HomeMy WebLinkAboutItem 06.eSeptember 18, 2017 Item No.________
RESOLUTION AUTHORIZING THE ISSUANCE OF LEASE REVENUE LIQUOR
ENTERPRISE REFUNDING BONDS BY THE HOUSING AND REDEVELOPMENT
AUTHORITY OF THE CITY OF LAKEVILLE, MINNESOTA
Proposed Action
Staff recommends adoption of the following motion: Move to approve a Resolution
Authorizing the Issuance of Lease Revenue Liquor Enterprise Refunding Bonds by the Housing
and Redevelopment Authority of the City of Lakeville, Minnesota.
Overview
Passage of this motion will result in the issuance of Lease Revenue Liquor Enterprise
Refunding Bonds to refinance the Liquor Revenue Bonds, Series 2007 and authorizes the
execution of the associated documents (Lease-Purchase Agreement and other closing
documents, as may be necessary).
Primary Issues to Consider
• None
Supporting Information
• Resolution (Prepared by Dorsey & Whitney, LLP)
• Summary of Terms (Prepared by Springsted Inc.)
• Lease-Purchase Agreement between HRA and City of Lakeville (Prepared by Dorsey
& Whitney, LLP)
Financial Impact: $ Budgeted: Y☒ N☐ Source:
Related Documents: (CIP, ERP, etc.):
Envision Lakeville Community Values: Good Value for Public Services
Report Completed by: Jerilyn Erickson, Finance Director
Varies Liquor Revenues
CIP
4821-4073-5311\2
CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE
I, the undersigned, being the duly qualified and acting City Clerk of the City of Lakeville,
Minnesota (the City), hereby certify that the attached resolution is a true copy of Resolution
No. __________, entitled: “RESOLUTION APPROVING THE ISSUANCE OF LEASE
REVENUE LIQUOR ENTERPRISE REFUNDING BONDS BY THE HOUSING AND
REDEVELOPMENT AUTHORITY OF THE CITY OF LAKEVILLE, MINNESOTA” (the
Resolution), on file in the original records of the City in my legal custody; that the Resolution
was duly adopted by the City Council of the City at a meeting on September 18, 2017, and that
the meeting was duly held by the City Council and was attended throughout by a quorum; and
that the Resolution has not as of the date hereof been amended or repealed.
I further certify that upon vote being taken on the Resolution at said meeting, the
following City Council members voted in favor thereof:
and the following voted against the same:
and the following abstained from voting thereon or were absent:
WITNESS my hand officially this 18th day of September 2017
City Clerk
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CITY OF LAKEVILLE, MINNESOTA
RESOLUTION
Date September 18, 2017 Resolution No.
Motion By Seconded By
RESOLUTION APPROVING THE ISSUANCE OF LEASE REVENUE
LIQUOR ENTERPRISE REFUNDING BONDS BY THE HOUSING AND
REDEVELOPMENT AUTHORITY OF THE CITY OF LAKEVILLE,
MINNESOTA
BE IT RESOLVED by the City Council of the City of Lakeville, Minnesota (the City), as
follows:
Section 1. Recitals. The City has heretofore issued its Liquor Revenue Bonds, Series
2007, dated May 1, 2007, in the aggregate original principal amount of $3,955,000 (the Series
2007 Bonds), to acquire certain real property and construct, furnish and equip a new liquor store
thereon (the Project). The City now finds it necessary and desirable that the Housing and
Redevelopment Authority of the City of Lakeville, Minnesota (the Authority) issue its revenue
bonds, in one or more series (the Bonds), to refinance the costs of the Project and refund the
Series 2007 Bonds. Upon issuance of the Bonds and defeasance of the Series 2007 Bonds, good
and marketable title to the Project will be in the City, conveyed to the Authority and leased to the
City with an option to purchase pursuant to a Lease-Purchase Agreement dated as of
November 1, 2017, between the City, as lessee, and the Authority, as lessor (the Lease).
Section 2. Authority. The City is authorized by Minnesota Statutes, Sections 465.71 and
471.64 to lease real and personal property with an option to purchase under the Lease, provided
that the City retains the right to terminate said lease-purchase agreement at the end of any fiscal
year during its term. It is hereby found, determined and declared to be necessary and desirable
and in the best interest of the City to enter into the Lease with the Authority in order to provide
for the refinancing of the Project by the Authority and the lease of the Project to the City. The
obligation created by the Lease in excess of $1,000,000 shall, as provided in Minnesota Statutes,
Section 465.71, be included in the calculation of net debt of the City for purposes of Minnesota
Statutes, Section 475.53, and such obligation does not cause the net debt of the City to exceed its
debt limit.
Section 2. Authorization and Approval. The transfer of title from the City to the
Authority by quitclaim deed or other instrument is hereby approved and such instrument shall be
executed and delivered in the name and on behalf of the City by the Mayor and City Clerk or
their authorized designees. The form of the Lease is hereby approved and shall be executed and
delivered in the name and on behalf of the City by the Mayor and City Clerk or their authorized
designees in substantially the form on file, but with such final changes thereto as may be
approved by the officers executing the same, which approval shall be conclusively evidenced by
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the execution thereof. In the event the Chair or Executive Director of the Authority are not
available to execute the Bond Purchase Agreement relating to the Bonds (the Bond Purchase
Agreement) by and between the Authority and Robert W. Baird & Co. Incorporated, the City
Administrator of the City is hereby authorized to approve the sale of the Bonds, on behalf of the
Authority, in an aggregate principal amount not to exceed $2,700,000, and to execute the Bond
Purchase Agreement, on behalf of the Authority, as authorized by the Authority Resolution (as
defined herein), provided that the true interest cost of the Bonds to the Authority is less than or
equal to 2.50% per annum. The Mayor and City Clerk or their authorized designees, or the City
Administrator of the City, are further hereby authorized and directed to consent to and execute
the Bond Purchase Agreement to the extent the agreement includes representations and/or
covenants of the City. The Mayor and City Clerk or their authorized designees are also
authorized and directed to execute such closing certificates and other documents, instruments
and certificates as may be necessary to complete the issuance and delivery of the Bonds. The
Bonds, if issued, shall not constitute a charge, lien or encumbrance, legal or equitable, upon any
property of the City or the Authority. The City hereby further approves the terms of the Trust
Indenture dated as of November 1, 2017 to be executed by the Authority, relating to the Bonds
(the Indenture), and the sale and issuance of the Bonds pursuant to an Authority resolution dated
as of the date hereof, relating to the Bonds (the Authority Resolution), and the Indenture.
Section 3. General Tax Covenant. The City agrees 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 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. So long as any Bonds are outstanding, the City
shall not enter into any contract for the sale of all or a portion of the Project financed by such
Bonds or enter into any lease, management contract, use agreement or other agreement with any
non-governmental person relating to the use of all or a portion of the Project financed by such
Bonds or security for the payment of such Bonds which might cause such Bonds to be
considered “private activity bonds” or “private loan bonds” pursuant to Section 141 of the Code.
Section 4. 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 Securities Exchange Commission (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 an
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.
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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 (a) 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 (b) 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 365 days after the end of each fiscal year of the City, commencing
with the fiscal year ending December 31, 2017, 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, containing
balance sheets as of the end of such fiscal year and a statement of
operations, changes in fund balances and cash flows for the fiscal year
then ended, showing in comparative form such figures for the preceding
fiscal year of the City, prepared in accordance with generally accepted
accounting principles promulgated by the Financial Accounting Standards
Board as modified 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,
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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 submitted
to each of the repositories hereinafter referred to under subsection (c) or the SEC. If the
document incorporated by reference is a final official statement, it must be available from the
Municipal Securities Rulemaking Board (the “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 or 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 10 business days, to the MSRB through
EMMA, 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 Bonds;
(G) modifications to rights of holders of the Bonds, if material;
(H) bond calls, if material, and tender offers;
(I) defeasances;
(J) release, substitution or sale of property securing repayment of the Bonds,
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 the
City or the sale of all or substantially all of the assets of the City, other
than in the ordinary course of business, the entry into a definitive
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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.
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.
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.
(3) In a timely manner, to the MSRB through EMMA, 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 (c)(1) at the time specified thereunder;
(B) the amendment or supplementing of this section pursuant to
subsection (e), together with a copy of such amendment or
supplement;
(C) the termination of the obligations of the City under this section
pursuant to subsection (e);
(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) Identifying Information to Accompany Documents. All documents provided to
the MSRB shall be accompanied by identifying information as prescribed by the MSRB.
(d) Term; Amendments; Interpretation. 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
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further effect as of any date on which the City delivers to the registrar for the Bonds 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. This section may be
amended or supplemented by the City from time to time, without notice to 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 the City or
the type of operations conducted by the City, or (b) is required by, or better complies with, the
provisions of paragraph (d)(2) of the Rule; (ii) this section as so amended or supplemented
would have complied with the requirements of paragraph (d)(2) 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. This
section is entered into to comply with, and should be construed so as to satisfy the requirements
of, paragraph (d)(2) of the Rule.
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APPROVED AND ADOPTED this 18th day of September 2017
CITY OF LAKEVILLE
By
Douglas P. Anderson, Mayor
ATTEST:
Charlene Friedges, City Clerk
SUMMARY OF TERMS
September 14, 2017
$2,270,000 (approximate)
Lakeville Housing and Redevelopment Authority, Minnesota
Lease Revenue Liquor Enterprise Refunding Bonds, 2017 (the “Bonds”)
Introduction: The HRA of the City of Lakeville (the “HRA”) will be negotiating the refunding of its
2007 Liquor Revenue Bond. Security for the 2017 Bonds will be a pledge of liquor
enterprise funds as well as an annual appropriation. The purpose of the refunding is to
achieve interest cost savings on an approximately even annual basis over the same
repayment term. The net present value savings are currently estimated to be in
excess of $300,000.
