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Item 07
CITY OF LAKEVILLE RESOLUTION Date July 20, 2015 Resolution No. Motion By Seconded By RESOLUTION AUTHORIZING ISSUANCE, AWARDING SALE, PRESCRIBING THE FORM AND DETAILS AND PROVIDING FOR THE PAYMENT OF $17,585,000 GENERAL OBLIGATION BONDS, SERIES 2015A 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 15, 2015, authorized the issuance and sale on the date hereof of its General Obligation Bonds, Series 2015A (the Bonds), pursuant to Minnesota Statutes, Chapters 429 and 475 and Section 162.18. Proceeds of the Bonds will be used to finance (a) various improvement projects in the City, including the City’s 2015 street reconstruction and street improvement projects for Hamburg Avenue and Kensington Boulevard (the Improvement Project) and (b) improvements to State Aid highways in the City, including the CSAH 50/CSAH 60 (185th Street) roundabout and expansion and Ipava Ave. traffic signals at 175th Street and 165th Stree (the CSAH Project; together with the Improvement Project, the Project). Pursuant to Minnesota Statutes, Section 162.18, subdivision 1, the average principal of and interest due in any calendar year on the portion of the Bonds issued to finance the CSAH Project, $________ (the CSAH Bonds), together with any similar obligations of the City which are outstanding (such total maximum annual debt service being equal to $______), shall not exceed 90 percent of the amount of the last annual allotment, preceding the bond issue, received by the City from the construction account in the municipal state aid street fund (90% of such amount being equal to $2,096,835). 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. 2 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, 2015, 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 Improvement Bonds CSAH Bonds Rate Year Improvement Bonds CSAH Bonds Rate 2017 % 2027 % 2018 2028 2019 2029 2020 2030 2021 2031 2022 2032 2023 2033 2024 2034 2025 2035 2026 2036 [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 3 the Bonds shall be payable on February 1 and August 1 in each year, commencing February 1, 2016, 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. Redemption. Bonds maturing in 2026 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, 2025, 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.] 4 2.05. Appointment of Initial Registrar. 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: (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 5 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. (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 destro yed, 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. (j) 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 6 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 b y 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 7 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. In such event, the Bonds will be transferable in accordance 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 form in Exhibit A hereto. SECTION 3. GENERAL OBLIGATION BONDS, SERIES 2015A CONSTRUCTION FUND. There is hereby established on the official books and records of the City a separate fund designated as the General Obligation Bonds, Series 2015A 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 improvement. The City Clerk shall maintain the Construction Fund until all costs and expenses incurred by the City in connection 8 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 Bonds, Series 2015A Bond Fund. SECTION 4. GENERAL OBLIGATION BONDS, SERIES 2015A BOND FUND. There is hereby established on the official books and records of the City a separate fund designated as the General Obligation Bonds, Series 2015A 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 (d) such moneys allotted and to be allotted to the City from its account in the Municipal State Aid Road Fund of the State of Minnesota as shall be sufficient to pay the principal of and interest on the CSAH Bonds when due and (e) any other funds appropriated by the City Council for the payment of the Bonds. With regard to the state aid allotments, the City shall follow the procedure set forth in Minnesota Statutes, Section 162.18, Subdivision 4, for obtaining such funds. If at any time the moneys in the Bond Fund should be insufficient to pay all principal and interest due on the Bonds, the City shall nevertheless pay the same from any moneys on hand in the general fund of the City, and the moneys so used shall be restored to the general fund, to the extent attributable to the CSAH Bonds, from the moneys next received by the City from the Construction or Maintenance Account in the municipal State Aid Road Fund of the State of Minnesota, which are not required for the payment of additional principal and interest, or from the proceeds of taxes levied pursuant to Section 6 hereof. 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. 9 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 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 1/12th 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 Improvement 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 Improvement Project financed by the Improvement Bonds. The City estimates it has levied or will levy special assessments in the original aggregate principal amount of approximately $3,106,139. It is estimated that the principal and interest on such special assessments will be levied beginning in 2015 and collected in the years 2016-2035 in the amounts shown on Exhibit B 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 and state aid allotments, 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 full; 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 10 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 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 11 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 (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. 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. 12 (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, 2015, 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 13 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 (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. 14 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 furt her 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 15 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 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 supp lement 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 furnish 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. 16 9.03. Official Statement. The Official Statement relating to the Bonds, dated __________, 2015, 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 l5c2-12 adopted by the SEC under the Securities Exchange Act of 1934. The officers of the City are hereby authorized and directed to execute such certificates as may be appropriate concerning the accuracy, completeness and sufficiency of the Official Statement. APPROVED AND ADOPTED this 20th day of July, 2015. CITY OF LAKEVILLE, By: Matt Little, Mayor ATTEST: Charlene Friedges, City Clerk UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF DAKOTA CITY OF LAKEVILLE GENERAL OBLIGATION BOND, SERIES 2015A R-___ $_________ Interest Rate Maturity Date Date of Original Issue CUSIP No. __% February 1, 20__ August 20, 2015 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: THOUSAND DOLLARS 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, 2016 (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 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 $17,585,000 issued pursuant to a resolution adopted by the City Council on July 20, 2015 (the Resolution), to finance various improvement and state aid road 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 and Section 162.18. 2 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 2026 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, 2025, 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 20__ 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 Payment Date Aggregate Principal Amount *final maturity 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 3 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, together with anticipated allotments of municipal state aid street funds, 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, allotments and taxes to its General Obligation Bonds, Series 2015A 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. 4 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 By 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. ______________________ 5 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 may be 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: ____________________________________ EXHIBIT B City of Lakeville, Minnesota General Obligation Bonds, Series 2015A PAYMENTS ON SPECIAL ASSESSMENTS Year of Collection Principal Interest Total 2 PROJECTED TAX LEVIES Levy year / Collect year Levy 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 20, 2015, by the City Council of the City of Lakeville, Minnesota, setting forth the form and details of an issue of $17,585,000 General Obligation Bonds, Series 2015A, dated as of August 20, 2015 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 _______________, 2015. Dakota County Auditor (SEAL) New Issue: Moody's assigns Aa1 to City of Lakeville, MN's $17.6M GO Bonds, Ser. 2015A Global Credit Research - 14 Jul 2015 Maintains Aa1 on $86.4M post-sale GO debt LAKEVILLE (CITY OF) MN Cities (including Towns , Villages and Towns hips) MN Moody's Rating ISSUE RATING General Obligation Bonds, Series 2015A Aa1 Sale Amount $17,585,000 Expected Sale Date 07/20/15 Rating Description General Obligation Moody's Outlook NOO NEW YORK, July 14, 2015 --Moody 's Inves tors Servic e has as signed a Aa1 rating to the City of Lak eville, MN's $17.6 million General Obligation (GO) Bonds, Ser. 2015A. Conc urrently, Moody's maintains the Aa1 rating on the city's outstanding GO debt and Aa3 rating on the city 's outs tanding lease revenue