Bond, only to Cede & Co. in accordance with DTC's Operational Arrangements, 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 interest on the Bonds to the extent of the sum or sums so paid. No person other than DTC shall receive an authenticated Bond for each separate stated maturity evidencing the obligation of the City to make payments of principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the Bonds will be transferable to such new nominee in accordance with paragraph (e) hereof. (c) In the event the City determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bonds in the form of bond certificates, the City may notify DTC and the Registrar, whereupon DTC shall notify the Participants of the availability through DTC of Bonds in the form of certificates. hi such event, the Bonds will be transferable in accordance M with paragraph (e) hereof. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and the Registrar and discharging its responsibilities with respect thereto under applicable law. In such event the Bonds will be transferable in accordance with paragraph (e) hereof. (d) The execution and delivery of the Representation Letter to DTC, if not previously filed with DTC, by the Mayor or City Clerk is hereby authorized and directed. (e) In the event that any transfer or exchange of Bonds is permitted under paragraph (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this resolution. In the event Bonds in the form of certificates are issued to owners other than Cede & Co., its successor as nominee for DTC as owner of all the Bonds, or another securities depository as owner of all the Bonds, the provisions of this resolution shall also apply to all matters relating thereto, including, without limitation, the printing of such Bonds in the form of bond certificates and the method of payment of principal of and interest on such Bonds in the form of bond certificates. 2.09. Form of Bonds The Bonds shall be prepared in substantially the following form: UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF DAKOTA CITY OF LAKEVILLE GENERAL OBLIGATION IMPROVEMENT BOND, SERIES 2014A ILIA$ Interest Rate REGISTERED OWNER: PRINCIPAL AMOUNT: Maturity Date February 1, 20_ CEDE & CO. THOUSAND DOLLARS Date of Original Issue August 20, 2014 CUSIP No. CITY OF LAKEVILLE, State of Minnesota (the City) acknowledges itself to be indebted and for value received hereby promises to pay to the registered owner specified above, or registered assigns, the principal amount specified above on the maturity date specified above and promises to pay interest thereon from the date of original issue specified above or from the most recent Interest Payment Date (as hereinafter defined) to which interest has been paid or duly provided for, at the annual interest rate specified above, payable on February 1 and August 1 in each year, commencing February 1, 2015 (each such date, an Interest Payment Date), all subject to the provisions referred to herein with respect to the redemption of the principal of this Bond 7 before maturity. The interest so payable on any Interest Payment Date shall be paid to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a business day) of the calendar month immediately preceding the Interest Payment Date. Interest hereon shall be computed on the basis of a 360 -day year composed of twelve 30 -day months. The interest hereon and, upon presentation and surrender hereof at the principal office of the Registrar described below, the principal hereof are payable in lawful money of the United States of America by check or draft drawn on U.S. Bank National Association, St. Paul, Minnesota, as bond registrar, transfer agent and paying agent, or its successor designated under the Resolution described herein (the Registrar). For the prompt and full payment of such principal and interest as the same respectively become due, the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. This Bond is one of an issue (the Bonds) in the aggregate principal amount of $9,160,000 issued pursuant to a resolution adopted by the City Council on July 21, 2014 (the Resolution), to finance various improvement projects in the City and is issued pursuant to and in full conformity with the Constitution and laws of the State of Minnesota thereunto enabling, including Minnesota Statutes, Chapters 429 and 475. The Bonds are issuable only in fully registered form, in the denomination of $5,000 or any integral multiple thereof, of single maturities. Bonds maturing in 2024 and later years shall be subject to redemption and prepayment at the option of the City, in whole or in part, in such order of maturity dates as the City may select and, within a maturity, by lot as selected by the Registrar (or, if applicable, by the bond depository in accordance with its customary procedures) in multiples of $5,000, on February 1, 2023, and on any date thereafter, at a price equal to the principal amount thereof and accrued interest to the date of redemption. The City shall cause notice of the call for redemption thereof to be published if and as required by law, and at least thirty and not more than 60 days prior to the designated redemption date, shall cause notice of redemption to be mailed, by first class mail, to the registered holders of any Bonds, at the holders' addresses as they appear on the bond register maintained by the Registrar, but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon partial redemption of any Bond, a new Bond or Bonds will be delivered to the owner without charge, representing the remaining principal amount outstanding. [Bonds maturing in the year _ shall be subject to mandatory redemption, at a redemption price equal to their principal amount plus interest accrued thereon to the redemption date, without premium, on February 1 in each of the years shown below, in an amount equal to the following principal amounts: Term Bonds Maturing in 20 Sinking Fund Aggregate Payment Date Principal Amount Notice of redemption shall be given as provided in the preceding paragraph.] As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Registrar, by the registered owner hereof in person or by the owner's attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner or the owner's attorney, and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange, the City will cause a new Bond or Bonds to be issued in the name of the designated transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to any such transfer or exchange. The City and the Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment as herein provided and for all other purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. Notwithstanding any other provisions of this Bond, so long as this Bond is registered in the name of Cede & Co., as nominee of The Depository Trust Company, or in the name of any other nominee of The Depository Trust Company or other securities depository, the Registrar shall pay all principal of and interest on this Bond, and shall give all notices with respect to this Bond, only to Cede & Co. or other nominee in accordance with the operational arrangements of The Depository Trust Company or other securities depository as agreed to by the City. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed prior to and in the issuance of this Bond in order to make it a valid and binding general obligation of the City in accordance with its terms, have been done, do exist, have happened and have been performed as so required; that, prior to the issuance hereof, the City Council has by the Resolution covenanted and agreed to levy ad valorem taxes upon all taxable property in the City and special assessments upon property specially benefited by the local improvements financed by the Bonds, which taxes and special assessments will be collectible for the years and in amounts sufficient to produce sums not less than five percent in excess of the principal of and interest on the Bonds when due, and has appropriated such special assessments and taxes to its General Obligation Improvement Bonds, Series 2014A Bond Fund for the payment of principal and interest; that if necessary for payment of principal and interest, additional ad valorem taxes are required to be levied upon all taxable property in the City, without limitation as to rate or amount and that the issuance of this Bond, together with all other indebtedness of the City outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the City to exceed any constitutional or statutory limitation of indebtedness. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon shall have been executed by the Registrar by manual signature of one of its authorized representatives. IN WITNESS WHEREOF, the City has caused this Bond to be executed on its behalf by the facsimile signatures of its Mayor and City Clerk. CITY OF LAKEVILLE, MINNESOTA (facsimile signature — City Clerk) (facsimile signature — Mayor) CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. Date of Authentication: U.S. BANK NATIONAL ASSOCIATION, as Registrar M Authorized Representative 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 the applicable laws or regulations: TEN COM - as tenants in common UTMA ................... as Custodian for ..................... (Cust) (Minor) TEN ENT - as tenants by the entireties under Uniform Transfers to Minors Act .............. (State) JT TEN -- as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used. 10 ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and does hereby irrevocably constitute and appoint attorney to transfer the said Bond on the books kept for registration of the within Bond, 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 enlargement or any change whatsoever. Signature Guaranteed: Signature(s) must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in STAMP or such other "signature guaranty program" as maybe determined by the Registrar in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: [end of bond form] SECTION 3. GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2014A CONSTRUCTION FUND There is hereby established on the official books and records of the City a separate fund designated as the General Obligation Improvement Bonds, Series 2014A Construction Fund (the Construction Fund). To the Construction Fund there shall be credited from the proceeds of the Bonds an amount equal to the estimated cost of the Project. There shall also be credited to the Construction Fund all special assessments collected with respect to the Project until all costs of the Project have been fully paid. All proceeds of the Bonds deposited in the Construction Fund will be expended solely for the payment of the costs of the Project. To the extent required by Minnesota Statutes, Section 429.091, subdivision 4, the City shall maintain a separate account within the Construction Fund to record expenditures for each 11 improvement. The City Clerk shall maintain the Construction Fund until all costs and expenses incurred by the City in connection with the construction of the improvements have been paid. All special assessments on hand in the Construction Fund when terminated or thereafter received, and any Bond proceeds not so transferred, shall be credited to the General Obligation Improvement Bonds, Series 2014A Bond Fund. SECTION 4. GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2014A BOND FUND There is hereby established on the official books and records of the City a separate fund designated as the General Obligation Improvement Bonds, Series 2014A Bond Fund (the Bond Fund). Into the Bond Fund shall be paid (a) the amounts specified in Section 3 above, (b) any amounts received from the Purchaser upon delivery of the Bonds in excess of the amounts appropriated to the Construction Fund pursuant to Section 3 hereof, (c) any special assessments and taxes collected pursuant to Sections 5 or 6 hereof, except as otherwise provided in Section 3 hereof and (d) any other funds appropriated by the City Council for the payment of the Bonds. The money on hand in the Bond Fund from time to time shall be used only to pay the principal of and interest on the Bonds. If the balance on hand in the Bond Fund is at any time insufficient to pay principal and interest then due on the Bonds, such amounts shall be paid from other money on hand in other funds of the City, which other funds shall be reimbursed therefor when sufficient money becomes available in the Bond Fund. The Bond Fund shall be maintained until the City has paid, or made provision for the payment of, all of the principal of and interest on the Bonds. There are hereby established two accounts in the Bond Fund, designated as the "Debt Service Account' and the "Surplus Account." There shall initially be deposited into the Debt Service Account upon the issuance of the Bonds the amount set forth in (b) above. Thereafter, during each Bond Year (i.e., each twelve month period commencing on February 2 and ending on the following February 1), as monies are received into the Bond Fund, the City Clerk shall first deposit such monies into the Debt Service Account until an amount has been appropriated thereto sufficient to pay all principal and interest due on the Bonds through the end of the Bond Year. All subsequent monies received in the Bond Fund during the Bond Year shall be appropriated to the Surplus Account. If at any time the amount on hand in the Debt Service Account is insufficient for the payment of principal and interest then due, the City Clerk shall transfer to the Debt Service Account amounts on hand in the Surplus Account to the extent necessary to cure such deficiency. Investment earnings (and losses) on amounts from time to time held in the Debt Service Account and Surplus Account shall be credited or charged to said accounts. If the aggregate balance in the Bond Fund is at any time insufficient to pay all interest and principal then due on all Bonds payable therefrom, the payment shall be made from any fund of the City which is available for that purpose, subject to reimbursement from the Surplus Account in the Bond Fund when the balance therein is sufficient, and the City Council covenants and agrees that it will each year levy a sufficient amount of ad valorem taxes to take care of any accumulated or anticipated deficiency, which levy is not subject to any constitutional or statutory limitation. In order to ensure compliance with the Code and applicable Regulations (all as defined in Section 8.01 hereof), upon allocation of any funds to the Bond Fund, the balance then on hand in 12 the Bond Fund shall be ascertained. If it exceeds the amount of principal and interest on the Bonds to become due and payable through the next following February 1, plus a reasonable carryover equal to 1 /12 of the debt service due in the following bond year, the excess shall (unless an opinion is received from bond counsel stating that another use shall not interfere with the tax exemption of the bonds) be used to prepay or purchase Bonds, or be invested at a yield which does not exceed the yield on the Bonds calculated in accordance with Section 148 of the Code. SECTION 5. SPECIAL ASSESSMENTS The City hereby covenants and agrees that, for the payment of the costs of the Project, the City has done or will do and perform all acts and things necessary for the final and valid levy of special assessments in an amount not less than 20% of the cost of the Project financed by the Bonds. The City estimates it has levied or will levy special assessments in the original aggregate principal amount of approximately $2,520,000. It is estimated that the principal and interest on such special assessments will be levied beginning in 2015 and collected in the years 2016 -2034 in the amounts shown on Appendix I attached hereto. The principal of the special assessments shall be made payable in annual installments, with interest as established by this City Council in accordance with law on installments thereof from time to time remaining unpaid. In the event any special assessment shall at any time be held invalid with respect to any lot or tract of land, due to any error, defect or irregularity in any action or proceeding taken or to be taken by the City or by this City Council or by any of the officers or employees of the City, either in the making of such special assessment or in the performance of any condition precedent thereto, the City hereby covenants and agrees that it will forthwith do all such further things and take all such further proceedings as shall be required by law to make such special assessment a valid and binding lien upon said property. SECTION 6. PLEDGE OF TAXING POWERS For the prompt and full payment of the principal of and interest on the Bonds as such payments respectively come due, the full faith, credit and unlimited taxing powers of the City shall be and are hereby irrevocably pledged. In order to produce aggregate amounts which, together with the collections of special assessments as set forth in Section 5, will produce amounts not less than 5% in excess of the amounts needed to meet when due the principal and interest payments on the Bonds, ad valorem taxes are hereby levied on all taxable property in the City. The taxes will be levied and collected in years and amounts shown on the attached levy computation. Said taxes shall be irrepealable as long as any of the Bonds are outstanding and unpaid, provided that the City reserves the right and power to reduce said levies in accordance with the provisions of Minnesota Statutes, Section 475.61. SECTION 7. DEFEASANCE When all of the Bonds have been discharged as provided in this Section, all pledges, covenants and other rights granted by this Resolution to the Holders of the Bonds shall cease. The City may discharge its obligations with respect to any Bonds which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in fall; or, if any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued from the due date to the date of such deposit. The City may also discharge its obligations with respect to any prepayable Bonds called for redemption by depositing with the Registrar on or before the date of redemption an amount equal to the principal, interest and redemption premium, if any, which are then due, provided that notice of such redemption has been duly given as provided herein. The City may also at any time discharge its obligations with 13 respect to any Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with the Registrar or with a bank or trust company qualified by law to act as an escrow agent for this purpose, cash or securities which are authorized by law to be so deposited for such purpose, bearing interest payable at such times and at such rates and maturing or callable at the holder's option on such dates as shall be required to pay all principal and interest to become due thereon to maturity or, if notice of redemption as herein required has been irrevocably provided for, to an earlier designated redemption date, provided, however, that if such deposit is made more than ninety days before the maturity date or specified redemption date of the Bonds to be discharged, the City shall have received a written opinion of bond counsel to the effect that such deposit does not adversely affect the exemption of interest on any Bonds from federal income taxation and a written report of an accountant or investment banking firm verifying that the deposit is sufficient to pay when due all of the principal and interest on the Bonds to be discharged on and before their maturity dates or earlier designated redemption date. SECTION 8. TAX COVENANTS; ARBITRAGE MATTERS AND CONTINUING DISCLOSURE 8.01. General Tax Covenant The City agrees with the registered owners from time to time of the Bonds that it will not take, or permit to be taken by any of its officers, employees or agents, any action that would cause interest on the Bonds to become includable in gross income of the recipient under the Internal Revenue Code of 1986, as amended (the Code) and applicable Treasury Regulations (the Regulations), and agrees to take any and all actions within its powers to ensure that the interest on the Bonds will not become includable in gross income of the recipient under the Code and the Regulations. All proceeds of the Bonds deposited in the Construction Fund will be expended solely for the payment of the costs of the Project. The Project is owned and maintained by the City and available for use by members of the general public on a substantially equal basis. The City shall not enter into any lease, management contract, use agreement, capacity agreement or other agreement with any non - governmental person relating to the use of the Project, or any portion thereof, or security for the payment of the Bonds which might cause the Bonds to be considered "private activity bonds" or "private loan bonds" pursuant to Section 141 of the Code. 8.02. Arbitrage Certification The Mayor and City Clerk being the officers of the City charged with the responsibility for issuing the Bonds pursuant to this Resolution, are authorized and directed to execute and deliver to the Purchaser a certificate in accordance with Section 148 of the Code, and applicable Regulations, stating the facts, estimates and circumstances in existence on the date of issue and delivery of the Bonds which make it reasonable to expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of the Code and Regulations. 8.03. Arbitrage Rebate The City acknowledges that the Bonds are subject to the rebate requirements of Section 148(f) of the Code. The City covenants and agrees to retain such records, make such determinations, file such reports and documents and pay such amounts at such times as are required under said Section 148(f) and applicable Regulations, unless the Bonds qualify for an exception from the rebate requirement pursuant to one of the spending exceptions set forth in Section 1.148 -7 of the Regulations and no "gross proceeds" of the Bonds 14 (other than amounts constituting a "bona fide debt service fund ") arise during or after the expenditure of the original proceeds thereof. 8.04. Reimbursement The City certifies that the proceeds of the Bonds will not be used by the City to reimburse itself for any expenditure with respect to the Project which the City paid or will have paid more than 60 days prior to the issuance of the Bonds unless, with respect to such prior expenditures, the City shall have made a declaration of official intent which complies with the provisions of Section 1.150 -2 of the Regulations, provided that this certification shall not apply (i) with respect to certain de minimis expenditures, if any, with respect to the Project meeting the requirements of Section 1.150- 2(f)(1) of the Regulations, or (ii) with respect to "preliminary expenditures" for the Project as defined in Section 1.150- 2(f)(2) of the Regulations, including engineering or architectural expenses and similar preparatory expenses, which in the aggregate do not exceed 20% of the "issue price" of the Bonds. 8.05. Not Qualified Tax - Exempt Obligations The Bonds are not designated as "qualified tax- exempt obligations" for purposes of Section 265(b)(3) of the Code. 8.06 Continuing Disclosure (a) Purpose and Beneficiaries To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit the Purchaser and other participating underwriters in the primary offering of the Bonds to comply with amendments to Rule 15c2 -12 promulgated by the SEC under the Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2 -12), relating to continuing disclosure (as in effect and interpreted from time to time, the Rule), which will enhance the marketability of the Bonds, the City hereby makes the following covenants and agreements for the benefit of the Owners (as hereinafter defined) from time to time of the Outstanding Bonds. The City is the only obligated person in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. The City has complied in the past five years in all material respects with any undertaking previously entered into by it under the Rule. If the City fails to comply with any provisions of this section, any person aggrieved thereby, including the Owners of any Outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of any agreement or covenant contained in this section, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder to the extent permitted by law. Notwithstanding anything to the contrary contained herein, in no event shall a default under this section constitute a default under the Bonds or under any other provision of this resolution. As used in this section, Owner or Bondowner means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial Owner (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, Beneficial Owner means, in respect of a Bond, any person or entity which (i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (ii) is treated as the owner of the Bond for federal income tax purposes. 15 (b) Information To Be Disclosed The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: (1) on or before twelve months after the end of each fiscal year of the City, commencing with the fiscal year ending December 31, 2014, the following financial information and operating data in respect of the City (the Disclosure Information): (A) the audited financial statements of the City for such fiscal year, prepared in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under Minnesota law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof, and certified as to accuracy and completeness in all material respects by the fiscal officer of the City; and (B) to the extent not included in the financial statements referred to in paragraph (A) hereof, the information for such fiscal year or for the period most recently available of the type contained in the Official Statement under headings: City Property Values; City Indebtedness; and City Tax Rates, Levies and Collections. Notwithstanding the foregoing paragraph, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within 10 days after the receipt thereof, the City shall provide the audited financial statements. Any or all of the Disclosure Information may be incorporated by reference, if it is updated as required hereby, from other documents, including official statements, which have been filed with the SEC or have been made available to the public on the Internet Web site of the Municipal Securities Rulemaking Board (MSRB). The City shall clearly identify in the Disclosure Information each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be a Material Fact (as defined in paragraph (2) hereof), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this section is amended as permitted by this paragraph (b)(1) or subsection (d), then the City shall include in the next Disclosure Information to be delivered hereunder, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. 