The 2007 Liquor Revenue Bonds were issued to pay for the construction of the new
liquor store located at Galaxie Avenue and 160th Street, Lakeville, Minnesota (the
“Facility”).
Underwriter: The City has contacted two underwriting firms to obtain cost proposals. The City has
selected Robert W. Baird & Company (the “Underwriter”) to underwrite the Bonds. The
Underwriter’s activities are focused on pricing the Bonds, as well as any other activities
leading up to pricing required in their capacity as the underwriter.
Issuer: Lakeville Housing and Redevelopment Authority, Minnesota (the “HRA”)
Authority for Issuance: MSA 426.19, 465.71 or 471.64 and an indenture of trust between the HRA and a
trustee yet to be selected (the “Trustee”).
Security and Source of
Payment:
The financing will consist of a lease purchase agreement between the City and the
HRA, wherein the HRA as issuer will receive lease payments equal to scheduled debt
service from the City as operator of the liquor operations. This approach uses a
lease/leaseback format with an annual appropriation pledge to cover debt service from
other available funds of the City in the event that the net revenue of the Liquor
Enterprise is not sufficient to cover debt service. The City will pledge the net revenues
of the Enterprise to the payment of the Lease. The debt service coverage level for the
past three years of the Net Revenue of the Enterprise over the existing bond’s debt
service is shown in the table below:
Fiscal Year Net Revenue Debt Service Coverage
12/31/2014 1,624,852.00 322,625.00 5.04 x
12/31/2015 1,060,978.00 324,125.00 3.27 x
12/31/2016 1,140,004.00 320,250.00 3.56 x
Lakeville Housing and Redevelopment Authority, Minnesota
Lease Revenue Liquor Enterprise Refunding Bonds, 2017
Page 2
0483.151
The City will transfer title to the Facility to the HRA and then lease it back from the
HRA pursuant to a lease (the “Lease”). Title will be transferred back to the City at the
end of the Lease term.
Lease payments will be payable solely from City funds which are annually budgeted
and appropriated by the governing body of the City and which may be terminated by
action of such governing body. There is no assurance that the Lease will be renewed
each Fiscal Year for all of its anticipated term. The governing body of the City is under
no obligation to provide City funds for such renewals. Accordingly, any factors which
may potentially influence the budgeting process of the City should be considered by a
prospective purchaser of the Bonds.
In the event the governing body of the City fails to renew the Lease for any Fiscal
Year, fails to budget and appropriate sufficient City funds for payment of all Rental
Payments, or defaults under the Lease, the Lease will be terminated and the Trustee
will take control of the Facility on behalf of the HRA for the benefit of the bondholders.
The City should note that any failure to appropriate lease payments leading to a default
on timely payment of debt service in all likelihood will lead the rating agency to
downgrade the City’s general obligation rating several categories, and conceivably to
non-investment grade. This situation would cause the interest costs of the City’s future
general obligation bonds to substantially increase for many years.
The refunded issue structure includes a debt service reserve. The existing debt
service reserve will be used as a cash contribution to the refunding. The Underwriter
has indicated that as long as the Bonds are rated in the “Aa” category no reserve fund
will be required to secure the refunding Bonds.
Please Note: The City of Lakeville is currently exploring opportunities to sell the
Kenrick liquor store property and enter into a long-term lease for the existing building.
Sale proceeds would potentially be used for building an additional store at the
Keokuk/I35 location. The City will continue to operate the liquor operations at the
Kenrick location.
Structure and Preliminary
Repayment Structure:
Attached are preliminary schedules showing a refunding summary, debt service
comparison, debt service to maturity and to call, a pricing summary, and a debt service
schedule. Payment dates are also provided. Interest will be paid semi-annually each
February 1 and August 1, beginning February 1, 2018. Principal will be paid annually
each February 1, beginning February 1, 2019. The last principal payment is on
February 1, 2027. Interest rates as of September 6 were provided by the Underwriter.
New debt service has been structured to achieve approximately level annual interest
cost reductions for all years exclusive of those impacted by the dynamics of the
existing debt service reserve.
Interest will be calculated as simple interest on the basis of a 360-day year of twelve
30-day months.
Lakeville Housing and Redevelopment Authority, Minnesota
Lease Revenue Liquor Enterprise Refunding Bonds, 2017
Page 3
0483.151
Optional Redemption
Provisions:
The City would prefer an optional prepayment provision at par beginning on February
1, 2025, for the remaining maturities. Subject to negotiation
Tax Status: Tax exempt
Bank Qualification: Non-Bank Qualified
Rating: The City anticipates rating the Bonds.
The City has just completed the competitive sale of its GO Bonds. The GO rating was
affirmed at Aa1 and Aa3 on its lease revenue debt.
Pricing Parameters: The HRA will adopt a resolution setting the maximum principal amount of the Bonds at
$2,700,000 and the maximum true interest cost (TIC) at 2.50%. The same resolution
will authorize the HRA Board Chair or Executive Director or the City Administrator to
approve the final sale and pricing of the Bonds.
Legal and Disclosure: Dorsey & Whitney LLP, Minneapolis, MN will serve as Bond Counsel on all matters
relating to the Issue. It is the City’s expectation that Bond Counsel will draft all legal
documents and the City will pay the fees and expenses of Bond Counsel.
Springsted will have responsibility for preparation of the official statement.
Expected Pricing and
Delivery Date:
The City expect to price the Bonds in mid-October. The settlement would occur
approximately 30 days thereafter.
Lakeville Housing and Redevelopment Authority, Minnesota
Lease Revenue Liquor Enterprise Refunding Bonds, 2017
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0483.151
$2,270,000
City of Lakeville, Minnesota
Lease Revenue Refunding Bonds, Series 2017 (Annual Principal)
Current Refunding of Series 2007 Liquor
Refunding Summary
Dated 11/08/2017 | Delivered 11/08/2017
Sources Of Funds
Par Amount of Bonds...............................................................................................................................................$2,270,000.00
Reoffering Premium..................................................................................................................................................91,413.60
Transfers from Prior Issue DSR Funds....................................................................................................................295,133.11
Total Sources........................................................................................................................................................$2,656,546.71
Uses Of Funds
Total Underwriter's Discount (0.663%).................................................................................................................. 15,050.10
Costs of Issuance....................................................................................................................................................64,475.00
Deposit to Current Refunding Fund..........................................................................................................................2,571,993.06
Rounding Amount.....................................................................................................................................................5,028.55
Total Uses..............................................................................................................................................................$2,656,546.71
ISSUES REFUNDED AND CALL INFORMATION
Prior Issue Call Price................................................................................................................................................ 100.000%
Prior Issue Call Date.................................................................................................................................................12/15/2017
SAVINGS INFORMATION
Net Present Value Benefit........................................................................................................................................$332,374.35
BOND STATISTICS
Average Life............................................................................................................................................................5.409 Years
Average Coupon......................................................................................................................................................2.6802900%
Net Interest Cost (NIC)............................................................................................................................................. 2.0583544%
True Interest Cost (TIC)............................................................................................................................................2.0037101%
Series 2017 Ref 2007 Liqu | SINGLE PURPOSE | 9/ 6/2017 | 10:55 AM
Lakeville Housing and Redevelopment Authority, Minnesota
Lease Revenue Liquor Enterprise Refunding Bonds, 2017
Page 5
0483.151
$2,270,000
City of Lakeville, Minnesota
Lease Revenue Refunding Bonds, Series 2017 (Annual Principal)
Current Refunding of Series 2007 Liquor
Debt Service Comparison
Date Total P+I Net New D/S Old Net D/S Savings
02/01/2018 - - 263,125.00 263,125.00
02/01/2019 289,095.69 289,095.69 326,250.00 37,154.31
02/01/2020 291,750.00 291,750.00 325,750.00 34,000.00
02/01/2021 286,950.00 286,950.00 329,750.00 42,800.00
02/01/2022 287,150.00 287,150.00 328,000.00 40,850.00
02/01/2023 287,250.00 287,250.00 325,750.00 38,500.00
02/01/2024 287,250.00 287,250.00 328,000.00 40,750.00
02/01/2025 289,600.00 289,600.00 329,500.00 39,900.00
02/01/2026 291,650.00 291,650.00 325,250.00 33,600.00
02/01/2027 288,400.00 288,400.00 30,366.89 (258,033.11)
Total $2,599,095.69 $2,599,095.69 $2,911,741.89 $312,646.20
PV Analysis Summary (Net to Net)
Net FV Cashflow Savings..........................................................................................................................................312,646.20
Gross PV Debt Service Savings................................................................................................................................ 577,393.95
Effects of changes in DSR investments.....................................................................................................................(250,048.15)
Net PV Cashflow Savings @ 1.804%(Bond Yield)...................................................................................................327,345.80
Contingency or Rounding Amount..............................................................................................................................5,028.55
Net Future Value Benefit............................................................................................................................................ $317,674.75
Net Present Value Benefit.......................................................................................................................................... $332,374.35
Net PV Benefit / $641,679.32 PV Refunded Interest..................................................................................................51.798%
Net PV Benefit / $2,947,409.09 PV Refunded Debt Service...................................................................................... 11.277%
Net PV Benefit / $2,525,000 Refunded Principal....................................................................................................... 13.163%
Net PV Benefit / $2,270,000 Refunding Principal.......................................................................................................14.642%
Refunding Bond Information