debt. Post-sale, the c ity will have $86.4 million of GO debt and $8.5 million of lease revenue debt outstanding. SUMMARY RATING RATIONALE The Aa1 GO rating reflects the city's large and affluent tax base experiencing rapid growth; healthy financial profile highlighted by sizeable operating fund res erves; above average debt burden and unfunded pens ion liabilities. The Aa3 leas e rev enue rating reflec ts the ris k of annual non-appropriation, the non-essential nature of the leased asset (ic e rink) and the credit c haracteristics of Lakeville's Aa1 GO rating. OUTLOOK Outlooks are generally not assigned to loc al government credits with this amount of debt outstanding. WHAT COULD MAKE THE RATING GO UP -Moderation of the city's debt profile -Improvement in the c ity 's s ocioec onomic indices WHAT COULD MAKE THE RATING GO DOWN -Material growth in the city's debt burden -Erosion of operating fund liquidity and reserves STRENGTHS -Large, affluent tax base benefiting from its proximity to the Twin Cities (Minneapolis Aa1 stable; St. Paul Aa1 stable(m)) metro area -Healthy financial profile highlighted by sizeable operating fund reserves CHALLENGE -Elev ated debt profile RECENT DEVELOPMENTS Recent developments have been incorporated into the Detailed Rating Rationale. DETAILED RATING RATIONALE ECONOMY AND TAX BASE: LARGE, AFFLUENT TAX BASE EXPERIENCING RAPID GROWTH The city's large tax bas e is ex pected to remain healthy over the medium-term, due to the city's favorable location near Minneapolis and St. Paul, growing population and s trong soc ioeconomic indicators. The c ity is located in Dakota County (Aaa stable) approx imately 25 miles south of downtown Minneapolis. The c ity's large $6.1 billion (ec onomic mark et value) tax base is primarily residential and consists of mostly single family homes , with the majority of residents commuting into the city for work. There is also a notable commercial and indus trial pres ence which comprises roughly one-fourth of valuations. The city endured significant valuation declines ranging from 5% to 8% during muc h of the recent economic downturn. Since 2012, valuations hav e grown steadily due to a mix of new c onstruction and appreciation of ex isting property, with the city's economic market value growing by 6% and 7% in the last two assessment years, res pectively. Management expects recent tax base growth to continue, citing $80 million in building permit activity in the first five months of 2015, compared to $144 million in all of 2014. Lakeville has approximately 30% of its land available for development which it will rezone for residential development as demand grows. Socioeconomic indicators for the population are s trong with median family income at 160% of the nation. The city's unemployment rate is v ery s trong at 3.4% as of March 2015, c ompared to 4.5% in the state and 5.6% in the nation over the same period. FINANCIAL OPERATIONS AND RESERVES: HEALTHY FINANCIAL PROFILE WITH SOUND RESERVES The city's financial profile is expec ted to remain healthy due to s izeable operating fund reserves and ample liquidity. Most rec ently, in 2014, the city budgeted for a General Fund surplus of $460,000, but ended the year with a larger operating surplus of $1.4 million. The growth in reserves was driv en by favorable revenue variances in building permits and c harges for serv ices, as well as personnel expenditures whic h came in below budget. The city's available operating fund (combined General and Debt Service funds) reserves increased to $10.8 million or a sound 30% of operating fund revenues . The city had originally budgeted for a $500,000 surplus in 2015; however, due to a higher contribution to fund balance in 2014, council authorized increas ed s pending for personnel and capital. Approximately $900,000 in additional capital expenditures and increased personnel costs are ex pected to reduce operating fund reserves by $600,000 in the current fis c al year. The c ity abides by a policy to maintain between 40% and 50% of General Fund ex penditures 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 , whic h comprised 61% of operating fund revenues in 2014. The city receives limited state and federal aid and does not have s ignificant reliance on economically sens itiv e rev enues. Liquidity The city's unrestricted c ash balance within its main operating funds has remained stable. At the close of fiscal 2014, operating fund net cas h totaled $11.1 million and a healthy 31% of operating fund revenues . The city anticipates maintaining similar levels of liquidity over the near-term. DEBT AND PENSIONS: ELEVATED DEBT PROFILE EXPECTED TO REMAIN MANAGABLE The city's debt burden will remain manageable despite elevated annual debt service cos ts and planned borrowing due to the city's projec ted tax base and budgetary growth. At 1.6% of full value and 2.7 times operating fund rev enues, the city's current level of borrowing is high compared to similarly rated entities. Debt serv ice accounted for an above average 31% of operating expenditures in fiscal 2014. The city's elev ated debt burden is somewhat offset by non-levy s upport from tax increment and s tate aid revenues . The city intends to iss ue additional debt within the next y ear for improvements to its water system. The city will utiliz e a cas h contribution from the utility in conjunction with the bonds. The project has an estimated c ost of $10.7 million and management has not y et determined the size of the impending borrowing. Debt Structure All of the city's debt is fixed rate and amortizes over the long-term. Principal amortization is average with 66% set to be retired over the next ten y ears. In addition to its GO debt, the city has lease revenue debt and liquor rev enue debt outstanding in the amount of $8.5 million and $2.8 million, res pectively. The lease revenue debt is subject to annual appropriation, but the city c onsistently appropriates for debt servic e and includes this expens e as part of its operating budget. Moody's does not rate the c ity's outstanding liquor revenue debt. Debt-Related Derivatives The city has no derivative exposure. Pens ions and OPEB The city participates in two multiple-employ er cos t-sharing plans adminis tered by the s tate, the General Employ ees Retirement Fund (GERF) and Public Employees Police and Fire Fund (PEPFF). Moody 's 3-year adjusted net pension liability (ANPL) for the c ity , under our methodology for adjusting reported pension data, is $56.9 million, or 1.6 times operating revenues. In 2014, the city contributed a total of $1.7 million, equal to a manageable 5% of operating revenues. Moody 's ANPL reflec ts certain adjustments we make to improv e 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. MANAGEMENT AND GOVERNANCE: STRONG INSTITUTIONAL FRAMEWORK AND PRUDENT MANAGEMENT UNDERPIN OPERATIONAL STABILITY Minnesota cities hav e an ins titutional framework score of "Aa" or strong. Cities rely on property taxes to fund the majority of operations followed by state aid. State Local Government Aid (LGA) comprises on average 25% of GF rev enues. The state increased aid for next biennium, after y ears of state aid cuts and stagnant aid. Cities ty pically have above average debt related expenditures . Notably, overall expenditures are predictable and cities have the ability to reduce expenditures if neces sary, and benefit from unlimited operating levy authority. Management utilizes a conserv ative budgeting approac h and has maintained a healthy financial profile through close expenditure monitoring. Positive operating results have allowed the city to make capital contributions from its operating budget to reduce future bonding needs. KEY STATISTICS - Estimated full valuation: $6.1 billion (Economic Market Value) - Estimated full valuation per capita: $105,500 - Estimated median family income as % of the US: 160% - Fis cal 2014 available operating fund balance / operating revenue: 30.0% - 5-year change in available operating fund balance / operating revenue: -1.0% - Fis cal 2014 operating net c ash / operating revenue: 31.0% - 5-year change in operating net cash / operating revenue: 1.0% - Ins titutional framework score: Aa - 5-year average operating revenue / operating expenditures: 1.01x - Net direct debt burden: 1.6% of full valuation; 2.7 times operating revenue - 3-year average Moody 's adjusted net pens ion liability : 0.9% of full valuation; 1.6 times operating revenue OBLIGOR PROFILE The City of Lakeville is located 25 miles s outh of downtown Minneapolis encompas s ing approximately 38 square miles in Dakota County . The city's population is estimated at 57,789 as of 2013. LEGAL SECURITY The bonds are secured by the c ity 's general obligation unlimited tax (GOULT) pledge which benefits from a dedicated property tax levy not limited by rate or amount. While the bonds are ultimately secured by the city 's GOULT pledge, special assessments and municipal state aid allotments are expected to cover portions of debt serv ice. Debt service on the Lakeville's leas e rev enue bonds is secured by the city's pledge to make annual lease payments, subject to annual appropriation. USE OF PROCEEDS Proceeds of the current issuance will be used to finance v arious street and water system improv ements. PRINCIPAL METHODOLOGY The principal methodology used in this rating was US Local Government General Obligation Debt publis hed in January 2014. Please see the Credit Polic y page on www.moodys.com for a c opy of this methodology. REGULATORY DISCLOSURES For ratings is sued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a s ubsequently iss ued bond or note of the same s eries or c ategory/c lass of debt or pursuant to a program for whic h the ratings are derived exclusively from existing ratings in acc ordance 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 ac tion for s ecurities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement prov ides certain regulatory disclosures in relation to the provisional rating as signed, and in relation to a definitiv e rating that may be assigned subsequent to the final iss uance of the debt, in each case where the trans action struc ture 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. The following information supplements Dis closure 10 ("Information Relating to Conflicts of Interest as required by Paragraph (a)(1)(ii)(J) of SEC Rule 17g-7") in the regulatory disclos ures made at the ratings tab on the is suer/entity page on www.moodys.c om for each c redit rating: Moody 's was not paid for s ervices other than determining a credit rating in the most recently ended fiscal year by the person that paid Moody's to determine this credit rating. Regulatory disclosures contained in this press release apply to the credit rating and, if applic able, the related rating outlook or rating review. Please s ee 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 s ee the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each c redit rating. Analysts Coley Anderson Lead Analyst Public Finance Group Moody 's Inves tors Service Rachel Cortez Back up Analyst Public Finance Group Moody 's Inves tors Service Genev ieve Nolan Additional Contact Public Finance Group Moody 's Inves tors Service Contacts Journalists: (212) 553-0376 Research Clients : (212) 553-1653 Moody 's Inves tors Service, Inc . 