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EDA Agenda 01-16-2008 (II) (Special Meeting)
EHLERS & ASSOCIATES INC Dear Elected Official: At your direction, we have prepared the enclosed preliminary Official Statement describing this financial transaction, which must meet the Securities and Exchange Commission disclosure requirements. This Official Statement is also being distributed to potential bidders who will rely on the contents of this document in assessing the security of this issue before submitting their bid. The resolution you will consider when you award the sale of this offering to the successful bidder will ask you to approve the contents of this Official Statement by designating it as the "Final Official Statement". "A Pocket Guide for Elected and Other Public Officials" prepared by the National League of Cities; National Association of Counties; National Association of State Auditors, Comptrollers, and Treasurers; and the Government Finance Officers Association with input from the Securities and Exchange Commission recommends that municipal officials ask the following questions of outside professionals who produce disclosure documents for the sale of municipal obligations. 1. What is the nature or scope of the written opinion or certification, if any, that you are giving in this transaction and relating to the disclosure document? Have we given you access to the information you need? 2. Have you explained to us all aspects of the structure or nature of this transaction so that you are confident we fully understand all critical aspects? Does our official statement adequately address any concerns you have about this transaction that a reasonable investor would consider important? 3. Are there any matters regarding your participation in this transaction about which you should make us aware, including potential conflicts of interest? 4. Has your review of the relevant financial documents and other materials, including the official statement, raised any concerns regarding this borrowing? Do these concerns need to be disclosed? 5. Are you aware of any circumstances in which we, our staff, or others have not complied with our procedures so that we can make sure that our official statement adequately and accurately describes this transaction? We hope Ehlers has answered these questions prior to or within this document. If not, please feel free to contact us. Please review the contents of the Official Statement, and let us know within one week if any changes are necessary to this Official Statement. Yours Truly, EHLERS & ASSOCIATES, INC. cc: Administrator L E A D E R S I N P U B L I C F I N A N C E Equal Opportunity Employer Charter Member of the National Association of Independent Public Finance Advisors 3060 Centre Pointe Drive, Roseville, MN 55113-1105 651.697.8500 fax 651.697.8555 www.ehlers-inc.com In the opinion of Bond Counsel, under existing laws, as presently enacted and construed, the interest to be paid on the Bonds is excludable from gross income of the recipient for United States income tax purposes and, to the same extent, is excludable from taxable net income of the recipient, trusts and estates for State of Minnesota income tax purposes. Interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax, but interest on the Bonds is included in adjusted current Ings in calculating thefederal alternative minimum tax imposed on corporations. Interest on the Bonds is included in the income offtnancial institutions and corporations urposes of the State of Minnesota franchise tax. The Authority will designate the Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the ability offinancial institutions to deduct from income forfederal income taxpurposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. New Issue Rating Application Made: Moody's Investors Service PRELIMINARY OFFICIAL STATEMENT DATED JANUARY 3, 2008 CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA $6,100,000* PUBLIC PROJECT REVENUE REFUNDING BONDS, SERIES 2008A PROPOSAL OPENING: January 16, 2008, 11:00 A.M., C.T. CONSIDERATION: January 16,2008,6:00 P.M., C.T. PURPOSE/AUTHORITY/SECURITY: The $6,100,000 Public Project Revenue Refunding Bonds, Series 2008A (the "Bonds") are being issued by the City ofMonticello Economic Development Authority, Minnesota (the "Authority") pursuant to Minnesota Statutes, Chapters 469 and 465, to provide financing for a full net cash advance refunding of the $7,555,000 Public Project Revenue Bonds, Series 2000A. The Bonds will be special obligations of the Authority payable from and secured by a pledge of lease payments required to be made to the Authority by the City pursuant to an Amended and Restated Lease -Purchase Agreement (the "Lease") to be entered into between the Authority and the City. THE BONDS DO NOT CONSTITUTE A GENERAL OBLIGATION OF THE AUTHORITY OR THE CITY AND ARE NOT A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. Delivery is subject to receipt of an approving legal opinion of Kennedy & Graven, " - rtered, Minneapolis, Minnesota. DATE OF BONDS: February 20, 2008 MATURITY: February 1 as follows: Year Amount* Year Amount* Year Amount* 2009 $595,000 2012 $980,000 2015 $990,000 2010 610,000 2013 990,000 2011 945,000 2014 990,000 MATURITY ADJUSTMENTS: *The Authority reserves the right to increase or decrease the principal amount of the Bonds on the day of sale, in increments of $5,000 each. Increases or decreases may be made in any maturity. If any principal amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross spread per $1,000. TERM BONDS: See "Term Bond Option" herein. INTEREST: August 1, 2008 and semiannually thereafter. OPTIONAL REDEMPTION: The Bonds are being offered without option of prior redemption. MINIMUM PROPOSAL: $6,025,740. GOOD FAITH DEPOSIT: $122,000. PAYING AGENT/ ESCROW AGENT: U.S. Bank National Association, St. Paul, Minnesota. BOOK -ENTRY -ONLY: See "Book -Entry -Only System" herein. (Unless otherwise specified by the Purchaser) This Preliminary Official Statement will be further supplemented by an addendum specifying the offering prices, interest rates, aggregate principal amount, principal amount per maturity, anticipated delivery date, and Syndicate Manager and Syndicate •nbers, together with any other information required by law, and, as supplemented, shall constitute a "Final Official Statement" ._ ne Authority with respect to the Bonds, as defined in S.E.C. Rule 15c2-12. EH L E R S 3060 Centre Pointe Drive, Roseville, MN 55113 651.697.8500 fax 651.697.8555 www.ehiers-inc.com & ASSOCIATES INC Offices in Roseville, MN Brookfield, WI and Lisle, IL REPRESENTATIONS No dealer, broker, salesperson or other person has been authorized by the Authority to give any information or to make any representation other than those contained in this Preliminary Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the Authority. This Preliminary Official Statement does not constitute an offer to sell or a solicitation of an offer to buy any of these Bonds in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction. This Preliminary Official Statement is not to be construed as a contract with the Syndicate Manager or Syndicate Members. Statements contained herein which involve estimates or matters of opinion are intended solely as such and are not to be construed as representations of fact. Ehlers & Associates, Inc. prepared this Preliminary Official Statement and any addenda thereto relying on information of the Authority and other sources for which there is reasonable basis for believing the information is accurate and complete. Bond Counsel has not participated in the preparation of this Preliminary Official Statement except as described herein and is not expressing any opinion as to the completeness or accuracy of the information contained therein. Compensation of Ehlers & Associates, Inc., payable entirely by the Authority, is contingent upon the sale of the issue. COMPLIANCE WITH S.E.C. RULE 15c2-12 Certain municipal obligations (issued in an aggregate amount over $1,000,000) are subject to General Rules and Regulations, Securities Exchange Act of 1934, Rule 15c2-12 Municipal Securities Disclosure (the "Rule"). Preliminary Official Statement: This Preliminary Official Statement was prepared for the Authority for dissemination to potential customers. Its primary purpose is to disclose information regarding these Bonds to prospective underwriters in the interest of receiving competitive proposals in accordance with the sale notice contained herein. Unless an addendum is posted prior to the sale, this Preliminary Official Statement shall be deemed nearly final for purposes of the Rule subject to completion, revision and amendment in a Final Official Statement as defined below. Review Period: This Preliminary Official Statement has been distributed to members of the legislative body and other public officials of the Authority as well as to prospective bidders for an objective review of its disclosure. Comments or requests for the correction of omissions or inaccuracies must be submitted to Ehlers & Associates at least two business days prior to the sale. Requests for additional infonnation or corrections in the Preliminary Official Statement received on or before this date will not be considered a qualification of a proposal received from an underwriter. If there are any changes, corrections or additions to the Preliminary Official Statement, interested bidders will be informed by an addendum at least one business day prior to the sale. Final Official Statement: Upon award of sale of these Bonds, the Preliminary Official Statement together with any previous addendum of corrections or additions will be further supplemented by an addendum specifying the offering prices, interest rates, aggregate principal amount, principal amount per maturity, anticipated delivery date, and Syndicate Manager and Syndicate Members, together with any other information required by law, and, as supplemented, shall constitute a "Final Official Statement" of the Authority with respect to the Bonds, as defined in S.E.C. Rule 15c2-12. Copies of the Final Official Statement will be delivered to the underwriter (Syndicate Manager) within seven business days following the proposal acceptance. Continuing Disclosure: Subject to certain exemptions, issues in an aggregate amount over $1,000,000 maybe required to comply with provisions of the Rule which require that underwriters obtain from the issuers of municipal securities (or other obligated party) an agreement for the benefit of the owners of the securities to provide continuing disclosure with respect to those securities. This Preliminary Official Statement describes the conditions under which these Bonds are exempt or required to comply with the Rule. CLOSING CERTIFICATES Upon delivery of these Bonds, the purchaser (underwriter) will be furnished with the following items: (1) a certificate of the appropriate officials to the effect that at the time of the sale of these Bonds and all times subsequent thereto up to and including the time of the delivery of these Bonds, this Preliminary Official Statement did not and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (2) a receipt signed by the appropriate officer evidencing payment for these Bonds; (3) a certificate evidencing the due execution of these Bonds, including statements that (a) no litigation of any nature is pending, or to the knowledge of signers, threatened, restraining or enjoining the issuance and delivery of these Bonds, (b) neither the corporate existence or boundaries of the Authority nor the title of the signers to their respective offices is being contested, and (c) no authority or proceedings for the issuance of these Bonds have been repealed, revoked or rescinded; and (4) a certificate setting forth facts and expectations of the Authority which indicates that the Authority does not expect to use the proceeds of these Bonds in a manner that would cause them to be arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or within the meaning of applicable Treasury Regulations. TABLE OF CONTENTS INTRODUCTORY STATEMENT ....................... 1 THEBONDS ........................................ I GENERAL...................................... 1 REDEMPTION .................................. I AUTHORITY; PURPOSE .......................... 2 ESTIMATED SOURCES AND USES ................ 4 SECURITY ..................................... 4 RATING ........................................ 4 CONTINUING DISCLOSURE ...................... 5 LEGAL OPINION ................................ 5 TAX EXEMPTION ............................... 5 QUALIFIED TAX-EXEMPT OBLIGATIONS .......... 6 FINANCIAL ADVISOR ........................... 6 RISK FACTORS ................................. 6 VALUATIONS ...................................... 9 CURRENT PROPERTY VALUATIONS ............. 10 2006/07 NET TAX CAPACITY BY CLASSIFICATION . 1 I TREND OF VALUATIONS ....................... I 1 LARGER TAXPAYERS .......................... 12 DEBT............................................. 13 DIRECT DEBT ................................. 13 SCHEDULES OF BONDED INDEBTEDNESS ........ 14 DEBT LIMIT ................................... 19 OVERLAPPING DEBT ........................... 19 DEBT RATIOS ................................. 20 DEBT PAYMENT HISTORY ...................... 20 FUTURE FINANCING ........................... 20 TAX LEVIES AND COLLECTIONS .................... 21 TAX COLLECTIONS ............................ 