Refunding Dated Date.................................................................................................................................................11/08/2017
Refunding Delivery Date.............................................................................................................................................11/08/2017
Series 2017 Ref 2007 Liqu | SINGLE PURPOSE | 9/ 6/2017 | 10:55 AM
Lakeville Housing and Redevelopment Authority, Minnesota
Lease Revenue Liquor Enterprise Refunding Bonds, 2017
Page 6
0483.151
3,955,000
City of Lakeville, Minnesota
Liquor Revenue Bonds, Series 2007
Debt Service To Maturity And To Call
Date Refunded
Bonds
Refunded
Interest
D/S To Call Principal Coupon Interest Refunded
D/S
11/08/2017 - - - - - - -
12/15/2017 2,525,000.00 46,993.06 2,571,993.06 - - - -
02/01/2018 - - - 200,000.00 5.000% 63,125.00 263,125.00
08/01/2018 - - - - - 58,125.00 58,125.00
02/01/2019 - - - 210,000.00 5.000% 58,125.00 268,125.00
08/01/2019 - - - - - 52,875.00 52,875.00
02/01/2020 - - - 220,000.00 5.000% 52,875.00 272,875.00
08/01/2020 - - - - - 47,375.00 47,375.00
02/01/2021 - - - 235,000.00 5.000% 47,375.00 282,375.00
08/01/2021 - - - - - 41,500.00 41,500.00
02/01/2022 - - - 245,000.00 5.000% 41,500.00 286,500.00
08/01/2022 - - - - - 35,375.00 35,375.00
02/01/2023 - - - 255,000.00 5.000% 35,375.00 290,375.00
08/01/2023 - - - - - 29,000.00 29,000.00
02/01/2024 - - - 270,000.00 5.000% 29,000.00 299,000.00
08/01/2024 - - - - - 22,250.00 22,250.00
02/01/2025 - - - 285,000.00 5.000% 22,250.00 307,250.00
08/01/2025 - - - - - 15,125.00 15,125.00
02/01/2026 - - - 295,000.00 5.000% 15,125.00 310,125.00
08/01/2026 - - - - - 7,750.00 7,750.00
02/01/2027 - - - 310,000.00 5.000% 7,750.00 317,750.00
Total $2,525,000.00 $46,993.06 $2,571,993.06 $2,525,000.00 - $681,875.00 $3,206,875.00
Yield Statistics
Base date for Avg. Life & Avg. Coupon Calculation.................................................................................................11/08/2017
Average Life............................................................................................................................................................. 5.132 Years
Average Coupon.......................................................................................................................................................5.0000000%
Weighted Average Maturity (Par Basis)................................................................................................................... 5.132 Years
Weighted Average Maturity (Original Price Basis)....................................................................................................5.127 Years
Refunding Bond Information
Refunding Dated Date............................................................................................................................................... 11/08/2017
Refunding Delivery Date........................................................................................................................................... 11/08/2017
2007 Liquor Rev Bonds | SINGLE PURPOSE | 9/ 6/2017 | 10:55 AM
Lakeville Housing and Redevelopment Authority, Minnesota
Lease Revenue Liquor Enterprise Refunding Bonds, 2017
Page 7
0483.151
$2,270,000
City of Lakeville, Minnesota
Lease Revenue Refunding Bonds, Series 2017 (Annual Principal)
Current Refunding of Series 2007 Liquor
Pricing Summary
Maturity Type of Bond Coupon Yield Maturity
Value
Price YTM Call Date Call Price Dollar Price
02/01/2019 Serial Coupon 2.000% 1.100% 220,000.00 101.096% - - - 222,411.20
02/01/2020 Serial Coupon 2.000% 1.200% 240,000.00 101.754% - - - 244,209.60
02/01/2021 Serial Coupon 2.000% 1.300% 240,000.00 102.206% - - - 245,294.40
02/01/2022 Serial Coupon 2.000% 1.400% 245,000.00 102.455% - - - 251,014.75
02/01/2023 Serial Coupon 2.000% 1.550% 250,000.00 102.251% - - - 255,627.50
02/01/2024 Serial Coupon 3.000% 1.750% 255,000.00 107.346% - - - 273,732.30
02/01/2025 Serial Coupon 3.000% 1.950% 265,000.00 107.047% - - - 283,674.55
02/01/2026 Serial Coupon 3.000% 2.100% 275,000.00 106.006% c 2.198% 02/01/2025 100.000% 291,516.50
02/01/2027 Serial Coupon 3.000% 2.250% 280,000.00 104.976% c 2.396% 02/01/2025 100.000% 293,932.80
Total - - - $2,270,000.00 - - - - - $2,361,413.60
Bid Information
Par Amount of Bonds....................................................................................................................................................... $2,270,000.00
Reoffering Premium or (Discount).................................................................................................................................... 91,413.60
Gross Production............................................................................................................................................................. $2,361,413.60
Total Underwriter's Discount (0.663%)...........................................................................................................................$(15,050.10)
Bid (103.364%)................................................................................................................................................................ 2,346,363.50
Total Purchase Price........................................................................................................................................................ $2,346,363.50
Bond Year Dollars............................................................................................................................................................ $12,278.36
Average Life.................................................................................................................................................................... 5.409 Years
Average Coupon.............................................................................................................................................................. 2.6802900%
Net Interest Cost (NIC)......................................................................................................................................................2.0583544%
True Interest Cost (TIC).................................................................................................................................................... 2.0037101%
Series 2017 Ref 2007 Liqu | SINGLE PURPOSE | 9/ 6/2017 | 10:55 AM
Lakeville Housing and Redevelopment Authority, Minnesota
Lease Revenue Liquor Enterprise Refunding Bonds, 2017
Page 8
0483.151
$2,270,000
City of Lakeville, Minnesota
Lease Revenue Refunding Bonds, Series 2017 (Annual Principal)
Current Refunding of Series 2007 Liquor
Debt Service Schedule
Date Principal Coupon Interest Total P+I
02/01/2018 - - - -
08/01/2018 - - 41,020.69 41,020.69
02/01/2019 220,000.00 2.000% 28,075.00 248,075.00
08/01/2019 - - 25,875.00 25,875.00
02/01/2020 240,000.00 2.000% 25,875.00 265,875.00
08/01/2020 - - 23,475.00 23,475.00
02/01/2021 240,000.00 2.000% 23,475.00 263,475.00
08/01/2021 - - 21,075.00 21,075.00
02/01/2022 245,000.00 2.000% 21,075.00 266,075.00
08/01/2022 - - 18,625.00 18,625.00
02/01/2023 250,000.00 2.000% 18,625.00 268,625.00
08/01/2023 - - 16,125.00 16,125.00
02/01/2024 255,000.00 3.000% 16,125.00 271,125.00
08/01/2024 - - 12,300.00 12,300.00
02/01/2025 265,000.00 3.000% 12,300.00 277,300.00
08/01/2025 - - 8,325.00 8,325.00
02/01/2026 275,000.00 3.000% 8,325.00 283,325.00
08/01/2026 - - 4,200.00 4,200.00
02/01/2027 280,000.00 3.000% 4,200.00 284,200.00
Total $2,270,000.00 - $329,095.69 $2,599,095.69
Yield Statistics
Bond Year Dollars.................................................................................................................................................... $12,278.36
Average Life.............................................................................................................................................................5.409 Years
Average Coupon...................................................................................................................................................... 2.6802900%
Net Interest Cost (NIC).............................................................................................................................................. 2.0583544%
True Interest Cost (TIC)............................................................................................................................................ 2.0037101%
Bond Yield for Arbitrage Purposes.......................................................................................................................... 1.8040032%
All Inclusive Cost (AIC)............................................................................................................................................. 2.5623560%
IRS Form 8038
Net Interest Cost....................................................................................................................................................... 1.8455026%
Weighted Average Maturity...................................................................................................................................... 5.454 Years
Series 2017 Ref 2007 Liqu | SINGLE PURPOSE | 9/ 6/2017 | 10:55 AM
DRAFT 9/15/17
=====================================================================
LEASE-PURCHASE AGREEMENT
between the
HOUSING AND REDEVELOPMENT AUTHORITY
OF THE CITY OF LAKEVILLE, MINNESOTA
as Lessor
and the
CITY OF LAKEVILLE, MINNESOTA
as Lessee
Dated as of November 1, 2017
=====================================================================
Relating to:
LEASE REVENUE LIQUOR ENTERPRISE REFUNDING BONDS, SERIES 2017A
This instrument drafted by:
Dorsey & Whitney LLP (NC)
Suite 1500
50 South Sixth Street
Minneapolis, Minnesota 55402
(612) 340-2600
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS AND EXHIBITS............................................................................... 5
Section 1.1. Definitions .................................................................................................... 5
Section 1.2. Exhibits......................................................................................................... 6
ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES ............................... 7
Section 2.1. Representations, Covenants and Warranties of Lessee ................................ 7
Section 2.2. Representations Covenants and Warranties of Lessor ................................. 7
ARTICLE III AGREEMENT TO LEASE ..................................................................................... 9
Section 3.1. Lease............................................................................................................. 9
Section 3.2. Possession and Enjoyment ........................................................................... 9
Section 3.3. Lessor Access to Project .............................................................................. 9
ARTICLE IV TERM OF LEASE ................................................................................................. 10
Section 4.1. Term of Lease............................................................................................. 10
Section 4.2. Termination of Lease Term ........................................................................ 10
ARTICLE V RENTAL PAYMENTS .......................................................................................... 11
Section 5.1. Rental Payments ......................................................................................... 11
Section 5.2. Current Expense ......................................................................................... 11
Section 5.3. Rental Payments to be Unconditional ........................................................ 11
Section 5.4. Reserved ..................................................................................................... 11
Section 5.5. Intent to Continue Rental Payments; Appropriations ................................ 11
ARTICLE VI NONAPPROPRIATION ....................................................................................... 12
Section 6.1. Termination of Lease ................................................................................. 12
Section 6.2. Return of Project ........................................................................................ 12