250 Greenwich Street New York, NY 10007 USA © 2015 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytic s, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved. 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MJ KK or MSFJ (as applicable) hereby disclose that mos t issuers of debt securities (including corporate and municipal bonds, debentures, notes and commerc ial paper) and preferred stoc k rated by MJ KK or MSFJ (as applic able) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating s ervices rendered by it fees ranging from J PY200,000 to approx imately JPY350,000,000. MJ KK and MSFJ also maintain polic ies and procedures to address Japanese regulatory requirements. * Preliminary; subject to change. Th e i n f o r m a t i o n c o n t a i n e d i n t h i s P r e l i m i n a r y O f f i c i a l S t a t e m e n t i s d e e m e d b y t h e Ci t y to b e f i n a l a s o f t h e d a t e h e r e o f ; h o w e v e r , t h e p r i c i n g a n d u n d e r w r i t i n g i n f o r m a t i o n i s s u b j e c t to c o m p l e t i o n o r a m e n d m e n t . Un d e r n o c i r c u m s t a n c e s s h a l l t h i s P r e l i m i n a r y O f f i c i a l S t a t e m e n t c o n s t i t u t e a n o f f e r t o s e l l o r t h e s o l i c i t a t i o n o f a n o f f e r to b u y , n o r s h a l l t h e r e b e a n y s a l e o f t h e s e s e c u r i t i e s i n a n y j u r i s d i c t i o n i n w h i c h s u c h o f f e r , so l i ci t a t i o n o r s a l e w o u l d b e u n l a w f u l p r i o r t o r e g i s t r a t i o n o r q u a l i f i c a t i o n u n d e r t h e s e c u r i t i e s l a w s o f a n y s u c h j u r i s d i c t i o n . PRELIMINARY OFFICIAL STATEMENT DATED JUNE 30, 2015 NEW ISSUE Moody’s Rating: Requested NOT BANK QUALIFIED In the opinion of Dorsey & Whitney LLP, Minneapolis, Minnesota, Bond Counsel, based on present federal and Minnesota laws, regulations, rulings and decisions, and assuming compliance with certain requirements of the Internal Revenue Code of 1986, a s amended, (the “Code”), and certain covenants, interest to be paid on the Bonds is excluded from gross income for federal income tax pu rposes 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 for purposes of the Minnesota franchise tax on corporations and financial institutions and in adjusted current earnings of corporations f or federal alternative minimum tax purposes. The Bonds will not be designated as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code. See “TAX EXEMPTION AND RELATED TAX CONSIDERATIONS.” $17,585,000* City of Lakeville, Minnesota General Obligation Bonds, Series 2015A (the “Bonds”) (Book Entry Only) Dated Date: Date of Delivery Interest Due: Each February 1 and August 1, commencing February 1, 2016 The Bonds will mature February 1 in the years and amounts* as follows: 2017 $760,000 2018 $765,000 2019 $765,000 2020 $785,000 2021 $785,000 2022 $800,000 2023 $815,000 2024 $830,000 2025 $845,000 2026 $860,000 2027 $830,000 2028 $850,000 2029 $880,000 2030 $905,000 2031 $930,000 2032 $960,000 2033 $1,000,000 2034 $1,035,000 2035 $1,070,000 2036 $1,115,000 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 above. The City may elect on February 1, 2025, and on any day thereafter, to prepay Bonds due on or after February 1, 2026 at a price of par plus accrued interest. 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. Additional sources of security for the Bonds are discussed herein. Proposals shall be for not less than $17,373,980 plus accrued interest, if any, on the total principal amount of the Bonds. Proposals shall specify rates 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. Following receipt of proposals, a good faith deposit will be required to be delivered to the City by the lowest bidder as described in the “Terms of Proposal” herein. Award of the Bonds will be made on the basis of True Interest Cost (TIC). 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 ava ilable for delivery at DTC on or about August 20, 2015. PROPOSALS RECEIVED: July 20, 2015 (Monday) until 10:00 A.M., Central Time AWARD: July 20, 2015 (Monday) at 7:00 P.M., Central Time 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 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 Justin Miller FINANCE DIRECTOR Jerilyn Erickson 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 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 print ed 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 .............................................................................................................................. i-iv Introductory Statement ....................................................................................................................... 1 Continuing Disclosure ....................................................................................................................... 1 The Bonds .......................................................................................................................................... 2 Authority and Purpose ....................................................................................................................... 4 Sources and Uses of Funds ................................................................................................................ 4 Security and Financing ...................................................................................................................... 5 Future Financing ................................................................................................................................ 5 Litigation ............................................................................................................................................ 6 Legality .............................................................................................................................................. 6 Tax Exemption and Related Considerations ...................................................................................... 6 Rating ................................................................................................................................................. 9 Municipal Advisor ............................................................................................................................. 9 Certification ....................................................................................................................................... 9 City Property Values .......................................................................................................................... 10 City Indebtedness ............................................................................................................................... 11 City Tax Rates, Levies and Collections ............................................................................................. 16 Funds on Hand ................................................................................................................................... 17 City Investments ................................................................................................................................ 17 General Information Concerning the City ......................................................................................... 18 Governmental Organization and Services .......................................................................................... 24 Proposed Form of Legal Opinion............................................................................................. Appendix I Continuing Disclosure Covenants ............................................................................................ Appendix II Summary of Tax Levies, Payment Provisions, and Minnesota Real Property Valuation ...................................................................................... Appendix III Excerpt of 2014 Comprehensive Annual Financial Report ..................................................... Appendix IV * Preliminary; subject to change. - i - THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $17,585,000* CITY OF LAKEVILLE, MINNESOTA GENERAL OBLIGATION BONDS, SERIES 2015A (BOOK ENTRY ONLY) Proposals for the Bonds will be received on Monday, July 20, 2015, until 10:00 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 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 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 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 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, 2nd Floor, New York, New York 10018 Customer Support: (212) 849-5000 - ii - DETAILS OF THE BONDS The 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, 2016. Interest will be computed on the basis of a 360- day year of twelve 30-day months. The Bonds will mature February 1 in the years and amounts* as follows: 2017 $760,000 2018 $765,000 2019 $765,000 2020 $785,000 2021 $785,000 2022 $800,000 2023 $815,000 2024 $830,000 2025 $845,000 2026 $860,000 2027 $830,000 2028 $850,000 2029 $880,000 2030 $905,000 2031 $930,000 2032 $960,000 2033 $1,000,000 2034 $1,035,000 2035 $1,070,000 2036 $1,115,000 * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the 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 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 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 ab ove. 