16 (2) In a timely manner not in excess of ten business days after the occurrence of the event, notice of the occurrence of any of the following events (each a Material Fact): (A) Principal and interest payment delinquencies; (B) Non - payment related defaults, if material; (C) Unscheduled draws on debt service reserves reflecting financial difficulties; (D) Unscheduled draws on credit enhancements reflecting financial difficulties; (E) Substitution of credit or liquidity providers, or their failure to perform; (F) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB) or other materi al notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; (G) Modifications to rights of security holders, if material; (H) Bond calls, if material, and tender offers; (I) Defeasances; (J) Release, substitution, or sale of property securing repayment of the securities, if material; (K) Rating changes; (L) Bankruptcy, insolvency, receivership or similar event of the obligated person; (M) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (N) Appointment of a successor or additional trustee or the change of name of a trustee, if material. As used herein, for those events that must be reported if material, an event is "material" if it is an event as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed hereunder or information generally available to the public. Notwithstanding the foregoing sentence, an event is also "material" if it is an event that would be deemed material for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. For the purposes of the event identified in (L) hereinabove, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an 17 order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information required under paragraph (b)(1) at the time specified thereunder; (B) the amendment or supplementing of this section pursuant to subsection (d), together with a copy of such amendment or supplement and any explanation provided by the City under subsection (d)(2); (C) the termination of the obligations of the City under this section pursuant to subsection (d); (D) any change in the accounting principles pursuant to which the financial statements constituting a portion of the Disclosure Information are prepared; and (E) any change in the fiscal year of the City. (c) Manner of Disclosure (1) The City agrees to make available to the MSRB, in an electronic format as prescribed by the MSRB from time to time, the information described in subsection (b). (2) All documents provided to the MSRB pursuant to this subsection (c) shall be accompanied by identifying information as prescribed by the MSRB from time to time. (d) Term; Amendments; Interpretation (1) The covenants of the City in this section shall remain in effect so long as any Bonds are Outstanding. Notwithstanding the preceding sentence, however, the obligations of the City under this section shall terminate and be without further effect as of any date on which the City delivers to the Registrar an opinion of Bond Counsel to the effect that, because of legislative action or final judicial or administrative actions or proceedings, the failure of the City to comply with the requirements of this section will not cause participating underwriters in the primary offering of the Bonds to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended, or any statutes or laws successory thereto or amendatory thereof. (2) This section (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (c)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of this Council filed in the office of the recording officer of the City IN accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that: (i) such amendment or supplement (a) is made in connection with a change in circumstances that arises from a change in law or regulation or a change in the identity, nature or status of the City or the type of operations conducted by the City, or (b) is required by, or better complies with, the provisions of paragraph (b)(5) of the Rule; (ii) this section as so amended or supplemented would have complied with the requirements of paragraph (b)(5) of the Rule at the time of the primary offering of the Bonds, giving effect to any change in circumstances applicable under clause (i)(a) and assuming that the Rule as in effect and interpreted at the time of the amendment or supplement was in effect at the time of the primary offering; and (iii) such amendment or supplement does not materially impair the interests of the Bondowners under the Rule. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) This section is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so as to satisfy the requirements of paragraph (b)(5) of the Rule. SECTION 9. CERTIFICATION OF PROCEEDINGS 9.01. Registration of Bonds The City Clerk is hereby authorized and directed to file a certified copy of this resolution with the County Auditor of Dakota County and obtain a certificate that the Bonds and the taxes levied pursuant hereto have been duly entered upon the Auditor's bond register. 9.02. Authentication of Transcript The officers of the City and the County Auditor are hereby authorized and directed to prepare and fiunish to the Purchaser and to Dorsey & Whitney LLP, Bond Counsel, certified copies of all proceedings and records relating to the Bonds and such other affidavits, certificates and information as may be required to show the facts relating to the legality and marketability of the Bonds, as the same appear from the books and records in their custody and control or as otherwise known to them, and all such certified copies, affidavits and certificates, including any heretofore furnished, shall be deemed representations of the City as to the correctness of all statements contained therein. 9.03. Official Statement The Official Statement relating to the Bonds, dated June 30, 2014, prepared and distributed by Springsted Incorporated, the financial consultant for the City, is hereby approved. Springsted Incorporated is hereby authorized on behalf of the City to prepare and deliver to the Purchaser within seven business days from the date hereof a supplement to the Official Statement listing the offering price, the interest rates, selling compensation, delivery date, the underwriters and such other information relating to the Bonds required to be included in the Official Statement by Rule 15c2 -12 adopted by the SEC under the Securities Exchange Act of 1934. The officers of the City are hereby authorized and directed to 19 execute such certificates as may be appropriate concerning the accuracy, completeness and sufficiency of the Official Statement. APPROVED AND ADOPTED this 21 ' day of July, 2014. CITY OF LAKEVILLE, Matt Little, Mayor ATTEST: Charlene Friedges, City Clerk 20 APPENDIXI City of Lakeville, Minnesota General Obligation Improvement Bonds, Series 2014A Payments on Special Assessments Year of Collection Principal Interest Total 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 PROJECTED TAX LEVIES Lew year / Collect year Lev Total 2 DAKOTA COUNTY AUDITOR'S CERTIFICATE AS TO REGISTRATION AND TAX LEVY The undersigned, being the duly qualified and acting County Auditor of Dakota County, Minnesota, hereby certifies that there has been filed in my office a certified copy of a resolution duly adopted on July 21, 2014, by the City Council of the City of Lakeville, Minnesota, setting forth the form and details of an issue of $9,160,000 General Obligation Improvement Bonds, Series 2014A, dated as of August 20, 2014 and levying taxes for their payment. I further certify that the issue has been entered on my bond register and the tax required by law for their payment has been levied and filed as required by Minnesota Statutes, Sections 475.61 to 475.63. WITNESS my hand officially this day of 1 2014. Dakota County Auditor (SEAL) v E o € v F . m t `o 0 S c° O V a o . O T a e e m y E o.: 5 � 5 � a c m A ,8 r C L y T L D G cos v� 9 O J � T Q U A a p O X50 A O g5 a U b y a c� b � V y o� �E E E a' N � G V V N 0 c9 Q 0 y z� . E i v y3 � °' 3 r = m a ^� 5 45�c' � � 3 U � � € °o O o. _gym j o PRELIMINARY OFFICIAL STATEMENT DATED JULY 1, 2014 NEW AND REFUNDING ISSUES NOT BANK QUALIFIED Moody's Rating: Requested In the opinion of Dorsey & Whitney LLP, Bond Counsel, based on present federal and Minnesota laws, regulations, rulings and decisions, and assuming compliance with certain covenants by the City, interest on the Bonds is excluded from gross income for federal income tax purposes and from taxable net income of individuals, estates, and trusts for Minnesota income tax purposes, and is not an item of tax preference for federal or Minnesota alternative minimum tax purposes. Such interest is included in taxable income jar purposes of the Minnesota franchise tax on corporations and financial institutions and in adjusted current earnings of corporations for federal alternative minimum tax purposes. See "TAX EXEMPHON AND BELATED CONSIDER9TIONS" herein. City of Lakeville, Minnesota $9,160 General Obligation Improvement Bonds, Series 2014A (the "Series 2014A Bonds ") $13 General Obligation Refunding Bonds, Series 2014B (the "Series 2014B Bonds ") (Book Entry Only) Dated Date: Date of Delivery Interest Due: Each February 1 and August 1, commencing February 1, 2015 The Bonds (as defined herein) will mature February 1 as shown on the inside front cover of this Official Statement. Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth on the following page. The Bonds will be general obligations of the City for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties. A separate proposal must be submitted for each Issue in the amounts shown below, plus accrued interest, if any. Proposals shall specify rates in integral multiples of 1 /100 or 1/8 of 1 %. The initial price to the public for each maturity of each issue must be 98.0% or greater. Proposals must be accompanied by a good faith deposit in the amounts shown below in the form of a certified or cashier's check payable to the order of the City, a wire transfer, or a Financial Surety Bond, and delivered to Springsted Incorporated prior to the time proposals will be opened. Award of the Bonds will be made on the basis of True Interest Cost (TIC). Minimum Bid Good Faith Deposit The Series 2014A Bonds $ 9,068,400 $ 91,600 The Series 2014B Bonds 13,585,835 137,300 The City will not designate the Bonds as "qualified tax- exempt obligations" pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. The Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ( "DTC "). DTC will act as securities depository for the Bonds. Individual purchases may be made in book entry form only, in the principal amount of $5,000 and integral multiples thereof Investors will not receive physical certificates representing their interest in the Bonds purchased (see "Book Entry System" herein). U.S. Bank National Association, St. Paul, Minnesota will serve as registrar (the "Registrar ") for the Bonds. The Bonds will be available for delivery at DTC on or about August 20, 2014. PROPOSALS RECEIVED: July 21, 2014 (Monday) until 10:30 A.M., Central Time AWARD: July 21, 2014 (Monday) at 7:00 P.M., Central Time Springsted Further information may be obtained from SPRINGSTED Incorporated, Municipal Advisor to the City, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101 -2887 (651) 223 -3000 * Preliminary; subject to change. NOTICE TO BIDDERS $13 City of Lakeville, Minnesota General Obligation Refunding Bonds, Series 2014B (Book Entry Only) The City is issuing the above - referenced Series 2014B Bonds for debt service savings. If an adequate level of savings is not achieved through the competitive proposals received on July 21, 2014 the City may (i) adjust the size of the above - referenced Series 2014B Bonds; or (ii) reject all proposals for the above - referenced Series 2014B Bonds at their meeting that evening. July 1, 2014 * Preliminary; subject to change. Phone: 651- 223 -3000 Fax: 651- 223 -3046 Email: bond services @springsted.com Website: www.springsted.com Springsted Public Sector Advisors City of Lakeville, Minnesota $9,160,000* General Obligation Improvement Bonds, Series 2014A The Series 2014A Bonds will mature February 1 in the years and amounts* as follows 2016 $770,000 2020 $785,000 2024 $830,000 2028 $120,000 2032 $120,000 2017 $770,000 2021 $795,000 2025 $850,000 2029 $120,000 2033 $120,000 2018 $765,000 2022 $805,000 2026 $120,000 2030 $120,000 2034 $120,000 2019 $775,000 2023 $815,000 2027 $120,000 2031 $120,000 2035 $120,000 The City may elect on February 1, 2023, and on any day thereafter, to prepay Series 2014A Bonds due on or after February 1, 2024. $13,730,000* General Obligation Refunding Bonds, Series 2014B The Series 2014B Bonds will mature February 1 in the years and amounts* as follows 2017 $165,000 2021 $905,000 2024 $950,000 2027 $815,000 2030 $885,000 2018 $880,000 2022 $915,000 2025 $970,000 2028 $830,000 2031 $915,000 2019 $880,000 2023 $930,000 2026 $995,000 2029 $855,000 2032 $945,000 2020 $895,000 The City may elect on February 1, 2024, and on any day thereafter, to prepay Series 2014B Bonds due on or after February 1, 2025. * Preliminary; subject to change. CITY OF LAKEVILLE, MINNESOTA CITY COUNCIL Matt Little Mayor Doug Anderson Council Member Bart Davis Council Member Colleen Ratzlaff LaBeau Council Member Kerrin Swecker Council Member CITY ADMINISTRATOR Steven Mielke FINANCE DIRECTOR Dennis Feller MUNICIPAL ADVISOR Springsted Incorporated St. Paul, Minnesota BOND COUNSEL Dorsey & Whitney LLP Minneapolis, Minnesota For purposes of compliance with Rule 15c2 -12 of the Securities and Exchange Commission, this document, as the same may be supplemented or corrected by the City from time to time, may be treated as a Preliminary Official Statement with respect to the Bonds described herein that is deemed final as of the date hereof (or of any such supplement or correction) by the City. By awarding the Bonds to any underwriter or underwriting syndicate submitting a Proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded copies of the Final Official Statement in the amount specified in the each Terms of Proposal. No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds, other than as contained in the Preliminary Official Statement or the Final Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the City. Certain information contained in the Preliminary Official Statement or the Final Official Statement may have been obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness or accuracy. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE PRELIMINARY OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE PRELIMINARY OFFICIAL STATEMENT NOR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY SINCE THE RESPECTIVE DATE THEREOF. References herein to laws, rules, regulations, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Preliminary Official Statement or the Final Official Statement, they will be furnished upon request. Any CUSIP numbers for the Bonds included in the Final Official Statement are provided for convenience of the owners and prospective investors. The CUSIP numbers for the Bonds are assigned by an organization unaffiliated with the City. The City is not responsible for the selection of the CUSIP numbers and makes no representation as to the accuracy thereof as printed on the Bonds or as set forth in the Final Official Statement. No assurance can be given by the City that the CUSIP numbers for the Bonds will remain the same after the delivery of the Final Official Statement or the date of issuance and delivery of the Bonds. TABLE OF CONTENTS Page(s Terms of Proposal $9,160,000* General Obligation Improvement Bonds, Series 2014A ........... ............................... i -v $13,730,000* General Obligation Refunding, Series 2014B ......................... ............................... vi -x Introductory Statement ...... ............................... Continuing Disclosure ...... ............................... TheBonds ......................... ............................... The Series 2014A Bonds .. ............................... The Series 2014B Bonds ... ............................... Future Financing ............... ............................... Litigation........................... ............................... Legality............................. ............................... Tax Exemption .................. ............................... Related Tax Considerations ............................. Not Qualified Tax - Exempt Obligations........... Ratings.............................. ............................... Municipal Advisor ............ ............................... Certification ...................... ............................... City Property Val ues ......... ............................... City Indebtedness .............. ............................... City Tax Rates, Levies and Collections........... Funds on Hand .................. ............................... City Investments ............... ............................... General Information Concerning the City ....... Governmental Organization and Services........ Proposed Forms of Legal Opinions .......................................................... ............................... Appendix I Continuing Disclosure Covenants ............................................................. ............................... Appendix II Summary of Tax Levies, Payment Provisions, and Minnesota Real Property Val uation ....................................................... ............................... Appendix III Excerpt of 2013 Comprehensive Annual Financial Report ...................... ............................... Appendix IV * Preliminary; subject to change. THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $9,160,000* CITY OF LAKEVILLE, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2014A (BOOK ENTRY ONLY) Proposals for the Series 2014A Bonds and the Good Faith Deposit ( "Deposit ") will be received on Monday, July 21, 2014 until 10:30 A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota, after which time proposals will be opened and tabulated. Consideration for award of the Series 2014A Bonds will be by the City Council at 7:00 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Series 2014A Bonds regardless of the manner in which the proposal is submitted. (a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax (651) 223 -3046 to Springsted. Signed proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final proposal price and coupons, by telephone (651) 223 -3000 or fax (651) 223 -3046 for inclusion in the submitted proposal. OR (b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via PARITY ® . For purposes of the electronic bidding process, the time as maintained by PARITY shall constitute the official time with respect to all proposals submitted to PARITY Each bidder shall be solely responsible for making necessary arrangements to access PARITI' for purposes of submitting its electronic proposal in a timely manner and in compliance with the requirements of the Terms of proposal. Neither the City, its agents nor PARITY shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the City, its agents nor PARITY shall be responsible for a bidder's failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY The City is using the services of PARITY` solely as a communication mechanism to conduct the electronic bidding for the Series 2014A Bonds, and PARITY is not an agent of the City. If any provisions of this Terms of proposal conflict with information provided by PARITY ® , this Terms of proposal shall control. Further information about PARITY", including any fee charged, may be obtained from: PARITY, 1359 Broadway, 2 " Floor, New York, New York 10018 Customer Support: (212) 849 -5000 Preliminary; subject to change. -i- DETAILS OF THE SERIES 2014A BONDS The Series 2014A Bonds will be dated as of the date of delivery and will bear interest payable on February 1 and August 1 of each year, commencing February 1, 2015. Interest will be computed on the basis of a 360 -day year of twelve 30 -day months. The Series 2014A Bonds will mature February 1 in the years and amounts* as follows: 2016 $770,000 2020 $785,000 2024 $830,000 2028 $120,000 2032 $120,000 2017 $770,000 2021 $795,000 2025 $850,000 2029 $120,000 2033 $120,000 2018 $765,000 2022 $805,000 2026 $120,000 2030 $120,000 2034 $120,000 2019 $775,000 2023 $815,000 2027 $120,000 2031 $120,000 2035 $120,000 * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Series 2014A Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Series 2014A Bonds as that of the original proposal. Gross spread is the differential between the price paid to the City for the new issue and the prices at which the securities are initially offered to the investing public. Proposals for the Series 2014A Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify "Years of Term Maturities" in the spaces provided on the proposal form. BOOK ENTRY SYSTEM The Series 2014A Bonds will be issued by means of a book entry system with no physical distribution of Series 2014A Bonds made to the public. The Series 2014A Bonds will be issued in fully registered form and one Series 2014A Bond, representing the aggregate principal amount of the Series 2014A Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ( "DTC "), New York, New York, which will act as securities depository of the Series 2014A Bonds. Individual purchases of the Series 2014A Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. ' Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Series 2014A Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Series 2014A Bonds, will be required to deposit the Series 2014A Bonds with DTC. REGISTRAR The City will name the registrar which shall be subject to applicable SEC regulations. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The City may elect on February 1, 2023, and on any day thereafter, to prepay Series 2014A Bonds due on or after February 1, 2024. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all Series 2014A Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. -ii - SECURITY AND PURPOSE The Series 2014A Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties. The proceeds will be used to finance the City's 2014 Street Reconstruction Projects. BIDDING PARAMETERS Proposals shall be for not less than $9,068,400 plus accrued interest, if any, on the total principal amount of the Series 2014A Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Series 2014A Bonds is adjourned, recessed, or continued to another date without award of the Series 2014A Bonds having been made. Rates shall be in integral multiples of 1 /100 or 1/8 of 1 %. The initial price to the public for each maturity must be 98.0% or greater. Series 2014A Bonds of the same maturity shall bear a single rate from the date of the Series 2014A Bonds to the date of maturity. No conditional proposals will be accepted. GOOD FAITH DEPOSIT Proposals, regardless of method of submission, shall be accompanied by a Deposit in the amount of $91,600, in the form of a certified or cashier's check, a wire transfer, or Financial Surety Bond and delivered to Springsted Incorporated prior to the time proposals will be opened. Each bidder shall be solely responsible for the timely delivery of their Deposit whether by check, wire transfer or Financial Surety Bond. Neither the City nor Springsted Incorporated have any liability for delays in the transmission of the Deposit. Any Deposit made by certified or cashier's check should be made payable to the City and delivered to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101. Any Deposit sent via wire transfer should be sent to Springsted Incorporated as the City's agent according to the following instructions: Wells Fargo Bank, N.A., San Francisco, CA 94104 ABA #121000248 for credit to Springsted Incorporated, Account #635 - 5007954 Ref: Lakeville, MN Series 2014A Good Faith Deposit Contemporaneously with such wire transfer, the bidder shall send an e -mail to bond_services @springsted.com, including the following information; (i) indication that a wire transfer has been made (including the fed reference number and time released), (ii) the amount of the wire transfer, (iii) the issue to which it applies, and (iv) the return wire instructions if such bidder is not awarded the Series 2014A Bonds. Any Deposit made by the successful bidder by check or wire transfer will be delivered to the City following the award of the Series 2014A Bonds. Any Deposit made by check or wire transfer by an unsuccessful bidder will be returned to such bidder following City action relative to an award of the Series 2014A Bonds. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota and pre- approved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Series 2014A Bonds are awarded to an underwriter using a Financial Surety Bond, then that underwriter is required to submit its Deposit to the City in the form of a certified or cashier's check or wire transfer as instructed by -iii - Springsted Incorporated not later than 3:30 P.M., Central Time on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The Deposit received from the purchaser, the amount of which will be deducted at settlement, will be deposited by the City and no interest will accrue to the purchaser. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. The Series 2014A Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis calculated on the proposal prior to any adjustment made by the City. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non - substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Series 2014A Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION The City has not applied for or pre- approved a commitment for any policy of municipal bond insurance with respect to the Series 2014A Bonds. If the Series 2014A Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be insured, and the name of the desired insurer must be set forth on the bidder's proposal. The City specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the City. All costs associated with the issuance and administration of such policy and associated ratings and expenses (other than any independent rating requested by the City) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Series 2014A Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Series 2014A Bonds. CUSIP NUMBERS If the Series 2014A Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Series 2014A Bonds, but neither the failure to print such numbers on any Series 2014A Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Series 2014A Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT On or about August 20, 2014, the Series 2014A Bonds will be delivered without cost to the purchaser through DTC in New York, New York. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Dorsey & Whitney LLP of Minneapolis, Minnesota, and of customary closing papers, including a no- litigation certificate. On the date of settlement, payment for the Series 2014A Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Series 2014A Bonds has been made impossible by action of the City, or its agents, the purchaser shall be liable to the City for any loss suffered by the City by reason of the purchaser's non - compliance with said terms for payment. -iv - CONTINUING DISCLOSURE In accordance with SEC Rule 15c2- 12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Series 2014A Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Series 2014A Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Series 2014A Bonds. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Series 2014A Bonds, and said Preliminary Official Statement will serve as a nearly final Official Statement within the meaning of Rule 15c2 -12 of the Securities and Exchange Commission. For copies of the Preliminary Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223 -3000. A Final Official Statement (as that term is defined in Rule 15c2 -12) will be prepared, specifying the maturity dates, principal amounts and interest rates of the Series 2014A Bonds, together with any other information required by law. By awarding the Series 2014A Bonds to an underwriter or underwriting syndicate, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the sole underwriter or to the senior managing underwriter of the syndicate (the "Underwriter" for purposes of this paragraph) to which the Series 2014A Bonds are awarded up to 25 copies of the Final Official Statement. The City designates the Underwriter of the syndicate to which the Series 2014A Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Such Underwriter agrees that if its proposal is accepted by the City, (i) it shall accept designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Series 2014A Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated June 16, 2014 BY ORDER OF THE CITY COUNCIL /s/ Charlene Friedges City Clerk -v- THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $13,730,000* CITY OF LAKEVILLE, MINNESOTA GENERAL OBLIGATION REFUNDING BONDS, SERIES 2014B (BOOK ENTRY ONLY) Proposals for the Series 2014B Bonds and the Good Faith Deposit ( "Deposit ") will be received on Monday, July 21, 2014 until 10:30 A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota, after which time proposals will be opened and tabulated. Consideration for award of the Series 2014B Bonds will be by the City Council at 7:00 P.M., Central Time, of the same day. OFPROPOSALS Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Series 2014B Bonds regardless of the manner in which the proposal is submitted. (a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax (651) 223 -3046 to Springsted. Signed proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final proposal price and coupons, by telephone (651) 223 -3000 or fax (651) 223 -3046 for inclusion in the submitted proposal. 'IIii (b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via PARITY ® . For purposes of the electronic bidding process, the time as maintained by PARITY shall constitute the official time with respect to all proposals submitted to PARITY Each bidder shall be solely responsible for making necessary arrangements to access PARITY for purposes of submitting its electronic proposal in a timely manner and in compliance with the requirements of the Terms of proposal. Neither the City, its agents nor PARITY shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the City, its agents nor PARITY shall be responsible for a bidder's failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY The City is using the services of PARITY' solely as a communication mechanism to conduct the electronic bidding for the Series 2014B Bonds, and PARITY is not an agent of the City. If any provisions of this Terms of proposal conflict with information provided by PARITY this Terms of proposal shall control. Further information about PARITY including any fee charged, may be obtained from: PARITY 1359 Broadway, 2 nd Floor, New York, New York 10018 Customer Support: (212) 849 -5000 Preliminary; subject to change. -vi - DETAILS OF THE SERIES 2014B BONDS The Series 2014B Bonds will be dated as of the date of delivery and will bear interest payable on February 1 and August 1 of each year, commencing February 1, 2015. Interest will be computed on the basis of a 360 -day year of twelve 30 -day months. The Series 2014B Bonds will mature February 1 in the years and amounts* as follows 2017 $165,000 2021 $905,000 2025 $970,000 2029 $855,000 2018 $880,000 2022 $915,000 2026 $995,000 2030 $885,000 2019 $880,000 2023 $930,000 2027 $815,000 2031 $915,000 2020 $895,000 2024 $950,000 2028 $830,000 2032 $945,000 * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Series 2014B Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Series 2014B Bonds as that of the original proposal. Gross spread is the differential between the price paid to the City for the new issue and the prices at which the securities are initially offered to the investing public. Proposals for the Series 2014B Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify "Years of Term Maturities" in the spaces provided on the proposal form. BOOK ENTRY SYSTEM The Series 2014B Bonds will be issued by means of a book entry system with no physical distribution of Series 2014B Bonds made to the public. The Series 2014B Bonds will be issued in fully registered form and one Series 2014B Bond, representing the aggregate principal amount of the Series 2014B Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ( "DTC "), New York, New York, which will act as securities depository of the Series 2014B Bonds. Individual purchases of the Series 2014B Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Series 2014B Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Series 2014B Bonds, will be required to deposit the Series 2014B Bonds with DTC. REGISTRAR The City will name the registrar which shall be subject to applicable SEC regulations. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The City may elect on February 1, 2024, and on any day thereafter, to prepay Series 2014B Bonds due on or after February 1, 2025. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all Series 2014B Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. -vii - SECURITY AND PURPOSE The Series 2014B Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. The proceeds will be used to refund (i) the February 1, 2017 through February 1, 2026 maturities of the City's General Obligation Street Reconstruction Bonds, Series 2005A, dated December 1, 2005; and (ii) the February 1, 2018 through February 1, 2032 maturities of the City's General Obligation Capital Improvement Plan Bonds, Series 2007D, dated August 1, 2007. BIDDING PARAMETERS Proposals shall be for not less than $13,585,835 plus accrued interest, if any, on the total principal amount of the Series 2014B Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Series 2014B Bonds is adjourned, recessed, or continued to another date without award of the Series 2014B Bonds having been made. Rates shall be in integral multiples of 1 /100 or 1/8 of 1 %. The initial price to the public for each maturity must be 98.0% or greater. Series 2014B Bonds of the same maturity shall bear a single rate from the date of the Series 2014B Bonds to the date of maturity. No conditional proposals will be accepted. GOOD FAITH DEPOSIT Proposals, regardless of method of submission, shall be accompanied by a Deposit in the amount of $137,300, in the form of a certified or cashier's check, a wire transfer, or Financial Surety Bond and delivered to Springsted Incorporated prior to the time proposals will be opened. Each bidder shall be solely responsible for the timely delivery of their Deposit whether by check, wire transfer or Financial Surety Bond. Neither the City nor Springsted Incorporated have any liability for delays in the transmission of the Deposit. Any Deposit made by certified or cashier's check should be made payable to the City and delivered to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101. Any Deposit sent via wire transfer should be sent to Springsted Incorporated as the City's agent according to the following instructions: Wells Fargo Bank, N.A., San Francisco, CA 94104 ABA #121000248 for credit to Springsted Incorporated, Account #635 - 5007954 Ref: City of Lakeville Series 2014B Good Faith Deposit Contemporaneously with such wire transfer, the bidder shall send an e-mail to bond_services @springsted.com, including the following information; (i) indication that a wire transfer has been made (including the fed reference number and time released), (ii) the amount of the wire transfer, (iii) the issue to which it applies, and (iv) the return wire instructions if such bidder is not awarded the Series 2014B Bonds. Any Deposit made by the successful bidder by check or wire transfer will be delivered to the City following the award of the Series 2014B Bonds. Any Deposit made by check or wire transfer by an unsuccessful bidder will be returned to such bidder following City action relative to an award of the Series 2014B Bonds. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota and pre- approved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Series 2014B Bonds are - viii - awarded to an underwriter using a Financial Surety Bond, then that underwriter is required to submit its Deposit to the City in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The Deposit received from the purchaser, the amount of which will be deducted at settlement, will be deposited by the City and no interest will accrue to the purchaser. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. The Series 2014B Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis calculated on the proposal prior to any adjustment made by the City. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non - substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Series 2014B Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION City has not applied for or pre- approved a commitment for any policy of municipal bond insurance with respect to the Series 2014B Bonds. If the Series 2014B Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be insured, and the name of the desired insurer must be set forth on the bidder's proposal. The City specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the City. All costs associated with the issuance and administration of such policy and associated ratings and expenses (other than any independent rating requested by the City) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Series 2014B Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Series 2014B Bonds. CUSIP NUMBERS If the Series 2014B Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Series 2014B Bonds, but neither the failure to print such numbers on any Series 2014B Bonds nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Series 2014B Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT On or about August 20, 2014, the Series 2014B Bonds will be delivered without cost to the purchaser through DTC in New York, New York. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Dorsey & Whitney LLP of Minneapolis, Minnesota, and of customary closing papers, including a no- litigation certificate. On the date of settlement, payment for the Series 2014B Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Series 2014B Bonds has been made impossible by action of the City, or its agents, the purchaser shall be liable to the City for any loss suffered by the City by reason of the purchaser's non - compliance with said terms for payment. -ix - CONTINUING DISCLOSURE In accordance with SEC Rule 15c2- 12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Series 2014B Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Series 2014B Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Series 2014B Bonds. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Series 2014B Bonds, and said Preliminary Official Statement will serve as a nearly final Official Statement within the meaning of Rule 15c2 -12 of the Securities and Exchange Commission. For copies of the Preliminary Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223 -3000. A Final Official Statement (as that term is defined in Rule 15c2 -12) will be prepared, specifying the maturity dates, principal amounts and interest rates of the Series 2014B Bonds, together with any other information required by law. By awarding the Series 2014B Bonds to an underwriter or underwriting syndicate, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the sole underwriter or to the senior managing underwriter of the syndicate (the "Underwriter" for purposes of this paragraph) to which the Series 2014B Bonds is awarded up to 25 copies of the Final Official Statement. The City designates the Underwriter of the syndicate to which the Series 2014B Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Such Underwriter agrees that if its proposal is accepted by the City, (i) it shall accept designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Series 2014B Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated June 16, 2014 BY ORDER OF THE CITY COUNCIL /s/ Charlene Friedges City Clerk x- OFFICIAL STATEMENT CITY OF LAKEVILLE, MINNESOTA $9,160,000* GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2014A $13,730,000* GENERAL OBLIGATION REFUNDING, SERIES 2014B (BOOK ENTRY ONLY) INTRODUCTORY STATEMENT This Official Statement contains certain information relating to the City of Lakeville, Minnesota (the "City ") and its issuance of $9,160,000* General Obligation Improvement Bonds, Series 2014A (the "Series 2014A Bonds ") and $13,730,000* General Obligation Refunding Bonds, Series 2014B (the "Series 2014B Bonds "), collectively referred to as the "Bonds." The Bonds will be general obligations of the City for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties. Inquiries may be directed to Mr. Dennis Feller, Finance Director, City of Lakeville, 20195 Holyoke Avenue, Lakeville, Minnesota 55044 -0957, by telephoning (952) 985 -4481, or by emailing dfeller @lakevillemn.gov. Inquiries may also be made to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101 -2887, by telephoning (651) 223 -3000, or by emailing bond services @springsted.com. If information of a specific legal nature is desired, requests may be directed to Ms. Jennifer Hanson, Dorsey & Whitney LLP, 50 South Sixth Street, 15 Floor, Minneapolis, Minnesota 55402, Bond Counsel, by telephoning (612) 492 -6959, or by emailing hanson.jennifer@dorsey.com. CONTINUING DISCLOSURE hi order to permit bidders for the Bonds and other participating underwriters in the primary offering of the Bonds to comply with paragraph h (b)(5) of Rule 15c2 -12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Rule "), the City will covenant and agree, for the benefit of the registered holders or beneficial owners from time to time of the outstanding Bonds, in the Resolutions, to provide annual reports of specified information and notice of the occurrence of certain events, if material, as hereinafter described (the "Disclosure Covenants "). The information to be provided on an annual basis, the events as to which notice is to be given, if material, and a summary of other provisions of the Disclosure Covenants, including termination, amendment and remedies, are set forth in Appendix II to this Official Statement. For the past five years the City has complied in all material respects with all previous undertakings entered into pursuant to the Rule. A failure by the City to comply with the Undertaking will not constitute an event of default on the Bonds (although holders will have any available remedy at law or in equity). Nevertheless, such a failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. * Preliminary; subject to change. -1- THE BONDS General Description The Bonds are dated as of the date of delivery and will mature annually on February 1 as set forth on the inside front cover of this Official Statement. The Bonds are issued in book entry form. Interest on the Bonds is payable on February 1 and August 1 of each year, commencing February 1, 2015. Interest will be payable to the holder (initially Cede & Co.) registered on the books of the Registrar as of the fifteenth day of the calendar month next preceding such interest payment date. Principal of and interest on the Bonds will be paid as described in the section herein entitled "Book Entry System." U.S. Bank National Association, St. Paul, Minnesota will serve as Registrar for the Bonds, and the City will pay for registrar services. Redemption Provisions Thirty days' written notice of redemption shall be given to the registered owner(s) of the Bonds. Failure to give such written notice to any registered owner of the Bonds or any defect therein shall not affect the validity of any proceedings for the redemption of the Bonds. All Bonds or portions thereof called for redemption will cease to bear interest after the specified redemption date, provided funds for their redemption are on deposit at the place of payment. tional Redemption The City may elect on Februarys 1, 2022, and on any day thereafter, to prepay the Series 2014A Bonds due on or after February 1, 2023. The City may elect on Februarys 1, 2024, and on any day thereafter, to prepay the Series 2014B Bonds due on or after February 1, 2025. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all the Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. Book Entry System The Depository Trust Company ( "DTC "), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully- registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered certificate will be issued for each maturity of each series of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC is a limited- purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries)that DTC's participants ( "Direct Participants ") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ( "DTCC "). DTCC is the holding company for DTC, National Securities Clearing -2- Corporation, and Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants "). DTC has a Standard & Poor's rating of AA +. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond (`Beneficial Owner ") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book -entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or its agent on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment -3- of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to City or agent. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. THE SERIES 2014A BONDS Authority and Purpose The Series 2014A Bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475. The proceeds of the Series 2014A Bonds will be used to finance the City's 2014 Street Reconstruction Projects. For purposes of this Official Statement, the composition of the Series 2014 A Bonds has been broken out by the source of payment for each portion of the Series 2014A Bonds. The Series 2014A Bonds consist of: • the portion of the Series 2014A Bonds payable primarily from special assessments (the "Assessment Portion "); and • the portion of the Series 2014A Bonds payable solely from tax levies (the "Street Reconstruction Portion "). Sources and Uses of Funds The composition of the Series 2014A Bonds is estimated to be as follows -4- Street Assessment Reconstruction Portion Portion Total Sources of Funds: Principal Amount $2,520,000 $6,640,000 $9,160,000 Prepaid Assessments 21,828 0 21,828 Total Sources of Funds $2,541,828 $6,640,000 $9,181,828 Uses of Funds: Deposit to Project Fund $2,472,763 $6,479,603 $8,952,366 Allowance for Discount Bidding 25,200 66,400 91,600 Capitalized Interest 28,272 52,474 80,746 Costs of Issuance 15.593 41,523 57,116 Total Uses of Funds $2,541,828 $6,640,000 $9,181,828 -4- Security and Financing The Series 2014A Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties for repayment of the Assessment Portion of the Series 2014A Bonds. Special assessments in the total principal amount of approximately $2,520,000 are expected to be filed in 2014 for first collection in 2015. The City anticipates receiving prepayments of approximately $21,828. The remaining assessments of approximately $2,498,112 will be filed over a term of 20 years with equal annual payments of principal. Interest on the unpaid balance will be charged at an interest rate estimated to be 3.75 %. The City will also levy taxes for repayment of the Series 2014A Bonds, and will make its first levy in 2014 for collection in 2015. Each year's collection of taxes and special assessments, if collected in full, will be sufficient to pay 105% of the interest payment due August 1 of the collection year and the principal and interest payment due February 1 of the following year. THE SERIES 2014B BONDS Authority and Purpose The Series 2014B Bonds are being issued pursuant to Minnesota Statutes Chapter 475. The proceeds of the Series 2014B Bonds, along with available City funds, will be used to refund: • the February 1, 2017 through February 1, 2026 (the "2005A Refunded Maturities ") of the City's General Obligation Street Reconstruction Bonds, Series 2005A, dated December 1, 2005 (the "Series 2005A Bonds ") (the "Series 2005A Refunding Portion "); and • the February 1, 2018 through February 1, 2032 maturities (the "2007D Refunded Maturities ") of the City's General Obligation Capital Improvement Plan Bonds, Series 2007D, dated August 1, 2007 (the "Series 2007D Bonds ") (the "Series 2007D Refunding Portion "). The Series 2005A Refunded Maturities and the Series 2007D Refunded Maturities are collectively referred to as the "Refunded Maturities ". The Series 2005A Bonds and the Series 2007D Bonds are collectively referred to as the "Refunded Bonds ". The Series 2014B Bonds have been structured as a crossover refunding, which is being issued to achieve debt service savings. Specifically, the proceeds of the Series 2014B Bonds will be placed in an escrow account with U.S. Bank National Association, St. Paul, Minnesota (the "Escrow Agent "). The amounts on deposit with the Escrow Agent will be (i) used to pay the costs associated with the issuance of the Series 2014B Bonds; and (ii) will be invested in special obligations of the United States Treasury or other obligations of the United States or of its agencies, which shall mature in such amounts and at such times as to be available to: • pay the interest on the Series 2005A Refunding Portion of the Series 2014B Bonds to and including February 1, 2016, the anticipated call date of the Series 2005A Bonds; • pay the principal of and interest on the Series 2007D Refunding Portion of the Series 2014B Bonds to and including February 1, 2017, the anticipated call date of the Series 2007D Bonds; • redeem the Series 2005A Refunded Maturities on the anticipated call date of February 1, 2016 at a price of par plus accrued interest; and -5- • redeem the 2007D Refunded Maturities on the anticipated call date of February 1, 2017 at a price of par plus accrued interest. Verification services necessary to insure the adequacy of the escrow account to provide timely payment of the principal and interest for which the escrow account is obligated will be performed by a certified public accounting firm. Sources and Uses of Funds The composition of the Series 2014B Bonds is estimated to be as follows Security and Financing The Series 2014B will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. The City will make its first levy for the Series 2014B Bonds in 2014 for collection in 2015. Each year's collection of taxes, if collected in full, will be sufficient to pay 105% of the interest payment due August 1 of the collection year and the principal and interest payment due February 1 of the following year. The City also expects to use available special assessment revenues for payment for the Series 2014B Bonds. FUTURE FINANCING The City does not anticipate issuing any additional long -term general obligation debt for at least the next 90 days. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City's ability to meet its financial obligations. Series 2005A Series 2007D Refunding Refunding Portion Portion Total Sources of Funds: Principal Amount $1,810,000 $11,920,000 $13,730,000 Available City Funds 235,000 0 235,000 Total Sources of Funds $2,045,000 $11,920,000 $13,965,000 Uses of Funds: Deposit to Escrow Fund $1,992,952 $11,732,307 $13,725,259 Costs of Issuance 33,043 62,533 95,576 Allowance for Discount Bidding 19,005 125,160 144,165 Total Uses of Funds $2,045,000 $11,920,000 $13,965,000 Security and Financing The Series 2014B will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. The City will make its first levy for the Series 2014B Bonds in 2014 for collection in 2015. Each year's collection of taxes, if collected in full, will be sufficient to pay 105% of the interest payment due August 1 of the collection year and the principal and interest payment due February 1 of the following year. The City also expects to use available special assessment revenues for payment for the Series 2014B Bonds. FUTURE FINANCING The City does not anticipate issuing any additional long -term general obligation debt for at least the next 90 days. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City's ability to meet its financial obligations. LEGALITY The Bonds are subject to approval as to certain matters by Dorsey & Whitney LLP, of Minneapolis, Minnesota, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor attempted to examine or verify, any of the financial or statistical statements, or data contained in this Official Statement and will express no opinion with respect thereto. Legal opinions in substantially the forms set out in Appendix I herein will be delivered at closing. TAX EXEMPTION It is the opinion of Dorsey & Whitney LLP, Minneapolis, Minnesota, Bond Counsel, based on current law, and on certifications to be furnished at closing, and assuming compliance by the City with certain covenants (the "Tax Covenants "), that interest on the Bonds is excluded from gross income for federal income tax purposes and from taxable net income of individuals, estates, and trusts for Minnesota income tax purposes. Interest on the Bonds is included in taxable income for purposes of Minnesota franchise taxes imposed on corporations and financial institutions. Interest on the Bonds is not an item of tax preference for federal or Minnesota alternative minimum tax purposes, but it is included in adjusted current earnings of corporations for purposes of the federal alternative minimum tax. The Code establishes certain requirements that must be met after the issuance of the Bonds in order that interest on the Bonds be excluded from federal gross income and from Minnesota taxable net income of individuals, estates, and trusts. These requirements include, but are not limited to, provisions regarding the use of Bond proceeds and the facilities financed or refinanced with such proceeds; restrictions on the investment of Bond proceeds and other amounts; and provisions requiring that certain investment earnings be rebated periodically to the federal government. Noncompliance with such requirements may cause interest on the Bonds to be included in federal gross income or in Minnesota taxable net income retroactively to their date of issue. Compliance with the Tax Covenants will satisfy the current requirements of the Code with respect to exclusion of interest on the Bonds from federal gross income and from Minnesota taxable net income of individuals, estates, and trusts. No provision has been made for redemption of or for an increase in the interest rate on the Bonds in the event that interest on the Bonds is included in federal gross income or in Minnesota taxable net income. Original Issue Discount Certain maturities of the Bonds may be issued at a discount from the principal amount payable on such Bonds at maturity (collectively, the "Discount Bonds "). The difference between the price at which a substantial amount of the Discount Bonds of a given maturity is first sold to the public (the "Issue Price ") and the principal amount payable at maturity constitutes "original issue discount" under the Code. The amount of original issue discount that accrues to a holder of a Discount Bond under section 1288 of the Code is excluded from federal gross income and from Minnesota taxable net income of individuals, estates, and trusts to the same extent that stated interest on such Discount Bond would be so excluded. The amount of the original issue discount that accrues with respect to a Discount Bond under section 1288 is added to the owner's federal and Minnesota tax basis in determining gain or loss upon disposition of such Discount Bond (whether by sale, exchange, redemption or payment at maturity). Original issue discount is taxable under the Minnesota franchise tax on corporations and financial institutions. Interest in the form of original issue discount accrues under section 1288 pursuant to a constant yield method that reflects semiannual compounding on dates that are determined by reference to the maturity date of the Discount Bond. The amount of original issue discount that accrues for any particular -7- semiannual accrual period generally is equal to the excess of (1) the product of (a) one -half of the yield on such Bonds (adjusted as necessary for an initial short period) and (b) the adjusted issue price of such Bonds, over (2) the amount of stated interest actually payable. For purposes of the preceding sentence, the adjusted issue price is determined by adding to the Issue Price for such Bonds the original issue discount that is treated as having accrued during all prior semiannual accrual periods. If a Discount Bond is sold or otherwise disposed of between semiannual compounding dates, then the original issue discount that would have accrued for that semiannual accrual period for federal income tax purposes is allocated ratably to the days in such accrual period. If a Discount Bond is purchased for a cost that exceeds the sum of the Issue Price plus accrued interest and accrued original issue discount, the amount of original issue discount that is deemed to accrue thereafter to the purchaser is reduced by an amount that reflects amortization of such excess over the remaining term of such Bond. If such excess is greater than the amount of remaining original issue discount, the Code's basis reduction rules for amortizable bond premium might result in taxable gain upon sale, redemption or maturity of the Bonds, even if the Bonds are sold, redeemed or retired for an amount equal to or less than their cost. Except for the Minnesota rules described above, no opinion is expressed as to state and local income tax treatment of original issue discount. It is possible under certain state and local income tax laws that original issue discount on a Discount Bond may be taxable in the year of accrual, and may be deemed to accrue differently than under federal law. Holders of Discount Bonds should consult their tax advisors with respect to the computation and accrual of original issue discount and with respect to the other federal, state and local tax consequences associated with the purchase, ownership, redemption, sale or other disposition of Discount Bonds. Bond Premium Certain maturities of the Bonds may be issued at a premium to the principal amount payable at maturity. Except in the case of dealers, which are subject to special rules, Bondholders who acquire Bonds at a premium, even Bonds that were not initially offered at a premium, must, from time to time, reduce their federal and Minnesota tax bases for the Bonds for purposes of determining gain or loss on the sale or payment of such Bonds. Premium generally is amortized for federal and Minnesota income and franchise tax purposes on the basis of a bondholder's constant yield to maturity or to certain call dates with semiannual compounding. Accordingly, bondholders who acquire Bonds at a premium might recognize taxable gain upon sale of the Bonds, even if such Bonds are sold for an amount equal to or less than their original cost. Amortized premium is not deductible for federal or Minnesota income tax purposes. Bondholders who acquire Bonds at a premium should consult their tax advisors concerning the calculation of bond premium and the timing and rate of premium amortization, as well as the state and local tax consequences of owning and selling Bonds acquired at a premium. RELATED TAX CONSIDERATIONS Section 86 of the Code and corresponding provisions of Minnesota law require recipients of certain social security and railroad retirement benefits to take interest on the Bonds into account in determining the taxability of such benefits. Passive investment income, including interest on the Bonds, may be subject to taxation under section 1375 of the Code, and corresponding provisions of Minnesota law, for an S corporation that has accumulated earnings and profits at the close of the taxable year, if more than 25 percent of its gross receipts is passive investment income. Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds, and Minnesota law similarly denies a deduction for such interest in the case of individuals, estates, and trusts. Indebtedness may be allocated to the Bonds for this purpose even though not directly traceable to the purchase of the Bonds. Federal and Minnesota laws also restrict the deductibility of other expenses allocable to the Bonds. Because of the Code's basis reduction rules for amortizable Bond premium, Bondholders who acquire Bonds at a premium might recognize taxable gain upon sale of the Bonds, even if the Bonds are sold for an amount equal to or less than their original cost. In the case of a financial institution, no deduction is allowed under the Code for that portion of the holder's interest expense which is allocable to interest on the Bonds within the meaning of section 265(6) of the Code. In the case of an insurance company subject to the tax imposed by section 831 of the Code, the amount which otherwise would be taken into account as losses incurred under section 832(b)(5) of the Code must be reduced by an amount equal to 15 percent of the interest on the Bonds that is received or accrued during the taxable year. Interest on the Bonds may be included in the income of a foreign corporation for purposes of the branch profits tax imposed by section 884 of the Code, and is included in net investment income of foreign insurance companies under section 842(b) of the Code. The market value and marketability of the Bonds may be adversely affected by future changes in federal or Minnesota tax treatment of interest on the Bonds or by future reductions in income tax rates. THE FOREGOING IS NOT INTENDED TO BE AN EXHAUSTIVE DISCUSSION OF COLLATERAL TAX CONSEQUENCES ARISING FROM OWNERSHIP OR DISPOSITION OF THE BONDS OR RECEIPT OF INTEREST ON THE BONDS. PROSPECTIVE PURCHASERS OR BONDHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO APPLICABLE FEDERAL, STATE AND LOCAL TAX RULES. Proposed Changes in Federal and State Tax Law From time to time, there are legislative proposals that, if enacted, could adversely effect the federal and state tax matters referred to herein, adversely affect the marketability or market value of the Bonds, or otherwise prevent holders of the Bonds from realizing the full benefit of the tax exemption of interest on the Bonds. For example, both President Obama and the Chairman of the Committee on Ways and Means of the U.S. House of Representative have proposed legislation that effectively would impose a partial tax on otherwise tax exempt interest for certain higher income taxpayers. In addition, regulatory and administrative actions may from time to time be announced that could adversely affect the market value, marketability or tax status of the Bonds. No prediction is made concerning future events. The opinions expressed by Bond Counsel in connection with the issuance of the Bonds are based upon existing law. Purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed legislation, regulatory actions, or litigation. NOT QUALIFIED TAX - EXEMPT OBLIGATIONS The City will not designate the Bonds as "qualified tax- exempt obligations" for purposes of Section 265(b)(3) of the Code relating to the ability of financial institutions to deduct from income for federal income tax purposes a portion of the interest expense that is allocable to carrying and acquiring tax - exempt obligations. SIR RATINGS An application for ratings of the Bonds has been made to Moody's Investors Service ( "Moody's "), 7 World Trade Center, 250 Greenwich Street, 23 Floor, New York, New York If ratings are assigned, they will reflect only the opinion of Moody's. Any explanation of the significance of the ratings may be obtained only from Moody's. There is no assurance that the ratings, if assigned, will continue for any given period of time, or that such ratings will not be revised, suspended or withdrawn, if, in the judgment of Moody's, circumstances so warrant. A revision, suspension or withdrawal of the ratings may have an adverse effect on the market price of the Bonds. MUNICIPAL ADVISOR The City has retained Springsted Incorporated, Public Sector Advisors, of St. Paul, Minnesota ( "Springsted "), as municipal advisor in connection with certain aspects of the issuance of the Bonds. In preparing this Official Statement, Springsted has relied upon governmental officials, and other sources, who have access to relevant data to provide accurate information for this Official Statement, and Springsted has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. Springsted is not a public accounting firm and has not been engaged by the Issuer to compile, review, examine or audit any information in this Official Statement in accordance with accounting standards. Springsted is an independent advisory firm, registered as a municipal advisor, and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. CERTIFICATION The City has authorized the distribution of the Preliminary Official Statement for use in connection with the initial sale of the Bonds and a Final Official Statement following award of the Bonds. The Purchaser(s) will be furnished with a certificate signed by the appropriate officers of the City stating that the City examined each document and that, as of the respective date of each and the date of such certificate, each document did not and does not contain any untrue statement of material fact or omit to state a material fact necessary, in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. 10- CITY PROPERTY VALUES Trend of Values /°/ Assessment/ Assessor's Market Value $41,029,548 Adjusted Collection Estimated Sales Economic Homestead Taxable Taxable Net Year Market Value Ratio(b) Market Value Exclusion Market Value Tax Capacity 2013/14 $5,303,140,500 93.1% $5,694,637,601 $249,697,332 $4,995,818,217 $57,189,869 2012/13 5,080,153,100 94.2 5,387,471,135 256,627,663 4,767,475,321 55,320,301 2011/12 5,334,195,300 99.7 5,338,375,753 238,131,979 5,030,003,164 58,325,034 2010/11 5,425,990,500 N/A N/A N/A 5,356,855,900 62,063,161 2009/10 5,821,102,500 N/A N/A N/A 5,736,602,200 65,043,115 Ca/ For a description of the Minnesota property tax system, see Appendix III. (5,439,491) (b) Sales Ratio Study for the year of assessment as posted by the Minnesota Department of Revenue, http.//www.revenue. state. mn. us /propertytax/Pages /statistics- imv.aspx. Prior to 2011112 a different methodology was used to calculate sales ratios. (c) Economic market values for the year of assessment as posted by the Minnesota Department of Revenue, http:11www. revenue. state. mn. us/propertytax /Pages /statistics- imv.aspx. Source: Dakota County, Minnesota, May 2014, except as otherwise noted. 2013/14 Adjusted Taxable Net Tax Capacity: $57,189,869* Real Estate: Residential Homestead $41,029,548 71.8% Commercial/Industrial, Public Utility, and Railroad 13,050,730 22.8 Non - Homestead Residential 1,468,225 2.6 Agricultural and Seasonal/Recreational 762,179 1.3 Personal Property 863,624 1.5 2013/14 Net Tax Capacity $57,174,306 100.0% Less: Captured Tax Increment Tax Capacity (861,019) Contribution to Fiscal Disparities (5,439,491) Plus: Distribution from Fiscal Disparities 6,316,073 2013/14 Adjusted Taxable Net Tax Capacity $57,189,869 * Excludes mobile home valuation of $131,112. -11- Ten of the Largest Taxpayers in the City 2013/14 Net Taxpaver Type of Business Tax Capacity Lakeville 2004 LLC Commercial $ 331,302 Heritage Commons LLC Retail 319,220 Dakota Electric Association Utility 268,116 Target Corporation Retail 256,414 Argonne Investments LLC Retail 254,243 Walker Highview Hills LLC Apartments 246,873 LTF Real Estate Company Inc. Real Estate 238,810 CenterPoint Energy Utility 230,222 FR/CAL Interstate South LLC Industrial 229,776 Wal -Mart Real Estate Business Trust Commercial 215,522 Total $2,590,498* * Represents 4.5% of the City's 2013114 adjusted taxable net tax capacity. CITY INDEBTEDNESS Legal Debt Limit and Debt Margin* Legal Debt Limit (3% of 2013/14 Estimated Market Value) $159,094,215 Less: Outstanding Debt Subject to Limit (Including the Street Reconstruction Portion of the Series 2014A Bonds and the Series 2014B Bonds and Excluding the Refunded Maturities) (51,805,000 Legal Debt Margin as of August 20, 2014 $107,289,215 * The legal debt margin is referred to statutorily as the "Net Debt Limit" and may be increased by debt service funds and current revenues which are applicable to the payment of debt in the current fiscal year. NOTES: Certain types ofdebt are not subject to the legal debt limit. See Appendix III —Debt Limitations The 2013 Minnesota Legislature clarified the definition of estimated market value and established it as the basis for the calculation of the Net Debt Limit. A large contributing factor to the change was to offset the effect of the Market Value Homestead Exclusion implemented by the 2012 Minnesota Legislature, which had a significant impact on taxable market values. -12- General Obligation Debt Supported Solely by Taxes(a) (a) These issues are subject to the legal debt limit. (b) Excludes the Series 2005A Refunded Maturities. (c) Excludes the Series 2007D Refunded Maturities General Obligation Special Assessment Debt Est. Principal Date Original Est. Principal Final Outstanding of Issue Amount Purpose Maturi ty As of 8 -20 -14 11 -1 -04 $14,445,000 Capital Improvements 2 -1 -2015 $ 360,000 12 -1 -05 5,430,000 Street Reconstruction 2 -1 -2016 305,000 (b) 8 -1 -07 15,115,000 Capital Improvements 2 -1 -2017 1,475,OOO(c) 12 -15 -07 2,810,000 Street Reconstruction 2 -1 -2028 2,260,000 12 -30 -09 4,945,000 Street Reconstruction 2 -1 -2030 4,175,000 12 -1 -11 1,215,000 Park Refunding 4 -1 -2015 410,000 8 -15 -12 22,450,000 Street Reconstruction and 8 -15 -13 4,685,000 Local Improvements 2 -1 -2034 Capital Improvements Refunding 2 -1 -2030 22,450,000 8 -20 -14 6,640,000 Street Reconstruction (the Street Portion of the Series 2014A Bonds) 2 -1 -2035 Reconstruction Portion of the Total Series 2014A Bonds) 2 -1 -2025 6,640,000 8 -20 -14 13,730,000 Street Reconstruction and Capital Est. Principal Date Improvements Refunding Final Outstanding of Issue (the Series 2014B Bonds) 2 -1 -2032 13,730,000 Total 2 -1 -07 $2,265,000 Tax Increment Refunding $51,805,000 (a) These issues are subject to the legal debt limit. (b) Excludes the Series 2005A Refunded Maturities. (c) Excludes the Series 2007D Refunded Maturities General Obligation Special Assessment Debt Est. Principal Date Original Final Outstanding of Issue Amount Pu�ose Maturity As of 8 -20 -14 2 -1 -07 $3,165,000 Improvement Refunding 2 -1 -2016 $ 185,000 8 -1 -07 1,310,000 Local Improvements 2 -1 -2018 200,000 10 -1 -08 620,000 Local Improvements 2 -1 -2019 150,000 12 -30 -09 4,250,000 Refunding 2 -1 -2020 2,015,000 12 -1 -11 2,385,000 Local Improvements 2 -1 -2032 1,850,000 8 -15 -12 6,805,000 Local Improvements 2 -1 -2033 6,300,000 8 -15 -13 4,685,000 Local Improvements 2 -1 -2034 4,685,000 8 -20 -14 2,520,000 Local Improvements (the Assessment Portion of the Series 2014A Bonds) 2 -1 -2035 2,520,000 Total $17,905,000 General Obligation Tax Increment Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 8 -20 -14 2 -1 -07 $2,265,000 Tax Increment Refunding 2 -1 -2022 $1,890,000 -13- General Obligation Revenue Debt (a) These bonds were issued by the Housing and Redevelopment Authority of the City of Lakeville, Minnesota. Gross revenues from the Ames Ice Arena and Lakeville Hockey Association operations are pledged to the repayment of this debt. (b) These bonds were issued through means of an operating lease purchase agreement between the City and the Housing and Redevelopment Authority of the City of Lakeville, Minnesota. This issue will be repaid with annual appropriation lease payments to be made by the City. Pursuant to a joint powers agreement between the City and Independent School District No. 194 (Lakeville), Minnesota (the "District'), the District has agreed to reimburse the City for 50% of the annual debt service payments for this issue. (c) These bonds are general obligations of the City, but are payable from gross revenues of the City's Ice Arena. Revenue Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturitv As of 8 -20 -14 5 -1 -07 $3,955,000 Liquor Store 2 -1 -2027 $3,070,000 -14- Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 8 -20 -14 11 -1 -04 $9,735,000 Water Revenue Refunding 2 -1 -2016 $1,975,000 12 -15 -07 3,675,000 State -Aid Street 4 -1 -2018 1,660,000 1 -1 -10 2,680,000 State -Aid Street Refunding 4 -1 -2020 1,705,000 12 -1 -11 665,000 State -Aid Street Refunding 4 -1 -2021 525.000 Total $5,865,000 Ice Arena Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturi tv As of 8 -20 -14 4 -1 -99 $1,250,000 Recreational Facility Revenue 8 -1 -2019 $ 770,000(a) 12 -1 -06 9,230,000 Ice Arena Lease Revenue 2 -1 -2032 8,100,000(b) 10 -1 -08 775,000 Ice Arena Refunding 2 -1 -2015 140.000 Total $9,010,000 (a) These bonds were issued by the Housing and Redevelopment Authority of the City of Lakeville, Minnesota. Gross revenues from the Ames Ice Arena and Lakeville Hockey Association operations are pledged to the repayment of this debt. (b) These bonds were issued through means of an operating lease purchase agreement between the City and the Housing and Redevelopment Authority of the City of Lakeville, Minnesota. This issue will be repaid with annual appropriation lease payments to be made by the City. Pursuant to a joint powers agreement between the City and Independent School District No. 194 (Lakeville), Minnesota (the "District'), the District has agreed to reimburse the City for 50% of the annual debt service payments for this issue. (c) These bonds are general obligations of the City, but are payable from gross revenues of the City's Ice Arena. Revenue Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturitv As of 8 -20 -14 5 -1 -07 $3,955,000 Liquor Store 2 -1 -2027 $3,070,000 -14- Estimated Calendar Year Debt Service Payments Including the Bonds and Excluding the Refunded Maturities (a) Includes the Street Reconstruction Portion of the Series 2014A Bonds and the Series 2014B Bonds at assumed average annual interest rates of 2.09% and 2.67 9 1 o, respectively, and excludes the Refunded Maturities. (b) Includes the Assessment Portion ofthe Series 2014A Bonds at an assumed average annual interest rate of 3.04% (c) 63.2 %ofthis debt will be retired within ten years. (d) 78.5% of this debt will be retired within ten years. 15- G.O. Debt Supported G.O. Special Solely by Taxes Assessment Debt Principal Principal Year Principal & Interest Principal & Interest 2014 (at 8 -20) (Paid) $ 1,538 (Paid) (Paid) 2015 $ 2,365,000 4,315,018 $ 1,590,000 $ 2,040,507 2016 2,835,000 4,858,369 1,810,000 2,228,519 2017 2,860,000 4,488,666 1,700,000 2,081,784 2018 3,175,000 4,457,474 1,675,000 2,020,505 2019 3,295,000 4,490,430 1,635,000 1,941,349 2020 3,410,000 4,509,021 1,405,000 1,673,153 2021 3,555,000 4,548,523 1,270,000 1,504,441 2022 3,620,000 4,508,178 1,125,000 1,327,925 2023 3,740,000 4,524,148 1,135,000 1,303,708 2024 3,870,000 4,543,171 705,000 844,483 2025 4,025,000 4,579,389 400,000 523,085 2026 3,450,000 3,887,610 395,000 505,893 2027 2,385,000 2,728,778 395,000 493,558 2028 2,475,000 2,735,518 395,000 480,858 2029 2,375,000 2,554,036 395,000 467,763 2030 2,510,000 2,605,395 390,000 449,533 2031 915,000 952,677 395,000 441,063 2032 945,000 952,356 395,000 427,308 2033 350,000 369,218 2034 225,000 233,730 2035 120,000 122.220 Total $51,805,000(c) $66,240,295 $17,905,000( $21,480,603 (a) Includes the Street Reconstruction Portion of the Series 2014A Bonds and the Series 2014B Bonds at assumed average annual interest rates of 2.09% and 2.67 9 1 o, respectively, and excludes the Refunded Maturities. (b) Includes the Assessment Portion ofthe Series 2014A Bonds at an assumed average annual interest rate of 3.04% (c) 63.2 %ofthis debt will be retired within ten years. (d) 78.5% of this debt will be retired within ten years. 15- Estimated Calendar Year Debt Service Payments Including the Bonds and Excluding the Refunded Maturities (continued) G.O. Tax Increment Debt G.O. Revenue Debt Principal Principal Year Principal & Interest Principal & Interest 2014 (at 8 -20) (Paid) (Paid) (Paid) $ 63,541 2015 $ 210,000 $ 282,561 $1,685,000 1,861,201 2016 220,000 283,961 1,765,000 1,878,358 2017 220,000 275,161 780,000 847,226 2018 230,000 276,161 800,000 840,326 2019 240,000 276,761 375,000 396,064 2020 245,000 271,908 380,000 388,626 2021 260,000 276,493 80,000 80,860 2022 265,000 270,565 Total $1,890,000 $2,213,571 $5,865,000 $6,356,202 Ice Arena Debt Revenue Debt Principal Principal Year Principal & Interest Principal & Interest 2014 (at 8 -20) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 (Paid) $ 520,000 415,000 470,000 505,000 525,000 370,000 390,000 415,000 435,000 450,000 470,000 495,000 520,000 545,000 575,000 605,000 635,000 670,000 (Paid) $ 925,864 800,490 834,980 847,028 842,480 661,988 664,888 671,775 672,650 667,738 667,038 670,325 672,163 672,534 676,634 679,347 680,672 685,494 (Paid) 175,000 180,000 190,000 200,000 210,000 220,000 235,000 245,000 255,000 270,000 285,000 295,000 310,000 (Paid) 324,125 320,250 321,000 321,250 321,000 320,250 323,875 321,875 319,375 321,250 322,375 317,875 317,750 Total $9,O10,000(a) $12,994,088 (a) 49.9% of this debt will be retired within ten years. (') 71.0% of this debt will be retired within ten years. $3,070,000 (b) $4,172,250 16- Other Debt Obligations Metropolitan Council Loan Agreement The City entered into a loan agreement with the Metropolitan Council on February 21, 2006 in the amount of $1,466,300 to finance the acquisition of property for a commuter vehicle park and pool lot. In 2013 the City made no payments on this loan. As of December 31, 2013 the balance of the loan is $1,159,843. The loan is interest -free and will be discharged by the Metropolitan Council at an undetermined future date. Overlapping Debt Total $191,420,779 (a) Only those units with outstanding general obligation debt are shown here. (b) Excludes general obligation tax and aid anticipation certificates and revenue - supported debt (c) Excludes the outstanding principal amount of the City of Lakeville Housing and Redevelopment Authority's $9,230,000 Lease Revenue Bonds (Ice Arena Project), Series 2006, of which 50% of the debt service is paid by Independent School District No. 194 (Lakeville), pursuant to a joint powers agreement. This debt has already been included under the City's debt totals in its entirety. (d) Excludes general obligation debt supported by wastewater revenues and housing rental payments. Includes certificates ofparticipation. (e) Includes general obligation grant anticipation notes Debt Ratios* G.O. G.O. Direct & Direct Debt Overlapping Debt To 2013/14 Estimated Market Value ($5,303,140,500) 1.36% 4.97% Per Capita (57,048 — 2012 MN State Demographer's Estimate) $1,263 $4,618 * Excludes general obligation revenue debt; ice arena debt; revenue debt; and other debt obligations. -17- 2013/14 Debt Applicable to Adjusted Taxable Est. G.O. Debt Tax Capacity in the City Taxing Unit Net Tax Capacity As of 8- 20 -14 Percent Amount Dakota County $ 402,262,793 $ 40,890,000 12.7% $ 5,193,030 ISD No. 192 (Farmington) 27,215,403 194,835,000 18.8 36,628,980 ISD No. 194 (Lakeville) 50,181,718 155,085,000(c) 87.8 136,164,630 ISD No. 196 (Rosemount - Apple Valley -Eagan) 145,765,904 96,477,253 5.5 5,306,249 Metropolitan Council 2,999,061,916 21,040,000(d) 1.7 357,680 Metropolitan Transit 2,381,101,627 370,010,000(e) 2.1 7,770,210 Total $191,420,779 (a) Only those units with outstanding general obligation debt are shown here. (b) Excludes general obligation tax and aid anticipation certificates and revenue - supported debt (c) Excludes the outstanding principal amount of the City of Lakeville Housing and Redevelopment Authority's $9,230,000 Lease Revenue Bonds (Ice Arena Project), Series 2006, of which 50% of the debt service is paid by Independent School District No. 194 (Lakeville), pursuant to a joint powers agreement. This debt has already been included under the City's debt totals in its entirety. (d) Excludes general obligation debt supported by wastewater revenues and housing rental payments. Includes certificates ofparticipation. (e) Includes general obligation grant anticipation notes Debt Ratios* G.O. G.O. Direct & Direct Debt Overlapping Debt To 2013/14 Estimated Market Value ($5,303,140,500) 1.36% 4.97% Per Capita (57,048 — 2012 MN State Demographer's Estimate) $1,263 $4,618 * Excludes general obligation revenue debt; ice arena debt; revenue debt; and other debt obligations. -17- CITY TAX RATES, LEVIES AND COLLECTIONS Tax Capacity Rates for a City Resident in Independent School District No. 194 (Lakeville) 2011/12 2012/13 33.421% 41.234 33.535 5.848 114.038% 2 Total 31.827% 40.696 33.048 5.538 111.109% 013/14 For Debt Only 0.963% 8.650 25.151 1.575 36.339% 31.426% 39.051 32.061 5.562 Total 96.594% 104.736% 108.100% (a) The City also has a 2013114 tax rate of 0.00378% spread on the market value of property in support of debt service. (b) Independent School District No. 194 (Lakeville) also has a 2013114 tax rate of 0.25945% spread on the market value of property in support of an excess operating levy. (0 Special districts include Metropolitan Mosquito Control, Metropolitan Council, Metropolitan Transit District, the Dakota County Community Development Agency, the Light Rail Authority, and the Vermillion River Watershed District. NOTE: Taxes are determined by multiplying the net tax capacity by the tax capacity rate, plus multiplying the referendum market value by the market value rate. This table does not include the market value based rates. See Appendix X. Tax Levies and Collections 2009/10 2010/11 Dakota County 27.269% 29.149% City of Lakeville(a) 36.624 38.250 ISD No. 194 (In Process of Collection) 2012/13 20,422,240 (Lakeville)(b) 27.714 32.138 Special Districts(c) 4.987 5.199 2011/12 2012/13 33.421% 41.234 33.535 5.848 114.038% 2 Total 31.827% 40.696 33.048 5.538 111.109% 013/14 For Debt Only 0.963% 8.650 25.151 1.575 36.339% 31.426% 39.051 32.061 5.562 Total 96.594% 104.736% 108.100% (a) The City also has a 2013114 tax rate of 0.00378% spread on the market value of property in support of debt service. (b) Independent School District No. 194 (Lakeville) also has a 2013114 tax rate of 0.25945% spread on the market value of property in support of an excess operating levy. (0 Special districts include Metropolitan Mosquito Control, Metropolitan Council, Metropolitan Transit District, the Dakota County Community Development Agency, the Light Rail Authority, and the Vermillion River Watershed District. NOTE: Taxes are determined by multiplying the net tax capacity by the tax capacity rate, plus multiplying the referendum market value by the market value rate. This table does not include the market value based rates. See Appendix X. Tax Levies and Collections Collected During Collected and/or Abated Net Collection Year as of 5 -20 -14 Levy /Collect Lev * Amount Percent Amount Percent 2013/14 $21,053,626 (In Process of Collection) 2012/13 20,422,240 $20,196,219 98.9% $20,320,132 99.5% 2011/12 20,485,607 20,266,433 98.9 20,435,146 99.8 2010/11 20,341,647 19,955,441 98.1 20,326,951 99.9 2009/10 20,785,640 20,437,282 98.3 20,774,312 99.9 * The net levy excludes state aid for property tax relief and fiscal disparities, if applicable. The net levy is the basis for computing tax capacity rates. See Appendix III. FUNDS ON HAND As of April 30, 2014 Funds Cash and Investments General $ 5,477,095 Special Revenue 953,822 Debt Service: G.O. Supported by Taxes 779,314 G.O. Supported by Special Assessments 1,577,237 G.O. Supported by Tax Increment 2,887,599 G.O. State -Aid Road Bonds 23,598 Ice Arena Revenue 75,463 Capital Projects 22,427,394 Liquor 3,925,333 Utility 6,500,829 Internal Service 506,585 Escrow 7.182.794 Total $52,317,063 CITY INVESTMENTS Investments shall be undertaken so as to insure the preservation of capital in the overall portfolio. Safety of principal is the foremost objective. Liquidity and yield are also important considerations. It is essential that money is always available when needed; therefore, the City's investment goal is to maximize yield while scheduling maturity dates to coincide with expenditure needs. The City's investment portfolio shall be designed to attain a market - average rate of return during budgetary and economic cycles, taking into account the City's investment risk constraint and the cash flow characteristics of the portfolio. Each individual participating in the investment process shall seek to act responsibly as custodians of the public trust. Investment officials shall avoid any transaction that might impair public confidence in the City's ability to govern effectively. Investment Procedures Cash management is essential to the City's investment program. The Finance Department has responsibility to organize and establish procedures for effective cash management, based on the following guidelines: 1. Cash balances will be prepared based on cash received the previous day, warrants paid the previous day and sizable checks or wire transfers that present investment opportunity. 