Section 6.3. Effect of Termination ................................................................................. 12
Section 6.4. Reserved ..................................................................................................... 12
ARTICLE VII MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS ............ 13
Section 7.1. Maintenance and Modification of Project by Lessee ................................. 13
Section 7.2. Taxes, Other Government Charges and Utility Charges ............................ 13
Section 7.3. Liability Insurance...................................................................................... 14
Section 7.4. Lessee’s Negligence ................................................................................... 14
Section 7.5. Property Insurance...................................................................................... 14
Section 7.6. Worker’s Compensation Insurance ............................................................ 14
2
Section 7.7. Other Insurance and Requirements for All Insurance ................................ 14
Section 7.8. Advances .................................................................................................... 15
Section 7.9. Liens ........................................................................................................... 15
Section 7.10. Rebate ....................................................................................................... 15
ARTICLE VIII DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF NET
PROCEEDS .................................................................................................................................. 16
Section 8.1. Damage, Destruction and Condemnation................................................... 16
Section 8.2. Cooperation of Lessor ................................................................................ 16
Section 8.3. Condemnation of Other Property Owned by Lessee .................................. 16
ARTICLE IX LESSEE’S EQUIPMENT; WARRANTIES ......................................................... 17
Section 9.1. Installation of Lessee’s Equipment ............................................................ 17
Section 9.2. Reserved ..................................................................................................... 17
Section 9.3. Reserved ..................................................................................................... 17
Section 9.4. Warranties .................................................................................................. 17
Section 9.5. Disclaimer of Warranties ........................................................................... 17
ARTICLE X OPTION TO PURCHASE ...................................................................................... 18
Section 10.1. When Available ........................................................................................ 18
Section 10.2. Exercise of Option .................................................................................... 18
Section 10.3. Release of Lessor’s Interest...................................................................... 18
Section 10.4. Defeasance ............................................................................................... 18
ARTICLE XI ASSIGNMENT, SUBLEASING, MORTGAGING AND SELLING .................. 19
Section 11.1. Assignment by Lessor .............................................................................. 19
Section 11.2. Assignment and Subleasing by Lessee..................................................... 19
Section 11.3. Restriction on Mortgage or Sale of Project by Lessee ............................. 19
ARTICLE XII EVENTS OF DEFAULT AND REMEDIES ....................................................... 20
Section 12.1. Events of Default Defined ........................................................................ 20
Section 12.2. Remedies on Default ................................................................................ 21
Section 12.3. Return of Project ...................................................................................... 21
Section 12.4. Delay; Notice............................................................................................ 21
Section 12.5. No Remedy Exclusive .............................................................................. 22
Section 12.6. Agreement to Pay Attorneys’ Fees and Expenses .................................... 22
Section 12.7. No Additional Waiver Implied By One Waiver....................................... 22
ARTICLE XIII TITLE .................................................................................................................. 23
Section 13.1. Title to Project .......................................................................................... 23
Section 13.2. Security Interest........................................................................................ 23
3
ARTICLE XIV ISSUANCE OF THE BONDS............................................................................ 24
Section 14.1. Agreement to Issue Bonds; Application of Bond Proceeds ..................... 24
ARTICLE XV ADMINISTRATIVE PROVISIONS ................................................................... 25
Section 15.1. Notices ...................................................................................................... 25
Section 15.2. Binding Effect .......................................................................................... 25
Section 15.3. Severability............................................................................................... 25
Section 15.4. Amendments, Charges and Modifications ............................................... 25
Section 15.5. Further Assurances and Corrective Instruments ...................................... 25
Section 15.6. Execution in Counterparts ........................................................................ 25
Section 15.7. Applicable Law ........................................................................................ 25
Section 15.8. Lessor and Lessee Representatives .......................................................... 25
Section 15.9. Captions .................................................................................................... 25
4
LEASE-PURCHASE AGREEMENT
This LEASE-PURCHASE AGREEMENT (the Lease) is executed as of November 1,
2017, between the HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF
LAKEVILLE, MINNESOTA, as lessor (together with its successors and assigns, Lessor), whose
address is 20195 Holyoke Avenue, P.O. Box 957, Lakeville, Minnesota 55044, and the CITY OF
LAKEVILLE, MINNESOTA, as lessee (Lessee), whose address is 20195 Holyoke Avenue, P.O.
Box 957, Lakeville, Minnesota 55044.
RECITALS
WHEREAS, the Lessee is authorized by Minnesota Statutes to acquire real and personal
property by entering into lease-purchase agreements;
WHEREAS, the Lessee has heretofore issued its Liquor Revenue Bonds, Series 2007,
dated May 1, 2007, in the aggregate original principal amount of $3,955,000 (the Series 2007
Bonds), to acquire certain real property (as further described herein, the Land) and construct,
furnish and equip a new liquor store thereon (as further described herein, the Improvements);
WHEREAS, the Lessor has authorized the issuance of its $[_________] Lease Revenue
Liquor Enterprise Refunding Bonds, Series 2017A (the Bonds), for the purpose of refunding all
the outstanding Series 2007 Bonds and refinancing the Land and the Improvements;
WHEREAS, the Series 2007 Bonds will be defeased upon issuance of the Bonds and
good and marketable title to the Land and the Improvements will be in the Lessee, which title
will be conveyed simultaneously with the issuance of the Bonds by quitclaim deed to the Lessor;
and
WHEREAS, to secure payment of the Bonds, the Lessor hereby leases to the Lessee, and
the Lessee hereby hires and takes from the Lessor, the Land and the Improvements, and for such
purpose the Lessor grants to the Lessee for the term of this Lease all rights necessary for the
Lessee to lease and purchase the Land and the Improvements.
NOW, THEREFORE, in the joint and mutual exercise of their powers, and in
consideration of the mutual covenants herein contained, the parties hereto recite and agree as
follows:
5
ARTICLE I
DEFINITIONS AND EXHIBITS
Section 1.1. Definitions. Unless the context otherwise requires, the terms defined in
this Section shall, for all purposes of this Lease, have the meanings herein specified.
Code means the Internal Revenue Code of 1986, as now or hereafter amended, and the
regulation and revenue rulings and procedures issued pursuant thereto from time to time.
Fiscal Year means each twelve month fiscal period of Lessee commencing on January 1
of any year and ending on the following December 31.
Improvements means the building designed, acquired, constructed and installed on the
Land with proceeds of the Series 2007 Bonds and any personal property acquired or installed in
connection therewith, and any other improvements constructed on the Land and or personal
property acquired with proceeds of the Series 2007 Bonds.
Indenture means the Trust Indenture entered into between Lessor and U.S. Bank National
Association, as trustee, dated as of the date hereof.
Independent Counsel means an attorney duly admitted to the practice of law before the
highest court of any state who is not an officer or a full-time employee of Lessor, Lessee or an
assignee thereof.
Land means the real property acquired with proceeds of the Series 2007 Bonds, as legally
described in the attached Exhibit A.
Lessee Representative means the City Administrator or City Finance Director of Lessee,
or any other person authorized to act on behalf of Lessee under or with respect to this Lease, as
evidenced by a certificate conferring such authority executed by the City Administrator, given to
the Trustee and the Lessor.
Lessor Representative means the Chair or Executive Director of Lessor, or any other
person authorized to act on behalf of Lessor under or with respect to this Lease, as evidenced by
a certificate conferring such authority executed by the Chair, given to the Trustee and the Lessee.
Net Proceeds means any insurance proceeds or condemnation award paid with respect to
the Improvements, remaining after payment therefrom of all expenses incurred in the collection
thereof.
Payment Date means the date upon which any Rental Payment is due and payable as
provided in the attached Exhibit B.
Permitted Encumbrances means, as of any particular time, (i) liens for taxes and
assessments not then delinquent, or which Lessee may, pursuant to provisions of Article VII
hereof, permit to remain unpaid; (ii) this Lease; (iii) any mechanic’s, laborer’s, materialmen’s,
supplier’s or vendor’s lien or right not filed or perfected in the manner prescribed by law, or
6
which Lessee may, pursuant to provisions of Article VII hereof, permit to remain unpaid;
(iv) minor defects and irregularities in the title to the Land which do not in the aggregate
materially impair the use of the Project for the purposes for which it is or may reasonably be
expected to be held; (v) easements, exceptions or reservations for the purpose of pipelines,
telephone lines, telegraph lines, power lines and substations, roads, streets, alleys, highways,
railroad purposes, drainage and sewage purposes, dikes, canals, laterals, ditches, the removal of
oil, gas, coal or other minerals, and other like purposes, or for the joint or common use of real
property, facilities and equipment, which do not materially impair the use of the Project for the
purposes for which it is or may reasonably be expected to be held; (vi) rights reserved to or
vested in any municipality or governmental or other public authority to control or regulate or use
in any manner any portion of the Land which do not materially impair the use of the Project for
the purposes for which it is or may reasonably be expected to be held; (vii) present and future
valid zoning laws and ordinances; and (viii) [any liens or encumbrances specifically listed as
such on Exhibit A attached hereto].