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 Bonds will be issued by means of a book entry system with no physical distribution of Bonds ma de to the public. The Bonds will be issued in fully registered form and one Bond, representing the aggregate principal amount of the 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 Bonds. Individual purchases of the 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 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 Bonds, will be required to deposit the 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, 2025, and on any day thereafter, to prepay Bonds due on or after February 1, 2026. 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 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. - iii - SECURITY AND PURPOSE The 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 and Minnesota municipal state aid allotments. The proceeds will be used to finance various street improvement projects. BIDDING PARAMETERS Proposals shall be for not less than $17,373,980 plus accrued interest, if any, on the total principal amount of the 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 Bonds is adjourned, recessed, or continued to another date without award of the 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. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. GOOD FAITH DEPOSIT To have its proposal considered for award, the lowest bidder is required to submit a good faith deposit to the City in the amount of $175,850 (the “Deposit”) no later than 1:00 P.M., Central Time on the day of sale. The Deposit may be delivered as described herein in the form of either (i) a certified or cashier’s check payable to the City; or (ii) a wire transfer. The lowest bidder shall be solely responsible for the timely delivery of their Deposit whether by check or wire transfer. Neither the City nor Springsted Incorporated have any liability for delays in the receipt of the Deposit. If the Deposit is not received by the specified time, the City may, at its sole discretion, reject the proposal of the lowest bidder, direct the second lowest bidder to submit a Deposit, and thereafter award the sale to such bidder. Certified or Cashier’s Check. A Deposit made by certified or cashier’s check will be considered timely delivered to the City if it is made payable to the City and delivered to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101 by the specified time. Wire Transfer. A Deposit made by wire will be considered timely delivered to the City upon submission of a federal wire reference number by the specified time. Wire transfer instructions will be available from Springsted Incorporated following the receipt and tabulation of proposals. The successful bidder must send an e-mail including the following information: (i) the federal reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to which it applies. Once an award has been made, the Deposit received from the lowest bidder (the “purchaser”) will be retained by the City and no interest will accrue to the purchaser. The amount of the Deposit will be deducted at settlement from the purchase price. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. AWARD The 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 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 Bonds. If the 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 - iv - 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 Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Bonds. CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the 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, 2015, the 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 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 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. CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the 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 Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Bonds. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the 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 Municipal 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 Bonds, together with any other information required by law. By awarding the 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 Bonds are awarded up to 25 copies of the Final Official Statement. The City designates the Underwriter of the syndicate to which the 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 Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated June 15, 2015 BY ORDER OF THE CITY COUNCIL /s/ Charlene Friedges City Clerk * Preliminary; subject to change. - 1 - OFFICIAL STATEMENT $17,585,000* CITY OF LAKEVILLE, MINNESOTA GENERAL OBLIGATION BONDS, SERIES 2015A (BOOK ENTRY ONLY) INTRODUCTORY STATEMENT This Official Statement contains certain information relating to the City of Lakeville, Minnesota (the “City”) and its issuance of $17,585,000* General Obligation Bonds, Series 2015A (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. Additional sources of security for the Bonds are discussed herein. Inquiries may be directed to Ms. Jerilyn Erickson, Finance Director, City of Lakeville, 20195 Holyoke Avenue, Lakeville, Minnesota 55044-0957, by telephoning (952) 985-4481, or by emailing jerickson@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, 15th Floor, Minneapolis, Minnesota 55402, Bond Counsel, by telephoning (612) 492-6959, or by emailing hanson.jennifer@dorsey.com. CONTINUING DISCLOSURE In 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. To the best of its knowledge, the City has complied for the past five years in all material respects in accordance with the terms of its previous continuing disclosure undertakings entered into pursuant to the Rule. In the interest of full disclosure, the City notes the following, which is presented irrespective of materiality: Within the past five years, Moody’s Investors Service has changed the credit ratings of certain municipal bond insurance firms, which resulted in the change of the insured ratings of certain debt issues of the City. Material event notices regarding certain insurance rating changes have not been filed; however, the information was publicly available through other sources. - 2 - 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 the ir market price. 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 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, 2016. 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. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 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. Optional Redemption The City may elect on February 1, 2025, and on any day thereafter, to prepay the Bonds due on or after February 1, 2026. 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 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 - 3 - 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 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 reque sted 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 t heir 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). - 4 - 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 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. AUTHORITY AND PURPOSE The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429, 462, and 475. The proceeds will be used to finance various street improvement projects. SOURCES AND USES OF FUNDS For purposes of this Official Statement, the composition of the Bonds has been broken out by the source of payment for each portion of the Bonds. The Bonds consist of: the portion of the Bonds payable primarily from special assessments (the “Assessment Portion”); and the portion of the Bonds payable from annual state-aid allotments received from the Minnesota Department of Transportation (the “State-Aid Portion”). - 5 - The composition of the Bonds is estimated to be as follows: Assessment State-Aid Portion Portion Total Sources of Funds: Principal Amount $12,570,000 $5,015,000 $17,585,000 Available City Funds 350,000 0 350,000 Prepaid Assessments 246,187 0 246,187 Total Sources of Funds $13,166,187 $5,015,000 $18,181,187 Uses of Funds: Deposit to Project Fund $12,817,277 $4,926,276 $17,743,553 Allowance for Discount Bidding 150,840 60,180 211,020 Capitalized Interest 122,239 0 122,239 Costs of Issuance 75,830 28,544 104,374 Total Uses of Funds $13,166,187 $5,015,000 $18,181,187 SECURITY AND FINANCING The 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. Additional sources of security for the Bonds are described below. Improvement Portion The City will pledge special assessments against benefited properties for repayment of the Assessment Portion of the Bonds. Special assessments in the total principal amount of approximately $3,106,139 are expected to be filed in 2015 for first collection in 2016. The City anticipates receiving prepayments of approximately $246,187 which will be used to reduce the par amount of the Assessment Portion of the Bonds. Assessments will be filed over terms ranging from 10 to 29 years with equal annual payments of principal. Interest on the unpaid balance will be charged at an interest rates ranging from 4.00% to 4.80%. The City will also levy taxes for repayment of the Assessment Portion of the Bonds, and will make its first levy in 2015 for collection in 2016. 