21 TAX CAPACITY RATES ......................... 21 LEVY LIMITS .................................. 21 THECITY ......................................... 22 CITY GOVERNMENT ........................... 22 EMPLOYEES; PENSIONS; UNIONS ............... 22 LITIGATION ................................... 22 FUNDS ON HAND .............................. 22 ENTERPRISE FUNDS ........................... 23 SUMMARY GENERAL FUND INFORMATION ...... 24 GENERAL INFORMATION ........................... 25 LOCATION .................................... 25 LARGER EMPLOYERS .......................... 25 U.S. CENSUS DATA ............................. 26 EMPLOYMENT/UNEMPLOYMENT DATA ......... 26 BUILDING PERMITS ............................ 27 FINANCIAL INSTITUTIONS ...................... 27 EDUCATION ................................... 28 IN-PATIENT MEDICAL FACILITIES ............... 28 w EXCERPTS FROM FINANCIAL STATEMENTS ........ A-1 FORM OF LEGAL OPINION ........................ B -I BOOK -ENTRY -ONLY SYSTEM ..................... C-1 FORM OF CONTINUING DISCLOSURE CERTIFICATE. D-1 TERMS OF PROPOSAL ............................ E -i ECONOMIC DEVELOPMENT AUTHORITY Bill Demeules President Dan Frie Vice President Bill Tapper Treasurer Wayne Mayer Commissioner Clint Herbst Commissioner William Fair Commissioner Robert Viering Commissioner ADMINISTRATION 011ie Koropchak, Executive Director Angela Schumann, Secretary Tom Kelly, Assistant Treasurer CITY COUNCIL Clint Herbst Mayor Wayne Mayer Council Member Tom Perrault Council Member Brian Stumpf Council Member Susie Wojchouski Council Member ADMINISTRATION Jeff ONeill, City Administrator Tom Kelly, Finance Director Dawn Grossinger, Deputy City Clerk PROFESSIONAL SERVICES Campbell Knutson, P.A., City Attorney, Eagan, Minnesota Kennedy & Graven, Chartered, Bond Counsel, Minneapolis, Minnesota Ehlers & Associates, Inc., Financial Advisors, Roseville, Minnesota (Other offices located in Brookfield, Wisconsin and Lisle, Illinois) IV INTRODUCTORY STATEMENT This Preliminary Official Statement contains certain information regarding the Monticello Economic Development Authority, Minnesota (the "Authority") and the issuance of its $6,100,000 Public Project Revenue Refunding Bonds, Series 2008A (the "Bonds"). Any descriptions or summaries of the Bonds, statutes, or documents included herein are not intended to be complete and are qualified in their entirety by reference to such statutes and documents and the form of the Bonds to be included in the resolution awarding the sale of the Bonds to be adopted by the Board of Commissioners on January 16, 2008. Inquiries may be directed to Ehlers & Associates, Inc. ("Ehlers" or the "Financial Advisor"), Roseville, Minnesota, (651) 697-8500, the Authority's Financial Advisor. A copy of this Preliminary Official Statement may be downloaded from Ehlers' web site at www.ehlers-inc.com by connecting to the link to the Bond Sales and following the directions at the top of the site. THE BONDS GENERAL The Bonds will be issued in fully registered form as to both principal and interest in denominations of $5,000 each or any integral multiple thereof, and will be dated, as originally issued, as of February 20, 2008. The Bonds will mature on February 1 in the years and amounts set forth on the cover of this Preliminary Official Statement. Interest will be payable on February 1 and August 1 of each year, commencing August 1, 2008, to the registered owners of the Bonds appearing of record in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the MSRB. All Bonds of the same maturity will bear interest from date of issue until paid at a single, uniform rate. The Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC") (unless otherwise specified by the purchaser). (See "Book -Entry -Only System" herein.) As long as the Bonds are held under the book -entry system, beneficial ownership interests in the Bonds may be acquired in book -entry form only, and all payments of principal of, premium, if any, and interest on the Bonds shall be made through the facilities of DTC and its Participants. If the book -entry system is terminated, principal of, premium, if any, and interest on the Bonds shall be payable as provided in the resolution awarding the sale of the Bonds. The Authority has selected U.S. Bank National Association, St. Paul, Minnesota, to act as paying agent (the "Paying Agent"). The Authority will pay the charges for Paying Agent services. The Authority reserves the right to remove the Paying Agent and to appoint a successor. REDEMPTION The Bonds are being offered without option of prior redemption, except as follows. The Bonds are subject to extraordinary redemption upon the happening of certain events of damage to or destruction or condemnation of the Site or the Facilities (as defined in the Lease referenced below) or change of law rendering the Lease unenforceable or impossible of performances, all as provided in the Lease. AUTHORITY; PURPOSE The Bonds are being issued by the Authority pursuant to Minnesota Statutes, Chapters 469 and 465, and a Trust Indenture dated as of February 1, 2008 (the "Indenture") between the Authority and U.S. Bank National Association, St. Paul, Minnesota (the "Trustee"). The Bonds are being issued to finance the full net cash advance refunding of the 2009 through 2015 maturities of the $7,555,000 Public Project Revenue Bonds, Series 2000A dated March 1, 2000 (the "Series 2000A Bonds") issued by the Housing and Redevelopment Authority in and for the City of Monticello, Minnesota (the "HRA") as follows: Date of Maturities Principal Refunded Call Call Being Interest to be Issue Being Refunded Issue Date Price Refunded Rates Refunded Series 2000A Bonds 3/01/00 2/01/10 Par 2011 6.125% $ 870,000 2012 6.125% 920,000 2013 6.125% 950,000 2014 6.250% 970,000 2015 6.250% 995,000 $4,705,000 In addition, the 2009 and 2010 maturities are being defeased and will be paid by the escrow agent. The Bonds are being sold in advance of the call date of the Series 2000A Bonds and proceeds of the Bonds will be invested in accordance with the Internal Revenue Code of 1986, as amended. Acceptance of a bid is dependent upon a satisfactory escrow account being established in an amount sufficient to pay all principal and interest payments due on the Series 2000A Bonds from through February 1, 2010 and to pay the principal being called on the Series 2000A Bonds on February 1, 2010. The Authority will establish an escrow account with direct obligations of the U.S. Government. Actuarial services necessary to ensure adequacy of the escrow account to provide timely payment of the Series 2000A Bonds to be refunded on the call date will be performed by a certified public accountant. The Series 2000A Bonds provided funds to current refund the entire amount of the HRA's $7,385,000 Temporary Public Project Revenue Bonds dated December 1, 1998 (the "1998 Bonds"). Proceeds of the 1998 Bonds were used to provide funds to finance the construction and equipping of a community center in city office space, and an armory (the "Project") in the City of Monticello, Minnesota (the "City"). The Project is leased to the City, pursuant to an Amended and Restated Lease -Purchase Agreement dated as of February 1, 2008 (the "Lease"), between the Authority and the City and under the statutory authority of Minnesota Statutes, Section 465.71. The property on which the Project is constructed is leased by the City to the Authority under and Amended and Restated Ground Lease between the City and the Authority dated as of February 1, 2008 (the "Ground Lease"). Pursuant to an Assignment and Security Agreement dated as of February 1, 2008 (the "Assignment"), the Authority will assign to the Trustee the Authority's interest in the Lease and the Lease Payments to be made thereunder (except for the certain rights of the Authority to indemnification and payment of expenses) and will grant to the Trustee a security interest in the financed Project. The City Council of the City has taken the necessary steps to allocate all powers and projects of the HRA to the Authority, and the HRA, by its Resolution No. 2007-06, dated November 7, 2007, has transferred and assigned to the Authority all outstanding contracts to which the HRA is a party and all bonded indebtedness issued by the HRA, including the Series 2000A Bonds and the trust indenture thereof 2 Brief descriptions of the Authority, the City, the Project, the Lease, the Ground Lease, the Indenture, and the Assignment are included in the Preliminary Official Statement. Such descriptions do not purport to be comprehensive or definitive. Copies of the documents in their entirety are available from Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105. All references to the Bonds are qualified in their entirety by the definitive forms thereof and the information with respect thereto included in the above-mentioned documents. The Authority is a body politic and corporate and political subdivision, organized under and pursuant to the Constitution and laws of the State of Minnesota and, as authorized by Minnesota Statutes, Sections 469.090 through 469.1081. The Authority has good right and lawful authority to lease property, to acquire and lease the Project to the City pursuant to the Lease, and to receive and pledge the revenues from the Project, in accordance with the terms ofthe Lease and as provided in the Indenture. The Authority is authorized to enter into the Indenture and the Lease. The City is a statutory city and political subdivision, organized under and pursuant to the Constitution and laws of the State of Minnesota. The City has the right and lawful authority to lease the Project from the Authority and to make rental payments therefor as set forth in the Lease. The Project is a 78,000 square foot multi-purpose facility. Among the functions housed in the Project are City offices, senior center, meeting rooms, aquatics center, gym and fitness facilities. The Project also serves as a National Guard training facility, including National Guard offices. The City and the State Armory Building Commission have entered into a development agreement that describes the terms and conditions of usage as a National Guard training facility. The State Armory Building Commission contributed $1,500,000 towards the construction of the Project. The City occupied the Project in December, 1999. The Lease: Pursuant to the Lease, the Authority will lease the facility to the City, subject to the City's right to terminate the Lease at the end of any Fiscal Year. Lease Payments are to be made by the City in amounts sufficient to pay the principal of and interest on the Bonds when due. Ground Lease: Pursuant to the Ground Lease, the City will lease the site on which the Project is to be constructed to the Authority. The Indenture: The Authority will issue the Bonds pursuant to the Indenture, and the Indenture sets forth the rights and obligations of the Authority, the Trustee and the Bondholders with respect thereto. The Assignment: Pursuant to the Assignment, the Authority will assign to the Trustee the Authority's interest in the Lease and the Lease Payments to be made thereunder (except for the certain rights of the Authority to indemnification and payment of expenses) and will grant to the Trustee a security interest in the financed Project. ESTIMATED SOURCES AND USES Sources Par Amount of Bonds $6,100,000 Total Sources $6,100,000 Uses Deposit to Net Cash Escrow Fund $5,982,133 Contingency 1,607 Discount Allowance 74,260 Finance Related Expenses 42,000 Total Uses $6,100,000 SECURITY The Bonds are valid and binding special, limited obligations of the Authority payable solely from and secured by a pledge of lease payments to be made to the Authority by the City pursuant to the Lease. The Bonds do not constitute a general obligation of the Authority or the City and are not a charge against the general credit of the Authority and shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the Authority, except the interest of the Authority in the Lease. The City's obligation to make rental payments under the Lease is subject to its annual right to terminate the Lease at the end of any fiscal year by failure to appropriate the funds. (See Risk Factors herein). It is the intent of the City to levy ad valorem taxes in an amount sufficient to make rental payments required under the Lease. The levy for this purpose is currently not subject to any statutory limit as to rate or amount, but it is subject to the City's general obligation debt limit. In the event the annual appropriation is not made, the Trustee is entitled to repossession and the right to re -lease the buildings and the Authority's interest in the land, who on behalf of the owners of the Bonds will attempt to sell or sublease and operate the Facilities. There is no assurance that the Trustee will be able to re -lease the interest in the building(s) and land, or to do so for amounts that would pay all interest and principal on the Bonds. RATING General obligation debt of the City is currently rated "A2" by Moody's Investors Service. The Authority has requested a rating on this issue from Moody's Investors Service, and bidders will be notified as to the assigned rating prior to the sale. Such a rating, if and when received, will reflect only the view of the rating agency and any explanation of the significance of such rating may only be obtained from Moody's Investors Service. There is no assurance