Project means the Land and the Improvements, together.
Qualified Investments means only those described in Minnesota Statutes, Section 475.67,
Subdivision 8, or any successor statute.
Rental Payment means any payment due from Lessee to Lessor under Section 5.1 of this
Lease.
State means the State of Minnesota.
State and Federal Law or Laws means the Constitution and laws of the State, any
ordinance, rule or regulation of any agency or political subdivision of the State and any law of
the United States, and any rule or regulation of any federal agency.
Term of this Lease or Lease Term means the period during which this Lease remains in
effect as specified in Sections 4.1 and 4.2.
Trustee means U.S. Bank National Association, as trustee under the Indenture.
Section 1.2. Exhibits.
The following exhibits are attached to and by reference made a part of this Lease:
Exhibit A – A legal description of the Land.
Exhibit B – The schedule of Rental Payments to be paid by Lessee to Lessor, showing the
date and amount of each Rental Payment.
7
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of Lessee. Lessee represents,
covenants and warrants as follows:
(a) Lessee is a duly formed and validly existing body corporate and political
subdivision of the State, governed by the Constitution and laws of the State.
(b) State and Federal Laws authorize Lessee to construct, lease, operate and
maintain the Project; to enter into this Lease and the transactions contemplated hereby;
and to carry out its obligations under this Lease.
(c) The officers of Lessee executing this Lease and the documents
contemplated hereby have been duly authorized to execute and deliver this Lease and
related documents under the terms and provisions of a resolution of Lessee’s governing
body or by other appropriate official action.
(d) Lessee has complied with all open meeting laws, all public bidding laws
and all other State and Federal Laws applicable to this Lease and the acquisition of the
Project by Lessee.
(e) Except as provided under the terms of this Lease, Lessee will not transfer,
lease, assign, mortgage or encumber the Project.
(f) During the Term of this Lease, Lessee will not take or permit to be taken
any action with respect to the Lease or the Project which would cause the interest
received by the holders of the Bonds to become includable in gross income of such
recipients for federal income tax purposes under the Code and Lessee will take all actions
necessary to ensure that such interest remains not includable in gross income of such
recipients for federal income tax purposes under the Code, insofar as it has the power and
authority to do so.
(g) Lessee may accomplish any of its obligations herein by an agent.
Section 2.2. Representations Covenants and Warranties of Lessor. Lessor represents,
covenants and warrants as follows:
(a) Lessor is a public body, corporate and politic duly organized, existing and
in good standing under the laws of the State; has full and complete power to issue the
Bonds and to enter into this Lease and to enter into and carry out the transactions
contemplated hereby, and to carry out its obligations under, this Lease; is possessed of
full power to own and hold real and personal property, and to lease the same; and has
duly authorized the issuance and delivery of the Bonds and the execution and delivery of
this Lease.
8
(b) Neither the issuance and delivery of the Bonds nor the execution and
delivery of this Lease, nor the fulfillment of or compliance with the terms and conditions
hereof, nor the consummation of the transactions contemplated hereby, conflicts with or
results in a breach of the terms, conditions or provisions of any law, regulation,
restriction or any agreement or instrument to which Lessor is now a party or by which
Lessor or its property is bound, or constitutes a default under any of the foregoing, or
results in the creation or imposition of any lien, charge or encumbrance whatsoever upon
any of the property or assets of Lessor, or upon the Project, except Permitted
Encumbrances.
(c) Upon payment by Lessee of the amounts described in Section 10.1 hereof
or the defeasance of Lessee’s obligations hereunder pursuant to Article X hereof, Lessor
will deliver to Lessee all documents which are or may be necessary to vest all of Lessor’s
right, title and interest in and to the Project in Lessee, and will release all liens and
encumbrances created under this Lease.
(d) During the Term of this Lease, Lessor will not take or permit to be taken
any action with respect to the Lease or the Project which would cause the interest
received by the holders of the Bonds to become includable in gross income of such
recipients for federal income tax purposes under the Code and Lessee will take all actions
necessary to ensure that such interest remains not includable in gross income of such
recipients for federal income tax purposes under the Code, insofar as it has the power and
authority to do so.
9
ARTICLE III
AGREEMENT TO LEASE
Section 3.1. Lease. Lessor hereby leases, with an option to purchase, the Project to
Lessee, and Lessee hereby leases, with an option to purchase, the Project from Lessor, upon the
terms and conditions set forth in this Lease.
Section 3.2. Possession and Enjoyment. Lessor hereby covenants with respect to the
Project to provide Lessee during the Term of this Lease with quiet use and enjoyment of the
Project, and Lessee shall during such Lease Term peaceably and quietly have and hold and enjoy
the Project, without suit, trouble or hindrance from Lessor, except as expressly set forth in this
Lease. Lessor will, at the request of Lessee and at Lessee’s cost, join in any legal action in
which Lessee asserts its right to such possession and enjoyment to the extent Lessor may
lawfully do so.
Section 3.3. Lessor Access to Project. Lessee agrees that Lessor shall have the right
during Lessee’s normal working hours on Lessee’s normal working days to enter on and examine
and inspect the Project for the purpose of assuring that the Project is being properly maintained,
preserved and kept in good repair and condition. Lessee further agrees that Lessor shall have
such rights of access to the Project as may be reasonably necessary to cause the proper
maintenance of the Project in the event of failure by Lessee to perform its obligations hereunder.
10
ARTICLE IV
TERM OF LEASE
Section 4.1. Term of Lease. This Lease shall be and remain in effect with respect to
the Project for a Lease Term commencing on the date of execution hereof and continuing until
terminated as provided in Section 4.2.
Section 4.2. Termination of Lease Term. The Term of this Lease will terminate upon
the occurrence of the first of the following events:
(a) the termination by Lessee of its obligation to make any further Rental
Payments in accordance with Section 6.1;
(b) the exercise by Lessee of its option to purchase Lessor’s interest in the
Project or to defease its obligations hereunder pursuant to Article X;
(c) a default by Lessee and Lessor’s election to terminate this Lease pursuant
to Article XII; or
(d) the payment by Lessee of all Rental Payments required to be paid by
Lessee hereunder.
11
ARTICLE V
RENTAL PAYMENTS
Section 5.1. Rental Payments. Lessee shall pay semiannual Rental Payments with
respect to the Project, as set forth in Exhibit B, three business days (if by check) and one
business day (if by wire) prior to the dates that payments are due on the Bonds, as further
described in the Indenture. The Rental Payments shall be payable to the Trustee, as assignee of
the Lessor, at its address specified Section 14.08 of the Indenture. The Lessee shall also pay, as
additional Rental Payments, any amounts necessary to restore the balance on hand in the Debt
Service Reserve Fund to the Debt Service Reserve Requirement pursuant to Section 5.02 of the
Indenture.
Section 5.2. Current Expense. The obligations of Lessee under this Lease, including
its obligation to pay the Rental Payments due with respect to the Project in any Fiscal Year for
which this Lease is in effect, shall constitute a current expense of Lessee for such Fiscal Year
and shall not constitute an indebtedness of Lessee within the meaning of the Constitution and
laws of the State. Nothing herein shall constitute a pledge by Lessee of any taxes or other
moneys, other than moneys lawfully appropriated from time to time by or for the benefit of
Lessee in its annual budget, the proceeds or Net Proceeds of the Project, to the payment of any
Rental Payment or other amount coming due hereunder.
Section 5.3. Rental Payments to be Unconditional. Except as provided in Section 6.1,
the obligation of Lessee to make Rental Payments due with respect to the Project or any other
payments required hereunder shall be absolute and unconditional in all events. Notwithstanding
any dispute between Lessee and Lessor or any other person, Lessee shall make all Rental
Payments and other payments required hereunder when due and shall not withhold any Rental
Payment or other payment pending final resolution of such dispute nor shall Lessee assert any
right of set-off or counterclaim against its obligation to make such Rental Payments or other
payments required under this Lease. Lessee’s obligation to make Rental Payments or other
payments during the Lease Term shall not be abated through accident or unforeseen
circumstances. However, nothing herein shall be construed to release Lessor from the
performance of its obligations hereunder, and if Lessor should fail to perform any such
obligation, Lessee may institute such legal action against Lessor as Lessee may deem necessary
to compel the performance of such obligation or to recover damages therefor.
Section 5.4. Reserved.
Section 5.5. Intent to Continue Rental Payments; Appropriations. Lessee presently
intends to continue this Lease for the entire Term of this Lease and to pay all Rental Payments
required hereunder. Lessee reasonably and in good faith believes that amounts sufficient to pay
all Rental Payments due hereunder can and will lawfully be appropriated or budgeted and made
available for this purpose during the Lease Term.
12
ARTICLE VI
NONAPPROPRIATION
Section 6.1. Termination of Lease. Lessee shall have the right to cancel and terminate
this Lease, in whole but not in part, effective at the end of any Fiscal Year of Lessee, in the
manner and subject to the terms specified in this Section and Section 6.3, if Lessee is not
authorized by law to appropriate or does not appropriate moneys sufficient to pay the Rental
Payments coming due in the next Fiscal Year. Lack of a sufficient appropriation shall be
evidenced by a specific provision in Lessee’s budget for the Fiscal Year in question so stating.