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 for the Assessment Portion of the Bonds. State-Aid Portion The City does not anticipate the need to levy taxes for repayment of the State-Aid Portion of the Bonds. The City will pledge annual state-aid allotments received from the Minnesota Department of Transportation for repayment of the State Aid Portion of the Bonds, which will be sufficient to pay 105% of the debt service due on the State-Aid Portion of the Bonds in each year. FUTURE FINANCING The City does not anticipate issuing any additional long-term general obligation debt for at least the next 90 days. - 6 - 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. A legal opinion in substantially the form set out in Appendix I herein will be delivered at closing. TAX EXEMPTION AND RELATED CONSIDERATIONS The following discussion 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 should consult their tax advisors with respect to collateral tax consequences, including, without limitation, the determination of gain or loss on the sale of a Bond, the calculation of alternative minimum tax liability, the inclusion of Social Security or other retirement payments in taxable income, the disallowance of deductions for certain expenses attributable to the Bonds, and applicable state and local tax rules in states other than Minnesota. The form of the approving opinion of Dorsey & Whitney LLP, Bond Counsel, is attached as Appendix 1 hereto. Tax Exemption It is the opinion of Dorsey & Whitney LLP, Minneapolis, Minnesota, Bond Counsel, based on present federal and Minnesota laws, regulations, rulings and decisions, and on certifications to be furnished at closing, and assuming compliance by the City with certain covenants (“Tax Covenants”), that interest to be paid 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. Such interest is, however, included in taxable income for purposes of the Minnesota franchise tax on corporations and financial institutions. Certain provisions of the Internal Revenue Code of 1986, as amended (the “Code”), however, impose continuing requirements that must be met after the issuance of the Bonds in order that interest on the Bonds be and remain excludable 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 of the Code may cause interest on the Bonds to be includable 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 same becomes includable in federal gross income or in Minnesota taxable net income. - 7 - Not Qualified Tax-Exempt Obligations The Bonds will not be designated 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. Sections 265(a)(2) and 291 of the Code impose additional limitations on the deductibility of such interest expense. 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 un der 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 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 basis reduction rules in the Code 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. - 8 - 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 Interest on the Bonds is not an item of tax preference for federal or Minnesota alternative minimum tax purposes, but is included in adjusted current earnings of corporations for purposes of the federal alternative minimum tax. 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 basis reduction rules in the Code 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 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. Proposed Changes in Federal and State Tax Law From time to time, there are Presidential proposals, proposals of various federal committees and legislative proposals in Congress and in the state that, if enacted, could alter or amend the federal and state tax matters referred to herein or 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 Representatives 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 only. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory actions or litigation. - 9 - THE FOREGOING IS NOT INTENDED TO BE AN EXHAUSTIVE DISCUSSION OF COLLATERAL TAX CONSEQUENCES ARISING FROM OWNTERSHIP OR DISPOSITION OF THE BONDS OR RECEIPT OF INTEREST ON THE BONDS. PROSPECTIVE PURCHASERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSEQUENCES OF, OR TAX CONSIDERATIONS FOR, PURCHASING OR HOLDING THE BONDS. RATING An application for a rating of the Bonds has been made to Moody’s Investors Service (“Moody’s”), 7 World Trade Center, 250 Greenwich Street, 23rd Floor, New York, New York If a rating is assigned, it will reflect only the opinion of Moody’s. Any explanation of the significance of the rating may be obtained only from Moody’s. There is no assurance that the rating, if assigned, will continue for any given period of time, or that such rating will not be revised, suspended or withdrawn, if, in the judgment of Moody’s, circumstances so warrant. A revision, suspension or withdrawal of the rating 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 City 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 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(a) Assessment/ Assessor’s Market Value Adjusted Collection Estimated Sales Economic Homestead Taxable Taxable Net Year Market Value Ratio(b) Market Value(c) Exclusion Market Value Tax Capacity 2014/15 $5,838,740,900 N/A N/A $222,029,569 $5,553,395,148 $63,207,455 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 (a) For a description of the Minnesota property tax system, see Appendix III. (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 2011/12 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://www.revenue.state.mn.us/propertytax/Pages/statistics-imv.aspx. Source: Dakota County, Minnesota, May 2015, except as otherwise noted. 2014/15 Adjusted Taxable Net Tax Capacity: $63,207,456* Real Estate: Residential Homestead $46,374,248 73.8% Commercial/Industrial, Public Utility, and Railroad 12,999,141 20.7 Non-Homestead Residential 1,629,527 2.6 Agricultural and Seasonal/Recreational 887,113 1.4 Personal Property 921,826 1.5 2014/15 Net Tax Capacity $62,811,855 100.0% Less: Captured Tax Increment Tax Capacity (446,760) Contribution to Fiscal Disparities (5,481,001) Plus: Distribution from Fiscal Disparities 6,323,361 2014/15 Adjusted Taxable Net Tax Capacity $63,207,455 * Excludes mobile home valuation of $133,133 - 11 - Ten of the Largest Taxpayers in the City 2014/15 Net Taxpayer Type of Business Tax Capacity Lakeville 2004 LLC Commercial $ 331,278 Heritage Commons LLC Retail 323,038 Southfork Apartments LLC Apartments 308,528 Argonne Investments LLC Retail 285,031 Dakota Electric Association Utility 268,928 CenterPoint Energy Utility 265,484 Walker Highview Hills LLC Apartments 259,216 Target Corporation Retail 256,414 LTF Real Estate Company Inc. Real Estate 238,810 FR/CAL Interstate South LLC Industrial 229,776 Total $2,766,503* * Represents 4.4% of the City’s 2014/15 adjusted taxable net tax capacity. CITY INDEBTEDNESS Legal Debt Limit and Debt Margin* Legal Debt Limit (3% of 2014/15 Estimated Market Value) $175,162,227 Less: Outstanding Debt Subject to Limit (41,730,000) Legal Debt Margin as of August 20, 2015 $133,432,227 * 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 of debt 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 t he 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. General Obligation Debt Supported Solely by Taxes(a) Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 8-20-15 12-1-05 $ 5,430,000 Street Reconstruction 2-1-2016 $ 155,000(b) 8-1-07 15,115,000 Capital Improvements 2-1-2017 1,005,000(c) 12-15-07 2,810,000 Street Reconstruction 2-1-2028 2,135,000 12-30-09 4,945,000 Street Reconstruction 2-1-2030 3,970,000 8-15-12 22,450,000 Street Reconstruction and Capital Improvements Refunding 2-1-2030 21,805,000 8-20-14 12,660,000 Street Reconstruction and Capital Improvements Refunding 2-1-2032 12,660,000 Total $41,730,000 (a) These issues are subject to the legal debt limit. (b) Excludes $1,950,000 of principal refunded by the City’s General Obligation Refunding Bonds, Series 2014B. (c) Excludes $11,185,000 of principal refunded by the City’s General Obligation Refunding Bonds, Series 2014B. - 12 - General Obligation Special Assessment Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 8-20-15 2-1-07 $3,165,000 Improvement Refunding 2-1-2016 $ 95,000 8-1-07 1,310,000 Local Improvements 2-1-2018 150,000 10-1-08 620,000 Local Improvements 2-1-2019 120,000 12-30-09 4,250,000 Refunding 2-1-2020 1,635,000 12-1-11 2,385,000 Local Improvements 2-1-2032 1,655,000 8-15-12 6,805,000 Local Improvements 2-1-2033 5,750,000 8-15-13 4,685,000 Local Improvements 2-1-2034 4,390,000 8-20-14 8,520,000 Local Improvements 2-1-2035 8,520,000 8-20-15 12,570,000 Local Improvements (the Assessment Portion of the Bonds) 2-1-2036 12,570,000 Total $34,885,000 General Obligation Tax Increment Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 8-20-15 2-1-07 $2,265,000 Tax Increment Refunding 2-1-2022 $1,680,000 General Obligation State-Aid Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 8-20-15 12-15-07 $3,675,000 State-Aid Street 4-1-2018 $1,270,000 1-1-10 2,680,000 State-Aid Street Refunding 4-1-2020 1,445,000 12-1-11 665,000 State-Aid Street Refunding 4-1-2021 450,000 8-20-15 5,015,000 State-Aid Street (the State-Aid Portion of the Bonds) 4-1-2036 5,015,000 Total $8,180,000 Ice Arena Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 8-20-15 4-1-99 $1,250,000 Recreational Facility Revenue 8-1-2019 $ 635,000(a) 12-1-06 9,230,000 Ice Arena Lease Revenue 2-1-2032 7,855,000(b) Total $8,490,000 (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. - 13 - Revenue Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 8-20-15 5-1-07 $3,955,000 Liquor Store 2-1-2027 $2,895,000 Estimated Calendar Year Debt Service Payments Including the Bonds G.O. Debt Supported G.O. Special Solely by Taxes Assessment Debt Principal Principal Year Principal & Interest Principal & Interest (a) 2015 (at 8-20) (Paid) (Paid) (Paid) (Paid) 2016 $ 2,210,000 $ 3,721,529 $ 2,340,000 $ 3,327,262 2017 2,195,000 3,639,773 2,810,000 3,765,661 2018 2,355,000 3,715,816 2,805,000 3,704,571 2019 2,495,000 3,750,910 2,770,000 3,608,951 2020 2,610,000 3,755,121 2,565,000 3,339,540 2021 2,775,000 3,815,799 2,445,000 3,154,478 2022 2,830,000 3,769,465 2,330,000 2,971,260 2023 