2. The investment records will be reviewed and updated as investments mature or are purchased. 3. Each month, the investment records will be balanced to the financial records. 4. Interest earnings will be allocated to the various City funds. 19- Current Cash and Investments As of April 30, 2014, the City's portfolio had a book value of $51,447,927 versus a cost to the City of $52,223,130. The composition of the portfolio was as follows: 7.57% in cash or money market funds, 33.03% in certificates of deposit, 18.25% in municipal bonds, and 41.15% in in government agency securities. The portfolio had a maturity schedule as follows: Year Cost Percent of Total 2012 MN State Demographer Liquid $ 3,895,902 7.4% 2014 7,471,990 14.3 2015 12,700,746 24.3 2016 7,529,538 14.4 2017 6,192,009 11.8 2018 -2024 13.657,743 26.1 Total investments $51,447,928 98.3% Cash 869,135 1.7 Total $52,317,063 100.0% GENERAL INFORMATION CONCERNING THE CITY The City is located in southern Dakota County, approximately 20 miles south of downtown Minneapolis and St. Paul. The area of the City is approximately 38 square miles (24,320 acres). Population The City's population trend is shown below. Year Population Percent Change 2012 MN State Demographer 57,048 2.0% 2010 U.S. Census Bureau 55,954 29.7 2000 U.S. Census Bureau 43,128 73.5 1990 U.S. Census Bureau 24,854 68.0 1980 U.S. Census Bureau 14,790 -- Sources: Minnesota State Demographic Center, httn://www demonraohv.state.mn.us/ and United States Census Bureau, hap•//www.census.eov/ The City's population by age group for the past two years is as follows: 0 -17 18 -34 353564 65 and Over 2013 17,194 11,538 25,730 4,281 2012 17,790 10,818 25,332 3,981 Source: Claritas, Inc. -20- Transportation Interstate 35W runs north -south through the City. In addition, County Highways 5, 9, 23, 31,46, 50, 60, and 70 run through the City. Public transportation services are provided through Metro Transit and the Minnesota Valley Transit Authority. The City is located approximately 18 miles from the Minneapolis /St. Paul International Airport. Employment As a part of the Minneapolis -Saint Paul metropolitan area, the City's labor market is drawn from many of the surrounding communities; and, conversely, many City residents commute to other areas of the Minneapolis -Saint Paul metropolitan area for work. Major employers located within in the City are listed below: Employer Independent School District No. 194 (Lakeville) Hearthside Food Solutions ConAgra Store Brands Target Imperial Plastics, hic. Despatch Industries, Inc. Malt -O -Meal Brands Life Time Fitness Menasha Corporation City of Lakeville Fleet Farm Image Trend Jeff Belzers Chev- Dodge -Kia Verified Credentials, Inc. National Polymers, Inc. Hearth & Home Technologies, Inc. Source: City of Lakeville, Minnesota. Labor Force Data Labor Force: City of Lakeville Dakota County State of Minnesota Unemployment Rate: City of Lakeville Dakota County State of Minnesota Source: Minnesota Department of Employment and Economic Development, hap.•Ilwww.,2ositivelvminnesota com 2014 data arepreliminary. -21- Approximate Number Product/Service of Employees 2012 Public education 1,273 Food service contractors 715 Breakfast cereal manufacturing 515 Retail 360 Plastics material and resin manufacturing 320 Industrial furnace and oven manufacturing 300 Cereal production 250 Fitness clubs 230 Corrugated box manufacturing 221 City government 195 Retail 180 Computer programming 160 Auto dealership 110 Credit bureau 100 Plastics material and resin manufacturing 100 Fireplaces /metal work 130 Source: Minnesota Department of Employment and Economic Development, hap.•Ilwww.,2ositivelvminnesota com 2014 data arepreliminary. -21- Annual Average May 2010 2011 2012 2013 2014 30,918 31,037 131,213 31,565 31,910 229,733 230,864 231,946 232,407 234,489 2,962,633 2,969,696 2,969,366 2,973,987 2,992,521 6.7% 5.6% 4.9% 4.4% 3.7% 7.1 6.1 5.3 4.7 3.9 7.4 6.5 5.6 5.1 4.2 Source: Minnesota Department of Employment and Economic Development, hap.•Ilwww.,2ositivelvminnesota com 2014 data arepreliminary. -21- Retail Sales and Effective Buying Income (EBI) City of Lakeville Data Year/ Total Retail Total Median Report Year Sales ($0001 EBI 000 Household EBI 2013/14 $682,120 $1,604,578 $70,515 2012/13 412,143 1,569,458 67,218 2011/12 449,604 1,528,938 67,621 2010/11 632,140 1,504,083 68,290 2009/10 494,077 1,554,243 72,417 Dakota County Data Year/ Total Retail Total Median Report Year Sales ($000) EBI 000 Household EBI 2013/14 $6,421,455 $10,844,223 $56,674 2012/13 5,794,034 10,770,815 55,539 2011/12 6,784,232 10,387,368 56,655 2010/11 6,786,831 10,287,060 56,964 2009/10 6,197,129 10,543,345 59,620 The 2013 Median Household EBI for the State of Minnesota was $48,180. The 2013 Median Household EBI for the United States was $43,715. Source: Claritas, Inc. Commerce and Industry Building construction and commercial /industrial development initiated and/or completed within the past 24 months has been as follows: New Permits in 2012, 2013, and through April 30, 2014 (in excess of $250,000) Business Product /Service Valuation Cosmopolitan Medical $1,400,000 McDonalds Restaurant 900,000 McDonalds Restaurant 800,000 Ballet Royale Dance Studio 724,000 Advanced Auto Parts Retail 500,000 Sheila A. Lewis, Trust Office/Warehouse /Storage 474,000 _22_ Expansion or Remodel Building Permits in 2011, 2012, and through April 30, 2013 (in excess of $250,000) Business MOM Brands Jeff Belzer's National Polymers ConAgra QA -1 Precision Products MOM Brands Dick's Sanitation Progressive Rail McDonalds Park Dental Holiday Station Product/Service Valuation Corporate Headquarters $4,320,000 Automobile Dealership 2,420,000 Plastic's Manufacturer 2,094,000 Food Manufacturer 1,500,000 Motorsports products manufacturer 761,000 Admin. Offices/Technology Center 438,000 Recycling/Waste Hauler 438,000 Railroad 428,000 Restaurant 400,000 Medical 312,000 Convenience Store 289,000 In late 2012, Malt -O -Meal Brands (MOM Brands) acquired a second 65,000 square -foot building in the Fairfield Business Campus, which is adjacent to their existing 98,000 square -foot building where they currently have over 240 employees. MOM Brands was issued a building permit in February 2013 to begin a $4,320,000 renovation of their second building. MOM Brands moved their corporate headquarters from downtown Minneapolis to the City in September 2013, bringing an additional 100 corporate jobs to the community and have an approximately 250 employees in the City. Walmart constructed a new 152,000 square -foot store on Keokuk Avenue near the County Road 70/I -35 interchange, which opened in October 2012. In February 2012, Stonehenge Development completed construction of a new 20,000 square -foot store currently being leased to Goodwill. This new commercial retail building is located on Kenrick Avenue south of Kenwood Trail. In 2012, ConAgra Foods was issued a permit valued at $1.5 million to construct a 27,000 square -foot warehouse addition to their existing manufacturing plant within the City. The addition replaces warehouse space the company previously leased in the City of Shakopee, Minnesota, and improves ConAgra's shipping and logistics operations. In January 2012, ImageTrend, a local software development company, completed construction on a 24,000 square -foot expansion to their existing building. This expansion resulted in the ability to hire up to 100 additional employees for the company, bringing the total employment to approximately 240 people. Since 2012, over 1 million square feet of existing industrial buildings have been purchased or leased throughout the City. Some of the larger tenants /owners include: Genpak (210,000 square feet); CSC (First Park Spec. Building - 160,000 square feet); BTD (100,000 square feet); MOM Brands (65,000 square feet); Midwest Veterinary Supply (51,000 square feet); GRI Group (45,600 square feet); and Boise (41,778 square feet). Residential Development The City is reliant upon regional sanitary sewer and the allocation of Metropolitan Urban Service Area (MUSA) from the Metropolitan Council for future urban growth. To accommodate the City's forecasted 2030 growth, the City has allocated its MUSA in three stages: MUSA Expansion Areas A (2010 or thereafter), B (2015 or thereafter), and the Urban Reserve (2020 or thereafter). MUSA Expansion Area A was brought into the current MUSA on February 4, 2013, which increased the amount of available residentially zoned land within the current MUSA. -23- As of April 30, 2014, there were 500 vacant single - family lots, 185 vacant townhome unit lots that have been final platted but not yet built upon, and 359 single- family lots and 62 townhome unit lots preliminary platted pending final plat approval for development. The City is currently processing subdivision applications that would plat an additional 1,039 single - family lots and 87 townhome unit lots. A total of approximately 2,561 acres of residentially zoned land is available (has not received preliminary or final plat approval) within the current MUSA, including 1,206 acres of single - family zoned property, 265 acres of single- and two - family zoned property, 827 acres of townhome zoned property, and 263 acres of Planned Unit Development. Permits Issued by the City Source: City of Lakeville Financial Institutions The following full service banks are located in the City *: Provincial Bank Lakeview Bank Total Deposits As of 6 -30 -14 $ 63,726,000 50,662,000 $114,388,000 In addition, branch offices of Affinity Plus Credit Union; Anchor Bank; Bank of the West; Bremer Bank; Citizens Bank; Guaranty Bank; Inter Bank; KleinBank; M &I Bank; Merchants Bank; New Market Bank; Sterling State Bank; TCF National Bank; U.S. Bank National Association; and Wells Fargo Bank, National Association are located throughout the City. * This does not purport to be a comprehensive list. Source: Federal Deposit Insurance Corporation, htty'/fwww2 fdic eov /idasp /main asp -24- New Single New Total Value* Family Residential Commercial/Industrial (All Permits) Year Number Value Number Value 2014 (to 4 -30) 104 $ 35,626,000 0 -0- $ 40,520,312 2013 374 120,393,000 5 $ 3,998,000 149,511,301 2012 280 83,894,000 2 860,000 129,305,246 2011 122 37,013,000 3 10,345,000 87,670,949 2010 138 38,240,000 3 799,000 54,308,186 * In addition to building permits, the total value includes all other permits issued by the City (ie. heating, lighting, plumbing, roofreplacement, etc). Source: City of Lakeville Financial Institutions The following full service banks are located in the City *: Provincial Bank Lakeview Bank Total Deposits As of 6 -30 -14 $ 63,726,000 50,662,000 $114,388,000 In addition, branch offices of Affinity Plus Credit Union; Anchor Bank; Bank of the West; Bremer Bank; Citizens Bank; Guaranty Bank; Inter Bank; KleinBank; M &I Bank; Merchants Bank; New Market Bank; Sterling State Bank; TCF National Bank; U.S. Bank National Association; and Wells Fargo Bank, National Association are located throughout the City. * This does not purport to be a comprehensive list. Source: Federal Deposit Insurance Corporation, htty'/fwww2 fdic eov /idasp /main asp -24- Health Care Services The following is a summary of health care facilities located in and nearby the City: Facili * Ebenezer Ridges Geriatric Care Center Fairview Ridges Hospital MSOCS — Hershey MSOCS — Lakeville Jonquil Location No. of Beds City of Burnsville 104 City of Burnsville 198 City of Lakeville 6 City of Lakeville 6 * This does not purport to be a comprehensive list. Source: Minnesota Department of Health, httn .• / /Www.health.state.mn.usl. Education Public Education The following districts serve the residents of the City Non - Public Education City residents are also served by the following private schools: 2013/14 School Location Grades Enrollment All Saints Catholic School Glory Academy Post - Secondary Education City of Lakeville K -8 City of Lakeville K -12 353 14 Lakeville residents and businesses have access to a number of post - secondary programs and institutions, many of which provide customized training programs for local companies. Inver Hills Community College and Dakota County Technical College are located minutes away, while the Minneapolis /Saint Paul metropolitan area offers a variety of colleges, universities and vocational schools. -25- 2013/14 School Location Grades Enrollment Independent School District No. 192 (Farmington) City of Farmington K -12 6,976 Independent School District No. 194 (Lakeville) City of Lakeville K -12 10,978 Independent School District No. 196 (Rosemount - Apple Valley- Eagan) City of Rosemount K -12 27,221 Non - Public Education City residents are also served by the following private schools: 2013/14 School Location Grades Enrollment All Saints Catholic School Glory Academy Post - Secondary Education City of Lakeville K -8 City of Lakeville K -12 353 14 Lakeville residents and businesses have access to a number of post - secondary programs and institutions, many of which provide customized training programs for local companies. Inver Hills Community College and Dakota County Technical College are located minutes away, while the Minneapolis /Saint Paul metropolitan area offers a variety of colleges, universities and vocational schools. -25- GOVERNMENTAL ORGANIZATION AND SERVICES The City has been a municipal corporation since 1967 and became a statutory City on January 1, 1974. The City's governing body consists of a Mayor and four Council members, all elected at large. The Mayor serves a two -year term of office and Council members serve overlapping four -year terms. The present Mayor and Council members are: Er.piration of Term Matt Little Mayor December 31, 2014 Doug Anderson Council Member December 31, 2016 Kerrin Swecker Council Member December 31, 2016 Bart Davis Council Member December 31, 2014 Colleen Ratzlaff LaBeau Council Member December 31, 2014 Mr. Steven C. Mielke is the City Administrator and has served in this capacity since June 2004. The City Administrator is responsible for the daily management of City business and the administration of policy as directed by the Council. Mr. Mielke was previously the City Manager for the City of Hopkins, Minnesota, and has 25 years of experience in local government. Mr. Mielke has resigned as City Administrator effective July 20, 2014. The City is in the recruitment process for the City Administrator position. The City's Finance Director, Mr. Dennis Feller, has been with the City in that capacity since 1977. Mr. Feller has a Bachelor of Science degree in accounting from Bemidji State University. He is an active member and past President of the Minnesota Government Finance Officers Association. Ms. Charlene Friedges has been the City Clerk since September 1989 and is currently an officer with the Minnesota Clerks and Finance Officer's Association. Mr. David L. Olson is the Community and Economic Development Director, a position he formerly held in Farmington, Minnesota. The City's current employment is 195 persons. Public Utilities The City provides water and sewer facilities to a majority of its residential areas. The City's present water system includes 17 wells and eight water storage facilities with a total capacity of 8.5 million gallons. The City's water treatment plant has a production capacity of 20 million gallons of water per day. The Metropolitan Council Environmental Service completed expansion of the Empire plant in 2008, which increases the plant's capacity to 48 million gallons per day. The plant meets discharge standards. Lakeville's daily use of the plant is approximately 4.0 million gallons per day of the total capacity. Other Services The City's Police Department consists of 53 full -time officers and 21 police reservists. The City's Fire Department has four stations and is served by 85 trained volunteers. The City has a fire rating of 3 for insurance purposes, which results in a significant reduction of fire insurance premiums for commercial and industrial buildings and apartments. -26- Additional City facilities include 62 public parks (including 40 playgrounds), 18 conservation areas, three municipal swimming beaches, six outdoor ice rinks which are fully boarded, three indoor ice rinks, and approximately 103 miles of paved trails and sidewalks. The City operates three liquor stores that are located adjacent to major highways. Two of the facilities which are located at County Road 46 (160th Street) and Kenrick Avenue and at County Road 46 (160th Street) and Galaxie Avenue are owned by the City; retail space for a third facility located at County Road 50 (Kenwood Trail) and Dodd Boulevard is leased by the City. Minnesota Statutes prohibit private off -site liquor operations if the City owns and operates a municipal liquor store. Sales for 2013 were $15,381,124, resulting in net income before transfers of $1,469,168. Sales as of April 30, 2014 were $4,453,389, which is a $93,568 (2.1%) increase over the same period in 2013. Labor Contracts The status of labor contracts in the City is as follows: Bargaining Unit No. of Employees Law Enforcement Labor Services Inc. Local No. 177 8 Law Enforcement Labor Services Inc. 40 Minnesota Teamsters Public & Law Enforcement Employees Union Local No. 320 39 Subtotal 87 Non - unionized employees 108 Total employees 195 * In negotiations. Employee Pensions Expiration Date of Current Contract December 1, 2015 December 1, 2013* December 1, 2015 Employees of the City are covered by 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), which are cost - sharing multiple - employer retirement plans. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers are covered by the PEPFF. 27- The City's contributions for the past five years are as follows: PEDCP Two Council members of the City are covered by the Public Employees Defined Contribution Plan ( PEDCP), a multiple - employer deferred compensation plan administered by PERA. The PEDCP is a tax - qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until the time of withdrawal. Plan benefits depend solely on the amounts contributed to the plan plus investment earnings less administrative expenses. An eligible elected official who chooses to participate in the plan contributes 5% of their salary, which is matched by the elected official's employer. PERA receives 2% of employer contributions and 0.025% of the assets in each member's account annually for administering the plan. The City's contributions to PEDCP for the past five years are as follows: PEDCP 2013 GERF PEPFF 2013 $611,079 $693,976 2012 587,750 679,673 2011 596,142 650,578 2010 583,884 621,658 2009 578,225 602,343 PEDCP Two Council members of the City are covered by the Public Employees Defined Contribution Plan ( PEDCP), a multiple - employer deferred compensation plan administered by PERA. The PEDCP is a tax - qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until the time of withdrawal. Plan benefits depend solely on the amounts contributed to the plan plus investment earnings less administrative expenses. An eligible elected official who chooses to participate in the plan contributes 5% of their salary, which is matched by the elected official's employer. PERA receives 2% of employer contributions and 0.025% of the assets in each member's account annually for administering the plan. The City's contributions to PEDCP for the past five years are as follows: PEDCP 2013 $1,670 2012 1,311 2011 1,307 2010 869 2009 1,020 Firefighter's Association Firefighters of the City are members of the Lakeville Fire Relief Association (the "Association "). The Association is the administrator of a single - employer defined benefit pension plan that operates under the provisions of Minnesota State Statutes Chapter 424A. State aids and City contributions fund the plan. As of December 31, 2013 the plan had 104 members. The City's contributions to the Association for the past four years are as follows: Association Plan 2013 $ 60,000 2012 44,804 2011 44,804 2010 178,380 For more information regarding the liability of the City with respect to its employees, please reference Note 16, Defined Benefit Pension Plans — Statewide, Note 17, Defined Contribution Plan — Statewide, and Note 18, Lakeville Fire Relief Association, of the City's Comprehensive Annual Financial Report for fiscal year ended December 31, 2013, an excerpt of which is included as Appendix IV of this Official Statement. IBM Other Post - Employment Benefits The Governmental Accounting Standards Board (GASB) has issued Statement No. 45, Accounting and Financial Reporting by Employers for Post - employment Benefits Other Than Pensions (GASB 45), which addresses how state and local governments must account for and report their obligations related to post - employment healthcare and other non - pension benefits (referred to as Other Post - Employment Benefits or "OPEB "). The City operates a single - employer defined benefit plan that provides medical and dental insurance to eligible employees through the City's health insurance plan. The City currently finances the plan on a pay -as- you -go basis. During the fiscal year ended December 31, 2013, the City contributed $21,690 to the plan. Components of the City's annual OPEB cost, the amount actually contributed to the plan, and the changes in the City's net OPEB obligation for fiscal year ended December 31, 2013 are as follows: Annual required contribution $ 75,006 Interest on net OPEB obligation 8,587 Adjustment to annual required contribution — (12 , 550 ) Annual OPEB cost (expense) $ 71,043 Contributions made (21,690 Increase in net OPEB obligation $ 49,353 Net OPEB obligation — beginning of year 214,674 Net OPEB obligation — end of year S264 Funded status of the City's OPEB as reported in the actuarial reports received to -date The City's annual OPEB cost, the percentage of the annual OPEB cost contributed to the plan, and the net OPEB obligation for the past five years are as follows: Unfunded UAAL as Annual Actuarial Actuarial a percentage Actuarial Actuarial Value Accrued Accrued of Annual Valuation Date of Assets Liability Liability (UAAL) Covered Payroll January 1, 2011 $ 88,458 $ -0- $588,458 5.0% January 1, 2008 290,424 -0- 290,424 2.6 The City's annual OPEB cost, the percentage of the annual OPEB cost contributed to the plan, and the net OPEB obligation for the past five years are as follows: For more information regarding the liability of the City with respect to its employees, please reference Note 14, Other Post - Employment Benefits (OPEB) Plan of the City's Comprehensive Annual Financial Report as of December 31, 2013, an excerpt of which is included as Appendix IV to this Official Statement. -29- Annual Net Annual Employer OPEB Cost OPEB Fiscal Year Ended OPEB Cost Contribution Contributed Obligation December 31, 2013 $71,043 $21,690 30.5% $264,027 December 31, 2012 72,144 16,594 23.0 214,674 December 31, 2011 73,281 11,356 15.5 159,124 December 31, 2010 41,447 9,809 23.7 97,199 December 31, 2009 41,866 8,484 20.3 65,561 For more information regarding the liability of the City with respect to its employees, please reference Note 14, Other Post - Employment Benefits (OPEB) Plan of the City's Comprehensive Annual Financial Report as of December 31, 2013, an excerpt of which is included as Appendix IV to this Official Statement. -29- General Fund Budget Summary Revenues: General Property Taxes Licenses and Permits Intergovernmental Charges for Services Court Fines Investment Income Miscellaneous Total Revenues Expenditures: Mayor and Council Committees and Commissions City Administration City Clerk Legal Counsel Planning Community and Economic Development Inspections General Government Facilities Finance Information Systems Human Resources Insurance Police Fire Engineering Streets Parks Recreation Heritage Center Arts Center Other Total Expenditures Other Financing Sources (Uses): Transfer from Other Funds Transfer to Other Funds Total Other Financing Sources (Uses) Net Change in Fund Balance Fund Balance, January I Fund Balance, December 31 Source: City of Lakeville. 