Lessee may effect such termination by giving to Lessor a written notice of nonappropriation and
termination and by paying to Lessor any Rental Payments which are due and have not been paid
at or before the end of its then current Fiscal Year. Lessee shall endeavor to give notice of
termination not less than sixty (60) days prior to the end of such Fiscal Year, and shall notify
Lessor of any anticipated termination.
Section 6.2. Return of Project. In the event of termination of this Lease as provided in
Section 6.1, Lessee shall surrender possession of the Project to Lessor in accordance with
Section 12.3, and release its interest in the same, as granted under this Lease, within 10 days
after the termination of this Lease.
Section 6.3. Effect of Termination. Upon termination of Lessee’s obligation to make
Rental Payments as provided in Section 6.1, Lessee shall not be responsible for the payment of
any additional Rental Payments coming due with respect to succeeding Fiscal Years, but if
Lessee has not surrendered possession of the Project to Lessor in accordance with Sections 6.2
and 12.3, the termination shall nevertheless be effective, but Lessee shall be responsible for the
payment of damages in an amount equal to the amount of the Rental Payments thereafter coming
due under Exhibit B which are attributable to the number of days during which Lessee fails to
take such actions. Upon termination of this Lease as provided in Section 6.1, the Trustee, as
directed by and on behalf of the Lessor, shall thereafter use its best efforts to sell or lease its
interest in the Project or any portion thereof in a commercially reasonable manner in accordance
with applicable State laws and apply the proceeds of such lease or sale shall be applied in
accordance with the Indenture; provided, however, that a termination pursuant to Section 6.1 is
not an event of default hereunder.
Section 6.4. Reserved.
13
ARTICLE VII
MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS
Section 7.1. Maintenance and Modification of Project by Lessee. Lessee shall, at its
own expense, maintain, preserve and keep the Project in good repair, working order and
condition, and shall from time to time make all repairs, replacements and improvements
necessary to keep the Project in such condition. Lessor shall have no responsibility for any of
these repairs, replacements or improvements. In addition, Lessee shall, at its own expense, have
the right to remodel the Project or to make additions, modifications and improvements thereto.
All such additions, modifications and improvements shall thereafter comprise part of the Project
and be subject to the provisions of this Lease. Such additions, modifications and improvements
shall not in any way damage the Project nor cause it to be used for purposes other than those
authorized under the provisions of State law, and the Project, upon completion of any additions,
modifications and improvements made pursuant to this Section, shall be of a value not less than
the value of the Project immediately prior to the making of such additions, modifications and
improvements. Any property for which a substitution or replacement is made pursuant to this
Section may be disposed of by Lessee in such manner and on such terms as are determined by
Lessee. Lessee will not permit any mechanic’s or other lien to be established or remain against
the Project for labor or material furnished in connection with any remodeling, additions,
modifications, improvements, repairs, renewals or replacements made by Lessee pursuant to this
Section; provided that if any such lien is established and Lessee shall first notify Lessor of
Lessee’s intention to do so, Lessee may in good faith contest any lien filed or established against
the Project, and in such event may permit the items so contested to remain undischarged and
unsatisfied during the period of such contest and any appeal therefrom unless Lessor shall notify
Lessee that, in the opinion of Independent Counsel, by nonpayment of such item the interest of
Lessor in the Project will be materially endangered or the Project or any part thereof will be
subject to loss or forfeiture, in which event Lessee shall promptly pay and cause to be satisfied
and discharged all such unpaid items or provide Lessor with full security against any such loss or
forfeiture, in form satisfactory to Lessor. Lessor will cooperate fully with Lessee in any such
contest, upon the request and at the expense of Lessee.
Section 7.2. Taxes, Other Government Charges and Utility Charges. Lessee shall also
pay when due all gas, water, steam, electricity, heat, power, telephone, and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the Project. Lessee shall
also pay all property and excise taxes and governmental charges of any kind whatsoever which
may at any time be lawfully assessed or levied against or with respect to the Project or any part
thereof, and which become due during the Term of this Lease with respect thereto, and all special
assessments and charges lawfully made by any governmental body for public improvements that
may be secured by a lien on the Project; provided that with respect to special assessments or
other governmental charges that may lawfully be paid in installments over a period of years,
Lessee shall be obligated to pay only such installments as are required to be paid during the
Term of this Lease as and when the same become due.
Lessee may, at Lessee’s expense and in Lessee’s name, in good faith contest any such
taxes, assessments, utility and other charges and, in the event of any such contest, may permit the
taxes, assessments or other charges so contested to remain unpaid during the period of such
14
contest and any appeal therefrom unless Lessor shall notify Lessee that, in the opinion of
Independent Counsel, by nonpayment of any such items the interest of Lessor in the Project will
be materially endangered or the Project or any part thereof will be subject to loss or forfeiture, in
which event Lessee shall promptly pay such taxes, assessments or charges or provide Lessor
with full security against any loss which may result from nonpayment, in form satisfactory to
Lessor.
Section 7.3. Liability Insurance. Upon receipt of possession of the Project, the Lessee
shall take such measures as may be necessary to ensure that any liability for injuries to or death
of any person or damage to or loss of property arising out of or in any way relating to the
condition or the operation of the Project or any part thereof, is covered by a blanket or other
general liability insurance policy maintained by the Lessee. The Net Proceeds of all such
insurance shall be applied toward extinguishment or satisfaction of the liability with respect to
which any Net Proceeds may be paid.
Section 7.4. Lessee’s Negligence. Lessee assumes all risks and liabilities, whether or
not covered by insurance, for loss or damage to the Project and for injury to or death of any
person or damage to any property, whether such injury or death be with respect to agents or
employees of Lessee or of third parties, and whether such property damage be to Lessee’s
property or the property of others, which is proximately caused by the negligent conduct of
Lessee, its officers, employees and agents. Lessee hereby assumes responsibility for and agrees
to reimburse Lessor and Trustee for all liabilities, obligations, losses, damages, penalties, claims,
actions, costs and expenses (including reasonable attorney’s fees) whatsoever kind and nature,
imposed on, incurred by or asserted against Lessor or Trustee that in any way relate to or arise
out of a claim, suit or proceeding based in whole or in part upon the negligent conduct of Lessee,
its officers, employees and agents, to the maximum extent permitted by law.
Section 7.5. Property Insurance. Upon receipt of possession of the Project, the Lessee
shall have and assume the risk of loss with respect thereto. The Lessee shall procure and
maintain continuously in effect during the Lease Term, all-risk insurance, subject only to the
standard exclusions contained in the policy, in such amount as will be at least sufficient so that a
claim may be made for the full replacement cost of any part thereof damaged or destroyed and to
pay the applicable purchase price of the Project as set forth in Section 10.1. Such insurance may
be provided by a rider to an existing policy or under a separate policy. Such insurance may be
written with customary deductible amounts. The Net Proceeds of insurance required by this
Section shall be applied to the prompt repair, restoration or replacement of the Project, or to the
purchase of the Project, as provided in Section 8.1. Any Net Proceeds not needed for those
purposes shall be paid to the Lessee.
Section 7.6. Worker’s Compensation Insurance. If required by State law, the Lessee
shall carry worker’s compensation insurance covering all its employees on, in, near or about the
Project. Alternatively, the Lessee may self-insure against such liabilities in accordance with
applicable law.
Section 7.7. Other Insurance and Requirements for All Insurance. All insurance
required by this Article may be carried under a separate policy or a rider or endorsement; shall be
taken out and maintained with responsible insurance companies organized under the laws of one
15
of the states of the United States and qualified to do business in the State; shall contain a
provision that the insurer shall not cancel or revise coverage thereunder without giving written
notice to all parties at least ten (10) days before the cancellation or revision becomes effective;
and shall name Lessee and Lessor as insured parties. Lessee shall deposit with Lessor policies
evidencing any such insurance procured by it, or a certificate or certificates of the respective
insurers stating that such insurance is in full force and effect. Before the expiration of any such
policy, Lessee shall furnish to Lessor evidence that the policy has been renewed or replaced by
another policy conforming to the provisions of this Article, unless such insurance is no longer
obtainable in which event Lessee shall notify Lessor of this fact.
Section 7.8. Advances. If Lessee shall fail to perform any of its obligations under this
Lease, Lessor may, but shall not be obligated to take such action as may be necessary to cure
such failure, including the advancement of money, and Lessee shall be obligated to repay all
such advances on demand with interest at the maximum rate permitted by law or 12%, whichever
is less, from the date of the advance to the date of repayment.
Section 7.9. Liens. Lessee shall not, directly or indirectly, create, incur, assume or
suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the
Project, other than the respective rights of Lessor and Lessee as herein provided and Permitted
Encumbrances. Except as expressly provided in this Article, Lessee shall promptly, at its own
expense, take such action as may be necessary duly to discharge or remove any such mortgage,
pledge, lien, charge, encumbrance or claim.
Section 7.10. Rebate. The Lessor and Lessee acknowledge that the Bonds are subject to
the rebate requirements of Section 148(f) of the Code. The Lessee covenants and agrees to retain
such records, make such determinations, file such reports and documents and pay such amounts
at such times as are required under said Section 148(f) and applicable regulations, unless the
Bonds qualify for an exception from the rebate requirement pursuant to one of the spending
exceptions set forth in Section 1.148-7 of the regulations promulgated under the Code 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.