2,960,000 3,789,320 2,380,000 2,944,875 2024 3,090,000 3,803,627 1,985,000 2,476,396 2025 3,255,000 3,851,412 1,715,000 2,143,786 2026 3,415,000 3,892,540 1,020,000 1,402,928 2027 2,360,000 2,732,010 980,000 1,330,295 2028 2,460,000 2,742,790 995,000 1,311,288 2029 2,365,000 2,561,103 1,015,000 1,295,378 2030 2,500,000 2,609,480 1,025,000 1,268,179 2031 910,000 959,000 1,040,000 1,244,868 2032 945,000 961,538 1,060,000 1,225,243 2033 1,040,000 1,164,944 2034 940,000 1,025,948 2035 855,000 904,708 2036 770,000 786,170 Total $41,730,000(b) $54,071,233 $34,885,000(c) $44,396,729 (a) Includes the Assessment Portion of the Bonds at an assumed average annual interest rate of 3.63% (b) 64.2% of this debt will be retired within ten years. (c) 69.2% of this debt will be retired within ten years. - 14 - Estimated Calendar Year Debt Service Payments Including the Bonds (continued) G.O. Tax Increment Debt G.O. State-Aid Debt Principal Principal Year Principal & Interest Principal & Interest(a) 2015 (at 8-20) (Paid) (Paid) (Paid) $ 52,860 2016 $ 220,000 $ 283,961 $ 750,000 996,422 2017 220,000 275,161 975,000 1,203,064 2018 230,000 276,161 995,000 1,193,629 2019 240,000 276,761 575,000 751,154 2020 245,000 271,908 585,000 744,968 2021 260,000 276,493 290,000 437,840 2022 265,000 270,565 210,000 352,098 2023 220,000 356,773 2024 225,000 355,930 2025 230,000 354,615 2026 235,000 352,578 2027 245,000 354,530 2028 250,000 350,680 2029 260,000 351,243 2030 270,000 351,170 2031 280,000 350,513 2032 290,000 349,253 2033 305,000 352,276 2034 315,000 349,643 2035 330,000 351,338 2036 345,000 352,245 Total $1,680,000 $1,931,010 $8,180,000(b) $10,664,822 Ice Arena Debt Revenue Debt Principal Principal Year Principal & Interest Principal & Interest 2015 (at 8-20) (Paid) (Paid) (Paid) (Paid) 2016 $ 415,000 $ 800,490 $ 180,000 $ 320,250 2017 470,000 834,980 190,000 321,000 2018 505,000 847,028 200,000 321,250 2019 525,000 842,480 210,000 321,000 2020 370,000 661,988 220,000 320,250 2021 390,000 664,888 235,000 323,875 2022 415,000 671,775 245,000 321,875 2023 435,000 672,650 255,000 319,375 2024 450,000 667,738 270,000 321,250 2025 470,000 667,038 285,000 322,375 2026 495,000 670,325 295,000 317,875 2027 520,000 672,163 310,000 317,750 2028 545,000 672,534 2029 575,000 676,634 2030 605,000 679,347 2031 635,000 680,672 2032 670,000 685,494 Total $8,490,000(c) $12,068,224 $2,895,000(d) $3,848,125 (a) Includes the State-Aid Portion of the Bonds at an assumed average annual interest rate of 3.67%. (b) 61.8% of this debt will be retired within ten years. (c) 52.4% of this debt will be retired within ten years. (d) 79.1% of this debt will be retired within ten years. - 15 - 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 2014 the City made no payments on this loan. As of December 31, 2014 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 2014/15 Debt Applicable to Adjusted Taxable Est. G.O. Debt Tax Capacity in the City Taxing Unit(a) Net Tax Capacity As of 8-20-15(b) Percent Amount Dakota County $ 434,416,271 $ 23,420,000 14.6% $ 3,419,320 I.S.D. No. 192 (Farmington) 29,961,347 182,755,000 18.5 33,809,675 I.S.D. No. 194 (Lakeville) 50,181,718 145,930,000(c) 71.5 104,339,950 I.S.D. No. 196 (Rosemount- Apple Valley-Eagan) 158,591,651 82,720,000 5.9 5,880,480 Metropolitan Council 3,284,372,173 20,500,000(d) 1.9 393,600 Metropolitan Transit 2,617,722,263 292,215,000(e) 2.4 7,013,160 Total $153,856,185 (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 of participation. Includes an estimated $6,000,000 General Obligation Park Bonds, Series 2015B, scheduled to sell on July 8, 2015 and close on August 6, 2015. (e) Includes general obligation grant anticipation notes. Includes an estimated $45,000,000 General Obligation Transit Bonds, Series 2015B, scheduled to sell on July 8, 2015 and close on August 6, 2015. Debt Ratios* G.O. G.O. Direct & Direct Debt Overlapping Debt To 2014/15 Estimated Market Value ($5,838,740,900) 1.34% 3.98% Per Capita (57,789 – 2013 MN State Demographer’s Estimate) $1,355 $4,017 * Excludes general obligation state-aid debt, general obligation utility revenue debt, ice arena debt, revenue debt, and other debt obligations. - 16 - CITY TAX RATES, LEVIES AND COLLECTIONS Tax Capacity Rates for a City Resident in Independent School District No. 194 (Lakeville) 2014/15 For 2010/11 2011/12 2012/13 2013/14 Total Debt Only Dakota County 29.149% 31.426% 33.421% 31.827% 29.633% 0.526% City of Lakeville 38.250 39.051 41.234 40.696 38.948 8.343 I.S.D. No. 194 (Lakeville) (a) 32.138 32.061 33.535 33.048 31.459 24.087 Special Districts(b) 5.199 5.562 5.848 5.538 5.033 1.940 Total 104.736% 108.100% 114.038% 111.109% 105.073% 34.896% (a) Independent School District No. 194 (Lakeville) also has a 2014/15 tax rate of 0.24871% spread on the market value of property in support of an excess operating levy. (b) 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 III. Tax Levies and Collections Collected During Collected and/or Abated Net Collection Year as of 5-28-15 Levy/Collect Levy* Amount Percent Amount Percent 2014/15 $22,155,194 (In Process of Collection) 2013/14 21,053,626 $20,921,468 99.4% $20,977,277 99.6% 2012/13 20,422,240 20,196,219 98.9 20,354,432 99.7 2011/12 20,485,607 20,266,433 98.9 20,451,167 99.8 2010/11 20,341,647 19,955,441 98.1 20,333,174 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. - 17 - FUNDS ON HAND As of April 30, 2015 Funds Cash and Investments General $ 6,376,735 Special Revenue 843,250 Debt Service: G.O. Supported by Taxes 700,573 G.O. Supported by Special Assessments 2,447,047 G.O. Supported by Tax Increment 3,037,033 G.O. State-Aid Road Bonds 22,672 Ice Arena Revenue 84,795 Capital Projects 19,061,157 Liquor 1,485,597 Utility 6,807,346 Internal Service 483,642 Escrow 7,916,362 Total $49,266,209 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. - 18 - Current Cash and Investments As of April 30, 2015, the City’s portfolio had a book value of $48,683,166 versus a cost to the City of $49,071,058. The composition of the portfolio was as follows: 3.9% in cash or money market funds, 44.0% in certificates of deposit, 15.6% in municipal bonds, and 36.5% in government agency securities. The portfolio had a maturity schedule as follows: Year Cost Percent of Total Liquid $ 1,350,812 2.7% 2015 10,978,255 22.3 2016 16,368,181 33.2 2017 6,733,316 13.7 2018 8,707,737 17.7 2019-2024 4,544,865 9.2 Total investments $48,683,166 98.8% Cash 583,043 1.2 Total $49,266,209 100.0% 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 2013 MN State Demographer 57,789 3.3% 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, http://www.demography.state.mn.us/ and United States Census Bureau, http://www.census.gov/. The City’s population by age group for the past three years is as follows: Data Year/ Report Year 0-17 18-34 35-64 65 and Over 2014/15 17,066 11,860 26,037 4,692 2013/14 17,194 11,538 25,730 4,281 2012/13 17,790 10,818 25,332 3,981 Source: Claritas, Inc. - 19 - 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: Approximate Number Employer Product/Service of Employees Independent School District No. 194 (Lakeville) Public education 1,370 Hearthside Food Solutions Food service contractors 715 ConAgra Store Brands Breakfast cereal manufacturing 515 Schmitty & Sons Bus Company 400 MOM Brands Cereal production 250 Menasha Corporation Corrugated box manufacturing 237 Despatch Industries, Inc. Industrial furnace and oven manufacturing 230 BTD Manufacturing Metal fabrication 210 Jeff Belzers Chev-Dodge-Kia Auto dealership 200 Target Retail 200 Life Time Fitness Fitness clubs 200 City of Lakeville City government 195 Fleet Farm Retail 180 Image Trend Computer programming 160 NPL Construction 150 Verified Credentials, Inc. Credit bureau 140 Genpak Foodservice packaging 125 Imperial Plastics, Inc. Plastics material and resin manufacturing 120 Source: City of Lakeville, Minnesota. Labor Force Data Annual Average May 2011 2012 2013 2014 2015 Labor Force: City of Lakeville 31,854 32,172 32,844 33,102 33,703 Dakota County 227,827 228,710 230,288 231,677 236,008 State of Minnesota 2,944,331 2,954,948 2,965,675 2,974,102 3,029,136 Unemployment Rate: City of Lakeville 5.4% 4.6% 4.0% 3.4% 2.9% Dakota County 6.1 5.2 4.5 3.7 3.3 State of Minnesota 6.5 5.6 4.9 4.1 3.6 Source: Minnesota Department of Employment and Economic Development, http://www.positivelyminnesota.com. 2015 data are preliminary. - 20 - Retail Sales and Effective Buying Income (EBI) City of Lakeville Data Year/ Total Retail Total Median Report Year Sales ($000) EBI ($000) Household EBI 2014/15 $784,104 $1,721,803 $72,792 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 Dakota County Data Year/ Total Retail Total Median Report Year Sales ($000) EBI ($000) Household EBI 2014/15 $6,523,848 $11,518,560 $59,260 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 The 2014/15 Median Household EBI for the State of Minnesota was $50,560. The 2014/15 Median Household EBI for the United States was $45,448. 