that such rating, if and when received, will continue for any period of time or that it will not be revised or withdrawn. Any revision or withdrawal of the rating may have an effect on the market price of the Bonds. CONTINUING DISCLOSURE In order to comply with the provisions of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule") the City has entered into an undertaking (the "Undertaking") for the benefit of the holders of the Bonds. Through the Undertaking, the City covenants and agrees to provide certain annual financial information and operating data about the City and to provide notice of the occurrence of certain material events. This information shall be provided according to the time parameters described in the Undertaking and to the information repositories and the Municipal Securities Rulemaking Board as required by the Rule. The specific provisions of the Undertaking are set forth in the Continuing Disclosure Certificate in substantially the form attached hereto as Appendix D. The Continuing Disclosure Certificate will be executed and delivered by the City at the time the Bonds are delivered. The City is the only "obligated person" with respect to the Bonds within the meaning of the Rule. The City has complied in all material respects with any previous undertaking under the Rule. LEGAL OPINION An opinion as to the validity of the Bonds and the exemption from taxation of the interest thereon will be furnished by Kennedy & Graven, Chartered, Minneapolis, Minnesota, bond counsel to the Authority, and will accompany the Bonds. The legal opinion will state that the Bonds are valid and binding special obligations of the Authority enforceable in accordance with their terms, except to the extent to which enforceability may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. TAX EXEMPTION In the opinion of Bond Counsel, under existing statutes, regulations, rulings and decisions, interest on the Bonds is not includible in the "gross income" of the owners thereof for purposes of federal income taxation and is not includable in taxable net income of individuals, estates or trusts for purposes of State of Minnesota income taxation, but is subject to State of Minnesota franchise taxes measured by income that are imposed upon corporations, including financial institutions. Noncompliance following the issuance ofthe Bonds with certain requirements ofthe Internal Revenue Code of 1986, as amended, (the "Code") and covenants of the bond resolution may result in the inclusion of interest on the Bonds in gross income (for federal tax purposes) and taxable net income (for State ofMinnesota tax purposes) ofthe owners thereof. No provision has been made for redemption of the Bonds, or for an increase in the interest rate on the Bonds, in the event that interest on the Bonds becomes subject to United States or State of Minnesota income taxation. The Code imposes an alternative minimum tax with respect to individuals and corporations on alternative minimum taxable income. Interest on the Bonds will not be treated as a preference item in calculating alternative minimum taxable income. The Code provides, however, that a portion of the adjusted current earnings of a corporation not otherwise included in the minimum tax base would be included for purposes of calculating the alternative minimum tax that may be imposed with respect to corporations. Adjusted current earnings include income received that is otherwise exempt from taxation such as interest on the Bonds. The Code provides that in the case of an insurance company subject to the tax imposed by Section 831 of the Code, the amount which otherwise would be taken into account as "losses incurred" under Section 832(b)(5) shall be reduced by an amount equal to 15% of the interest on the Bonds that is received or accrued during the taxable year. 5 Interest on the Bonds may be included in the income of a foreign corporation for purposes of the branch profits tax imposed by Section 884 of the Code. Under certain circumstances, interest on the Bonds may be subject to the tax on "excess net passive income" of Subchapter S corporations imposed by Section 1375 of the Code. The above is not a comprehensive list of all Federal tax consequences which may arise from the receipt of interest on the Bonds. The receipt of interest on the Bonds may otherwise affect the Federal or State income tax liability of the recipient based on the particular taxes to which the recipient is subject and the particular tax status of other items or deductions. Bond Counsel expresses no opinion regarding any such consequences. All prospective purchasers of the Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax considerations for, purchasing or holding the Bonds. QUALIFIED TAX-EXEMPT OBLIGATIONS Prior to the adoption of the Code, financial institutions were generally permitted to deduct 80% of their interest expenses allocable to tax-exempt obligations. Under the Code, however, financial institutions are generally not entitled to such a deduction for tax-exempt obligations purchased after August 7, 1986. However, the Authority will designate the Bonds of this issue as qualified tax-exempt obligations pursuant to section 265(b)(3) of the Code which would permit financial institutions to deduct interest expenses allocable to the Bonds to the extent permitted under prior law. FINANCIAL ADVISOR Ehlers has served as Financial Advisor to the Authority in connection with the issuance of the Bonds. The Financial Advisor will not participate in the underwriting of the Bonds. The financial information included in this Preliminary Official Statement has been compiled by the Financial Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. Ehlers is not a firm of certified public accountants. RISK FACTORS Following is a description of possible risks to holders of these Bonds without weighting as to probability. This description of risks is not intended to be all-inclusive, and there may be other risks not now perceived or listed here. Ratings; Interest Rates: In the future, the Authority's credit rating may be reduced or withdrawn, or interest rates for this type of obligation may rise generally, both possibilities resulting in a reduction in the value of the Bonds for resale prior to maturity. Non -Appropriation: The City has the right to terminate the Lease, in whole but not in part, at the end of each fiscal year, if the City Council does not appropriate or budget moneys sufficient to pay the Lease Payments coming due in the next fiscal year ("Non -Appropriation"). Non -Appropriation must be evidenced by affirmative action of the City Council to terminate the Lease. The City must give notice of termination to the Authority and the Trustee as soon as practicable prior to the end of such fiscal year, but in any event the City is not required to give more than twelve months' notice. In the event the Lease is terminated due to Non -Appropriation, the City is under no obligation to make any further payments with respect to the Bonds. Under such circumstances the City is obligated to surrender the Facilities to the Trustee, and upon such surrender the Trustee shall use its best efforts to sell, lease or sublease the Facilities and apply the net proceeds therefrom to pay the principal of and interest on the Bonds. 0 If the Lease is terminated for reason of Non -Appropriation, it is probable that there will be insufficient moneys to fully pay the principal of and interest on outstanding Bonds as the same become due unless the net proceeds from the sale, lease or sublease of the Facilities is sufficient to pay the administrative, capital and other expenses incurred by the Trustee as a result of termination of the Lease, to pay interest as provided herein on all Bonds, and to pay principal at maturity on such Bonds as provided herein. Remedies: Remedies provided for in the Lease maybe unenforceable, or enforcement maybe delayed or be subject to judicial discretion, as a result of the application of principles of equity or of state and federal laws relating to bankruptcy, other forms of debtor relief, and creditors' rights generally. Without limitation of the foregoing, the assignment to the Trustee of the rights and interests of the Authority as security for the payment of the principal of and interest on the Bonds, pursuant to the terms of the Indenture and the Assignment, may be deemed by a court to be a mortgage or an equitable mortgage and not a present assignment of rights, title, and interests, and the exercise of any rights, title, or interests under the Assignment may be subject, therefore, to (a) payment of the mortgage registry tax, and (b) the requirements of foreclosure of a mortgage by action and the running of any applicable redemption periods. As a result, the claims of intervening third parties may take priority over the claims of the Trustee under the Assignment. In addition, during the period of time in which the mortgage registry tax is to be paid, a foreclosure action is then undertaken and completed, and any applicable redemption period expires, the Trustee will not be entitled to possession of the Facility and will not be permitted to re -lease the Facility or collect rents to be applied to debt service obligations on the Bonds. No assurance can be given that, upon the occurrence of an Event of Default or the termination of the Lease by the City, the Trustee will have funds available for the payment of the mortgage registry tax. Inability to Liquidate, or Delay in Liquidating, the Facility: An Event of Default under the Lease gives the Trustee (subject to the qualifications described above under "Remedies") the right to possession of, and the right to lease or liquidate the Facility. The enforceability of the Bonds, are subject to applicable bankruptcy laws, equitable principles affecting the enforcement of the Indenture, of creditors' rights generally, and liens securing such rights. A potential purchaser should not anticipate that lease or liquidation could be accomplished rapidly. Any delays in the ability of the Trustee to obtain unencumbered title to the Facility will result in delays in the payment of Bonds. No assurance can be given that any amounts received upon lease or liquidation of the Facility would be sufficient to pay the principal of the Bonds and interest accrued thereon. Effect of Termination of Lease on the Bonds: Bond Counsel has rendered no opinion with respect to the applicability or inapplicability of the registration requirements of the Securities Act of 1933, as amended, to any Bonds subsequent to a termination of the Lease by reason of non -appropriation or an Event of Default. If the Lease is terminated by reason of either such event, there is no assurance that the Bonds may be transferred by an owner thereof without compliance with the registration provisions of the Securities Act of 1933, as amended, or the availability of an exemption therefrom. In addition, Bond Counsel has rendered no opinion as to the treatment for United States and State of Minnesota income tax purposes of any moneys received by an owner of the Bonds subsequent to a termination of the Lease by reason of non -appropriation or an Event of Default. There is no assurance that any moneys received by the owners of the Bonds subsequent to either such event will be exempt from United States or State of Minnesota income taxation. Legislative Action: Many elements of local government finance, including the issuance of debt and the levy of property taxes, are controlled by State law. Future actions by the State legislature may affect the overall financial condition of the City, the taxable value of property within the City and the ability of the City to levy property taxes. Tax Exemption: If the federal government or the State of Minnesota taxes the interest on municipal obligations, directly or indirectly, or if there is a change in federal or state tax policy, the value of the Bonds may fall for purposes of resale. Noncompliance following the issuance of the Bonds with certain requirements of the Code and covenants 7 of the bond resolution may result in the inclusion of interest on the Bonds in gross income of the recipient for United States or in taxable net income of individuals, estates or trusts for State of Minnesota income tax purposes. No provision has been made for redemption of the Bonds, or for an increase in the interest rate on the Bonds, in the event that interest on the Bonds becomes subject to United States or State of Minnesota income taxation, retroactive to the date of issuance. Minnesota, like many other states, generally taxes interest on obligations of governmental issuers in other states. In 1995, Minnesota enacted a statement of intent, codified at Minn. Stat. § 289A.50, subd. 10, that interest on obligations of Minnesota governmental units and Indian tribes be included in the net income of individuals, estates and trusts for Minnesota income tax purposes, if a court determines that Minnesota's exemption of such interest and its taxation of interest on obligations of governmental units in other states unlawfully discriminates against interstate commerce. This provision applies to taxable years that begin during or after the calendar year in which any such court decision becomes final, irrespective of the date upon which the obligations were issued. In January 2006, the Kentucky Court of Appeals held, in Davis v. Department of Revenue, that the state's exemption