16
ARTICLE VIII
DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF NET PROCEEDS
Section 8.1. Damage, Destruction and Condemnation. If (i) more than 25% of the
value of the Project or any portion thereof is destroyed or is damaged by fire or other casualty, or
(ii) title to or the temporary use of the Project or any part thereof, or the interest of Lessee or
Lessor in the Project or any part thereof, shall be taken under the exercise of the power of
eminent domain by any governmental body or by any person, firm or corporation acting under
governmental authority, Lessee, unless it has determined to terminate this Lease in accordance
with Section 6.1 hereof, shall be entitled to the Net Proceeds of any insurance or condemnation
award and shall apply such Net Proceeds (x) to the prompt repair, restoration, modification or
improvement of the Project by Lessee, in which event Lessee shall be obligated to continue to
pay the Rental Payments due with respect to the Project, or (y) to the payment of the applicable
prepayment price in accordance with Article X. In the event the Lessee has determined to
terminate this Lease in accordance with Section 6.1 hereof, the Lessee shall turn over such Net
Proceeds to the Lessor.
Section 8.2. Cooperation of Lessor. Lessor shall cooperate fully with Lessee at the
expense of Lessee in filing any proof of loss with respect to any insurance policy covering the
casualties described in Section 8.1 hereof and in the prosecution or defense of any prospective or
pending condemnation proceeding with respect to the Project or any part thereof and will, to the
extent it may lawfully do so, permit Lessee to litigate in any proceeding resulting therefrom in
the name of and on behalf of Lessor. In no event will Lessor voluntarily settle, or consent to the
settlement of, any proceeding arising out of any insurance claim or any prospective or pending
condemnation proceeding with respect to the Project or any part thereof without the written
consent of Lessee.
Section 8.3. Condemnation of Other Property Owned by Lessee. Lessee shall be
entitled to the Net Proceeds of any condemnation award or portion thereof made for destruction
of, damage to or taking of its property not included in the Project.
17
ARTICLE IX
LESSEE’S EQUIPMENT; WARRANTIES
Section 9.1. Installation of Lessee’s Equipment. Lessee may at any time and from time
to time, in its sole discretion and its own expense, install items of moveable machinery, standard
office partition, railings, doors, lighting fixtures, and such other equipment as may in Lessee’s
judgment be necessary for its purposes, in or upon the Project. All such items shall remain the
sole property of Lessee, in which Lessor shall have no interest, and may be modified or removed
by Lessee at any time provided that Lessee shall repair and restore any and all damage to the
Project resulting from the installation, modification or removal of any such items. Nothing in
this Lease shall prevent Lessee from purchasing items to be installed pursuant to this Section
under a conditional sale or lease with option to purchase contract, or subject to a vendor’s lien or
security agreement, as security for the unpaid portion of the purchase price thereof, provided that
no such lien or security interest shall attach to any part of the Project.
Section 9.2. Reserved.
Section 9.3. Reserved.
Section 9.4. Warranties. Lessor hereby assigns to Lessee for and during the Term of
this Lease, all of its interest in all warranties and guarantees or other contract rights against any
architect, contractor or manufacturer for the Project, expressed or implied, issued on or
applicable to the Project, and Lessor hereby authorizes Lessee to obtain the customary services
furnished in connection with such warranties and guarantees at Lessee’s expense. Lessee’s sole
remedy for the breach of such warranties and guarantees shall be against the manufacturer or
supplier of such portion of the Project or such contractor or architect, and not against Lessor, nor
shall such matter have any effect whatsoever on the rights of the Lessor with respect to this
Lease, including the right to receive full and timely payments hereunder. Lessee expressly
acknowledges that Lessor does not make and has not made any representation or warranty
whatsoever as to the existence or availability of such warranties with respect to the Project or any
portion thereof.
Section 9.5. Disclaimer of Warranties. LESSOR MAKES NO WARRANTY OR
REPRESENTATION, EITHER EXPRESSED OR IMPLIED, AS TO THE VALUE, DESIGN,
CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR
FITNESS FOR THE USE CONTEMPLATED BY LESSEE OF THE PROJECT, OR ANY
OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE PROJECT. In no
event shall Lessor be liable for any incidental, indirect, special or consequential damage in
connection with or arising out of this Lease or the existence, furnishing, functioning or Lessee’s
use of any portion of the Project provided for in this Lease.
18
ARTICLE X
OPTION TO PURCHASE
Section 10.1. When Available. Lessee shall have the option to purchase Lessor’s
interest in the Project (i) on any Payment Date on or after [________, 202_], but only if Lessee is
not in default under this Lease, and (ii) on any date pursuant to the events described in Section
8.1 hereof, and only in the manner provided in this Article, at a price equal to the principal
amount of Rental Payments outstanding, plus accrued interest to the date of prepayment.
Section 10.2. Exercise of Option. Lessee shall give notice to Lessor of its intention to
exercise its option not less than forty-five (45) days prior to the Payment Date on which the
option is to be exercised, and shall deposit with Lessor on the date of exercise an amount equal
to all Rental Payments and any other amounts then due or past due. The closing shall be on the
Payment Date on which the option is to be exercised at the office of Lessor.
Section 10.3. Release of Lessor’s Interest. Upon exercise by Lessee of its option to
purchase, Lessee shall have no further obligations under this Lease and Lessor and its officers
shall take all actions necessary to authorize, execute and deliver to Lessee any and all documents
necessary to vest in Lessee, all of Lessor’s right, title and interest in and to the Project, free and
clear of all liens, leasehold interest and encumbrances arising under the provisions of this Lease.
Section 10.4. Defeasance. Lessee shall have the right to defease and satisfy its
obligations to pay Rental Payments due under this Lease, in the manner and with the effect
provided in this Section; but such right may only be exercised if Lessee is not in default under
the Lease, or if the exercise of such right would cure such default. If the whole amount of the
Rental Payments due and payable under this Lease shall be paid, or provision shall have been
made for the payment of the same by the deposit of cash or the Qualified Investments in an
amount sufficient (together with interest earnings thereon) to provide for payment of said Rental
Payments to the last Payment Date, or earlier Payment Date on which the option to purchase of
Lessee may be exercised, and all administrative expenses related thereto shall have been paid or
provided for, then, and in that case, all right, title and interest of Lessor in and to the Project, this
Lease and the Rental Payments due hereunder shall thereupon cease, terminate and become void;
and Lessor shall assign and transfer to or upon the order of Lessee all rights in the Project and
this Lease then held by Lessor, and shall execute such documents as may be reasonably required
by Lessee for this purpose; and thereafter the Rental Payments due hereunder shall be payable
solely from the moneys and securities so deposited.
19
ARTICLE XI
ASSIGNMENT, SUBLEASING, MORTGAGING AND SELLING
Section 11.1. Assignment by Lessor. Lessor shall not assign its obligations under this
Lease, and no purported assignment thereof shall be effective. All of Lessor’s rights, title and/or
interest in and to this Lease, the Rental Payments and other amounts due hereunder and the
Project may not be assigned except to a trustee or other fiduciary for the holders of the Bonds.
Section 11.2. Assignment and Subleasing by Lessee. This Lease may not be assigned or
subleased by Lessee without the written consent of Lessor.
Section 11.3. Restriction on Mortgage or Sale of Project by Lessee. Lessee will not
mortgage, sell, assign, transfer or convey the Project or any portion thereof during the Term of
this Lease without the written consent of Lessor.
20
ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES
Section 12.1. Events of Default Defined. The following shall be “events of default”
under this Lease and the terms “events of default” and “default” shall mean, whenever they are
used in this Lease, with respect to the Project, any one or more of the following events:
(a) Failure by Lessee to pay any Rental Payment or other payment required to
be paid hereunder on the due date specified herein and the continuation of said failure for
a period of three (3) business days after written notice given by Lessor that the payment
referred to in such notice has not been received.
(b) Failure by Lessee to observe and perform any covenant, condition or
agreement on its part to be observed or performed, other than as referred to in clause (i)
of this Section, for a period of thirty (30) days after written notice specifying such failure
and requesting that it be remedied has been given to Lessee by Lessor, unless Lessor shall
agree in writing to an extension of such time prior to its expiration; provided, however, if
the failure stated in the notice cannot be corrected within the applicable period, Lessor
will not unreasonably withhold its consent to an extension of such time if corrective
action is instituted by Lessee within the applicable period and diligently pursued until the
default is corrected.
(c) The filing by Lessee of a voluntary petition in bankruptcy, or failure by
Lessee promptly to lift any execution, garnishment or attachment of such consequence as
would impair the ability of Lessee to carry on its operations at the Project, or adjudication
of Lessee as a bankrupt, or assignment by Lessee into an agreement of composition with
creditors, or the approval by a court of competent jurisdiction of a petition applicable to
Lessee in any proceedings instituted under the provisions of the Federal Bankruptcy
Statute, as amended, or under any similar acts which may hereafter be enacted.
The provisions of this Section 12.1 and Section 12.2 are subject to the following
limitation: if by reason of force majeure Lessee is unable in whole or part to carry out its
obligations under this Lease with respect to the Project, other than the obligation of Lessee to
pay Rental Payments with respect thereto which shall be paid when due notwithstanding the
provisions of this paragraph, Lessor or Lessee shall not be deemed in default during the
continuance of such inability. The term “force majeure” as used herein shall mean, without
limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of
public enemies; orders or restraints of any kind of the government of the United States of
America or any of its departments, agencies or officials, or any civil or military authority;
insurrections; riots; landslides; earthquakes; fires; storms; droughts; floods; explosions; breakage
or accident to machinery, transmission pipes or canals; or any other cause of event not
reasonably within the control of Lessee and not resulting from its negligence. Lessee agrees,
however, to remedy with all reasonable dispatch the cause or causes preventing it from carrying
out its obligations under this Lease; provided that the settlement of strikes, lockouts and other
industrial disturbances shall be entirely within the discretion of Lessee and Lessee shall not be
required to make settlement of strikes, lockouts and other industrial disturbances by acceding to
21
the demands of the opposing party or parties when such course is in its judgment unfavorable to
Lessee.