2013 2013 2014 Budget Actual Budget $15,920,497 $15,961,759 $16,794,367 1,345,449 2,087,937 1,947,676 621,226 800,341 608,401 1,632,580 2,027,905 2,156,037 294,809 219,535 274,590 32,735 (27,206) 44,413 63.585 103.512 61,461 $19,910,881 $21,173,783 $21,886,945 $ 95,275 $ 91,761 $ 97,021 82,272 56,606 62,794 392,969 347,280 403,228 114,964 114,304 184,724 65,132 72,033 82,351 392,834 361,156 427,787 300,421 293,513 295,953 794,978 840,837 851,202 442,807 401,024 417,452 610,134 612,903 626,703 481,319 460,185 490,633 363,195 334,446 351,013 227,420 227,420 289,075 8,736,220 8,648,351 8,921,850 1,444,532 1,469,731 1,431, 615 693,354 666,090 904,728 2,634,403 3,100,857 2,738,702 2,202,544 2,135,103 2,235,675 578,477 562,675 584,240 72,605 90,419 78,774 416,048 425,994 405,068 105,000 0 303,497 $21,246,903 $21,312,688 $22,184,085 $ 715,297 0 $ 715,297 $ (620,725 $10,198,765 $ 9,578,040 $ 715,297 (2,401,607 $(1,686,310) $(1,825,215) $11,491,775 $ 9,666,560 $ 759,814 0 $ 759,814 $ 462,674 $ 9,666,560 $10,129,234 -30- Major General Fund Revenue Sources Revenue 2009 2010 2011 2012 2013 Property taxes $15,544,153 $16,271,094 $16,516,469 $16,529,500 $15,961,759 Charges for services 2,005,794 1,415,441 1,616,718 1,885,622 2,027,905 Licenses and permits 1,062,368 992,379 1,238,704 1,831,073 2,087,937 Intergovernmental 967,096 1,137,358 703,296 804,276 800,341 Transfers from other funds 492,645 637,831 633,008 665,631 715,297 Sources: City's Comprehensive Annual Financial Reports. (The Balance of This Page Has Been Intentionally Left Blank) -31- APPENDIX I PROPOSED FORMS OF LEGAL OPINIONS C � OORSEY DORSEY & WHITNEY LLP City of Lakeville, Minnesota [Original Purchaser] 1. Re: $ General Obligation Improvement Bonds, Series 2014A City of Lakeville, Minnesota Ladies and Gentlemen: As Bond Counsel in connection with the authorization, issuance and sale by the City of Lakeville, Minnesota (the City), of the obligations described above, dated, as originally issued, as of August 20, 2014 (the Bonds), we have examined certified copies of certain proceedings taken, and certain affidavits and certificates furnished, by the City in the authorization, sale and issuance of the Bonds, including the form of the Bonds. As to questions of fact material to our opinion, we have assumed the authenticity of and relied upon the proceedings, affidavits and certificates furnished to us without undertaking to verify the same by independent investigation. From our examination of such proceedings, affidavits and certificates and on the basis of existing law, it is our opinion that: The Bonds are valid and binding general obligations of the City, enforceable in accordance with their terms. The principal of and interest on the Bonds are payable from special assessments and ad valorem taxes heretofore duly levied on all taxable property in the City, which have been pledged and appropriated for this purpose, but if necessary for payment thereof, additional ad valorem taxes are required by law to be levied on all such property, which taxes are not subject to any limitation as to rate or amount. Interest on the Bonds (a) is not includable in gross income for federal income tax purposes or in taxable net income of individuals, estates or trusts for Minnesota income tax purposes; (b) is includable in taxable income of corporations and financial institutions for purposes of the Minnesota franchise tax; (c) is not an item of tax preference includable in alternative minimum taxable income for purposes of the federal alternative minimum tax applicable to all taxpayers or the Minnesota alternative minimum tax applicable to individuals, estates and trusts; and (d) is includable in adjusted current earnings of corporations in determining alternative minimum taxable income for purposes of federal and Minnesota alternative minimum taxes. The opinions expressed in paragraphs I and 2 above are subject, as to enforceability, to the effect of any state or federal laws relating to bankruptcy, insolvency, reorganization, moratorium or creditors' rights and the application of equitable principles, whether considered at law or in equity. I -1 The opinions expressed in paragraph 3 above are subject to the condition of the City's compliance with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon may be, and continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with these continuing requirements. Its failure to do so could result in the inclusion of interest on the Bonds in federal gross income and in Minnesota taxable net income, retroactive to the date of issuance of the Bonds. Except as stated in this opinion, we express no opinion regarding federal, state or other tax consequences to holders of the Bonds. We have not been asked, and have not undertaken, to review the accuracy, completeness or sufficiency of any offering materials relating to the Bonds, and, accordingly, we express no opinion with respect thereto. Dated this day of August, 2014. Very truly yours, I -2 City of Lakeville, Minnesota [Original Purchaser] Re: $ General Obligation Refunding Bonds, Series 2014B City of Lakeville, Minnesota Ladies and Gentlemen: As Bond Counsel in connection with the authorization, issuance and sale by the City of Lakeville, Minnesota (the City), of the obligations described above, dated, as originally issued, as of August 20, 2014 (the Bonds), we have examined certified copies of certain proceedings taken, and certain affidavits and certificates furnished, by the City in the authorization, sale and issuance of the Bonds, including the form of the Bonds. As to questions of fact material to our opinion, we have assumed the authenticity of and relied upon the proceedings, affidavits and certificates furnished to us without undertaking to verify the same by independent investigation. From our examination of such proceedings, affidavits and certificates and on the basis of existing law, it is our opinion that: The Bonds are valid and binding general obligations of the City, enforceable in accordance with their terms. The principal of and interest on the Bonds are payable from certain escrow earnings and special assessments and ad valorem taxes heretofore duly levied on all taxable property in the City, which have been pledged and appropriated for this purpose, but if necessary for payment thereof, additional ad valorem taxes are required by law to be levied on all such property, which taxes are not subject to any limitation as to rate or amount. Interest on the Bonds (a) is not includable in gross income for federal income tax purposes or in taxable net income of individuals, estates or trusts for Minnesota income tax purposes; (b) is includable in taxable income of corporations and financial institutions for purposes of the Minnesota franchise tax; (c) is not an item of tax preference includable in alternative minimum taxable income for purposes of the federal alternative minimum tax applicable to all taxpayers or the Minnesota alternative minimum tax applicable to individuals, estates and trusts; and (d) is includable in adjusted current earnings of corporations in determining alternative minimum taxable income for purposes of federal and Minnesota alternative minimum taxes. The opinions expressed in paragraphs 1 and 2 above are subject, as to enforceability, to the effect of any state or federal laws relating to bankruptcy, insolvency, reorganization, moratorium or creditors' rights and the application of equitable principles, whether considered at law or in equity. The opinions expressed in paragraph 3 above are subject to the condition of the City's compliance with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon may be, and continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with these continuing I -3 requirements. Its failure to do so could result in the inclusion of interest on the Bonds in federal gross income and in Minnesota taxable net income, retroactive to the date of issuance of the Bonds. Except as stated in this opinion, we express no opinion regarding federal, state or other tax consequences to holders of the Bonds. We have not been asked, and have not undertaken, to review the accuracy, completeness or sufficiency of any offering materials relating to the Bonds, and, accordingly, we express no opinion with respect thereto. Dated this _ day of August, 2014. Very truly yours, I -4 APPENDIX II CONTINUING DISCLOSURE COVENANTS Continuing Disclosure (a) Purpose and Beneficiaries To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit the Purchaser and other participating underwriters in the primary offering of the Bonds to comply with amendments to Rule 15c2 -12 promulgated by the SEC under the Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2 -12), relating to continuing disclosure (as in effect and interpreted from time to time, the Rule), which will enhance the marketability of the Bonds, the City hereby makes the following covenants and agreements for the benefit of the Owners (as hereinafter defined) from time to time of the Outstanding Bonds. The City is the only obligated person in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. If the City fails to comply with any provisions of this section, any person aggrieved thereby, including the Owners of any Outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of any agreement or covenant contained in this section, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder to the extent permitted by law. Notwithstanding anything to the contrary contained herein, in no event shall a default under this section constitute a default under the Bonds or under any other provision of this resolution. As used in this section, Owner or Bondowner means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial Owner (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, Beneficial Owner means, in respect of a Bond, any person or entity which (i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (ii) is treated as the owner of the Bond for federal income tax purposes. (b) Information To Be Disclosed The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: (1) on or before twelve months after the end of each fiscal year of the City, commencing with the fiscal year ending December 31, 2014, the following financial information and operating data in respect of the City (the Disclosure Information): (A) the audited financial statements of the City for such fiscal year, prepared in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under Minnesota law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof, and certified as to accuracy and completeness in all material respects by the fiscal officer of the City; and (B) to the extent not included in the financial statements referred to in paragraph (A) hereof, the information for such fiscal year or for the period most recently available of the type contained in the Official Statement under headings: City Property Values; City Indebtedness; and City Tax Rates, Levies and Collections. II -1 Notwithstanding the foregoing paragraph, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within 10 days after the receipt thereof, the City shall provide the audited financial statements. Any or all of the Disclosure Information may be incorporated by reference, if it is updated as required hereby, from other documents, including official statements, which have been filed with the SEC or have been made available to the public on the Internet Web site of the Municipal Securities Rulemaking Board ( "MSRB "). The City shall clearly identify in the Disclosure Information each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be a Material Fact (as defined in paragraph (2) hereof), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this section is amended as permitted by this paragraph (b)(1) or subsection (d), then the City shall include in the next Disclosure Information to be delivered hereunder, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner not in excess of ten business days after the occurrence of the event, notice of the occurrence of any of the following events (each a "Material Fact"): (A) Principal and interest payment delinquencies; (B) Non- payment related defaults, if material; (C) Unscheduled draws on debt service reserves reflecting financial difficulties; (D) Unscheduled draws on credit enhancements reflecting financial difficulties; (E) Substitution of credit or liquidity providers, or their failure to perform; (F) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; (G) Modifications to rights of security holders, if material; (H) Bond calls, if material, and tender offers; (I) Defeasances; (J) Release, substitution, or sale of property securing repayment of the securities, if material; (K) Rating changes; (L) Bankruptcy, insolvency, receivership or similar event of the obligated person; (M) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (I) Appointment of a successor or additional trustee or the change of name of a trustee, if material. As used herein, for those events that must be reported if material, an event is "material" if it is an event as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed lI -2 hereunder or information generally available to the public. Notwithstanding the foregoing sentence, an event is also "material" if it is an event that would be deemed material for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. For the purposes of the event identified in (L) hereinabove, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information required under paragraph (b)(1) at the time specified thereunder; (B) the amendment or supplementing of this section pursuant to subsection (d), together with a copy of such amendment or supplement and any explanation provided by the City under subsection (d)(2); (C) the termination of the obligations of the City under this section pursuant to subsection (d); (D) any change in the accounting principles pursuant to which the financial statements constituting a portion of the Disclosure Information are prepared; and (E) any change in the fiscal year of the City. (c) Manner of Disclosure (1) The City agrees to make available to the MSRB, in an electronic format as prescribed by the MSRB from time to time, the information described in subsection (b). (2) All documents provided to the MSRB pursuant to this subsection (c) shall be accompanied by identifying information as prescribed by the MSRB from time to time. (d) Term: Amendments: Interpretation (1) The covenants of the City in this section shall remain in effect so long as any Bonds are Outstanding. Notwithstanding the preceding sentence, however, the obligations of the City under this section shall terminate and be without further effect as of any date on which the City delivers to the Registrar an opinion of Bond Counsel to the effect that, because of legislative action or final judicial or administrative actions or proceedings, the failure of the City to comply with the requirements of this section will not cause participating underwriters in the primary offering of the Bonds to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended, or any statutes or laws successory thereto or amendatory thereof. (2) This section (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (c)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of this Council filed in the office of the recording officer of the City accompanied 11 -3 by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that: (i) such amendment or supplement (a) is made in connection with a change in circumstances that arises from a change in law or regulation or a change in the identity, nature or status of the City or the type of operations conducted by the City, or (b) is required by, or better complies with, the provisions of paragraph (b)(5) of the Rule; (ii) this section as so amended or supplemented would have complied with the requirements of paragraph (b)(5) of the Rule at the time of the primary offering of the Bonds, giving effect to any change in circumstances applicable under clause (i)(a) and assuming that the Rule as in effect and interpreted at the time of the amendment or supplement was in effect at the time of the primary offering; and (iii) such amendment or supplement does not materially impair the interests of the Bondowners under the Rule. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3)This section is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so as to satisfy the requirements of paragraph (b)(5) of the Rule. II -4 APPENDIX III SUMMARY OF TAX LEVIES, PAYMENT PROVISIONS, AND MINNESOTA REAL PROPERTY VALUATION (effective through levy year 2013 /payable year 2014) Following is a summary of certain statutory provisions effective through levy year 2013 /payable year 2014 relative to tax levy procedures, tax payment and credit procedures, and the mechanics of real property valuation. The summary does not purport to be inclusive of all such provisions or of the specific provisions discussed, and is qualified by reference to the complete text of applicable statutes, rules and regulations of the State of Minnesota. Property Valuations (Chapter 273, Minnesota Statutes) Assessor's Estimated Market Value Each parcel of real property subject to taxation must, by statute, be appraised at least once every five years as of January 2 of the year of appraisal. With certain exceptions, all property is valued at its market value, which is the value the assessor determines to be the price the property to be fairly worth, and which is referred to as the "Estimated Market Value." The 2013 Minnesota Legislature established the Estimated Market Value as the value used to calculate a municipality's legal debt limit. Economic Market Value The Economic Market Value is the value of locally assessed real property (Assessor's Estimated Market Value) divided by the sales ratio as provided by the State of Minnesota Department of Revenue plus the estimated market value of personal property, utilities, railroad, and minerals. Taxable Market Value The Taxable Market Value is the value that Net Tax Capacity is based on, after all reductions, limitations, exemptions and deferrals. Net Tax Capacity The Net Tax Capacity is the value upon which net taxes are levied, extended and collected. The Net Tax Capacity is computed by applying the class rate percentages specific to each type of property classification against the Taxable Market Value. Class rate percentages vary depending on the type of property as shown on the last page of this Appendix. The formulas and class rates for converting Taxable Market Value to Net Tax Capacity represent a basic element of the State's property tax relief system and are subject to annual revisions by the State Legislature. Property taxes are the sum of the amounts determined by (i) multiplying the Net Tax Capacity by the tax capacity rate, and (ii) multiplying the referendum market value by the market value rate. Market Value Homestead Exclusion In 2011, the Market Value Homestead Exclusion Program (MVHE) was implemented to offset the elimination of the Market Value Homestead Credit Program that provided relief to certain homesteads. The MVHE reduces the taxable market value of a homestead with an Assessor's Estimated Market Value up to $413,800 in an attempt to result in a property tax similar to the effective property tax prior to the elimination of the homestead credit. The MVHE applies to property classified as Class la or lb and Class 2a, and causes a decrease in the Issuer's aggregate Taxable Market Value, even if the Assessor's Estimated Market Value on the same properties did not decline. Property Tax Payments and Delinquencies (Chapters 275, 276, 277, 279 -282 and 549, Minnesota Statutes) Ad valorem property taxes levied by local governments in Minnesota are extended and collected by the various counties within the State. Each taxing jurisdiction is required to certify the annual tax levy to the county auditor within five (5) working days after December 20 of the year preceding the collection year. A listing of property taxes due is prepared by the county auditor and turned over to the county treasurer on or before the first business day in March. II The county treasurer is responsible for collecting all property taxes within the county. Real estate and personal property tax statements are mailed out by March 31. One -half (1/2) of the taxes on real property is due on or before May 15. The remainder is due on or before October 15. Real property taxes not paid by their due date are assessed a penalty that, depending on the type of property, increases from 2% to 4% on the day after the due date. In the case of the first installment of real property taxes due May 15, the penalty increases to 4% or 8% on June 1. Thereafter, an additional 1% penalty shall accrue each month through October 1 of the collection year for unpaid real property taxes. In the case of the second installment of real property taxes due October 15, the penalty increases to 6% or 8% on November 1 and increases again to 8% or 12% on December 1. Personal property taxes remaining unpaid on May 16 are deemed to be delinquent and a penalty of 8% attaches to the unpaid tax. However, personal property that is owned by a tax - exempt entity, but is treated as taxable by virtue of a lease agreement, is subject to the same delinquent property tax penalties as real property. On the first business day of January of the year following collection all delinquencies are subject to an additional 2% penalty, and those delinquencies outstanding as of February 15 are filed for a tax lien judgment with the district court. By March 20 the county auditor files a publication of legal action and a mailing of notice of action to delinquent parties. Those property interests not responding to this notice have judgment entered for the amount of the delinquency and associated penalties. The amount of the judgment is subject to a variable interest determined annually by the Department of Revenue, and equal to the adjusted prime rate charged by banks but in no event is the rate less than 10% or more than 14 %. Property owners subject to a tax lien judgment generally have five years (5) in the case of all property located outside of cities or in the case of residential homestead, agricultural homestead and seasonal residential recreational property located within cities or three (3) years with respect to other types of property to redeem the property. After expiration of the redemption period, unredeemed properties are declared tax forfeit with title held in trust by the State of Minnesota for the respective taxing districts. The county auditor, or equivalent thereof, then sells those properties not claimed for a public purpose at auction. The net proceeds of the sale are first dedicated to the satisfaction of outstanding special assessments on the parcel, with any remaining balance in most cases being divided on the following basis: county - 40 %; town or city - 20 %; and school district - 40 %. Property Tax Credits (Chapter 273, Minnesota Statutes) In addition to adjusting the taxable value for various property types, primary elements of Minnesota's property tax relief system are: property tax levy reduction aids; the homestead credit refund and the renter's property tax refund, which relate property taxes to income and provide relief on a sliding income scale; and targeted tax relief, which is aimed primarily at easing the effect of significant tax increases. The homestead credit refund, the renter's property tax refund, and targeted credits are reimbursed to the taxpayer upon application by the taxpayer. Property tax levy reduction aid includes educational aids, local governmental aid, equalization aid, county program aid and disparity reduction aid. III Debt Limitations All Minnesota municipalities (counties, cities, towns and school districts) are subject to statutory "net debt" limitations under the provisions of Minnesota Statutes, Section 475.53. Net debt is defined as the amount remaining after deducting from gross debt the amount of current revenues that are applicable within the current fiscal year to the payment of any debt and the aggregate of the principal of the following: 1. Obligations issued for improvements that are payable wholly or partially from the proceeds of special assessments levied upon benefited property. 2. Warrants or orders having no definite or fixed maturity. 3. Obligations payable wholly from the income from revenue producing conveniences. 4. Obligations issued to create or maintain a permanent improvement revolving fund. Obligations issued for the acquisition and betterment of public waterworks systems, and public lighting, heating or power systems, and any combination thereof, or for any other public convenience from which revenue is or may be derived. 6. Certain debt service loans and capital loans made to school districts. 7. Certain obligations to repay loans. 8. Obligations specifically excluded under the provisions of law authorizing their issuance. 9. Certain obligations to pay pension fund liabilities. 10. Debt service funds for the payment of principal and interest on obligations other than those described above. 11. Obligations issued to pay judgments against the municipality. Levies for General Obligation Debt (Sections 475.61 and 475.74, Minnesota Statutes) Any municipality that issues general obligation debt must, at the time of issuance, certify levies to the county auditor of the county(ies) within which the municipality is situated. Such levies shall be in an amount that if collected in full will, together with estimates of other revenues pledged for payment of the obligations, produce at least five percent in excess of the amount needed to pay principal and interest when due. Notwithstanding any other limitations upon the ability of a taxing unit to levy taxes, its ability to levy taxes for a deficiency in prior levies for payment of general obligation indebtedness is without limitation as to rate or amount. Metropolitan Revenue Distribution (Chapter 473F, Minnesota Statutes) "Fiscal Disparities Law" The Charles R. Weaver Metropolitan Revenue Distribution Act, more commonly known as "Fiscal Disparities," was first implemented for taxes payable in 1975. Forty percent of the increase in commercial - industrial (including public utility and railroad) net tax capacity valuation since 1971 in each assessment district in the Minneapolis /St. Paul seven - county metropolitan area (Anoka, Carver, Dakota, excluding the City of Northfield, Hennepin, Ramsey, Scott, excluding the City of New Prague, and Washington Counties) is contributed to an area -wide tax base. A distribution index, based on the factors of population and real property market value per capita, is employed in determining what proportion of the net tax capacity value in the area -wide tax base shall be distributed back to each assessment district. III -3 STATUTORY FORMULAE: CONVERSION OF TAXABLE MARKE VALUE (TMV) TO NET TAX CAPACITY FOR MAJOR PROPERTY CLASSIFICATIONS Local Tax Local Tax Commercial /IndustriaUPublic Utility (3a) Up to $150,000 Payable Payable Property Type 2010 2011 -2014 Residential Homestead (la) 2.00% 2.00% Up to $500,000 1.00% 1.00% Over $500,000 1.25% 1.25% Residential Non - homestead 0.50% 0.55% Single Unit (4bbl) 1.00% 1.00% Up to $500,000 1.00% 1.00% - Over $500,000 1.25% 1.25% 1 -3 unit and undeveloped land (4b1) 1.25% 1.25% Market Rate Apartments 1.25 0 /./ °I 1.25 % ( ° ) Regular (4a) 1.25% 1.25% Low- Income (4d) 0.75% 0.75% Commercial /IndustriaUPublic Utility (3a) Up to $150,000 1.50% 1.50 % Over $150,000 2.00 % (°) 2.00 %t Electric Generation Machinery 2.00% 2.00% Commercial Seasonal Residential Homestead Resorts (lc) Up to $600,000 0.50% 0.55% $600,000 - $2,300,000 1.00% 1.00% Over $2,300,000 1.25 % (°) 1.25 % t°i Seasonal Resorts (4c) Up to $500,000 1.00 % °t 1.00 % ( Q) Over $500,000 1.25 0 /./ °I 1.25 % ( ° ) Non - Commercial (4cl2) Up to $500,000 1.00 % / ° »I 1.00% 1 @ Over $500,000 1.25 % t°lrol 1.25 %t ° I @I Disabled Homestead (lb) Up to $50,000 0.45% 0.45% $50,000 to $500,000 1.00% 1.00% Over $500,000 1.25% 1.25% Agricultural Land & Buildings Homestead (2a) Up to $500,000 1.00% 1.00% Over $500,000 1.25% 1.25% Remainder of Farm Up to $1,500,000 0.50 % @ / 0.55 %Ni Over $1,500,000 1.00 %0 1.00 9/. Non - homestead (2b) 1.00 % ( 1) 1.00% State tax is applicable to these classifications. (a) Exempt from referendum market value based taxes. (c) Legislative increases, payable 2014. Historical valuations are: Payable 1013 - $1,290,000; Payable 2012 - $1,210,000; Payable 2011 - $1,140,000; and Payable 2010 - $1,010,000. II APPENDIX IV EXCERPT OF 2013 COMPREHENSIVE ANNUAL FINANCIAL REPORT Data on the following pages was extracted from the City's Comprehensive Annual Financial Report for fiscal year ended December 31, 2013. The reader should be aware that the complete financial statements may contain additional information which may interpret, explain or modify the data presented here. The City's comprehensive annual financial reports for the years ending 1985 through 2012 were awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association of the United States and Canada (GFOA). The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. The City has submitted its CAFR for the 2013 fiscal year to GFOA. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report (CAFR), whose contents conform to program standards. Such CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. IV -1 I I r Aa . LLe7t:1!]:ig To the City Council and Management City of Lakeville. Minreeda REPORT ON THE FWANCIALSTATEMENTE We have audited she financial statements ofthe govemmnm activitia, Me business -type activities, each major Pond, and the aggregate remaining fund information of the City of dakevilb. Mimseson f City) as of and fo the year ended December 31, 2013, and the related notes m the financial statemems, which collectively crnspdse the City's basic financial Netemenn as listed in the table ofeoments. MANAGEMENT'S HLSTONSIBIL1TY MR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of theta financial statements in accordance with accounting principles gurmlly aespeed in the United States of America; this includes the design, implementation, and ne iomm nce of internal annual relevant to the p¢pnration and fair presntadn of financial statements that art fire from material miMmemnk whether due to feud or mi. A OmTOg'S RESPONSnILITY Our responsibility is to express opinions on these financial wtements based n our audit. We confessed oat audit in accordance with auditing standards generally accepted in the United Stmn of America and the etandands applicable to financial audits contaied in Gowrmanm Auditing Srmdards, issued by the Comptroller Dermal of the United Sams. Those standards require IMt we plan and pcd. the audit to obtain reasonable magmne about whither the financial statements are free from nteterial misstatement. An audit involves performing procedures to obtain audh evidence about the amounts and disclosures in the financial Staterrema. The pumoodures elected depend on the auditor's judgment, including Me asraMnanl of fice risks of materiel misstatement of the boosted s ilamems, whether due to frnud or error. In snaking those risk assessments, the auditor considers entered antral relevant to the City's prepaation and fair pruntation of the financial seremnle in order to design audit procedures that art appropriate in the circumstances, but rat fer the purpose of expressing n opinion on the Clfativnes, of the City*, internal talent. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and die nensmebiness of significant accounting estimates made by management as well as evaluating the overall prettnUlion ofrhe financial smmnene. We believe that the audit evidence we love obtained is auRciom and appregoode to provide u basis far am audit opinions. 0"NIONS In our opinion, the financial statements referred to an the pravioa page present fairly, in all material respects, the respective financial positin office gmemmental activities, the business -type activities, each major loud, and the aggregate..ining fond information of the City as of December 31, 2013, and the rearpWrm changes in financial position and, where applicable, cash Rows thereal', in accordance with anouming principles gnemlly anpted in the United Stites ofAmerics. 0THER MATTERS RiN abed Suppkmennry Infumnirs. Accounting principles generally accepted in the United Smn of America requite that the Managements Discussion and Aalysis, the budgetary comparison information for the Cenrnl Fund, end the Other Purl- Employmem Benefits Plan - Schedule of Funding Prospects, ss listed in the table of contents, he presented b entitlement the basic fmnamial indentures. Such information. although rat a pan of the basic fmncial smtements, is requilN by the Govemmntal Accounting Standards Bond who considers it w be an essential pan of fiaamtal reporting for placing the basic financial amemnts in an appropriate operational. commute, or historical contest. We have applied certain limited procedures to the An uiwW supplementary information in accardanm with auditing ssndards generally accepted in the United Stain of America, which condsted of inquiries of irsmgnment Aden the methods of preparing the infomation and camparm, the mit.tton for consistency with c areigements .,Mo. to our inquiries, the basic fmncial MatnRnla, and ether knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide my assummce on Ue information bemuse the limited procedures do not provide us with sufficient evidence to express an opinion or faovidc any ame rece. Other leformadism Our audit was oondumM for the purpose offnaming opinion n the financial statemnls Wt collectively comprise the City's basic Menial satements. The introductory section, combining and individual fund smemcnn end schedules, supplemonm infomatin, and Rndstinl semen, M listed in the table of exec ents, are presented fm purposes ofaddidional analysis and ere ms, a required pan of the home financial mlemene. The combining and individual fund comments and schedules and aupplememel Information arc the responsibility of .,.I end were derive from and relate directly to the underlying acceunring and other recands med in prepare the basic frmmial smemne. Such to brumfon Me been subjected to the auditing procedures applied in fit audit of the basic financial cotenants and certain ish ilmord procedures, including comparing and reconciling such information dmonly to the underlying acmunrng real cafe records used Ins prepare the bask franaul statements m m the basic flameout smemenss lhemulves, and allies additional lameadreen in scccedanm with auditing standards generally accepted in the Untied Soles of America. In curepinin, the combining and individual hand smemnts and schedules and supp4ntnnl tnfomattn are fairly staged. in all material respeda, in relation to the basic financial cmemno as o whole. The intmdussory and statistical sections have ms, hen subjeaed an be auditing procedures applied m the audit of the basic fcumial maemnes and, accordingly, we do not enpreaa m opinion on provide my assusmce n Men. OTHER RaMRAA eREemommiY CovaaNMerOArmmtne STANOAM In axordance with Gosrmmnr Anodising Standards, we have also issued our Aspen dared May 30. 2014 an oat corcideAmim of the City's Normal nntml ova 0mnetal repning and on our tests of its compliance with cemin provisions of laws, regulations contracts, gong agreements and other sisters. The possum of that upon is to describe the scope of our testing of internal control ore femol reporting and conspllance and the results of that testing. and mm to provide an opinion an internal radial over financial occurring or n compliance. That repent is an integral pan of an audit performed in acordanea with Govermnnr Ata icing Smadmdt to considoing she City's internal control a,. financial reporting and commitments. Al au.y, �1,a�A�aP,AA ...a 2na/a...a G S ca., P. Mienpahi' Minmsma May 30, 2014 IV -.L CITY OF LAKEVILLE, MINNESOTA STATEMENT OF NET POSITION DECEMBER 31, 2013 Governmental Business-type Activities Activitle s Total ASSETS: Cash and investments Receivables Internal balances Inventory Prepaid items Restricted assets (temporarily): Cash and investments Investments held by trustee $ 41,735,486 $ 11,356,043 $ 53,091,529 10,521,158 2,529,740 13,050,898 (191,612) 191,612 - 100,632 1,721,888 1,822,520 25,382 36,210 61,592 - 324,125 324,125 23,759,815 - 23,759,815 Capital assets Non - depreciable Depreciable, net Total capital assets Total assets LIABILITIES: Salaries, accounts, contracts, interest, and deposits Unearned revenue Non - current liabilities Due within one year Due in more than one year Total liabilities 30,350,245 4,237,441 34,587,686 159,793,262 104,073,367 263,866,629 190,143,507 108,310,808 298,454,315 266,094,368 124,470,426 390,564,794 4,359,124 1,776,002 6,135,126 381,119 - 381,119 17,097,800 388,177 17,485,977 94,498,952 3,222,095 97,721,047 116,336,995 5,386,274 121,723,269 NET POSITION: Net investment in capital assets Restricted for Special purposes Debt service Capital acquisition Unrestricted 129,599,494 105,055,746 234,655,240 42,759 - 42,759 12,114,137 324,125 12,438,262 5,489,048 - 5,489,048 2,511,935 13,704,281 16,216,2 Total net position See accompanying notes to basic financial statements. $ 149,757,373 $ 119,084,152 $ 268,841,525 IV -3 d [r O {3, z r N ' W m a U W aU, a °o w�A O ul U v Y w C E d m N W �U C W w U 'N a 0 N m O c o. E m r IV -4 1� O 1n m to m O N m cD r N m 10 01 10 V' m m N O 0 O O (D O N O a0 n f0 t tO 0) aD O O T O In w W) ui co v co w n cc of n co r; v W co co (O GO n V N LL7 V n M N eF O O W to OD n 1: N �Cl OD LO aD F O v f7 t0 1+1 th 17 O (3 a0 .N.. N N R c N N Y 00 . fA 3 c C m N N r IL 04 , yOj r.- tO10 amD u`Ti O C co CCCj NN — r.- W Q 01 CL 0 3 r m to W V 'r° I:cominmin U7 m0)C', o m o o ° CD u�nv m n Z c a m -'m�mv v CD00 (0 n m m E = co 0 ) co v O) co to r- ri co o co IO c0 1D ap OD N m N W r N m 10 E> CO O 11700 n OON I1) n Y/ L' f`l, v M 1D t0 N - N O) o� rn Q _O v .... ^ 0 fH 4`l b r c 0 C a r m O W m c—° 0) 1100 i t m N •t N c m � n m 0 _ m 469 fA C b 'O c r a 0 N O O n O10 c 10 co t P 1 m C A n0) n N mo N n m c o or m . m E 0 t m 4 C N N rd.. cO�V cA cn W 2 IL r o rnM o M m r `� ccDOC°oouni tq 0ii E' c c • 1., IO OD "l m W o W 10 o co cd Ih m W H 'm _u El omvc v Alo vn t 0 o. rn NW m d' C4 O M m m N W N .. C .L V C to N! U 2 C C N C d X E y d G y yy 01 O V N N 0 �>. m C C d j a t0 eq 1 m arnr� 1x nmm im0 n > E of 0 0 C . m U M N a It V 0 M E Q> d O O O 10 17 N O V) O C a. C C f O. 6 ^^ m z z � d s � � d W E C d :. O€ m d a E O r H 0 0) > E Lc+E c WE W d o ' D o • m 0. p a � w m S m° y c E U U 0 �m.0 �~ a O L`I- O F I (La'a c L7 c L C9 m w C E d m N W �U C W w U 'N a 0 N m O c o. E m r IV -4 W a z z J w M N d w O zz m f U m q A O o W M M N M N Oni m W 0 O Om M m O, N N W C O 0 pm VV CyyD f N a 0 �QNp O O � � N V � I� O W W W< N E C N 4p C O N th O yy m lV ^ V N N M O O W OD f m ILI V N A ^ l0 OM h A 0616 OI V A O f0 � c vi cq 't Q v m o m v "It CR T g c m E n ��i in n N ° M� M u p � �i dim N IL N N n N N O 19 d! 19 M C r r r r a 3 F a a in W a < e a rn rn n N C O �' � � r n OI C4 t W W < W vs ai w W M ' H Any am} M • n • • A N W • • to • ' W C1 N N N N (D r I� O t7 t7 M t0 Oi P 1� O U' e N N W to N N ltl 0 19 19 tll M D ' 0 .'- O Q� . p• i i p ONpEf N. N• i N b 8 a s W fU W N N O 0 pnpp D 0 O o O O M A N nl P) A 1� vi N N i?VV1�'11� M tO M Y! Yi m`�I N l7 M t t'7 pp O W �- M �y (N� O UI ItfWpl O 19 Vl f9 19 e O C J m N C C 55 as � �� > 9 2 QX m y �p W m t T o � m m b p m E D F F m C C 0 T n a C E m C p t y m C g mm .Q q g � y F' L A M A C 0 ,SE• O• cI S J >> a E m $ a Q J S Y C m E a C � G Q E k1 IV -5 CITY OF LAKEVILLE, MINNESOTA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION DECEMBER 31, 2013 Fund balance - total governmental funds $ 64,782,416 Amounts reported for governmental activities in the statement of net position are different because: 1. Capital assets used in governmental activities are not current financial resources and therefore are not reported in the governmental funds. Governmental capital assets $ 311,296,089 Less accumulated depreciation (121,152,582) 190,143,507 2. Grant receivable that is applicable towards accrued bond interest payable is susceptible to full accrual on the govemment -wide statements. 30,933 3. Long tens liabilities are not payable with current financial resources and therefore are not reported in the governmental funds. Bonds (105,210,000) Accrued interest (1,644,629) Loan (1,159,843) Unamortized bond discount 7,846 Unamortized bond premium (2,566,425) (110,573,051) 4. Accrued compensated absences and net OPEB obligations are not Payable with current financial resources and therefore are not reported in the governmental funds. (2,668,330) 5. Deferred inflows of resources in governmental funds is susceptible to full accrual on the govemment -wide statements. 7,491,769 6. The City uses an internal service fund to charge the cost of insurance activities to individual funds. A portion of the assets and liabilities of the municipal reserves fund are included in governmental activities in the statement of net position. 550,129 Net position of governmental activities $149,757,373 See accompanying notes to basic financial statements. IV-6 4 < Z Q � f s w W A > G W yMj � ViVn iil =4 C LL C LL a � z 0 0 w W z �aa Uhu> �dd m t?NOAm� O � � �n dN{7m mINN N �mrNO O e-N �Nm V r E o ri r E5 ro .- m � N M f7 H glq Y n f .-�rn m m�a r o 0 pp yy t yO1O�N 10 v t •1 W r N N O m Ypl O W 10 M M N Im 2 p U ly • ' ' O • ' IV pN� ' O r • � O O q � N Y y C �E H a yy 11•, � „ N�OIr w m � � E � H !• m ' ' O ' m • m ' �m C i v a w 11pp�m mm {{pppp 11pp O O N NON m O N N N N H L mmq� b V C m � g�e E i ® C N m C j B E.EE m �. cSE"�cc 5�v c ! N�mp Vp A m•OOO p MO WA 00.Om O $ VN OnMO O� Ol h M A rNgMO mGJNOd V � n O w V MSG tp1pp r �FN m 1V1�0h� mV IO M N �O �m O� V A O O mNm 0010 nN ED N m n O fnp< O l� W r d OP1M N rN N NM m� d nv6 n ni m H M" 0 M o nMmom emlgio oggn M n m n m$" mlo 1 IV o M N O M N 1mD N �pO� In brdVN I NN p� N Y �O l7 E � N O N b 0:0 nY [7 mi O) t Oi N N lV Ip N M m m m N H m• fpp� f•l ' pp O 8 O m OI m '� N ^m N � m N r � N CI m 01 "'IO A N N O Imo N ` m I m O t m � M m 1h � N ED tp c ' N M •O N N r r H m m nd d � Ip m m � m $ � M n 10 d O m ID .n N Ey l7 In N d N N ID N r N N w 8 r pp m `Si l in n � S vu'i d o fV w N 1 m �� w p ap}py� m (O O N mdNr n N m m t f m fD H m n p r' N {O �'O M N N 1 r ( m C6 m ' tLl 1p 0 t O N N -d7 V' d' EO N M t•1 � �' n d Imm t0 N an A d m EG H d + m b �CDa'a'ac�a a'a I�u IV -7 C m m i =• o a m m m $ 1a I �u9 5 I - O 8 8 m m C N m Ci W O c m n 6 m a CITY OF LAKEVILLE, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES M FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2013 Net change in fund balances - total govemmental funds $ 3,075,714 Amounts reported for governmental activities in the statement of activities are different because: 1. Governmental funds report capital outlays as expenditures while the government -wide statement of activities reports depreciation expense to allocate those expenditures over the life of the assets. As a result, fund balance decreases by the amount of financial resources expended, whereas net position decreases by the amount of depreciation expense charged for the year. This is the amount by which depreciation expense exceeded capital outlay. Capital outlay $ 9,973,154 Capital contributed by developer 4,138,329 Depreciation expense (8,940,423) 5,171,060 2. In the government -wide statement of activities, only the gain or loss on the sale of capital assets is reported, whereas in the governmental funds, the proceeds from the sales increase financial resources. Thus, the change in net position differs from the change in fund balance by the net book value of the capital assets disposed of. (57,771) 3. Revenues in the govemment -wide statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds. Deferred inflows of resources - December 31, 2012 (7,323,456) Deferred inflows of resources - December 31, 2013 7,491,769 168,311 4. Bond proceeds are reported as other financing sources in governmental funds and thus contribute to the increase in fund balance. Bond, loan, and capital lease principal maturities are reported as expenditures in governmental funds thus reducing fund balance. In the government-wide statements, however, issuing debt increases long- term liabilities while debt repayment reduces long -tens liabilities thus affecting the statement of activities. Bond proceeds (4,665,000) Bond, loan, and capital lease principal maturities 5,825,000 1,140,000 5. Interest and debt premium/discounts in the government-wide statement of activities differs from the amounts reported in govemmental funds because accrued interest was calculated for long -tens debt payable in addition to the amortizations of debt premiums/ discounts which are recognized respectively as expenditures and other financing sources and uses in the governmental fund statements. Accrued interest payable (111,576) Grant applicable towards accrued interest payable (642) Premium on 2013 bonds issued (78,287) Amortization of debt premiumstdiscounts 222,334 31,829 6. Accrued compensated absences and net OPEB obligations are not payable with current financial resources and therefore are not reported in the govemmental funds. Net compensated absences increase - December 31, 2013 (161,828) Net OPEB obligation increase - December 31, 2013 (41,953) (203,781) 7. Internal service funds are used by management to charge the costs of certain activities, such as insurance, to individual funds. This amount represents a portion of the change in net position of the internal service fund, which are reported in with governmental activities. (98,719) Change in net position of governmental activities $ 9,226,643 See accompanying notes to basic financial statements. IV -8 CITY OF LAKEVILLE, MINNESOTA STATEMENT OF NET POSITION - PROPRIETARY FUNDS DECEMBER 31, 2013 Business -type Activities - Governmental Enterprise Funds Activities - Internal Service Liquor Ut lfty Total Funds ASSETS Current assets Cash and investments Interest receivable Accounts receivable Inventory Prepaid expenses Total current assets $ 3,876,758 $ 7,479,285 18,942 39,870 81 2,470,847 1,679,469 42,419 22,710 13,500 5,597,960 10,045,921 $ 11,356,043 58,812 2,470,928 1,721,888 36,210 15,643,881 749,526 1 ,737 751,263 Non - current assets Restricted cash and investments 324,125 324,125 Capital assets Land 1,272,296 528,160 1,800,456 Buildings and improvements 3,903,664 22,041,706 25,945,370 Machinery and equipment 420,956 2,343,101 2,764,057 Infrastructure - 129,277,552 129,277,552 Construction in process 30,714 2,406,271 2,436,985 Accumulated depreciation (1,324,144) (52,589,468) (53,913,612) Net capital assets 4,303,486 104,007,322 108,310,808 Total non - current assets 4,627,611 104,007,322 108,634,933 Total assets 10,225,571 114,053,243 124,278,814 751,263 LIABILITIES Current liabilities Salaries payable 32,223 49,408 81,631 - Accounts payable 1,207,916 299,812 1,507,728 9,522 Contracts payable 4,228 100,682 104,910 - Accrued interest payable 67,396 - 67,396 - Deposits payable 8,937 5,400 14,337 - Accrued compensated absences 92,550 130,627 223,177 - Long -term debt - current 165,000 165,000 - Totalcurrentliabilities 1,578,250 585,929 2,164,179 9,522 Non - current liabilities Accrued compensated absences 10,760 82,327 93,087 Net OPEB obligation 13,841 25,105 38,946 Long -term debt 3,090,062 - 3,090,062 Total non - current liabilities 3,114,663 107,432 3,222,095 Total liabilities 4,692,913 693,361 5,386,274 9,522 NET POSITION Net investment in capital assets 1,048,424 104,007,322 105,055,746 Restricted for debt service 324,125 - 324,125 Unrestricted 4,160,109 9,352,560 13,512,669 741,741 Total net position $ 5,532,658 $ 113,359,882 118,892,540 $ 741,741 Explanation of difference between proprietary funds statement of net position and the government -wide statement of net position: The City uses an internal service fund to charge the cost of its insurance activities to individual funds. This amount consists of the necessary adjustment to reflect the consolidation of internal service fund activities: Net position of business -type activities See accompanying notes to basic financial statements. 191,612 $ 119,084,152 IV -9 CITY OF LAKEVILLE, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2013 Sales and cost of sales Sales Cost of sales Gross profit Operating revenues User charges Other Total operating revenues Gross profit and total operating revenues Operating expenses Personnel services Commodities Other charges and services Disposal charges Depreciation Total operating expenses Operating income (loss) Non - operating revenue (expense) Intergovernmental - grants Investment income (charges) Interest, fiscal charges, bond premium (net) Disposal of capital assets Total non-operating revenue (expense) Income (loss) before contributions and transfers Contributed capital from governmental activities Contributed capital from developers Transfers from other funds Transfers to other funds Total contributions and transfers (net) Change in net position Net position, January 1 Net position, December 31 Business -type Activities - Governmental Enterprise Funds Activities - Intemal Service Li quo Utility Total Funds $ 15,381,124 $ 15,381,124 11,432,525 11,432,525 3,948,599 3,948,599 $ 8,966,298 8,966,298 $ 298,427 (161,309) 160,540 160,540 112,636 (198,532 9,126,838 9,126,838 411,063 3,948,599 9,126,838 13,075,437 411,063 1,396 1,282,013 1,796,122 3,078,135 - 50,973 355,301 406,274 111,971,795 833,997 2,339,848 3,173,845 478,310 - 3,092,195 3,092,195 - 113,916 3,161,343 3,275,259 2,280,899 10,744,809 13,025,708 478,310 1,667,700 (1,617,971 49,729 (67,247 3,762 179,828 (13,469) (28,351) (161,309) - (27,516 (106,220 (198,532 45,257 1,469,168 (1,572,714 - 94,958 3,304,878 1,396 (1,749,982) (440,431) (1,749,982 2,960,801 (280,814 1,388,087 5,813,472 111,971,795 $ 5,532,658 $ 113,359,882 183,590 (41,820) (1,235) (161,309) (133,736 (153,275 (103,546) (68,482 94,958 3,304,878 1,396 (2,190,413 1,210,819 1,107,273 Explanation of difference between proprietary funds statement of revenue, expenses, and changes in fund net position and the statement of activities: The City uses an internal service fund to charge the cost of its insurance activities to individual funds. This amount represents the income that has been allocated back to the business -type activities in the govemment -wide statement of activities that is attributable to the City's business -type activities: Change in net position of business -type activities See accompanying notes to basic financial statements. (16,904) $ 1,090,369 IMAH (47,141) (47,141 (115,623 857,364 $ 741,741 CITY OF LAKEVILLE, MINNESOTA STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2013 Cash flows from capital and related financing activities Acquisition of capital assets (116,291) (2,676,861) (2,793,152) Proceeds from sale of capital assets 108 4,474 4,582 Interest and fiscal charges (166,175) - (166,175) Principal maturities (160,000) (160,000) Net cash flows from capital and related financing activities (442,358) (2,672,387) (3,114,745) Cash flows from Investing activities Investment income received (6,807) (18,212) (25,019) (355) Net change in cash and cash equivalents Cash and cash equivalents, January 1 Change In Accounting Principle Cash and cash equivalents, December 31 (including restricted cash account of $324,125) (637,680) (1,429,255) (2,066,935) (108,631) 4,838,563 8,908,539 13,747,102 858,157 $ 4,200.883 $ 7,479,284 $ 11,680,167 $ 749,526 Reconciliation of operating income (loss) to net cash flows from operating activities Operating Income (loss) Adjustments Depreciation expense (Increase) decrease in assets Accounts receivable Inventory Prepaid expenses Increese (decrease) in liabilities Salaries payable Accounts payable Deposits payable Accrued compensated absences Net OPEB obligation Total adjustments Net cash flows from operating activities Suoolememal schedule of non!oash financing activities: The City assumes ownership of utility capital assets from governmental projects and land developers. Capital assets assumed were as follows: $ 1,667,700 Business -type Activities - Governmental $ (67,247) 113,916 Enterprise Funds 3.275,259 Activities - 921 190,419 191,340 534 Internal Service 87,271 Liquor Utility Total Funds Cash flows from operating activities - 5,196 9,027 14,223 Cash received from customers $ 15,382,045 $ 9,317,257 $ 24,699,302 $ - Cash received from general service charges - - - 411,597 Cash paid to suppliers (12,527,013) (5,917,725) (18,444,738) (472,732) Cash paid to and for employees (1,297,327) (1,770,562) (3,067,869) 3,136,946 Net cash flows from operating activities 1,557,705 1,628,970 3,166,675 (61,135) Cash flows from noncapital financing activities Intergovernmental - grant 3,762 71,409 75,171 - Transfers from other funds - 1,396 1,396 - Transfers lo other funds (1,749,982) (440,431) (2,190,413) (47,141) Net cash flows from noncapital financing activities (1,746,220) (367,626) (2,113,846) (47,141) Cash flows from capital and related financing activities Acquisition of capital assets (116,291) (2,676,861) (2,793,152) Proceeds from sale of capital assets 108 4,474 4,582 Interest and fiscal charges (166,175) - (166,175) Principal maturities (160,000) (160,000) Net cash flows from capital and related financing activities (442,358) (2,672,387) (3,114,745) Cash flows from Investing activities Investment income received (6,807) (18,212) (25,019) (355) Net change in cash and cash equivalents Cash and cash equivalents, January 1 Change In Accounting Principle Cash and cash equivalents, December 31 (including restricted cash account of $324,125) (637,680) (1,429,255) (2,066,935) (108,631) 4,838,563 8,908,539 13,747,102 858,157 $ 4,200.883 $ 7,479,284 $ 11,680,167 $ 749,526 Reconciliation of operating income (loss) to net cash flows from operating activities Operating Income (loss) Adjustments Depreciation expense (Increase) decrease in assets Accounts receivable Inventory Prepaid expenses Increese (decrease) in liabilities Salaries payable Accounts payable Deposits payable Accrued compensated absences Net OPEB obligation Total adjustments Net cash flows from operating activities Suoolememal schedule of non!oash financing activities: The City assumes ownership of utility capital assets from governmental projects and land developers. Capital assets assumed were as follows: $ 1,667,700 $ (1,617,971) $ 49,729 $ (67,247) 113,916 3,161,343 3.275,259 - 921 190,419 191,340 534 (275,968) 87,271 (188,697) - (1,216) - (1,216) - 5,196 9,027 14,223 - 67,046 (217,152) (150,106) 5,578 620 (500) 120 - (22,976) 11,599 (11,377) - 2,466 4,934 7,400 (109,995) 3,246,941 3,136,946 6,112 $ 1,557,705 $ 1,628,970 $ 3,186,675 $ (61,135) $ 3,399,836 $ 3,399,836 See accompanying notes to basic financial statements. IV -11 CITY OF LAKEVILLE, MINNESOTA STATEMENT OF FIDUCIARY NET POSITION - AGENCY FUND DECEMBER 31, 2013 Assets Cash and investments Liabilities Deposits payable See accompanying notes to basic financial statements. Escrow Fund $ 6,851,480 $ 6,851,480 IV -12 Q F Q � Z �a � a V ;6m m p °m CH G a 7wn Ury m OQ� Q H L 9 q O Z O S � 4 Y& E E A $,`o 2m�__x..5 6S S 8o �3 c5sr,° w5o Vi 8o z c C C c =,SYwS a @ n $ $ 5 - a vpN y p yy 55 3y �C c"�o 505 -.