of interest on its own bonds and those of its political subdivisions and its taxation of interest on the bonds of other states and their political subdivisions unlawfully discriminates against interstate commerce. The Kentucky Supreme Court declined to review this decision. The United States Supreme Court has agreed to review this decision and on November 5, 2007 heard oral arguments on the case. If the United States Supreme Court affirms this decision or a similar decision from another jurisdiction, it is likely that Minnesota's tax treatment of state and local government bonds would also be held to be unconstitutional. A challenge of Minnesota's treatment of state and local government bonds is possible even in the absence of a decision by the United States Supreme Court. If Minnesota's treatment of state and local government bonds were held to unlawfully discriminate against interstate commerce, the court would have to decide upon a remedy for the tax years at issue in the case. If the remedy were to exempt other states' bond interest rather than to tax Minnesota bond interest in the years preceding the decision, application of the 1995 statute to subsequent years could cause interest on the Bonds to become taxable by Minnesota and the market value of the Bonds to decline. Continuing Disclosure: A failure by the Authority to comply with the Undertaking for continuing disclosure (as described herein) will not constitute an event of default on the Bonds. Any such failure must be reported in accordance with the Rule and must be considered by any broker, dealer, or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. State Economy; State Aids: State cash flow problems could affect local governments and possibly increase property taxes. Book -Entry -Only System: The timely credit of payments for principal and interest on the Bonds to the accounts of the Beneficial Owners of the Bonds may be delayed due to the customary practices, standing instructions or for other unknown reasons by DTC participants or indirect participants. Since the notice of redemption or other notices to holders of these obligations will be delivered by the Authority to DTC only, there may be a delay or failure by DTC, DTC participants or indirect participants to notify the Beneficial Owners of the Bonds. Economy: A combination of economic, climatic, political or civil disruptions or terrorist actions could affect the local economy and result in reduced tax collections and/or increased demands upon local government. OVERVIEW All non-exempt property is subject to taxation by local taxing districts. Exempt real property includes Indian lands, public property, and educational, religious and charitable institutions. Most personal property is exempt from taxation (except investor-owned utility mains, generating plants, etc.). The valuation of property in Minnesota consists of two elements. (1) The estimated market value is set by city or county assessors. Not less than 20% of all real properties are to be appraised by local assessors each year. (2) The tax capacity (taxable) value of property is determined by class rates set by the State Legislature. The tax capacity rate varies according to the classification of the property. Tax capacity represents a percent of estimated market value. The property tax rate for a local taxing jurisdiction is determined by dividing the total tax capacity or market value of property within the jurisdiction into the dollars to be raised from the levy. State law determines whether a levy is spread on tax capacity or market value. Major classifications and the percentages by which tax capacity is determined are: Type of Property Residential homestead' Agricultural homestead' Agricultural non -homestead Seasonal recreational residential Residential non -homestead: Industrial/Commercial/Utility' 2004/05 First $500,000 - 1.00% Over $500,000 - 1.25% First $500,000 HGA - 1.00% Over $500,000 HGA - 1.25% First $600,000 - 0.55% 2 Over $600,000 - 1.00% 2 Land -1.00% 2 First $500,000 - 1.00% s Over $500,000 - 1.25%' 1 unit - 1 st $500,000 - 1.00% Over $500,000 - 1.25% 2-3 units - 1.25% 4 or more - 1.25% Small City 4 - 1.25% First $150,000 - 1.50% Over $150,000 - 2.00% 2005/06 First $500,000 - 1.00% Over $500,000 - 1.25% First $500,000 HGA - 1.00% Over $500,000 HGA - 1.25% First $600,000 - 0.55% 2 Over $600,000 - 1.00% 2 Land - 1.00% 2 First $500,000 - 1.00%' Over $500,000 - 1.25%' 1 unit - I st $500,000 - 1.00% Over $500,000 - 1.25% 2-3 units - 1.25% 4 or more - 1.25% Small City 4 - 1.25% First $150,000 - 1.50% Over $150,000 - 2.00% 2006/07 First $500,000 - 1.00% Over $500,000 - 1.25% First $500,000 HGA - 1.00% Over $500,000 HGA - 1.25% First $690,000 - 0.55% 2 Over $690,000 - 1.00%2 Land - 1.00%2 First $500,000 - 1.00%' Over $500,000 - 1.25%' I unit - 1st $500,000 - 1.00% Over $500,000 - 1.25% 2-3 units - 1.25% 4 or more - 1.25% Small City ° - 1.25% First $150,000 - 1.50% Over $150,000 - 2.00% I A residential property qualifies as "homestead" if it is occupied by the owner or a relative of the owner on the assessment date. 2 Applies to land and buildings. Exempt from referendum market value tax. 3 Exempt from referendum market value tax. 4 Cities of 5,000 population or less and located entirely outside the seven -county metropolitan area and the adjacent nine -county area and whose boundaries are 15 miles or more from the boundaries of a Minnesota city with a population of over 5,000. 5 The estimated market value of utility property is determined by the Minnesota Department of Revenue. 9 CURRENT PROPERTY VALUATIONS Estimated Full Value of Taxable Property, 2006/07 $1,327,198,990' ' According to the Minnesota Department of Revenue, the Assessor's Taxable Market Value (the "ATMV") for the City of Monticello is about 87.8% of the actual selling prices of property most recently sold in the City. That sales ratio was calculated by comparing the selling prices with the ATMV. Dividing the ATMV of real estate by 0.878 and adding personal property and mobile home ATMV, if any, results in an "Estimated Full Value of Taxable Property" for the City of $1,327,198,990. The captured tax increment value shown above represents the captured net tax capacity of tax increment financing districts in the City of Monticello. ' Mobile home valuations are not included in the net tax capacity for purposes of determining tax capacity rates. However, valuations of mobile homes are determined at the beginning of the collection year, and the same tax capacity rates are applied to mobile home net tax capacity valuations as to real estate and personal property. 10 2006/07 Assessor's 2006/07 Taxable Net Tax Market Value Capacity Real Estate $1,151,254,400 $16,027,033 Personal Property 8,929,700 177,822 Total Valuation $1,160,184,100 $16,204,855 Less: Captured Tax Increment Tax Capacity -2 (895,810) Taxable Net Tax Capacity $15,309,045 Mobile Home Valuation' $7,045,600 $70,172 ' According to the Minnesota Department of Revenue, the Assessor's Taxable Market Value (the "ATMV") for the City of Monticello is about 87.8% of the actual selling prices of property most recently sold in the City. That sales ratio was calculated by comparing the selling prices with the ATMV. Dividing the ATMV of real estate by 0.878 and adding personal property and mobile home ATMV, if any, results in an "Estimated Full Value of Taxable Property" for the City of $1,327,198,990. The captured tax increment value shown above represents the captured net tax capacity of tax increment financing districts in the City of Monticello. ' Mobile home valuations are not included in the net tax capacity for purposes of determining tax capacity rates. However, valuations of mobile homes are determined at the beginning of the collection year, and the same tax capacity rates are applied to mobile home net tax capacity valuations as to real estate and personal property. 10 2006/07 NET TAX CAPACITY BY CLASSIFICATION Residential homestead Agricultural Commercial/industrial Public utility Railroad operating property Non -homestead residential Commercial & residential seasonal/rec. Personal property Total TREND OF VALUATIONS 2006/07 Net Tax Capacity $ 5,498,967 183,695 3,962,470 4,932,565 18,786 1,347,334 83,216 177 52171) $16,204,855 Percent of Total Net Tax Capacity 33.93% 1.13% 24.45% 30.44% 0.12% 8.31% 0.51% 1.10% 100.00% ' Net Tax Capacity includes tax increment values. z Taxable Net Tax Capacity does not include tax increment values. 11 Assessor's Taxable Levy Taxable Net Tax Net Tax Percent +/- in Assessor's Year Market Value Capacity' Capacity2 Taxable Market Value 2002/03 $ 739,007,600 $10,919,247 $10,398,888 +11.38% 2003/04 812,855,300 11,714,671 11,146,634 + 9.99% 2004/05 882,038,300 12,498,912 11,863,014 + 8.51% 2005/06 993,647,300 13,935,442 13,228,292 +12.65% 2006/07 1,160,184,100 16,204,855 15,309,045 +16.76% ' Net Tax Capacity includes tax increment values. z Taxable Net Tax Capacity does not include tax increment values. 11 LARGER TAXPAYERS Source: Current Property Valuations, Net Tax Capacity by Classification, Trend of Valuations and Larger Taxpayers have been furnished by Wright County. ' The State of Minnesota Department of Revenue in its Rule 8100.0100 has implemented a phased reduction on personal property for utilities which will cause a decline in valuation for Xcel Energy in future years. For more information, contact the Finance Director, City of Monticello (763) 271-3211. 12 2006/07 2006/07 Assessor's Taxable Net Tax Taxpayer Type of Property Market Value Capacity Xcel Energy' Utility $255,253,800 $5,097,197 Wal-Mart Real Estate Business Tr. Commercial 12,381,800 246,886 Ocello LLC Commercial/Agriculture 15,438,200 157,844 Individual Commercial 7,142,000 140,102 Muller Family Theatres of Monti Commercial 5,692,600 113,102 Individuals Commercial 5,291,000 105,070 Gould Brothers Chevrolet LLP Commercial 5,096,200 101,174 Individual Industrial 5,013,100 98,762 Monticello/Washington Assoc. Commercial 4,592,300 91,096 Palf Co. Commercial 4,715,400 82,758 Source: Current Property Valuations, Net Tax Capacity by Classification, Trend of Valuations and Larger Taxpayers have been furnished by Wright County. ' The State of Minnesota Department of Revenue in its Rule 8100.0100 has implemented a phased reduction on personal property for utilities which will cause a decline in valuation for Xcel Energy in future years. For more information, contact the Finance Director, City of Monticello (763) 271-3211. 12 DEBT DIRECT DEBT' General Obligation Debt (see schedules following) Total g.o. debt being paid from revenues Total g.o. debt being paid from tax increment revenues Total g.o. debt being paid from special assessments and taxes Total g.o. debt being paid from revenues, special assessments, and taxes Total General Obligation Debt Lease Purchase Obligations (see schedule following) Total lease purchase obligations paid from annual appropriations (includes the Bonds of this offering) ' Outstanding debt is as of the dated date of the Bonds. 13 $ 9,168,564 575,000 4,205,000 28,755,000 $ 42,703,564 $ 6,100,000 N a) 3 C a) a) E O LL a) .Q R F— N O a c W C Z h Z = r 0 n J (D+' J c � W U = cn P O co Z o m O M a_) 00 2 -6 !R LL a) O N L>L' O N J fC w a) a) O U U N U) fn U)0< Q0) i C oD (n O T N M v— (0 n o O O T T T T <D O O O O O O O O O O O U N N N N N N N N N N N y) W LL V (( 0 0 0 0 0 0 0 0 R (0 N N O V' m 'V W O O D a W co � r- I- o W mIq to o (•) o00r-r-(0(0r-000 �-- N N M �t O O r W O R m r M m I- V' O N O O N O 2 O N m V' f- M m O M O 'V V V V N W h P- M O O R V m N IT M O O O N O O a` y W O M O 1� W m C CL C j W OD 1- (0 O It Cl) M N T o w W Cl) M Cl) Cl) Cl) Cl) Cl) Cl) co N M o v m m m m m m m m m m n F a -- N N N N N N N N N N O .-- N N N N N N N N N N V' V'W W W W W W W W W 00 (0 O O O O O O O O O O O M (0 N m m m O m V m 1l- m O O W 0 M O W V O W W N CD 't O O O N W N N W O I -I W N O ~ r� N N O W V' W N CM (`M N O C W O N m O N 00 O M m M M N N N T. -- N R f6 W V M M M W M (0 (0 I- N V' O O O V' O O V N� V' O O ~ C 'V O OV• W M O W W O W O M (0 m N O m M M O O CD Q. 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O O m LO f- rb m IL y IQ W Oi mCli m (D V) V M N '-- O d r 1c0 (D O O O M Cl) O N N V m N (O W 0 � rn o N C v W d• 00 0, N O N t` LO oro V O N ap a0 -- C C C R y -,T M oD (D D O O M M d N N V m N (D OD O N O V u') "4 C N O n M m LO- N N N r O R R O O O O O O O O O Q O O O O O O O O F- V 0 0 0 0 0 0 0 O c m O m O O O O O •- O V 00 m m m O o. Lo(ammmmm U 7 d O O O LO LO Uri b9 Q N L O O O y N N _- L i R R E L O � N R L � rnQ 30 0 0 tCD m y O N O N N rn /1 rT C CC O 'O m C � N N � C y N N 7 co U 'y N L O F- d O. n N r w (D 0 0 0 m M 0) m N N V m NW co R y .- m O N O �Y W V M r C N N O cq� m to N N N O O O w 7 co O y o y . 