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 2013, 2014 and through May 31, 2015 (in excess of $250,000) Business Product/Service Valuation Date Lewis Building Office/Warehouse/Storage $ 474,000 4/22/2013 McDonalds Restaurant 900,000 6/4/2013 Advanced Auto Parts Retail 500,000 7/11/2013 Cosmopolitan Orthodontics Medical 1,400,000 9/4/2013 Ballet Royale Dance Studio 724,000 12/3/2013 Super America Gas/Convenience with Car Wash 995,000 5/8/2014 NPL Office/Warehouse 1,500,000 12/12/2014 Allina Clinic Medical 1,250,000 2/10/2015 Lakeville Medical Medical 1,250,000 3/11/2015 FedEx Freight Distribution 8,131,000 3/30/2015 Goddard School Preschool 1,000,000 5/18/2015 - 21 - Expansion or Remodel Building Permits in 2013, 2014, and through May 31, 2015 (in excess of $250,000) Business Product/Service Valuation Date MOM Brands Corporate Headquarters $4,320,000 2/8/2013 MOM Brands Admin. Offices/Technology Center 438,000 6/5/2013 QA-1 Precision Products Motorsports products manufacturer 738,000 7/10/2013 Park Dental Medical 312,000 1/15/2014 Progressive Rail Railroad 428,000 2/5/2014 Holiday Car Wash 260,000 2/26/2014 Dick’s Sanitation Recycling/Waste Hauler 438,000 4/22/2014 Menasha Corporation Manufacturing Warehouse & Office 4,900,000 7/25/2014 Jeff Belzer's Auto body shop 600,000 10/8/2014 BTD Manufacturing Office and truck dock 1,820,000 12/5/2014 BTD Manufacturing Manufacturing 8,100,000 3/26/2015 Center for Diagnostic Imaging Medical 410,000 4/27/2015 Express Employment Office 265,000 4/30/2015 Allina Health Medical 805,000 5/6/2015 Applied Power Products Manufacturing 1,765,000 5/7/2015 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. MOM Brands has recently been acquired by Post Holdings. Post Holdings announced on May 15, 2015 that the Division Headquarters for the new combined cereal companies would be in the existing MOM Brands buildings in the City. Menasha Corporation has completed an expansion of its 241,000 square-foot facility with a 120,000 square-foot addition in 2014. The $7 million expansion project with provide manufacturing and warehouse operations. The facility is expected to have 235 employees when completed. The City of Lakeville will provide assistance through a Tax Increment Financing District to assist BTD with site improvements needed to facilitate the $7.1 million expansion. BTD Manufacturing, located in the Airlake Industrial Park, will be constructing a 200,000 square -foot addition to its existing 193,000 square-foot leased facility. BTD’s expansion will create approximately 100 new jobs in addition to their existing 215 employees. The City will provide assistance through a Tax Increment Financing District to assist BTD with site improvements needed to facilitate the $14.2 million expansion. In October 2014, the Lakeville City Council approved a preliminary plat and conditional use permit for a 94,000 square-foot FedEx Freight facility in the City. The project is proposed to be located on a 46 acre site at the southeast corner of 215th Street and Dodd Boulevard. FedEx Freight expects to employ 125 workers at the facility. Construction on the project began in the spring of 2015. In September 2014, the Lakeville City Council approved plans for a new Hy-Vee grocery story that will be located in the Spirit of Brandtjen Farm commercial district at the southeast corner of Coun ty Road 46 and Pilot Knob Road. The proposed project will consist of a 92,000 square-foot grocery store that includes a sit-down restaurant and a free-standing gas convenience store that includes a Caribou Coffee with a drive-thru and a separate four-bay automatic car wash. Construction is anticipated to begin in the summer of 2015. - 22 - 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); PAE (First Park Spec. Building – 282,000 square feet); BTD (193,000 square feet); MOM Brands (65,000 square feet); Midwest Veterinary Supply (51,000 square feet); Platinum Code (45,600 square feet); and Recycle Minnesota (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. As of April 7, 2015, there were 694 vacant single-family lots and 236 vacant townhome unit lots that have been final platted but not yet built upon, and 842 single-family lots and 71 townhome unit lots preliminary platted pending final plat approval for development. The City is currently processing subdivision applications that would plat an additional 529 single-family lots. A total of approximately 2,167 acres of residentially zoned land is available (has not received preliminary or final plat approval) within the current MUSA, including 919 acres of single-family zoned property, 228 acres of single- and two-family zoned property, 594 acres of townhome zoned property, and 426 acres of Planned Unit Development. Permits Issued by the City New Single New Total Value* Family Residential Commercial/Industrial (All Permits) Year Number Value Number Value 2015 (to 5-31) 124 $ 39,716,000 5 $11,851,000 $ 78,218,444 2014 319 108,181,000 4 2,697,000 144,277,182 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, roof replacement, etc.). Source: City of Lakeville. - 23 - Financial Institutions* The following full service banks are located in the City: Deposits As of 3-31-15 Provincial Bank $ 68,358,000 Lakeview Bank 51,443,000 Total $119,801,000 In addition, branch offices of Anchor Bank; BMO Harris Bank National Association; Bremer Bank, National Association; Citizens Bank; Great Southern Bank; Guaranty 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, http://www2.fdic.gov/idasp/main.asp. Health Care Services The following is a summary of health care facilities located in and nearby the City: Facility* Location No. of Beds Ebenezer Ridges Geriatric Care Center City of Burnsville 104 Fairview Ridges Hospital City of Burnsville 198 MSOCS – Hershey City of Lakeville 6 MSOCS – Lakeville Jonquil City of Lakeville 6 * This does not purport to be a comprehensive list. Source: Minnesota Department of Health, http://www.health.state.mn.us/. Education Public Education The following districts serve the residents of the City 2014/15 School Location Grades Enrollment I.S.D. No. 196 (Rosemount- Apple Valley-Eagan) City of Rosemount K-12 27,174 I.S.D. No. 194 (Lakeville) City of Lakeville K-12 10,919 I.S.D. No. 192 (Farmington) City of Farmington K-12 6,779 - 24 - Non-Public Education City residents are also served by the following private schools: 2014/15 School Location Grades Enrollment All Saints Catholic School City of Lakeville K-8 348 Southview Christian Lakeville K-12 48 Glory Academy City of Lakeville K-12 22 Post-Secondary Education 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. 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: Expiration of Term Matt Little Mayor December 31, 2016 Doug Anderson Council Member December 31, 2016 Kerrin Swecker Council Member December 31, 2016 Bart Davis Council Member December 31, 2018 Colleen Ratzlaff LaBeau Council Member December 31, 2018 Mr. Justin Miller is the City Administrator and has served in this capacity since December 2014. Mr. Miller has a Master’s degree in Public Administration from the University of Kansas and previously served as City Administrator for the City of Mendota Heights, Minnesota. The City’s Finance Director, Ms. Jerilyn Erickson, has been with the City in that capacity since April 27, 2015. Ms. Erickson has a Master’s degree in Business Administration and previously served as Finance Director for the City of Prior Lake, Minnesota from October 2008 until April, 2015. 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 the City of Farmington, Minnesota. The City’s current employment is 222.3 FTEs. 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 City is currently undergoing a number of projects in 2015 including constructing an additional - 25 - well and expanding the water treatment plant. When the expansion of the water treatment plant is completed, the City will have one additional water storage facility for a total of 9 and an additional 1 million gallons of storage capacity for a total of 9.5 million. The additional well and water storage facility will increase our daily water production capacity by 6.5 million gallons for a total water production capacity of 26.5 million gallons 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. The City’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 55 full-time sworn officers and 23 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. Additional City facilities include 58 public parks (including 41 playgrounds), 20 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 2014 were $14,883,858, resulting in net income before transfers of $1,357,734. Sales as of April 30, 2015 were $3,790,366, which is a $663,023 (14.9%) decrease over the same period in 2014. Labor Contracts The status of labor contracts in the City is as follows: No. of Expiration Date Bargaining Unit Employees of Current Contract Law Enforcement Labor Services Inc. Local No. 177 5.0 December 1, 2015 Law Enforcement Labor Services Inc. Local No. 384 4.0 December 1, 2015 Law Enforcement Labor Services Inc. Local No. 128 44.0 December 1, 2015 Minnesota Teamsters Public & Law Enforcement Employees Union Local No. 320 39.0 December 1, 2015 Subtotal 92.0 Non-unionized employees 130.3 Total employees (FTE) 222.3 - 26 - Employee Pensions 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. The City’s contributions for the past five years are as follows: GERF PEPFF 2014 $644,215 $719,853 2013 611,079 693,976 2012 587,750 679,673 2011 596,142 650,578 2010 583,884 621,658 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 expens es. 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 2014 $1,756 2013 1,670 2012 1,311 2011 1,307 2010 869 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, 2014 the plan had 104 members. The City’s contributions to the Association for the years listed below are as follows (contributions for 2014 not yet available): Association Plan 2013 $ 60,000 2012 44,804 2011 44,804 2010 178,380 - 27 - For more information regarding the liability of the City with respect to its employees, please reference Note 17, Defined Benefit Pension Plans – Statewide, Note 18, Defined Contribution Plan – Statewide, and Note 19, Lakeville Fire Relief Association, of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2014, an excerpt of which is included as Appendix IV of this Official Statement. 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. 