•• eb c Y @ '5 �8 3 C �C W M 's H'Q ly�� q— E 0 C L V N C O Ti S .W p 9 O `>> F � S m ° 9 — p C ''15 T O • s 2 � ,'O 8 ° Y p & 5 L °o. '" $ r r+.. @ 5 E ° o_ o n P a1L= 13 n c w �AN >gE cYC o'8 �y "0 � &�Ti " cr �B8s Tp,q wY�uE 3 m'o�c'y� CS �i N c � 6 � � �ei5 ° ( $e ��.omE ° � Y q SY O I L - A o _ V wCmSo �8°Oo5�5� �Pg 59' 8'Y >!' �• �' m -A .853gggg �S o uw°Y• t ag Om � E $� T 2! a `o c c =^J'os L 2' w 21' 3iV C T... SS U p C O G C V Ea9� ° � a y Sg S IX p V6 Smw78 iYi V agog �TU'SG a - as g g° zA M1lY 6Vb F_ �1 SOU C�FW$ 6V0$C h'iu CC 'J EY S O Y 9 �T pp U� h w 3 I J��� t h o 'EU m .$ " , �i o - LEpN�.} D j _ qpj V �. S > E �• a �'3llI ' I IV -13 F E y U�O Q �C Z � LL Ur n z } m �! V VZp 90 =`-�E -,� Z; m Nw �. .3 �� € m8 =• 8�`0 Fa 3o", fix' ',QS -c 3 v E gy 8 m n $ , �E8 W >P E a' 9 ix y s o s 3 o �e g ts E a 7 R i5 y a bBWn sW u�� S �a E���� wiY�E 3 .E n3 rg0a5 Ed r r EB ° �., ma 5 GU z`S'�EB g E A S Y . yi E @ w + 'S>o ze 8 - p E �E aa gg yy G = 4 F` E� CF 8E c gd . ♦$g �. E v - l�' 'u. •g5Y 6 u gc 0,8.E .c u 8 e m y E E $ > o o w °�e peg IV -14 F WWW z z� �a �U �s U da R V Uz0 Z Fk x� < ' LL V N elm a � m W � c e w g $ o'er± °� � g ° EL 2 TE� -U yept� &"j v x w�o� W� �n as "° > i , p$ a 6 E >5 gad p�ag' �.a E$' m�' Vie% c3, lit! LLu�. -g O o X>. Co b ggsVS o ++�o�dP �+o = g r���_u�SS Z g ° ; ,a " ci y 'y E ° _s eGE E_ � ng�9 m�'E'h g 6 U $ c "__ a 75 rz `o ° os t,6 y%3` X88 0 gr� `o q y �E 6 9$ T 3 O T _ G 4m 0 C p s° c� 49 T E�Za fz 9a } C O L.�y 0� r E E i go z. 5�`9 C'7 3 ° °�$ I a' sE U$ r M G 3 `o $ IV -15 F 1- - g W Z � �a � V <M W l F Z 1 t; =y o x�^ m OO� Ulm E C � •� u c � g � E o 2 y '' ?. a u e •¢ E3 §0 �''= v8.cg y�sB 7 v 5 _A 3. �', 3. y G.yy y . ' EC G' yVbpN eg a; y .B MO - EiJ '� y d'89 y ^y'wc �i 9 �F EME °ym '��5 bC �Y.. q 9 'E g Ee�o'i •Q € T °m' $ ,$ 'VOO nuE °m' =.. °E €MEEO a ° tl Q" e E yZt � a'O .yC C9 ° .5Y J. c •Y °�- 9 a U v_ y E u'Sw� 9 R 0 p a c °gy .B pig � O9C rigg z s� b g 9 u_ S V � � E 4� 0 � S d .0 ' � O J � � � gy °• CY 9 L 0 Y • � $$yEEy V E . CC_ J ° o C J w Y n 8 C Z'..t ' S y q y 9 q O C y L C E M I AM I E ° ± 5 ° ga � 5 C g � sE u y m y .9 °3 !' E 2$. q ° $ nII i3 2i� gg�ayy `oc m ¢ _ t - cg �.�a ;b__ = ° = ^gi Wz EL E 'o3 T E 5 'e .c ov m F m z` � ma• 8 V U E o �'m 9 E V i s 1V -16 O� z �F gQ a �Q > ° o � M p�m F Ow Uzo F� O Z �a ;V 4 N yVQ m � O O ! m .w Foy uzo a 0 m 5 U & m Y y §r'��o D A rh E� 9sx Y 3ea 5�� €So'. 1e wm c $�e�'§ at ii . R yy W E § ( 6 � b- c3 t s W -a' { c a; C { m V wV Oy � p9 NU� -J E99 >�4 p.0 OF 9 Y a 9V '°rip " _ 9 a C pp Q a C gg A V j F A F 6 o; § 9 c '$ o ggs$2 ro§5 .E7 ^W >£S 3< lo coE8 St V o 9 " • V.0 '�`.ow 8'E 8 �, f� � p ( �€ 5 W § E2m° 5 .T. '1 9 9W .CA o_ h'8 ¢ ° $$ �y w .S a Eu S oa o$� fi`,�° UD 6 Cg _✓. S . I T Z . m $ F a O O 6 ulu $'e - j O L .:^.� J Jam .Z C9O {L �9F IV -17 " ?Am Z 'o 0 E _ cg3 �. h 9 w.6 z. c PC �= z yam. 8 y 0 E,y °s yQ EE " n x % V 9 - m ,- 5 E uo= 5 EE Eg Spa �rb4 8 mmq� z b C n yo�a a ° u3a V " � L E F u V U u U z 0 Z ic: m .E o 9 Et :_ c ' i c 9u g pw, inkEE s$r ° Wr E o z e E,I m x 3 ,E CN m3� K a 'v c C ° _ V @ ei ue Ef'• S s Ow w g > 8 _ o ° 0 q a� y_ y � p p q � q 4 w:' 00, ,E c > � ^ Y� Q EOy �m $ y g } .n 51 2 Z Vi � ffi >w `a d gg E U`ry 6° 8p T, "cig Qw_ w E c E U -. Omo: 6 E ? E E @@� jj b A 2q . g o 9 o X Ria a 1*5 g m V g u �b�ya�E' 5C9 VOw � LLI66 56L 5.a ° la 6 6 $ NZ I �m° n Y oEd f Uz0 IW 8 LE c F p c E 7 .� J g� � n a c y f , W� €F 0 T >° Eye g7Y c c 8 E y v F i 4yW S �.g5 3 a c wi N � T Z t. � x � E i• Q : 5 H m Uzo z q c o p .C� L t j 6 6 g G g q��Y Q a o c � 3i`E c (g C 6 N 00 ,yy@@x e >• g$EC aC _6n I ts e� 5 amE a c ` q ° �£ d 0 e$ gpp c T❑ � y u a `o y emu. V V m�v' Sells y 4 ° T w w f E c E `o � a CJ'p � • • •p.pT Nh 'pm�O ' 1� � ��U'i'Y �U 6h _T ii Ac3 V C n3g �p ap {SJ 10 s W O $h MSf .00��� �P O m�Ci��� LO 'C gp F - � as a aaaa a a aS�.' C �� � d�' ' � • ° U 22 72 a H s_ 6aEE, Q QQ g T {. E da swz o 3� .E c c� $ p r > - p 8c� L� � �p3�-O cd�To ° g °g� 9 — 9 — . 9 YKI - 8 gg s U20 Z F f v »EES�EEPfIEE� }°u'�ti. > IV -19 aN �7 z �a �u {sue 4 x U ry �aM m� F� u Vzo aIZ Z �a �u ,a V aQ= Ak w 0 U Z ❑ p 1 b n V O n O P P m b w N P P e m m E w^ o hl wl $ m $I 8 e m $I cl vl P nl tV O c n w N ypg9 � C �O yJ N y y N w w 9 E � 5 0 d ms M.e3�t- �9� & F I L I z ❑ � Iw P � N Vl N1 w y l n 6 t a a ,2 0 o r � P m aV� r n QT - $ �WIIv mONN „mP -fI �O_�r e O m Nq � iSrn Nl el `�� I MI N r l m „ I P I w � N NI w nl 3 w ]Sx q "P = <�m sad = 1 1 � W p a�T W„m Nl y ^m � l � N P wl .2 gu 8 q t Z g ' ° ��ii CppC y _ E J-0 Pi m � � C � m � V � F z J = UU ❑ Q Z Q W �e o�mm �y w E g` U3 p 3 =Y 3 6 L] IV -20 Y O U N B 5 m N i�H Qi iF B c 9� Y 8 c g a E i" x^ S L m'cd � E o g E �to I M � Qa2a S z _ m �m3Y_._E sE� gg v E t k w� FE USE aeE"'cMS_� g g°g p� .3�3c� s g g iEaS s g s bt ta Mild q ` q � p O P � i_ G pCp S$• (._ 0 4 � 3 0. � . q � c EE 8 C $ Ys' ✓i u�m-1 6P � j' v H @•l] H14 h $�LO'EJ S�CyY a iS C `a � UH< =�a E d � �� •8 '= �4y�, t �Y T. O m a p a Q C y�C�C 'g��' u..E 6 IV-21 8 � 3 �b W P oo yy N ri P C p Q y, Y1P0�0 „ mHOf $ MP V m N� m H N P m g �y g 5{ yy n k � 'A6 �3 N N G� � N NNN N�f N T Eb 6 N u N p °° ry ry ry m s'm „ n P qq ..pp pp N N pF G NNN � O9 & e y 6°�� , YO �� � s„ � o� S � s la e m Q pQQpQQQQppyy��ss g N C ZF a— $�g iE e P . G S�b ab SBSSS ZJ L ° ,gS'^ E . m S � c�vih viQr „S o x y�o y y 9 um b goy W my. Cw LS ° VVFw3 Uzca; x all e y T �'E °�3T N_$6 F O �NS rv3w g EE ” C �p �idi % .6 rv". a l f c Y �� L•��:y =c d s "�.. `a 3 $. 'ta =C ''rvy o 1 � `vi W a a FF 4 A . icy 2 pp Q C jj [ - ULG ��2N 0'aa OFNSS. m 1"� I 6G0L V�6� N -22 F� z� t G Z J LL M �O� 0 2 UzC Q F Q � W� ^ a �S W V .�7 a H y V_ y N 6 - ,�M Yw� V�C F 0 Y ° w e E H w 0 P €�Q —q< �F5 C N N N vr3 P_ Ox �`3 F N ry N M „ P vf rQQSM a ` 'O n3 ry V ss Q g qy- gg OV „ in S E 8 6E6 ` � S� nx a � C p Rog > T K X 85 $o'$ N i�Dli w O.O e . R n V qq g a N N„ (V gg N ^ gg y 00 ,F L' Ti. AAAAAA� H N- a P P N w a x$8e m Cve 4 C 5 �0� 1 1 do" a a�z z 0 Yo €�Q —q< �F5 C N N N vr3 P_ Ox �`3 F N ry N M „ s 7 1$m ` 'O n3 e Y V g � C p Rog > T � ✓ X 85 $o'$ N i�Dli w 8 �p $y y 00 ,F L' Ti. AAAAAA� H N- a P P N w w x$8e m Cve 4 0 5 0 0 C N N N a ae F N ry N N „ w 'O n3 e Y g ~ J 0 > m E O �G p F v � 9 U a C k T r� C s� C _ c o� l W y. [y € S� 91 It y E ° u IV -23 r S� ry8 ry N a ae ry v N „ w g 0 �o 0 N w 8 p 00 N- P P N w w O �G p F v � 9 U a C k T r� C s� C _ c o� l W y. [y € S� 91 It y E ° u IV -23 S 6 I I � t I IS V � 22 .W7 V E $I 8 NIA 6 R$ w I Uzo p p wwb ? E n n �rK�� E L a z g E� $ q 0 8. Uz0 2 91'2` a IV -24 5 r g wE S� l ik _ m 3 = E$ ° 3 a .2 .5uoa 's - 0 En .5 G € €= E e t��sa� i_€ w w ml ,E bit N- a3- �ox�5 1 4 z 3 = x _ r Ea "=4 � fI1 i. O (j .' Q G G N A TU �. 9 mN G 6yNEpp�C ILC 6U �1 ?q pp A gg u $ $ V � € ko Vza z IS x$' c F_S� z' xo TV -25 c E o Yag " E Q 4 x i� 9 'Q W � m PQ ca wk �y 5 r g wE S� l ik _ m 3 = E$ ° 3 a .2 .5uoa 's - 0 En .5 G € €= E e t��sa� i_€ w w ml ,E bit N- a3- �ox�5 1 4 z 3 = x _ r Ea "=4 � fI1 i. O (j .' Q G G N A TU �. 9 mN G 6yNEpp�C ILC 6U �1 ?q pp A gg u $ $ V � € ko Vza z IS x$' c F_S� z' xo TV -25 � yov m._ 6 Hsi= 3Q _c a9� s T E u E V m o u C� o. E P Y E 6� y Y �qq 12 mg in UC E 83° s C1 p W S g E 4 3 p O Q p a a e c i ., b 3'- y{ Uzo z Bi o om ._ sx € Spa °- 5 17 B E 6 m° 3 gg 9 3 '003 E E a O° j W E c M ° 3� -�i _ SEA tl 3 �: FiE as S. V m �uhsx c v c `ryO u °'c E c f�C j ^•5 '� . e v n o. � u o E UJ.9U i6V ° ' y g + y a OVr l i p aV s 2 6 'O F y � 'L ° _ tl c r + �� m ° .mu 4x.3y -:Z. Q. 2a y S A N L p y ` t 9 9 m° C L • �rU E a S c n Eh €`J ' 9e �c3 Ei' u- �v _moo �iSY IV-26 z �a �Ury � <M O O w Uz a F� F z w {si � O Y � N a <^ � wzt Uz`S' gd w ° tm @'�_ i e"Cr c`o —%. Si `o u c - G E a w 5 �y yy °� g' �5 € a c E .s �gd5e 'fio U 8�'g `o L mSJ� `_aff E$� A3 ^�qv .E g ° EE 1 �s_ € 0 o E �( � q p i p C JGV> uF Y4C OYn L`G `� L•L 4Y� O.g� Ly N_ C �-' 3"a;as 5� w O_ W 14 ° n nT. 2 m .E S 3 z _ s .� wwN , w W�G•_'o .5 '^ 0 N N P V Y A W ; m � O� E q e ,� •G go � - �r and I 9 O- .°•Pi�N gg °. � y ° � y m9 p G p � G 06 7.i — y, 00141 4 T s ° ' q p a E56 ge pp uC °m m s -m �N >yT ^1IN y Q 6; C3 O g , - _ _ $E� n o°c $ w O ys o co_ 9 2 0 P n }a Y G m a E . m gg as B 1E IT d M m P' O w w w s :E m s °•5 �' '� O O 0o u l gill€ Ea 9 IV -27 F E E C C W t G TP W m > _ 3 C O V O E 6 'E O y b U nC @@ �1 g' L y C y ` nEo,o t Go �1+ c° GT Y. IL C SI?9 b p E Y g '9p� cl r Ergo � Za qV m3 n r3�= Va , U c i UEg nu y $ Z;A c zo �` 8 hs P-G P X. = y , wm a �E Fr P, oaa ° na O m 1 ❑ y� S: 3 m c o a 5r ° U ry a o G o$ >•' c a E Mgt C . HO W Ii � y Uzo z m z �'� 8 p 5. E 0 o Eau $E °'cL�PS�' m y yp� 3 @ y p � p S @L @ gn 'O. '`c a�ED L° S3E� g Cad o 0 o = �y at; m� g �. > 5'd 88888_= ° �V' � � O •� 9 E G 9 8 d G t x@ E S Q q La C O_ o y L � i� � U� 6 @ W y O S� P P V w b3U � `Sn gp 'cm y ° �f of ng C �+ W ` 4 C C T 9yt 6 U Z Q IV -28 A l C+qj ��St� Cw OL S T nc E Q E Nag O eel h ^ a T q 2 H Y C $ i L F d S y -G t u_ t .figg 'w O E y F ry 'm_' O O g pppp $iio ~'m5 CE EEY$ J wU 9 n L >d y � y � w C - ry K Q h G ���F § .2 L 8 Yu 8 X 5 C . �' � o� � `0 ° eEog�n.. � oY3�3 y � ^ t yg, LL tp - o �zA z cd o u o ` g Q g v C A4 E,S Es �5 •qgE� Is .E .� EYs jgE =sz ;xs x. wC V Kj' r g 5 Eep pZ ,y � gg o +� ' g,55 ' �'b 3 ° a . �5�ffi y Y V O Ss L'Leg `o e L_� Ng BE F � __l G � m W C ? T P v ! y 9 5 0 A o Q . 77 € pS� O �N .- � w y O C € � {i ,4 Q c �5 XX an a o 2 fi Y b YI - ,UZ ell E e `D• Y i�s•n� .r� .4r,�. =8 a �9Yp < p c 6 8u p L L l C ffi p y c`00 2 Y # . LL 3 Uz0 Z z TV-29 G c t w i s HI a r E E o w 6w � Zf3 J o E G o U2G � a g m = �Z�usj� s a g„ g ¢�¢ e yy e ary ^ pN W `Es rs _ s- o <� E.t E o g ° B °c d �.9 n m E $ Z a w e` Z E g `o `e 9 E E _ xx V 44 ' �� LL O V o wL 7 .0 LZ a G C 14 Ywu�i � m V Uic z u ❑ IV -30 wc ry 1. 0 �I � YI � N qLL � t N V N'0 wO f � OD p ] I N 1 � ' p BAR _ M N N l�l � y � 9� N m 0 m N r � N� M M N m w O N $vvvvyyyJJJJ���� Q CI °i {<y p Y y r, �n �i 0 h ro pqb� v m � nm pp O � r w LL N W N O� Ol V 19 M N d m N A N 11 N S3 1� N U m { ry t FL V Z a x U ° 2 a , 4 - 9 [U y `o " s $ s g= 4o<.. -9 ESES ;jig gg° pSp 3E u° W-m� ' W ' �` c $c`o� o ° - ° -•� �8 8Ljo8' ice sz � tl ��3 g'=i=w u 8 5 E _ g C2V �o UW ° `o . �4s w c 6 ° �•Q q q �' o N'a a y, Ki g g g g �� � . l`���.,?u �c,�Na r2 �•a °} E1? a ° c Ep E y F o E gg @E p a :'8 °€ g'ra.� 1 m�uE C'e cgSga c < W m ` - ° 3 °5 O 9 a. �° a N tgy1�' S Ny a ° �' �' (y �a < e w EW ' x yw�aYg zW;,Eys$.CE rd 1.2 WOW g � ° c � ° .4 � c � M v 2 y a $ eq 8 ° m C m` 6 w°• E m'� � ` m < G � 9 � $ o �cN - _ w: .� w E Y t; Uz° a� ° 'e._' w � - 9 AT9 '5J2 g.g I 3,.$ l7g o�g IV -31 V Z . m z u z z F � O z z w - E �aE a iv K O ❑ W V Z a J W U z a z V ❑ Z e a O h m S z z w s X ❑cow ❑ w } w O w w QM5 E i iii�''&ryJ fil ml 3001 of L6n $ �Cm vi cim �` ' l l � w n w a � Q gy C p N N V N IO N m N o m m n rn rn w m p w S o g E i c a f a qy� a g n a i V O m V^ m m C y p Y p p o ym I[� app �lgpl LL w yy O m m n 1V O m C! N m OI w p a 'tl IV -32 9 1� m N N) N O OI ?� NI p O mg N p N p $ N ^ m E C Om! yP� CI � mp q V P N r O Q; m W N M w yy I � $' mffi �i m n m m o v'. W 6 ry m y mp p ry {r� N ' y V O Vl 1 W� O 1 IV In qO (1pA ❑ S C� m 0 l' m 0 � � ID m1 w Q ti N U Z a x U z a e H F � W ❑ E z a = B U o�m� u7 d T u S M m5 w 4;; x$ '11 C a! I_L m � m � r mY � NON m 1 r m < N w VIII Cli N N P w my V m O S 0 4 p a S N 1 p p 1 q VI O 0 { 1 r n� 1 C ry O m W � spy O m yy V z w w Y] U Q 5 U O z e a F gy ^�'❑ W E $ _' 8 x aua 8 E n Ury,m Cl IV -33 S m U Z J a m Z 4� U z a s u 0 a C CYO Q 4 W a azW p W W W V z a m t`3 v z a x u A z a a H w o � w z � ? a e � w r z Z p o G W W w �x�xG c U VM�N D F LL a O G IL y ' L C C m N U U U5 5 2 m V ILL li YyC y�j� h O, � N IA m Yl 1 � N 10 t0 W ^ O OI O OI OI N N N " `O W P m m p 10 N In l P V Y N b N w w 1 w N th N (pp qm n I� O p V O A V p q O O V � 1�1 py O �YY Y p� O 0 Y N p 0 O tOV Y 0 y 9 N N ry D F LL a O G IL y ' L C C m N U U U5 5 2 m V ILL li YyC y�j� h O, � N IA m Yl 1 � N 10 t0 W ^ O OI O OI OI N N N " `O W P m m p 10 N In l P V Y N b N w 1 I(NI N th N (pp qm n I� O p V O A V p q O O V � 1�1 py O �YY Y p� O 0 Y N p 0 O tOV Y 0 y 9 N N ry =P w m a A m N r om P m N b o N Cl � sY o m p P O N �y N D L� �� 11�� Pm tp I m'O w ry 8 z � a043 ac4 Ti ci $ a ° b 6 C a W IV-34 g tk All {J{ ƒ 2 ! $22 !f 07 § { ( \ O il 2 , n f!» ® »I -! ! f : !| !!z; a, \ ! e f, §§ f2 ƒ) ) + ! £!!k !} §� b,�§)! l.I?L \; U ■ „d �l ;m q 'i . IV-3 5 ;{| § I! \] \\ § -- � / � !!! -! `- B� �! \) |,! \! §E\ tk All {J{ ƒ 2 ! $22 !f 07 § { ( \ O il 2 , n f!» ® »I -! ! f : !| !!z; a, \ ! e f, §§ f2 ƒ) ) + ! £!!k !} §� b,�§)! l.I?L \; U ■ „d �l ;m q 'i . IV-3 5 PROPOSAL SALE DATE: July 21, 2014 City of Lakeville, Minnesota $9,160,000' General Obligation Improvement Bonds, Series 2014A For the Series 2014A Bonds of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offer a price of $ (which may not be less than $9,068,400) plus accrued interest, if any, to the date of delivery. Interest Dollar Interest Dollar Year Rate % Yield °/ Price Year Rate % Yield % Price 2016 % % % 2026 % % % 2017 % % % 2027 2018 % % % 202$ % % % 2019 % % % 2029 % % % 2020 % % % 2030 % 2021 % % % 2031 2022 % % % 2032 2023 % % % 2033 % 2024 % % % 2034 2025 % % % 2035 % % % Designation of Term Maturities Years of Term Maturities In making this offer on the sale date of July 21, 2014 we accept all of the terms and conditions of the Terms of Proposal published in the Preliminary Official Statement dated July 1, 2014, including the City's right to modify the principal amount of the Series 2014A Bonds. (See "Terms of Proposal" herein.) In the event of failure to deliver these Series 2014A Bonds in accordance with said Terms of Proposal, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: TRUE INTEREST RATE: The Bidder ❑ will not ❑ will purchase municipal bond insurance from Account Members Account Manager LN Phone: ...................................................................................................... ............................... The foregoing proposal has been accepted by the City. Attest: SURE -BID Wire Transfer Preliminary; subject to change. Date: Good Faith Check Phone: 651- 223 -3000 Fax: 651- 223 -3046 Email: bond services(a),suringsted com Website: www.springsted.com Springsted Public Sector Advisors PROPOSAL SALE DATE: July 21, 2014 City of Lakeville, Minnesota $13,730,000 General Obligation Refunding Bonds, Series 2014B For the Series 2014B Bonds of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offer a price of $ (which may not be less than $13,585,835) plus accrued interest, if any, to the date of delivery. Interest Dollar Interest Dollar Year Rate % Yield % Price Year Rate % Yield % Price 2017 % % % 2025 % % % 2018 % % % 2026 % % % 2019 % % % 2027 % % % 2020 % % % 2028 % % % 2021 % % % 2029 % % % 2022 % % % 2030 % % % 2023 % % % 2031 % % % 2024 % % % 2032 % % % Years of Term Maturities Designation of Term Maturities In making this offer on the sale date of July 21, 2014 we accept all of the terms and conditions of the Terms of Proposal published in the Preliminary Official Statement dated July 1, 2014, including the City's right to modify the principal amount of the Series 2014B Bonds. (See "Terms of Proposal" herein.) In the event of failure to deliver these Series 2014B Bonds in accordance with said Terms of Proposal, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: TRUE INTEREST RATE: The Bidder ❑ will not ❑ will purchase municipal bond insurance from Account Members Account Manager Phone: ......................................................................................... ............................... The foregoing proposal has been accepted by the City. Attest: SURE -BID Preliminary; subject to change. Wire Transfer Date: ......... ............................... Good Faith Check Phone: 651- 223 -3000 Fax: 651- 223 -3046 Email: bond services(dsprinpsted.com Website: www.springsted.com Springsted Public Sector Advisors MOODY'S INVESTORS SERVICE New Issue: Moody's assigns Aa1 to the City of Lakeville's (MN) GO Bonds Ser. 2014A &B Global Credit Research -15 Jul 2014 Aal applies to $75.6M post -sale GO debt LAKEVILLE (CITY OF) MN Cities (including Towns, Villages and Townships) MN Moody's Rating ISSUE RATING General Obligation Refunding Bonds, Series 2014B Aa1 Sale Amount $13,730,000 Expected Sale Date 07/21/14 Rating Description General Obligation General Obligation Improvement Bonds, Series 2014A Aa1 Sale Amount $9,160,000 Expected Sale Date 07/21/14 Rating Description General Obligation Moody's Outlook NOO Opinion NEW YORK, July 15, 2014 — Moody's Investors Service has assigned Aa1 rating to the City of Lakeville's (MN) $9.2 million General Obligation Improvement Bonds, Series 2014A and $13.7 million General Obligation Refunding Bonds, Series 2014B. Proceeds from the Series 2014A bonds will finance street improvement plans throughout the city. Proceeds from the Series 2014B bonds will refund certain maturity's of the city's outstanding debt for net present value savings. Debt service for the city's GO debt is secured by the city's general obligation unlimited tax (GOULT) pledge which benefits from a dedicated property tax levy not limited by rate or amount. Concurrently, Moody's maintains the Aa1 underlying rating on the city's outstanding long -term general obligation (GO) debt and the Aa3 underlying rating on the city's lease revenue debt. The lease revenue debt is secured by an annual appropriation pledge of the city and is rated two notches below the GO rating due to risk of appropriation and non - essentiality of the pledged asset (an ice (nk). Post -sale, the district will have $75.6 million of outstanding long -term general obligation debt and $9.0 million of outstanding lease revenue debt. SUMMARY RATINGS RATIONALE The Aa1 underlying rating reflects the city's history of excellent financial management and strong reserve levels; wealthy tax base located just south of the Twin Cities Metropolitan Area, and an above average debt burden. :1iU 1011169 - Wealthy diverse tax base benefiting from its proximity to the Twin Cities metro area - Strong financial management with robust general fund reserves CHALLENGES - Elevated debt service as a portion of operating expenditures DETAILED CREDIT DISCUSSION WEALTHY TAX BASE NEIGHBORING THE TWIN CITIES Due to the city's favorable location near Minneapolis (Aa1 stable) and St. Paul (Aa1 stable), as well as its growing population with strong socioeconomic indicators, the city's tax base is expected to grow over the next three to five years. The city is located in Dakota County (Aaa stable) approximately 25 miles south of downtown Minneapolis. The city's large $5.7 billion tax base benefits from its proximity to the Twin Cities as the majority of the residents commute to the Twin Cities area for work. The city is primarily residential and consists of mostly single family homes. There is also a fairly significant commercial and industrial presence which comprises roughly one - fourth of valuations. The city endured steady valuation declines ranging from 5% to 8% 2010 and 2012. Valuations experienced growth starting in 2013 increasing by 1% and 5.7% in 2013 and 2014 respectively. Preliminary estimates by the county indicate a significant 10% increase in valuations coming for 2015. Approximately $450 million in growth is attributable to appreciation in real estate values while $140 million is associated with new construction activity. Through April 30, 2014, the city has seen approximately $40 million in building permit activity, slightly behind 2013's pace but still reflective of sustained growth trends. The city has approximately 30% of its land available for development which it will rezone for residential development as demand improves. Socioeconomic indicators for the population are strong with median family income at 160% of the nation. The city's unemployment rate is very strong at 3.7% as of May 2014, compared to 4.2% in the state and 6.1 % in the nation over the same period. STRONG FINANCIAL MANAGEMENT WITH AMPLE GENERAL FUND RESERVES The city's strong financial position, supported by a proactive management team and ample General Fund reserves, is expected to remain stable over the next three to five years. After posting planned General Fund draw of $1.8 million in fiscal 2013, the city still maintained a strong available fund balance of $9.5 million in its General Fund, equivalent to a high 44% of revenues. The entirety of the deficit is attributable to a one -time year -end transfer of $2.4 million to seed a capital equipment and replacement fund. Management plans to utilize these equipment reserves to fund its equipment maintenance and replacement program over the next five years. Year to date results for fiscal 2014 point to an operating surplus of approximately $500,000 despite increased snow removal costs. Management is currently in the process of finalizing its 2015 budget but expects to maintain reserves at current levels yet again. The city abides by a policy to maintain between 40% and 50% of General Fund expenditures in its reserve balance, a level which management expects to maintain going forward. The large majority of the city's revenues are derived from property taxes which comprised 72% of General Fund revenues in 2013. The second and third largest revenue sources included charges for services (8 %) and licenses and permits (7 %). The city receives limited state and federal aid and does not have significant reliance on economically sensitive revenues. ABOVE AVERAGE DIRECT DEBT BURDEN WITH ANNUAL BORROWING PLANNED; AVERAGE PENSION BURDEN The city's debt burden will remain manageable despite elevated annual debt service costs and planned borrowing due to the city's projected tax base and budgetary growth. While debt service is an elevated 31% of operating expenditures, we believe the city's debt burden will remain manageable due to some non -levy support and the city's effort to begin cash - financing certain ongoing capital projects. The city has an above average direct debt burden of 1.6% of full value and 3.05 times 2013 operating revenues. The city plans to issue approximately $15 million for street improvements and $9 million for water system improvements in fiscal 2015. Principal amortization is average with 68% over ten years. The city does have lease revenue debt that is subject to appropriation but the city consistently appropriates for debt service and includes this expense as a part of its operating budget. All of the district's debt is fixed rate mode, and the district is not a party to any interest rate swap agreements. The city participates in two multiple - employer cost - sharing plans administered by the state, the General Employees Retirement Fund (GERF) and Public Employees Police and Fire Fund ( PEPFF). Moody's 3 -year adjusted net pension liability (ANPL) for the city, under our methodology for adjusting reported pension data, is $51.8 million, or 1.74 times operating revenues (General Fund and Debt Service Funds). In 2013, the city contributed a total of $1.7 million, equal to a manageable 5.5% of operating revenues. Moody's ANPL reflects certain adjustments we make to improve the comparability of reported pension liabilities. The adjustments are not intended to replace the city's reported liability information, but to improve comparability with other rated entities. We determined the city's share of liability for GERF and PEPFF in proportion to its contributions to the plans. WHAT COULD CHANGE RATING UP - Moderation of annual debt service costs compared to operating budget - Improvement in the city's demographic profile WHAT COULD CHANGE RATING DOWN - Material growth in the city's debt burden - Erosion of general fund liquidity and reserves KEY STATISTICS 2014 Full value: $5.7 billion 2014 Estimated full value per capita: $98,542 2008 -2012 Median family income (as a % of US): 160% Fiscal 2013 Available Operating Fund Balance: 32% of revenues Fiscal 2008 to Fiscal 2013 Change in Available Operating Fund Balance as a % of revenues: -5.7% Fiscal 2013 Operating Fund Cash Balance: 32.3% of revenues Fiscal 2008 to Fiscal 2013 Change in Operating Fund Cash Balance as a % of revenues: -6.6% Fiscal 2008 to Fiscal 2013 Average Operating Revenues / Operating Expenditures: 0.99 times Institutional Framework: Aa Net Direct Debt / Full Value: 1.6% Net Direct Debt / Operating Revenues: 3.05 times 3 -year average of Moody's ANPL / Full Value: 0.9% 3-year average of Moody's ANPL / Operating Revenues: 1.7 times PRINCIPAL METHODOLOGY The principal methodology used in this rating was US Local Government General Obligation Debt published in January 2014. Please see the Credit Policy page on www.moodys.com for a copy of this methodology. REGULATORY DISCLOSURES For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer /entity page for the respective issuer on www.moodys.com. Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review. Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating. Please see the ratings tab on the issuer /entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Analysts Chandra Ghosal Lead Analyst Public Finance Group Moody's Investors Service Edward Damutz Additional Contact Public Finance Group Moody's Investors Service Contacts Journalists: (212) 553 -0376 Research Clients: (212) 553 -1653 Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 USA MOODY'S INVESTORS SERVICE © 2014 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and /or their licensors and affiliates (collectively, "MOODY'S "). All rights reserved. CREDIT RATINGS ISSUED BY MOODY S INVESTORS SERVICE, INC. ( "MIS ") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT -LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY S ( "MOODY S PUBLICATION ") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT -LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL -BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY S ANALYTICS, INC. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. MOODY'S CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS FOR RETAIL INVESTORS TO CONSIDER MOODY'S CREDIT RATINGS OR MOODY'S PUBLICATIONS IN MAKING ANY INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third -party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody's Publications. To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S. To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. MIS, a wholly -owned credit rating agency subsidiary of Moody's Corporation ( "MCO "), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5 %, is posted annually at www.moodys.com under the heading "Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy" For Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and /or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761 G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761 G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail clients. It would be dangerous for "retail clients" to make any investment decision based on MOODY'S credit rating. If in doubt you should contact your financial or other professional adviser.