0 c) N R 0 0 Co 0 0 0 0 0 O N N M 0 U C 0 C C C c 0 O m C tf7 0a 0 Cl 0 O 0 1 m m m O m V m �ncammmm Y d N 3 } C CD m 0r N--�T N ooCD 0 0 0 0 Q R U C 0 0 00 N N N Q. N N N Q � y W LL U 7 d O O O LO LO Uri b9 Q N L O O O y N N _- L i R R E L O � N R L � rnQ 30 0 0 tCD m y O N O N N rn /1 rT C CC O 'O m C � N N � C y N N 7 co U 'y N L O F- d O. n N r DEBT LIMIT The statutory limit on debt of Minnesota municipalities other than school districts or cities of the first class (Minnesota Statutes, Section 475.53, subd. 1) is 2% of the Assessor's Taxable Market Value of all taxable property within its boundaries. "Net debt" (Minnesota Statutes, Section 475.51, subd. 4) is the amount remaining after deducting from gross debt: (1) obligations payable wholly or partly from special assessments levied against benefitted property; (2) warrants or orders having no definite or fixed maturity; (3) obligations issued to finance any public revenue producing convenience; (4) obligations issued to create or maintain a permanent improvement revolving fund; (5) funds held as sinking funds for payment of principal and interest on debt other than those deductible under 14 above; (6) other obligations which are not to be included in computing the net debt of a municipality under the provisions of the law authorizing their issuance. Assessor's Taxable Market Value $1,160,184,100 Multiply by 2% 0.02 Statutory Debt Limit $ 23,203,682 Less: Long -Term Debt Outstanding Being Paid Solely from Taxes 0 Less: Long -Term Debt Outstanding Being Paid Solely from Annual Appropriations (applies to issues in excess of $1,000,000 originally issued after 6/1/97 which do not have revenues pledged) (includes the Bonds of this offering) (6,100,000 Unused Debt Limit OVERLAPPING DEBT' Taxing District Wright County I.S.D. No. 882 (Monticello) City's Share of Total Overlapping Debt $ 17,103,682 2006/07 City's Taxable Net % In Total Proportionate Tax Capacity City G.O. Debt Share $123,154,690 12.4307% $59,985,000 z $ 7,456,582 23,599,164 64.8711% 30,810,000 19,986,796 $27,443,378 ' Only those taxing jurisdictions with general obligation debt outstanding are included in this section. Does not include non -general obligation debt, self-supporting g.o. revenue debt, short-term general obligation debt, or general obligation tax/aid anticipation certificates of indebtedness. 2 Wright County also has $8,285,000 General Obligation Solid Waste Revenue Refunding Bonds outstanding which are payable entirely from the County's solid waste enterprise fund. This issue has not been included in the overlapping debt or debt ratios. 19 DEBT RATIOS DEBT PAYMENT HISTORY The City has never defaulted in the payment of principal and interest on its debt. FUTURE FINANCING The City may be issuing approximately $22,600,000 Communication System Revenue Bonds in the spring of 2008. ' Funds on hand for debt redemption (available for payment of principal and interest) have been deducted from total general obligation debt to determine net general obligation debt. 2 Debt service on the City's general obligation revenue debt is being paid entirely from revenues and therefore is considered self-supporting debt. 1. l Debt/Estimated Full Value of Debt/11,136 Taxable Property Estimated G.O. Debt ($1,327,198,990) Population Direct G.O. Debt Being Paid From: Revenues $ 9,168,564 Tax Increment Revenues 575,000 Special Assessments & Taxes 4,205,000 Revenues, Special Assessments & Taxes 28,755,000 Total General Obligation Debt $ 42,703,564 Less: Funds on Hand' (9,031,024) Less: G.O. Debt Paid Entirely from Revenues2 (9,168,564) Net General Obligation Debt $ 24,503,976 1.85% $2,200.43 City's Share of Total Overlapping Debt $ 27,443,378 2.07% $2,464.38 DEBT PAYMENT HISTORY The City has never defaulted in the payment of principal and interest on its debt. FUTURE FINANCING The City may be issuing approximately $22,600,000 Communication System Revenue Bonds in the spring of 2008. ' Funds on hand for debt redemption (available for payment of principal and interest) have been deducted from total general obligation debt to determine net general obligation debt. 2 Debt service on the City's general obligation revenue debt is being paid entirely from revenues and therefore is considered self-supporting debt. 1. l TAX LEVIES AND COLLECTIONS TAX COLLECTIONS Property taxes are collected in two installments in Minnesota --the first by May 15 and the second by October 15. Mobile home taxes are collectible in full by August 31. Minnesota Statutes require that levies (taxes and special assessments) for debt service be at least 105% of the actual debt service requirements to allow for delinquencies. TAX CAPACITY RATES3 Certified Total Collected Collected 2005/06 Tax Year Levy' Following Year to Datez % Collected 2002/03 $6,782,018 $6,724,654 $6,780,625 99.98% 2003/04 6,957,915 6,878,411 6,952,161 99.92% 28.940% 26.379% 24.372% 23.146% Monticello -Big Lake Hospital Dist 2004/05 6,957,915 6,868,574 6,944,031 99.80% 2005/06 6,750,000 6,629,330 6,698,575 99.24% 2006/07 6,500,000 r----------------------------------------------------- ; In process of collection L ----------------------------------------------------J Property taxes are collected in two installments in Minnesota --the first by May 15 and the second by October 15. Mobile home taxes are collectible in full by August 31. Minnesota Statutes require that levies (taxes and special assessments) for debt service be at least 105% of the actual debt service requirements to allow for delinquencies. TAX CAPACITY RATES3 Source: Tax Collections and Tax Capacity Rates have been furnished by Wright County. LEVY LIMITS The State Legislature has periodically imposed limitations on the ability of municipalities to levy property taxes. In 2001, the Legislature imposed levy limits for all counties and all cities over 2,500 population. These limitations have not applied to taxes levied to pay debt service. While these limitations have expired, the potential exists for future legislation to limit the ability of local governments to levy property taxes. For more detailed information about Minnesota levy limits, contact the Minnesota Department of Revenue or Ehlers & Associates. I This reflects the Final Levy Certification of the City after all adjustments have been made. z Collections are through May 15, 2007. 3 After reduction for state aids. Does not include the statewide general property tax against commercial/industrial, non -homestead resorts and seasonal recreational residential property. 21 2002/03 2003/04 2004/05 2005/06 2006/07 Wright County 36.863% 35.633% 34.414% 32.567% 30.714% City of Monticello 65.218% 62.421% 58.651% 51.028% 42.458% I.S.D. No. 882 (Monticello) 31.897% 28.940% 26.379% 24.372% 23.146% Monticello -Big Lake Hospital Dist 3.479% 3.039% 2.667% 2.330% 2.951% Source: Tax Collections and Tax Capacity Rates have been furnished by Wright County. LEVY LIMITS The State Legislature has periodically imposed limitations on the ability of municipalities to levy property taxes. In 2001, the Legislature imposed levy limits for all counties and all cities over 2,500 population. These limitations have not applied to taxes levied to pay debt service. While these limitations have expired, the potential exists for future legislation to limit the ability of local governments to levy property taxes. For more detailed information about Minnesota levy limits, contact the Minnesota Department of Revenue or Ehlers & Associates. I This reflects the Final Levy Certification of the City after all adjustments have been made. z Collections are through May 15, 2007. 3 After reduction for state aids. Does not include the statewide general property tax against commercial/industrial, non -homestead resorts and seasonal recreational residential property. 21 THE CITY CITY GOVERNMENT The City of Monticello was organized as a municipality in 1856. The City operates under a statutory form of government consisting of a five -member City Council of which the Mayor is a voting member. The City Administrator, Finance Director and Deputy City Clerk are responsible for administrative details and financial records. EMPLOYEES; PENSIONS; UNIONS The City currently has 50 full-time, 86 part-time, and 15 seasonal employees. All full-time and certain part-time employees of the City are covered by defined benefit pension plans administered by the Public Employee Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost-sharing multiple -employer retirement plans. PERA members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security. See the Notes to Financial Statements in Appendix A for a detailed description of the Plans. Recognized and Certified Bargaining Units Bargaining Unit I.U.O.W. Local No. 49 LITIGATION Expiration Date of Current Contract March 31, 2009 There is no litigation threatened or pending questioning the organization or boundaries of the City or the right of any of its officers to their respective offices or in any manner questioning their rights and power to execute and deliver these Bonds or otherwise questioning the validity of these Bonds. FUNDS ON HAND (As of September 30, 2007) Total Funds on Hand $28,792,544 22 Total Cash Fund and Investments General $ 5,573,653 Special Revenue 13,416,106 Debt Service 9,031,024 Capital Projects (3,326,841) Enterprise Funds 4,098,602 Total Funds on Hand $28,792,544 22 ENTERPRISE FUNDS Cash flows for the City's enterprise funds have been as follows as of December 31 each year: 2004 2005 2006 Water Total Operating Revenues $ 585,699 $ 701,346 $ 742,146 Less: Operating Expenses (865,379) (939,449) (913,638) Operating Income $ (279,680) $ (238,103) $ (171,492) Plus: Depreciation 416,775 446,567 447,833 Revenues Available for Debt Service $ 137,095 $ 208,464 $ 276,341 Sewer Total Operating Revenues $ 918,309 $ 969,996 $ 1,043,208 Less: Operating Expenses (2,083,841) (2,017,993) (2,095,124) Operating Income $(1,165,532) $(1,047,997) $(1,051,916) Plus: Depreciation 1,294,376 1,014,081 1,010,800 Revenues Available for Debt Service $ 128,844 $ (33,916) $ (41,116) Liquor Total Operating Revenues $ 877,528 $ 926,375 $ 951,307 Less: Operating Expenses (547,781) (558,544) (617,153) Operating Income $ 329,747 $ 367,831 $ 334,154 Plus: Depreciation 56,003 56,003 56,003 Revenues Available for Debt Service $ 385,750 $ 423,834 $ 390,157 Cemetery Total Operating Revenues $ 32,141 $ 32,834 $ 29,265 Less: Operating Expenses (32,275) (33,717) (71,044) Operating Income $ (134) $ (883) $ (41,779) Plus: Depreciation 1,929 1,929 2,055 Revenues Available for Debt Service $ 1,795 $ 1,046 $ (39,724) 23 SUMMARY GENERAL FUND INFORMATION Following are summaries of the revenues and expenditures and fund balances for the City's General Fund for the past five fiscal years. These summaries are not purported to be the complete audited financial statements of the City. Copies of the complete audited financial statements are available upon request. See Appendix A for excerpts from the City's 2006 audited financial statement. Beginning in 2003 the Cityprepared their financial statements in accordance with Governmental Accounting Standards Board Statement No. 34. COMBINED STATEMENT Revenues General Property Taxes Intergovernmental Licenses and Permits Fines and Forfeitures Charges for Services Investment Earnings Miscellaneous Total Revenues Expenditures Current: General Government Public Safety Health and welfare Public Works Sanitation Parks and recreation Community development Economic Development Culture and Recreation Capital Outlay Total Expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses) Operating Transfers In Operating Transfers Out Total Other Financing Sources (Uses) Excess of revenues and other financing sources over (under) expenditures and other financing uses General Fund Balance January 1 Residual Equity Transfer In (Out) General Fund Balance December 31 FISCAL YEAR ENDING DECEMBER 31 2002 2003 2004 2005 2006 $ 3,476,908 $ 3,777,084 $ 4,063,028 $ 4,315,338 $ 4,520,275 471,724 457,147 267,725 284,090 283,597 705,179 689,421 797,458 956,300 758,718 0 0 0 4,000 1,750 361,756 588,802 487,672 514,420 641,448 0 0 0 310,832 301,431 1.039.606 634,434 445,537 370,130 401,924 $ 6,055,173 $ 6,146,888 $ 6,061,420 $ 6,755,110 $ 6,909,143 $ 1,244,492 $ 1,348,264 $ 1,584,510 $ 1,464,075 $ 1,732,046 892,133 1,274,389 1,388,060 1,428,208 1,527,354 114,367 0 0 0 0 1,418,319 2,069,796 2,157,056 1,870,102 1,832,815 386,641 384,228 410,768 492,446 474,045 506,505 0 0 0 0 293,713 0 0 0 0 0 64,739 70,008 73,446 87,523 0 757,623 636,091 814,121 624,780 0 0 366,174 121,665 240,580 $ 4,856,170 $ 5,899,039 $ 6,612,667 $ 6,264,063 $ 6,519,143 $ 1,199,003 $ 247,849 $ (551,247) $ 491,047 $ 390,000 $ 0 $ 0 $ 158,000 $ 0 $ 667 (19,094) (214,650) (223,886) (136,900) (95,145) $ (19,094) $ (214,650) $ (65,886) $ (136,900) $ (94,478) $ 1,179,909 $ 33,199 $ (617,133) $ 354,147 $ 295,522 4,174,269 5,354,178 5,387,377 4,770,244 5,124,391 0 0 0 0 0 $ 5,354,178 $ 5,387,377 $ 4,770,244 $ 5,124,391 $ 5,419,913 DETAILS OF DECEMBER 31 FUND BALANCE Reserved $ 245,225 $ 270,441 $ 194,172 $ 388,527 $ 405,819 Unreserved: Designated 2,806,788 2,956,001 3,311,768 3,311,768 0 Undesignated 2,302,165 2,160,935 1,264,304 1,424,096 5,014,094 Total $ 5,354,178 $ 5,387,377 $ 4,770,244 $ 5,124,391 $ 5,419,913 24 GENERAL INFORMATION LOCATION The City of Monticello, with a current State Demographer's estimated population of 11,136 and comprising an area of 5.37 square miles, is located approximately 45 miles northwest of the Minneapolis -St. Paul metropolitan area. LARGER EMPLOYERS Larger employers in the City include the following: Firm Monticello -Big Lake Community Hospital I.S.D. No. 882 (Monticello) Xcel Energy Cargill Kitchen Solutions Wal-Mart Supercenter City of Monticello Denny Hecker Monticello Ultra Machining Corp. Cub Foods Monticello Clinic Bondhus Corporation Source: Written and telephone survey (November, 2007), the 2007Minnesota State Business Directory and the 2007 Minnesota Manufacturers Register. ' Includes full-time, part-time and seasonal. z Formerly Sunny Fresh Foods. 