Notwithstanding anything contained in this Section 12.1 to the contrary, a failure by
Lessee to pay when due any payment required to be made under this Lease or a failure by Lessee
to observe and perform any covenant, condition or agreement on its part to be observed or
performed under this Lease, resulting from Lessee’s termination of the Lease as contemplated by
Section 6.1 hereof, shall not constitute an event of default under this Section 12.1.
Section 12.2. Remedies on Default. Whenever any event of default referred to in
Section 12.1 hereof shall have happened and be continuing with respect to the Project, Lessor
shall have the right, at its option and without any further demand or notice, to take one or any
combination of the following remedial steps:
(a) With or without terminating this Lease, re-enter and take possession of the
Project and exclude Lessee from using it; provided, however, that if this Lease has not
been terminated, Lessor shall return possession of the Project to Lessee when the event of
default is cured; and provided further that Lessee shall continue to be responsible for the
Rental Payments due during the Fiscal Year then in effect; or
(b) With or without terminating this Lease, re-enter and take possession of the
Project, and sell its interest in, lease or sublease the Project or any part of it, holding
Lessee liable for the difference between (a) the sales price, rent and other amounts paid
by the purchaser, lessee or sublessee pursuant to such sales agreement, lease or sublease
(b) the balance of the Rental Payments and other amounts owed by Lessee during its the
current fiscal year, provided, however, that nothing contained herein shall impose an
obligation upon Lessor so to sell its interest in, lease or sublease the Project; or
(c) With or without terminating this Lease, declare all Rental Payments due or
to become due during the Fiscal Year of Lessee in effect when the default occurs to be
immediately due and payable by Lessee, whereupon such Rental Payments shall be
immediately due and payable; or
(d) Take whatever action at law or in equity may appear necessary or
desirable to collect the Rental Payments then due and thereafter to become due during the
then current Fiscal Year of Lessee with respect to the Project, or enforce performance and
observance of any obligation, agreement or covenant of Lessee under this Lease.
Section 12.3. Return of Project. Upon the expiration or termination of this Lease prior
to the payment of all Rental Payments in accordance with Exhibit B, Lessee shall deliver
possession of the Project to Lessor in the condition, repair, appearance and working order
required in Section 7.1.
Section 12.4. Delay; Notice. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time and as often as
may be deemed expedient. In order to entitle any party to exercise any remedy reserved to it in
22
this Lease it shall not be necessary to give any notice, other than such notice as may be required
in this Lease.
Section 12.5. No Remedy Exclusive. No remedy herein conferred upon or reserved to
Lessor is intended to be exclusive and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Lease or now or hereafter existing at law or in
equity. No delay or omission to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed expedient.
Section 12.6. Agreement to Pay Attorneys’ Fees and Expenses. In the event either party
to this Lease should default under any of the provisions hereof and the non defaulting party
should employ attorneys or incur other expenses for the collection of moneys or the enforcement
or performance or observance of any obligation or agreement on the part of the defaulting party
herein contained, the defaulting party agrees that it will on demand therefore pay to the non-
defaulting party the reasonable fee of such attorneys and such other expenses so incurred by the
nondefaulting party.
Section 12.7. No Additional Waiver Implied By One Waiver. In the event any
agreement contained in this Lease should be breached by either party and thereafter waived by
the other party, such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.
23
ARTICLE XIII
TITLE
Section 13.1. Title to Project. During the Term of this Lease, legal title to the Project
and any and all repairs, replacements, substitutions and modifications thereto shall be in Lessor,
subject to Lessee’s interests under this Lease. Upon termination of this Lease for either of the
reasons specified in Section 4.2, Clauses (b) and (d), Lessor shall transfer legal title to the Project
to Lessee and Lessor shall have no further interest therein. In either of such events, Lessor shall
execute and deliver to Lessee such documents as Lessee may request to evidence such transfer of
legal title to the Project to Lessee. Upon termination of this Lease for either of the reasons
specified in Section 4.2, Clauses (a) and (c), Lessee shall surrender possession of the Project to
Lessor and shall have no further interest therein. In either of such events Lessee shall execute
and deliver to Lessor such documents as Lessor may request to evidence the termination of
Lessee’s interest in the Project.
Section 13.2. Security Interest. Lessor shall have and retain a security interest under the
Uniform Commercial Code in any portion of the Project constituting personal property or
fixtures, the proceeds thereof and all repairs, replacements, substitutions and modifications
thereto or thereof made pursuant to Section 7.1, in order to secure Lessee’s payment of all Rental
Payments due during the Term of this Lease and the performance of all other obligations herein
to be performed by Lessee. Lessee will join with Lessor in executing such financing statements
or other documents and will perform such acts as Lessor may request to establish and maintain a
valid security interest in such personal property or fixtures. If requested by Lessor, Lessee shall
conspicuously mark such personal property or fixtures with appropriate lettering, labels or tags,
and maintain such markings during the Term of this Lease, so as clearly to disclose Lessor’s
security interest in such personal property or fixtures.
24
ARTICLE XIV
ISSUANCE OF THE BONDS
Section 14.1. Agreement to Issue Bonds; Application of Bond Proceeds. In order to
provide funds for payment of the costs of refunding the Series 2007 Bonds, the Lessor has, or
will have, upon or promptly after the execution of this Lease, issued and delivered to the initial
purchaser thereof the Bonds, and the Lessor has or will have deposited proceeds of the Bonds as
described in Section 4.01 of the Indenture.
25
ARTICLE XV
ADMINISTRATIVE PROVISIONS
Section 15.1. Notices. All notices, certificates or other communications hereunder shall
be sufficiently given and shall be deemed given on the earlier of (i) delivery or (ii) three days
following deposit in the United States mail in certified or registered form with postage fully
prepaid to the addresses shown in the first paragraph hereof. Lessor and Lessee, by notice given
hereunder, may designate different addresses to which subsequent notices, certificates or other
communications will be sent.
Section 15.2. Binding Effect. This Lease shall inure to the benefit of and shall be
binding upon Lessor and Lessee and their respective successors and assigns.
Section 15.3. Severability. In the event any provision of this Lease shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provision hereof.
Section 15.4. Amendments, Charges and Modifications. This Lease may be amended or
any of its terms modified only by written amendment authorized and executed by Lessee and
Lessor.
Section 15.5. Further Assurances and Corrective Instruments. Lessor and Lessee agree
that they will, if necessary, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements hereto and such further instruments as may
reasonably be required for correcting any inadequate or incorrect description of the Project
hereby leased or intended so to be or for carrying out the expressed intention of this Lease.
Section 15.6. Execution in Counterparts. This Lease may be simultaneously executed in
several counterparts each of which shall be an original and all of which shall constitute but one
and the same instrument.
Section 15.7. Applicable Law. This Lease shall be governed by and construed in
accordance with the laws of the State.
Section 15.8. Lessor and Lessee Representatives. Whenever under the provisions of this
Lease the approval of Lessor or Lessee is required, or Lessor or Lessee is required to take some
action at the request of the other, such approval of such request shall be given for Lessor by a
Lessor Representative and for Lessee by a Lessee Representative, and any party hereto shall be
authorized to rely upon any such approval or request.
Section 15.9. Captions. The captions or headings in this Lease are for convenience only
and in no way define, limit or describe the scope or intent of any provisions or Sections of this
Lease.
S-1
IN WITNESS WHEREOF, Lessor has caused this Lease to be executed in its corporate
name by its duly authorized officers, and Lessee has caused this Lease to be executed in its name
by its duly authorized officers, as of the date first above written.
Lessor:
HOUSING AND REDEVELOPMENT
AUTHORITY OF THE CITY OF LAKEVILLE
By
Chair
Attest
Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this ______ day of
_____________, 2017, by Bart Davis and Justin Miller, the Chair and Executive Director,
respectively, of the Housing and Redevelopment Authority of the City of Lakeville, Minnesota,
on behalf of such Authority.
IN WITNESS WHEREOF I have hereunto set my hand and official seal.
Notary Public
(SEAL)
[Signature Page – Lease-Purchase Agreement]
S-2
Lessee:
CITY OF LAKEVILLE, MINNESOTA
By
Mayor
And
City Clerk
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this ____ day of __________,
2016, by Douglas P. Anderson and Charlene Friedges, the Mayor and City Clerk, respectively, of
the City of Lakeville, Minnesota, on behalf of the City.
IN WITNESS WHEREOF I have hereunto set my hand and official seal.
Notary Public
(SEAL)
[Signature Page – Lease-Purchase Agreement]
A-1
EXHIBIT A
DESCRIPTION OF LAND
B-1
EXHIBIT B
RENTAL PAYMENT SCHEDULE
PAYMENT
DATE*
PRINCIPAL
PORTION
INTEREST
PORTION
TOTAL
RENTAL
PAYMENT
DUE
DEBT
SERVICE
RESERVE
FUND**
NET DEBT
SERVICE
* Payment due prior to this date as provided in Section 5.1 of the Lease.
** [Funds available in the Debt Service Reserve Fund may be used to pay principal and interest due. See
Section 5.02 of the Indenture. In the event such funds are not available, Rental Payments shall be paid from other
available funds pursuant to Article V of the Lease.]