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, 2014 are as follows: Annual required contribution $ 96,418 Interest on net OPEB obligation 10,561 Adjustment to annual required contribution (15,589) Annual OPEB cost (expense) $ 91,390 Contributions made (20,522) Increase in net OPEB obligation $ 70,868 Net OPEB obligation – beginning of year 264,027 Net OPEB obligation – end of year $334,895 Funded status of the City’s OPEB as reported in the actuarial reports received to-date: Unfunded UAAL as Actuarial Actuarial a percentage Actuarial Actuarial Value Accrued Accrued of Annual Valuation Date of Assets Liability Liability (UAAL) Covered Payroll January 1, 2014 - 0 - $728,720 $728,720 5.9% January 1, 2011 - 0 - 588,458 588,458 5.0 January 1, 2008 - 0 - 290,424 290,424 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: Fiscal Year Ended Annual OPEB Cost Employer Contribution Annual OPEB Cost Contributed Net OPEB Obligation December 31, 2014 $91,390 $20,522 22.5% $334,895 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 For more information regarding the liability of the City with respect to its employees, please reference Note 15, Other Post-Employment Benefits (OPEB) Plan of the City’s Comprehensive Annual Financial Report as of December 31, 2014, an excerpt of which is included as Appendix IV to this Official Statement. - 28 - General Fund Budget Summary 2014 2014 2015 Budget Actual Budget Revenues: General Property Taxes $16,794,367 $16,841,970 $17,811,502 Licenses and Permits 1,947,676 2,159,289 1,968,416 Intergovernmental 608,401 811,709 827,661 Charges for Services 2,156,037 2,489,277 2,939,577 Court Fines 274,590 223,642 288,001 Investment Income 44,413 99,179 40,376 Miscellaneous 61,461 81,622 46,145 Total Revenues $21,886,945 $22,706,688 $23,921,678 Expenditures: Mayor and Council $ 97,021 $ 93,122 $ 97,411 Committees and Commissions 62,794 70,622 71,096 City Administration 403,228 386,351 414,285 City Clerk 184,724 183,285 127,401 Legal Counsel 82,351 53,495 82,351 Planning 427,787 418,192 429,809 Community and Economic Development Development 295,953 272,594 300,526 Inspections 851,202 893,563 854,922 General Government Facilities 417,452 392,356 433,123 Finance 626,703 639,522 665,298 Information Systems 490,633 472,685 530,931 Human Resources 351,013 344,028 378,472 Insurance 289,075 289,075 322,100 Police 8,921,850 8,790,329 9,211,309 Fire 1,431,615 1,519,138 1,639,147 Engineering 904,728 715,285 712,273 Operations and Maintenance 0 144,811 533,796 Streets 2,738,702 3,040,942 2,994,209 Parks 2,235,675 2,212,461 2,388,645 Recreation 584,240 602,430 608,476 Heritage Center 78,774 101,236 104,516 Arts Center 405,068 425,771 448,505 Other 303,497 0 105,000 Total Expenditures $22,184,085 $22,061,293 $23,473,601 Other Financing Sources (Uses): Transfer from Other Funds $ 759,814 $ 759,814 $ 809,935 Transfer to Other Funds 0 0 (727,000) Total Other Financing Sources (Uses) $ 759,814 $ 759,814 $ 82,935 Net Change in Fund Balance $ 462,674 $ 1,405,209 $ 531,012 Fund Balance, January 1 $ 9,666,560 $ 9,666,560 $11,071,769 Fund Balance, December 31 $10,129,234 $11,071,769 $11,602,781 Source: City of Lakeville. - 29 - Major General Fund Revenue Sources Revenue 2010 2011 2012 2013 2014 Property taxes $16,271,094 $16,516,469 $16,529,500 $15,961,759 $16,841,970 Charges for services 1,415,441 1,616,718 1,885,622 2,027,905 2,489,277 Licenses and permits 992,379 1,238,704 1,831,073 2,087,937 2,159,289 Intergovernmental 1,137,358 703,296 804,276 800,341 811,709 Transfers from other funds 637,831 633,008 665,631 715,297 759,814 Sources: City’s Comprehensive Annual Financial Reports. (The Balance of This Page Has Been Intentionally Left Blank) APPENDIX I I-1 PROPOSED FORM OF LEGAL OPINION City of Lakeville, Minnesota [Original Purchaser] Re: $________ General Obligation Bonds, Series 2015A 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 __, 2015 (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: 1. The Bonds are valid and binding general obligations of the City, enforceable in accordance with their terms. 2. The principal of and interest on the Bonds are payable from special assessments, municipal state aid allotments, utility revenues 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. 3. 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 t o 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 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. I-2 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, 2015. Very truly yours, APPENDIX II II-1 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 th e 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 thi s 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-2 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, f rom 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 (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 II-3 “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 offi cer 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 pla n 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 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: II-4 (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. APPENDIX III III-1 SUMMARY OF TAX LEVIES, PAYMENT PROVISIONS, AND MINNESOTA REAL PROPERTY VALUATION Following is a summary of certain statutory provisions 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 1a or 1b 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. III-2 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 on homestead property of 2% until May 31 and increased to 4% on June 1. The penalty on nonhomestead property is assessed at a rate of 4% until May 31 and increased to 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, a penalty of 2% on homestead property and 4% on nonhomestead property is assessed. The penalty for homestead property increases to 6% on November 1 and again to 8% on December 1. The penalty for nonhomestead property increases to 8% on November 1 and again to 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 three years (3) 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. 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. III-3 4. Obligations issued to create or maintain a permanent improvement revolving fund. 5. 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 abilit y 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-4 STATUTORY FORMULAE: CONVERSION OF TAXABLE MARKET VALUE (TMV) TO NET TAX CAPACITY FOR MAJOR PROPERTY CLASSIFICATIONS Local Tax Payable Local Tax Payable Property Type 2011-2014 2015 Residential Homestead (1a) Up to $500,000 1.00% 1.00% Over $500,000 1.25% 1.25% Residential Non-homestead Single Unit (4bb1) 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 Regular (4a) 1.25% 1.25% Low-Income (4d) 0.75% Up to $100,000 0.75% Over $100,000 0.25% Commercial/Industrial/Public Utility (3a) Up to $150,000 1.50%(a) 1.50%(a) Over $150,000 2.00%(a) 2.00%(a) Electric Generation Machinery 2.00% 2.00% Commercial Seasonal Residential Homestead Resorts (1c) Up to $600,000 0.55% 0.55% $600,000 - $2,300,000 1.00% 1.00% Over $2,300,000 1.25%(a) 1.25%(a) Seasonal Resorts (4c) Up to $500,000 1.00%(a) 1.00%(a) Over $500,000 1.25%(a) 1.25%(a) Non-Commercial (4c12) Up to $500,000 1.00%(a)(b) 1.00%(a)(b) Over $500,000 1.25%(a)(b) 1.25%(a)(b) Disabled Homestead (1b) Up to $50,000 0.45% 0.45% 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 $1,900,000(c) 0.50%(b) 0.50%(b) Over $1,900,000(c) 1.00%(b) 1.00%(b) Non-homestead (2b) 1.00%(b) 1.00%(b) (a) State tax is applicable to these classifications. (b) Exempt from referendum market value based taxes. (c) Legislative increases, payable 2015. Historical valuations are: Payable 2014 - $1,500,000; Payable 2013 - $1,290,000; Payable 2012 - $1,210,000; and Payable 2011 - $1,140,000. NOTE: For purposes of the State general property tax only, the net tax capacity of non -commercial class 4c(1) seasonal residential recreational property has the following class rate structure: First $76,000 – 0.40%; $76,000 to $500,000 – 1.00%; and over $500,000 – 1.25%. In addition to the State tax base exemptions referenced by property classification, airport property exempt from city and school district property taxes under M.S. 473.625 is exempt from the State general property tax (MSP International Airport and Holman Field in St. Paul are exempt under this provision). APPENDIX IV IV -1 EXCERPT OF 2014 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, 2014. 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 2013 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 2014 fiscal year to GFOA. In order to be awarded a Certificate of Achievement, a government unit must p ublish 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-2 IV-3 IV-4 IV-5 IV-6 IV-7 IV-8 IV-9 IV-10 IV-11 IV-12 IV-13 IV-14 IV-15 IV-16 IV-17 IV-18 IV-19 IV-20 IV-21 IV-22 IV-23 IV-24 IV-25 IV-26 IV-27 IV-28 IV-29 IV-30 IV-31 IV-32 IV-33 IV-34 IV-35 IV-36 PROPOSAL SALE DATE: July 20, 2015 ________________________________ Phone: 651-223-3000 * Preliminary; subject to change. Fax: 651-223-3046 Email: bond_services@springsted.com Website: www.springsted.com City of Lakeville, Minnesota $17,585,000* General Obligation Bonds, Series 2015A For the 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 $17,373,980) plus accrued interest, if any, to the date of delivery. Year Interest Rate (%) Yield (%) Dollar Price Year Interest Rate (%) Yield (%) Dollar Price 2017 % % % 2027 % % % 2018 % % % 2028 % % % 201 % % % 2029 % % % 2020 % % % 2030 % % % 2021 % % % 2031 % % % 2022 % % % 2032 % % % 202 % % % 2033 % % % 2024 % % % 2034 % % % 2025 % % % 2035 % % % 2026 % % % 2036 % % % Designation of Term Maturities Years of Term Maturities In making this offer on the sale date of July 20, 2015 we accept all of the terms and conditions of the Terms of Proposal published in the Preliminary Official Statement dated June 30, 2015, including the City’s right to modify the principal amount of the Bonds. (See “Terms of Proposal” herein.) In the event of failure to deliver these 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 i ntentional 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 By: ___________________________ Phone: ________________________ ........................................................................................................................................................................................................................... The foregoing proposal has been accepted by the City. Attest: _______________________________ Date: ________________________________ ...........................................................................................................................................................................................................................