25 No. of Type of Business/Product Employees' Hospital, nursing home and counseling center 515 Elementary and secondary education 455 Utility 422 Egg processing plant 396 Discount retail store 325 Municipal government and services 151 Automobile dealership 150 Machine job shop 130 Retail grocery store 122 Clinic 98 Cutlery and hand -tool manufacturing 73 Source: Written and telephone survey (November, 2007), the 2007Minnesota State Business Directory and the 2007 Minnesota Manufacturers Register. ' Includes full-time, part-time and seasonal. z Formerly Sunny Fresh Foods. 25 U.S. CENSUS DATA Population Trend: City of Monticello, Minnesota 1990 U.S. Census 4,941 2000 U.S. Census 7,868 Current State Demographer's Estimate 11,136 Percent of Change 1990 - 2000 +59.24% Income and Age Statistics Housing Statistics All Housing Units City of Monticello 1990 2000 1,908 3,005 Source: 1990 and 2000 Census of Population and Housing. EMPLOYMENT/UNEMPLOYMENT DATA Rates are not compiled for individual communities within counties. Average Employment Year Wright County 2003 56,542 2004 58,825 2005 60,825 2006 61,276 2007, October 61,705 Percent of Change 57.49% Average Unemployment Wright County State of Minnesota 5.1% 4.8% 4.8% 4.6% 4.3% 4.1% 4.3% 4.0% 4.3% 4.1% Source: Minnesota Department of Employment and Economic Development. 26 City of Wright State of Monticello County Minnesota 1999 per capita income $19,229 $21,844 $23,198 1999 median household income $45,384 $53,945 $47,111 1999 median family income $53,566 $60,940 $56,874 2000 median gross rent $571 $526 $566 2000 median value owner occupied housing $130,200 $135,300 $122,400 2000 median age 29.8 yrs. 33.1 yrs. 35.4 yrs. Housing Statistics All Housing Units City of Monticello 1990 2000 1,908 3,005 Source: 1990 and 2000 Census of Population and Housing. EMPLOYMENT/UNEMPLOYMENT DATA Rates are not compiled for individual communities within counties. Average Employment Year Wright County 2003 56,542 2004 58,825 2005 60,825 2006 61,276 2007, October 61,705 Percent of Change 57.49% Average Unemployment Wright County State of Minnesota 5.1% 4.8% 4.8% 4.6% 4.3% 4.1% 4.3% 4.0% 4.3% 4.1% Source: Minnesota Department of Employment and Economic Development. 26 BUILDING PERMITS New Single Family Homes No. of building permits Valuation New Multiple Family Buildings No. of building permits Valuation New Commercial/Industrial No. of building permits Valuation 2003 2004 2005 2006 2007' 508 532 253 85 43 $27,277,623 $33,891,065 $18,690,351 $17,147,389 $8,511,801 59 53 20 0 0 $12,267,640 $25,559,179 $3,315,888 $0 $0 1 1 0 17 27 $500 $50,000 $0 $17,124,750 $15,888,821 No. of All Building Permits 1,156 1,199 594 1,323 898 (including additions and remodelings) Valuation of All Building Permits $39,599,263 $62,300,360 $23,860,039 $45,572,690 $45,554,185 (including additions and remodelings) FINANCIAL INSTITUTIONS Financial institutions located in the City include the following: First Minnesota Bank (Branch of Minnetonka) The First National Bank of Elk River (Branch of Elk River) Liberty Savings Bank, FSB (Branch of St. Cloud) TCF National Bank (Branch of Wayzata) U.S. Bank National Association (Branch of Cincinnati, OH) Wells Fargo Bank, National Association (Branch of Sioux Falls, SD) Premier Bank Minnesota Source: American Financial Directory. ' As of November 16, 2007. 27 EDUCATION Independent School District No. 882 (Monticello) provides education for 3,915 students in grades K through 12. The District, with 455 employees, owns and/or operates five schools, all of which are located in the City of Monticello. Teachers' contracts in the District are currently in negotiations. IN-PATIENT MEDICAL FACILITIES IN THE CITY Name of Facility Monticello Big Lake Community Hospital Source: Minnesota Department of Health. Type of Facility No. of Beds Hospital/Nursing home 39/89 i:'.. rzrexta`, 1era eclia."r i k.i s9`.yr:+ si::...; ^St;li m.feF, (Pub €'coi Ri f i'u k Tk2r7"i k:dt�rkc . 28 APPENDIX A EXCERPTS FROM FINANCIAL STATEMENTS Reproduced on the following pages are excerpts from the Authority's audited Financial Statements for the fiscal year ending December 31, 2006. The Financial Statements have been prepared by the Authority and audited by a certified public accountant. The Management's Discussion and Analysis and the Notes to Financial Statements are an integral part of the audit and any judgment of the Financial Statements should be based on the Financial Statements as a whole. Copies of the complete audited financial statements for the past three years and the current budget are available upon request from Ehlers. A-1 A-2 C m N s C m m N E N N O a Q@ m m U N y Ny > m C m R o IL„ 0 C�C m 'O'0 m E `m qi 'IT S a L> 3 vmcE 0Em' 12 E'mL wm>m mC o° E ° � 10o �daO �mU+uL- m =g o L 0 Emm olac ync"J'-o0 .D rnm mEB Eno `o-c� E- 01`c y� �`o mmm�E �>N J E m O R n m Z` C > " O H E c m m a o m 0 •C L C" a ° d y a E O p o a O N m U M ID m o E m ° a m m 0 U c L o m E m m c E o U> s c o s nom m m -0 N D+' - 9 R }...ao r va mm 'm a� �E h NLC ac -0 E. mCm avm !NmA �. 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O N N L d Q� �O 3" > X O 70 L o -W - d W� _U U O N E O) O m oo�u�00imov��+-es o N m N t�0 n m m . m U j d 0 �+ LL o�E m 0 F O p= N N d O N O n d -200 .+ N Z pW m E m d c m Q d m«� p C m W m cp �z LL Z w N Cl c m N m 0 o m w N yay'o V c U 0LU 00 0 -0 `m EwC;.R E= °' M °1�=c WHO'LL �wa ul m m m'v,Na�nWo3 m O >> O U Q 0 O E end w E a N a T W a a O N mU.c ro m O Loc ui V O Nm .39mo W O OI=� 2>t9 m U N J m c W > v m X 0) OU O U V ro C C X p N m- O - � n N d m m �"• m d C c S> C > o `m m m^ o !i _gy = mLL o 3 � � m U > �6mmm��o U ••. W W m,m=� m•E F N ¢�OQZa.LL_. W m m p_ @ I- 'E O :�r O L m Q a .0 on c�F.g} cU...o�.-Wm �U�m�a� c� J Q OY OmWn3�0 c7 (9 O co 3 a. 0 V0 N8WW w F- ;_' o.ti � 3 i7 U E u. F- W E $ u> A-6 CITY OF MONTICELLO, MINNESOTA STATEMENT OF NET ASSETS DECEMBER 31, 2006 (WITH COMPARATIVE AMOUNTS AS OF DECEMBER 31, 2005) ASSETS CURRENT ASSETS Cash and Investments Accounts Receivable Due from Other Governments Loans Receivable Land Held for Resale Prepaid Items Deferred Bond issuance Cost Inventory Special Assessments Receivable Capital Assets Not Being Depredated Land Construction in Progress Capital Assets Being Depreciated (Net) Buildings Office Equipment and Furniture Vehicles Machinery and Shop Equipment Improvements Other than Building Infrastructure Total Assets LIABILITIES CURRENT LIA1311JTIES Accounts Payable Due to Other Governments Other Accrued Liabilities Contracts Payable Accrued Interest Payable Deferred Revenue Escrow Deposits Contract for Deed - Due Within One year General Obligation Bonds Payable - Due Within One Year Compensated Absences Payable Due in More Than One Year Contract for Deed - Due in More Than One Year General Obligation Bonds Payable - Due Within More Than One Year Total Liabilities NET ASSETS Invested In Capital Assets, Net of Related Debt Unrestricted TOTAL NET ASSETS 47,392,129 - 47,392,129 50,495,271 57,310,310 603,950 57,914,260 60,901,037 7,009,622 35,749,380 42,759,002 42,087,013 56,949,749 5,437,867 62,367,616 49,876,951 $ 63,959,371 $ 41,187,247 $ 105,146,618 $ 91,963,964 A-7 Totals Govemmenial business -Type Activities Activities 2006 2005 $ 31,569,318 $ 4,901,337 $ 36,470,655 $ 49,724,417 374,624 536,801 911,425 772,298 2,018,563 - 2,018,563 - 1,512,228" 1,512,226 1,634,579 7,525,180 - 7,525,180 4,277,948 110,157 21,705 131,862 83,748 170,328 - 170,328 192,598 -581,974 581,974 568,107 16,508,777 - 16,508,777 8,004,206 6,363,420 1,209,580 7,573,000 7,294,498 20,523,835 5,845,433 26,369,268 17,020,597 10,162,201 2,976,117 13,138,318 13,636,144 157,885 48,066 205,951 216,300 596,326 23,939 620,265 648,418 392,326 127,275 519,601 626,799 2,088,335 8,387,732 10,476,067 9,998,976 21,196,178 17,131,238 38,327,416 38,165,368 121,269,681 41,791,1197 163,060,878 152,865,001 857,809 387,643 1,245,452 775,764 244,479 52,197 296,676 75,053 69,607 123,050 192,657 236,190 1,1'14,671 - 1,114,671 1,261,089 907,705 9D7,705 901,768 - 40,531 40,531 17,170 2,278,411 529 2,278,940 2,387,091 100,000 - 100,000 100,000 3,288,382 - 3,288,382 2,294,740 392,824 - 392,824 371,679 664,293 - 664,293 1,985,222 47,392,129 - 47,392,129 50,495,271 57,310,310 603,950 57,914,260 60,901,037 7,009,622 35,749,380 42,759,002 42,087,013 56,949,749 5,437,867 62,367,616 49,876,951 $ 63,959,371 $ 41,187,247 $ 105,146,618 $ 91,963,964 A-7 N Y m N N Q N Q �U)N W Gid ZF^c Z 7 cc f- w ro © Q :2 LL w LU �.j W U F- U ~Z D [iJ z�w UW0 t t QZ W O F- OC a W r m i7� n S N F� 0 0 0 0 0 0 M N (D tp OD 'd' I� ct M i0 0 10 O c^D_ h (�O_ (O W W D) N m N CO h (D N OJ h. CO ." _ r Q) c) N U) � co co (n N !� (0 M O CO h h CD N M cD N co N a7 CQ 14- n co N O fh �t M N cA M N M N W to M co V CD to m f O) MLr b' M N N N r d' M d r' () r f� cV' ch r 'ct M Q7 P M � a m ltd i� m N N M ' o O co tD . N t - L). ^ ct N O O NCD 07 d' >, N [O N M n cD CD (O O 1� CYJ M N m N ; N O r (" .�.. to Lp M N O Co M M y> , v M N N M r ;F _ G O r M V N Q � H3 m O O I-- 4 O O CO n d' 0 (07� (O o t� l0 1- O (D N M r c0 W Q N M I CO f� U) O W d) (D O 4 N lz M CL) CA CO N � u7 CO (h C� N co O h co � dam' M � � cNn CMD 0 dM- M -Lo r- N M o Ol r N C6 cq co In O m U O � M 6) a CO n CO to 0 O "' M m to co C~D co ii d z3 '� � m ko o�� m v (D (1) M a m r N <-- N G Y E co V 60 �jl 0 ft- 3 - 'IT v L Q cD c0 cl' (O (n U) U c0 tt (A c0 CJ. o 5 N c a (d y_ N O CD LO (D CD CO (D (O N [c T M d (C CO (n cc Lo V O C`C,-,CD LO cq y0. 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N . � N R >m Q W m o 9 0 a 0 F m 1[I Pf � N v m N N N ? m mnomO�jo�cm Qam Otoj000w Z�ZndQjfAUjC7 fnU � � U (A a n J o J a n „j • n m w A-9 U m m O � ' m O' O b O b m b P m N• m•' M N Om• O•• O C O T O N O � A P m b � N om¢ = m J m n v N j � � < � . . . ^ . v m m • � • m . r N . � b � m e ;C iys m m^ m b N m N• W M m � N n N Ur _ m n m uNi <bo_ m n 6 o w 4-2 Q O m � _ � n m m � O m a 1 m , _� • N R O OW fn E O N .• N tbD N r Q b 0 Pl N uj W i9 w ZFZODUI �=LL NO w ^m m N b 010 016 r .J V% C7 m N m aD m n• m POJ�P)N m W im K 1,: N O m m r h OJ wul � tll U Z W W m Q m_ Nm N N m N N m oaWnW �w>w� W a OQQ v 0 ¢ z }O F a W ¢ U o z m U Q G ❑ Z m m v n ❑ m j p m n m Z m 0 C m ¢ m N m 5 F c c a o m Q m a m m c mW ll ¢ a a J co u7 E e (7 Q m y N¢ a J t m F R >m Q W m o 9 0 a 0 F g v t 9= 2 m m 2 m W m mnomO�jo�cm Qam Otoj000w Z�ZndQjfAUjC7 fnU U (A a n J o J a „j LL A-9 CITY OF MONTICELLO, MINNESOTA GOVERNMENTAL FUNDS RECONCILATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE GOVERNMENT -WIDE STATEMENT OF NET ASSETS — GOVERNMENTAL ACTIVITIES DECEMBER 31, 2006 Total Fund Balances for Governmental Funds $ 36,473,402 Total net assets reported for governmental activities in the statement of net assets is different because: Capital assets used in governmental funds are not financial resources and therefore are not reported In the funds. Those assets consist of: Land 6,363,420 Construction in Progress 20,523,835 Buildings, Net of $2,193,106 Accumulated Depreciation 10,162,201 Office Equipment and Furniture, Net of $75,794 Accumulated Depreciation 157,885 Vehicles, Net of $987,647 Accumulated Depreciation 596,326 Machinery and Shop Equipment, Net of $475,336 Accumulated Depreciation 392,326 Improvements, Net of $1,715,763 Accumulated Depreciation 2,088,335 Infrastructure, Net of $11,237,897 Accumulated Depreciation 21,196,178 Some of the City's property taxes and special assessments will be collected after year-end, but are not available soon enough to pay for the current period's expenditures, and therefore, are reported as deferred revenue in the governmental funds, 18,580,468 Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. Accrued interest for general obligation bonds is included in the statement of net assets. (907,705) -Long-term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and therefore are not reported as fund liabilities. All liabilities - both current and long-term - are reported in the statement of activities: General Obligation Bonds Payable (50,113,973) Contract For Deed Payable (764,293) Deferred Bond Issuance Cost 170,328 Unamortized Bond Premium (566,538) Compensated Absences (392,824) Total Net Assets of Governmental Activities $ 63,959,371 Ew A-11 oho W �DOI� Nh -mm01 W tOmO)tONh 10 • P b m f�N N 1p OOOfO (D P N y C O O<m(0 �6 ci 4P L6 n b h (b0 'YmbO M r V d 1. 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U LL L. m U w r 22 Z G m C C C N m m ¢ o D C m X Q p LL W mem �m O O .i[ m '�E E .m Um °1 m U w O �c `mmI r- O O m o f'm� oma c E 010 m ul m m z c z F aE m z m E c m m E m m rn �, ¢ m �' LL 2 W W m W ► n m v E N o w d E w o m 0 >> a v 2 wmo m_mOmom=_ocp ZZU E m t > w ZUU 2 `m m m y� wM3�mE�-cg3m2 m O c= co O c c1 l zcO''•-m C7 4 j Q rn c m m y o i n V f 2 m 3 m d(7aa'U'�u5 c wmmmw U ro m >w WC7 (nJ=UCi �`L 17 n_u:mc.lw �U >= o Z ¢ O to 2 LL LL A-11 CITY OF MONTICELLO, MINNESOTA RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF THE GOVERNMENTAL FUNDS TO THE GOVERNMENT -WIDE STATEMENT OF ACTIVITIES GOVERNMENTAL ACTIVITIES YEAR ENDED DECEMBER 31, 2006 Net Change in Fund Balance -Total Governmental Funds $ (11,092,993) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital assets changed: Captial Asset Acquisitions and Disposals 13,051,926 Loss on Disposal of Capital Assets (1,850,754) Depreciation Expense (2,250,378) The governmental funds report bond proceeds as financing sources, while repayment of bond principal is reported as an expenditure. In the statement of net assets, however, issuing debt increases long-term liabilities and does not affect the statement of activities: Repayment of Bond Principal 2,086,726 Repayment of Contract for Deed 1,320,929 Change in Accrued Interest Expense for General Obligation Bonds (5,937) Amortization of Bond Issuance Costs (22,270) Amortization of Bond Premium 22,774 Change in Compensated Absences (21,145) Delinquent and deferred property taxes and special assessments receivable will be collected subsequent to year-end, but are not available soon enough to pay for the current period's expenditures, and therefore are deferred in the governmental funds. Change in Deferred Revenue for Special Assessments 10,574,409 Change in Net Assets of Governmental Activities $ 11,813,287 A-12 A-13 rdAM M A Om M MM N arnoG N QmO W 0J .- d W v ONNY O QN Q � N �^ c0 uD W �N NQ M1O W r tO 1�ON^ ObM r NOIW- r1�0N NGOO m W d m 0 N m W d W M O mmnn 1nm1Gny0 m m W O T01O � N O•: H O M � o • d N n0 mao Wrap A GOD n`1a� NGmD O MO000 mem nGo rn r dN W , M NN �GAp .AO. v-omo N W tpNN OQtD^ i� W mo.- rnNW N O N r n d M t7^ m N •v b l0 G D 1 m qui rmviWvu-i N m m N A� M a tmJ m A Q r n M '-- � Y • • • N � O W r r • m • • � m � � G r r • • • 0 M NmW l� W W N d U mo m OW m Amm Id O: 6 SOO., mQ • r m W W o <GADm A 4) N �. O�1m •1! 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C d M d N J Z N m C C 0 C C 0 0 0 M y j 3 L O G m m a N H .Ow L 2 E E ❑ �` a Z,� m o m o d m c H= U a m cam- m c m m m m o c ° a o m m c �Em. ad U5 U E c mcmi m a cy.y�-.'c"'maa mm `mmmi°N m °1cE _T v a a=Qa° =zz �aaz c �a d`�o �o ohm o`n A-26 \/k - {\\�/k c6 .7 C6- /ca \\/ \ \ /\\! _%16 Eo -- «m2 ca R(E �® - }/uj \ \ - ` ® §( � _ / G!/ u4 §% §)§ \ )/ ` ® -k■ mow \ \ [ \ b- ( $ \) r / 2k® b[ \ E s ( )/$!« oz. -al & a _ 2 § 3}\\\\§ 7\, - #®- �!o/;§ ) /(� @� § $ &/ _ $ .! G$! M H _} [ \# \\ 00o2000m 2 -00..... z ( A-27 CITY OF MONTICELLO, MINNESOTA BUGETARY COMPARISION SCHEDULE GENERALFUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL_ AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) REVENUE General Property Taxes Licenses and Permits Fines and Forfeitures Intergovernmental State Market Value Credit Mobile Home Market Value Credit Fire Department Aid State Police Aid State Highway Aid Recycling Incentive PERA Aid County/Regional Other Total Intergovernmental Charges for Services Animal Impound Fees Deputy Registrar Fees Inspection Fees Township Contract Other Total Charges for Services Investment Eamings Miscellaneous Development Cost Reimbursement Sale of City Property Rents Garbage Charge Other Total Miscellaneous Total Revenue 7,176,922 7,176,922 6,909,143 A-28 (267,779) 6,755,110 2006 Original Final 2006 Variance with 2005 Budget Budget Actual Final Budget Actual $ 4,712,505 $ 4,712,505 $ 4,520,275 $ (192,230) $ 4,315,338 819,025 819,025 758,718 (60,307) 956,300 - - 1,750 1,750 4,000 17,090 17,090 16,962 - - 13,879 13,879 14,828 95,000 95,000 98,518 3,518 94,839 45,000 45,000 43,322 (1,678) 40,368 67,345 67,345 77,449 10,104 67,345 13,000 13,000 9,619 (3,381) 10,201 6,740 6,740 6,741 1 6,741 12,200 12,200 16,979 4,779 32,806 239,285 239,285 283,597 44,312 284,090 24,000 24,000 28,528 4,528 24,002 268,000 268,000 285,811 17,811 277,437 85,000 85,000 268,689 183,689 162,879 45,675 45,675 46,890 1,215 49,906 - - 11,530 11,530 196 422,675 422,675 641,448 218,773 514,420 203,415 203,415 301,431 98,016 310,832 515,000 515,000 51,150 (463,850) 1,763 500 500 237 (263) 33,989 12,615 12,615 61,638 49,023 14,149 91,200 91,200 115,273 24,073 119,310 160,702 160,702 173,526 12,924 200,919 780,017 780,017 401,924 (378,093) 370,130 7,176,922 7,176,922 6,909,143 A-28 (267,779) 6,755,110 CITY OF MONTICELLO, MINNESOTA BUGETARY COMPARISION SCHEDULE (CONTINUED) GENERALFUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) A-29 2006 Origlnal Final Variance with EXPENDITURESBudget Budget Actual Final Budget Actual General Government Mayor and Council Current Personal Services $ 26,955 $ 26,955 $ 26,056 $ 899 $ 26,668 Other Services and Charges 14,500 14,500 12,143 2,357 23,082 Total Mayor and Council 41,455 41,455 38,199 3,256 49,750 Administration Current Personal Services 272,760 272,760 291,117 (18,357) 179,154 Supplies Other Services and Charges 300 17,525 300 17,525 264 12,211 36 5,314 12,215 12,476 Elections Total Administration 290,585 290,585 303,592 (13,007) 203,845 Current Personal Services 9,730 9,730 6,388 3,342 2,133 Supplies 5,650 5,850 246 5,404 Other Services and Charges 4,700 4,700 1,523 3,177 170 Finance Total Elections 20,080 20,080 13,771 17,537 2,303 Current Personal Services 225,665 225,665 260,016 (34,351) 189,063 Supplies Other Services and Charges 1,975 18,835 1,975 18,835 504 9,194 1,471 9,641 1,387 Total Finance 246,475 246,475 269,714 19,183 (23,239) 209,633 Data Processing Current Other Services and Charges 100,040 100,040 90,138 9,902 78,852 Capital Outlay 6,000 6,000 0 6,000 5,523 Total Data Processing 106,040 106,040 90,138 15,802 84,375 Audit 38,900 38,900 42,480 (3,580) 36,851 Legal 66,665 66,665 130,523 (63,858) 83,193 Assessing 55,625 55,625 55,156 469 50,441 Insurance Planning and Zoning 101,940 101,940 124,898 (22,958) 95,222 Current Personal Services 108,280 108,280 98,971 9,309 65,422 Other Services and Charges 5,650 5,850 22,619 (16,969) 8,727 Professional Services 183,800 183,800 191,390 (7,590) 230,386 Total Planning and Zoning 297,730 297,730 312,980 (15,250) 304,535 Deputy Registrar Current Personal Services Other Services and Charges 197,025 197,025 192,855 4,170 165,398 Total Deputy Registrar 17,125 17,125 12,427 205,282 4,698 15,654 181,052 214,150 214,150 8,868 A-29 CITY OF MONTICEL.LO, MINNESOTA BUGETARY COMPARISION SCHEDULE (CONTINUED) GENERAL FUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) EXPENDITURES (CONTINUED) General Government (Continued) City Hall Current Personal Services Supplies Utilities Professional Services Telephone Other Services and Charges Capital Outlay Total City Hall Severance Benefits Total General Government Public Safety National Guard Police Current Contractual Services Fire Department Current Personal Services Supplies Other Services and Charges Repairs and Maintenance Capital Outlay Total Fire Department Building Inspections Personal Services Other Services and Charges Total Building Inspections Animal Control Civil Defense Current Personal Services Other Services and Charges Total Civil Defense Total Public Safety 2006 Original Final Variance with 2005 Budget Budget Actual Final Budget Actual $ 9,930 $ 9,930 $ 8,616 $ 1,314 $ 6,815 19,810 19,810 17,705 2,105 32,924 16,200 16,200 21,510 (5,310) 19,476 6,400 6,400 12,023 (5,623) 18,125 23,200 23,200 21,953 1,247 22,629 48,170 48,170 60,273 (12,103) 54,258 - - - - 32,705 123,710 123,710 142,080 (18,370) 186,932 8,500 8,500 8,847 (347) 8,648 1,611,855 1,611,855 1,737,660 (114,577) 1,496,780 21,485 21,485 24,088 (2,603) 23,857 879,000 879,000 880,310 (1,310) 836,632 81,675 81,675 67,112 14,563 77,826 33,800 33,8.00 23,962 9,838 33,594 135,355 135,355 133,582 1,773 128,958 28,800 28,800 20,555 8,245 29,845 - - 136 (136) - 279,630 279,630 245,347 34,283 270,223 289,475 289,475 266,323 23,152 195,925 36,050 36,050 67,708 (31,658) 56,671 325,525 325,525 334,031 (F5 66) 252,596 43,700 43,700 48,643 (4,943) 42,224 10,420 10,42D - 10,420 32 6,350 6,35D 1,035 5,315 644 16,770 16,770 1,035 15,735 676 1,566,110 1,566,110 1,533,454 32,656 1,428,208 A-30 CITY OF MONTICELLO, MINNESOTA BUGETARY COMPARISION SCHEDULE (CONTINUED) GENERAL FUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) Total Snow and Ice Inspections Street Lighting -Parking Lots Shop and Garage Total Public Works 78,145 78,145 70,231 7,914 72,386 151,740 151,740 140,402 11,338 103,411 164,300 164,300 168,049 (3,749) 121,434 156,515 156.515 __148,831 7;684 140,377 2,190,835 2,190,835 1,889,591 301,244 1,878,018 A-31 2006 Original Final Variance with 2005 EXPENDITURES (CONTINUED) Budget Budget Actual Final Budget Actual Public Works Administration and Engineering Current Personal Services $ 252,955 $ 252,955 $ 280,075 $ (27,120) $ 153,964 Other Services and Charges 31,000 31,000 29,504 1,496 23,498 Professional Service 705,350 705,350 546,711 158,639 902,407 Capital Outlay - _ TotaiAdministration and Engineering 989,305 989,305 856,290 133,015 1,079,869 Streets Current - Personal Services 364,780 364,780 350,703 14,077 256,531 Supplies 70,750 70,750 80,441 (9,691) 77,953 Other Services and Charges 17,800 17,800 17,868 (68) 18,141 Capital Outlay 197,500 197,500 56,776 140,724 7,916 Total Streets 650,830 650,830 505,788 145,042 360,541 Snow and Ice Current Personal Services 49,395 49,395 33,108 16,287 47,843 Supplies 26,250 26,250 36,231 (9,981) 23,764 Other Services and Charges 2,500 2,500 892 1;608 779 Total Snow and Ice Inspections Street Lighting -Parking Lots Shop and Garage Total Public Works 78,145 78,145 70,231 7,914 72,386 151,740 151,740 140,402 11,338 103,411 164,300 164,300 168,049 (3,749) 121,434 156,515 156.515 __148,831 7;684 140,377 2,190,835 2,190,835 1,889,591 301,244 1,878,018 A-31 CITY OF MONTICELLO, MINNESOTA BUGETARY COMPARISION SCHEDULE (CONTINUED) GENERALFUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) A-32 2006 Original Final Variance with 2005 Budget Budget Actual Final Budget Actual EXPENDITURES (CONTINUED) Culture and Recreation Parks and Recreation Current Personal Services $ 352,425 $ 352,425 $ 301,441 $ 50,984 $ 285,896 Supplies 134,650 134,650 82,547 52,103 89,982 Other Services and Charges 61,250 61,250 55,948 5,302 59,980 Capital Outlay 255,000 255,000 172,090 82,910 81,044 Total Parks and Recreation 803,325 803,325 612,026 191,299 51.6,902 Senior Citizens/Museum Current Personal Services 1,500 1,500 1,334 166 1,503 Other Services and Charges 88,440 88,440 90,167 (1,727) 84,047 Total Senior Citizens/Museum 89,940 _ 89,940 91,501 (1,561) 85,550 Information Center - - 143 (143) 28 YMCA/Community Education 18,200 18,200 18,200 - 18,200 Ice Arena 75,000 75,000 75,000 75,000 Historical Church/School - - - - 199,485 Total Culture and Recreation 986,465 986,465 796,870 189,595 895,165 Sanitation Current Refuse Collection 477,785 477,785 474,045 3,740 492,446 Economic Development 76,990 76,990 87,523 (10,533) 73,446 Total Expenditures 6,910,040 6,910,040 6,519,143 402,125 6,264,063 EXCESS OF REVENUES OVER EXPENDITURES 266,882 266,882 390,000 134,346 491,047 OTHER FINANCING SOURCES (USES) Transfer In - - 667 667 - Transfer Out (95,145) (95,145) (136,900) Total Other Financing Sources (Uses) (94,478) (94,47B) (136,900) NET CHANGE IN FUND BALANCES $ 266,882 $ 266,882 295,522 $ 39,86B 354,147 Fund Balance - Beginning of Year 5,124,391 4,770,244 FUND BALANCE - END OF YEAR $ 5,419,913 $ 5,124,391 A-32 APPENDIX B FORM OF LEGAL OPINION j Offices in 470 U.S. Bank Plaza Kenned ; 200 South Sixth Street YMinneapolis Minneapolis MN 55402 Graven, ri 'Saint Paul (612) 337-9300 telephone ._. (612) 337-9310 fax St. Cloud http://www.kennedy-graven.com Affirmative Action Equal Opportunity Employer CHARTERED City of Monticello Economic Development Authority Public Project Revenue Refunding Bonds Series 2008A (City of Monticello, Minnesota Lease Obligation) We have acted as bond counsel to the City ofMonticello Economic Development Authority (the "Authority") in connection with the issuance by the Authority of its Public Project Revenue Refunding Bonds, Series 2008A (City of Monticello, Minnesota Lease Obligation), originally dated , 2008 (the "Bonds"), in the total principal amount of $ . The Bonds are being issued pursuant to a Trust Indenture, dated as of February 1, 2008 (the "Indenture") between the Authority and U.S. Bank National Association, Saint Paul, Minnesota, as trustee (the "Trustee'). A portion of the proceeds of the Bonds will be deposited in an escrow fund pursuant to an Escrow Agreement (Series 2008A), dated as of February 1, 2008 (the "Escrow Agreement') between the Authority and the Trustee (as escrow agent), to advance refund certain maturities of $7,555,000 Public Project Revenue Bonds, Series 2000A (the "Series 2000A Bonds"), issued by the Housing and Redevelopment Authority in and for the City of Monticello, Minnesota (the "HRA"). The Series 2000A Bonds were issued to refund the outstanding principal amount of $7,385,000 Temporary Public Project Revenue Bonds, Series 1998 (the "Series 1998 Bonds'), issued by the HRA. The Series 1998 Bonds were issued to finance the acquisition, construction and equipping of certain facilities, consisting of a community center, armory and city hall (the "Facilities') constructed on certain land (the "Site") in the City of Monticello, Minnesota (the "City'). The Site was leased by the HRA from the City pursuant to a Ground Lease, dated as of December 1, 1998 and amended as of March 1, 2000 (the "Original Ground Lease'). The Facilities were leased by the City from the HRA pursuant to a Lease -Purchase Agreement, dated as of December 1, 1998 and amended as of March 1, 2000 (the "Original Lease'). The City Council of the City has transferred the control, authority and operation of all projects of the HRA, including the Series 2000A Bonds and all agreements related thereto, to the Authority pursuant to Minnesota Statutes, Section 469.094, subdivision 2, In connection with issuance of the Bonds, the Authority and City have entered into an Amended and Restated Lease -Purchase Agreement dated as of February 1, 2008 (the "Lease"), and an Amended and Restated Ground Lease dated as of February 1, 2008 (the "Ground Lease"), which agreements supersede in all respects the Original Lease and Original Ground Lease, respectively. Pursuant to an Assignment and Security Agreement between the Authority and the Trustee dated as of February 1, 2008 (the "Assignment'), the Authority has assigned to the Trustee all of the Authority's right, title and interest in and to the Ground Lease, the Lease, and the Lease Payments to be made by the City thereunder (other than certain rights to indemnification and payment of expenses by the Authority) as security for the Bonds. For the purpose of rendering this opinion we have examined certified copies of certain proceedings taken by the Authority and the City in the authorization, sale and issuance of the Bonds, including the Indenture, the Ground Lease, the Lease, the Assignment, the Escrow Agreement, the form of the Bonds, and certain other proceedings and documents furnished by the Authority and the City. From our examination of such proceedings and other documents, assuming the genuineness of the signatures thereon and the accuracy of the facts stated therein and continuing compliance by the Authority and the City with the covenants in the Indenture and the Lease to comply with the Internal Revenue Code of 1986, as amended (the "Code"), and based upon laws, regulations, rulings and decisions in effect on the date hereof, it is our opinion, as of the date hereof, that: 1. The Bonds are in due form, have been duly executed and delivered, and are valid and binding limited obligations of the Authority, enforceable in accordance with their terms, except as such enforcement may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights. 2. The Indenture, the Ground Lease, the Lease, the Assignment and the Escrow Agreement have been duly executed and delivered by the parties thereto, and are valid and binding obligations of such parties, enforceable in accordance with their terms, except as such enforcement may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights. 3. The Bonds are not a general obligation of the Authority, and no owner of a Bond shall ever have the power to compel the exercise of any taxing power of the Authority for the payment of the Bonds. The principal of and interest on the Bonds are payable solely from Lease Payments to be made by the City under the Lease and amounts, if any, received by the Trustee from re-leasing the Site and the Facilities following an Event of Default under the Lease or termination of the Lease upon non -appropriation by the City. The Lease Payments payable under the Lease are payable solely from moneys to be appropriated by the City Council of the City for this purpose each year in the City's annual budget, but the City Council is not required to appropriate or provide moneys for this purpose. If moneys are not appropriated by the City Council to pay Lease Payments for any year, the Lease will be terminated at the end of the preceding year, and the City is not required to pay Lease Payments coming due after such termination. Neither the Lease, the City's obligation to pay Lease Payments, nor the Bonds, are a general obligation or indebtedness of the City, and the full faith and credit of the City is not pledged for their payment. 4. Interest on the Bonds is excludable from gross income of the recipient for federal income tax purposes, and, to the same extent, from taxable net income for Minnesota income tax purposes, and is not a preference item for purposes of the computation of the federal alternative minimum tax, or the computation of the Minnesota alternative minimum tax imposed on individuals, trusts and estates, but such interest is includable in the computation of "adjusted current earnings," used in the calculation of federal alternative minimum taxable income of corporations, and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income and the alternative minimum tax base. We express no opinion regarding other federal or state tax consequences arising with respect to the Bonds. IM 5. This opinion is subject to the condition that the Authority and the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes and, to the same extent, from taxable net income for Minnesota income tax purposes. The Authority and the City have covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal tax purposes and taxable net income for Minnesota income tax purposes retroactively to the date of issuance of the Bonds. We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. Dated at Minneapolis, Minnesota, February _, 2008. APPENDIX C BOOK -ENTRY -ONLY SYSTEM The Depository Trust Company ("DTC'), New York, New York, will act as securities depository for the securities (the "Securities "). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Security certificate will be issued for each maturity of the Securities, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants ") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (`DTCC "). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly( `Indirect Participants'). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtc.org. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner ") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalfof Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. C-1 Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Authority or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), Agent, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to (Tender/Remarketing) Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to the (Tender/Remarketing) Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book -entry credit of tendered Securities to (Tender/Remarketing) Agent's DTC account. 10. DTC may discontinue providing its services as securities depository with respect to the Securities at any time by giving reasonable notice to the Authority or the Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Security certificates are required to be printed and delivered. 11. The Authority may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered. 12. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the accuracy thereof. C-2 FORM OF CONTINUING DISCLOSURE CERTIFICATE 911 City of Monticello Economic Development Authority Public Project Revenue Refunding Bonds Series 2008A (City of Monticello, Minnesota Lease Obligation) This Continuing Disclosure Certificate (this "Disclosure Certificate") is executed and delivered by the City of Monticello, Minnesota (the "City") in connection with the issuance by the City of Monticello Economic Development Authority (the "Issuer") of $ Public Project Revenue Refunding Bonds, Series 2008A (the "Bonds"). The Bonds are being issued pursuant to a Trust Indenture, dated as of February 1, 2008 between the Issuer and U.S. Bank National Association, as Trustee (the "Indenture"), and the Bonds will be delivered to the Purchaser(s) on the date hereof. The City hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City pursuant to a resolution approved by the governing body of the City on January 14, 2008 (the "Resolution") for the benefit of the Holders (defined herein) of the Bonds in order to assist the Participating Underwriters (defined herein) in complying with SEC Rule 15c2 -12(b)(5). This Disclosure Certificate, together with the Resolution, constitutes the written agreement or contract for the benefit of the Holders of the Bonds that is required by the Rule. Section 2. Definitions. In addition to the defined terms set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" means any annual report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Audited Financial Statements" means annual financial statements, prepared in accordance with generally accepted accounting principles ("GAAP") for Governmental Units as Prescribed by the Governmental Accounting Standards Board ("GASB"). "City" means the City of Monticello, a statutory city and political subdivision of the State of Minnesota, which is an obligated person with respect to the Bonds. "Final Official Statement" means the deemed final official statement dated , 2008 plus the addendum thereto which together constitute the final official statement delivered in connection with the Bonds, which is available from the MSRB. "Fiscal Year" means the fiscal year of the City. "Holder" means the person in whose name a bond is registered or a beneficial owner of such a bond. "Issuer" means the City of Monticello Economic Development Authority, a public body corporate and politic and political subdivision of the State of Minnesota. D-1 "Material Event" means any of the events listed in Section 5(a) of this Disclosure Certificate. "MSRB" means the Municipal Securities Rulemaking Board, located at 1900 Duke Street, Suite 600, Alexandria, Virginia 22314. "NRMSIR" means any nationally recognized municipal securities information repository as recognized from time to time by the SEC for purposes of the Rule, as currently described on Exhibit A hereto. "Participating Underwriter" means any of the original underwriter(s) of the Bonds (including the Purchaser(s)) required to comply with the Rule in connection with the offering of the Bonds. "Repository" means each NRMSIR and each SID, if any. "Rule" means SEC Rule 15c2 -12(b)(5), promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and including written interpretations thereof by the SEC. "SEC" means the Securities and Exchange Commission. "SID" means any public or private repository or entity designated by the State of Minnesota as a state information depository for the purpose of the Rule. As of the date of this Disclosure Certificate, there is no SID. Section 3. Provision of Annual Financial Information and Audited Financial Statements. (a) The City shall provide, as soon as available, but not later than 12 months after the end of the Fiscal Year commencing with the year that ends December 31, 2007, each Repository with an Annual Report with respect to the City which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the Audited Financial Statements of the City may be submitted separately from the balance of the Annual Report and will be submitted as soon as available. (b) If the City is unable or fails to provide to the Repositories an Annual Report by the date required in subsection (a), the City shall send a notice of that fact to the Repositories and the MSRB. (c) The City shall determine each year prior to the date for providing the Annual Report the name and address of each Repository. Section 4. Content of Annual Reports. The City's Annual Report shall contain or incorporate by reference the following sections of the Final Official Statement: 1. Current Property Valuations 2. Direct Debt 3. Tax Levies and Collections 4. Population Trend 5. Employment/Unemployment In addition to the items listed above, the City's Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Disclosure Certificate. D-2 Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the City, which have been submitted to each of the Repositories or the SEC. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The City shall clearly identify each such other document so incorporated by reference. Section 5. Reporting of Material Events. (a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events if material with respect to the Bonds: and Principal and interest payment delinquencies; Non-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; Modifications to rights of security holders; Bond calls; 9. Defeasances; 10. Release, substitution or sale of property securing repayment of the Bonds; 11. Rating changes. (b) Whenever the City obtains knowledge of the occurrence of a Material Event, the City shall promptly file a notice of such occurrence with either all NRMSIRs or with the MSRB and with any SID. Notwithstanding the foregoing, notice of Material Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Indenture. (c) Unless otherwise required by law and subject to technical and economic feasibility, the City shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the City's information. Section 6. Termination of Reporting Obligation. The obligations of the City under this Disclosure Certificate shall terminate upon the legal defeasance, or upon the redemption or payment in full of all the Bonds. Section 7. Agent. The City may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent. D-3 Section 8. Amendment; Waiver. Notwithstanding any other provision ofthis Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause a violation of the Rule. This Disclosure Certificate, or any provision hereof, shall be null and void in the event that the City delivers to each then existing NRMSIR and the SID, if any, an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Bonds. The provisions of this Disclosure Certificate may be amended without the consent of the Holders of the Bonds, but only upon the delivery by the City to each then existing NRMSIR and the SID, if any, of the proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance of this Disclosure Certificate and by the City with the Rule. Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Holder of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Bonds and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance. Section 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Participating Underwriters and Holders from time to time of the Bonds, and shall create no rights in any other person or entity. IN WITNESS WHEREOF, we have executed this Disclosure Certificate in our official capacities effective the day of 2008. CITY OF MONTICELLO, MINNESOTA E Its Mayor By Its City Clerk/Administrator EXIIIBIT A Nationally Recognized Municipal Securities Information Repositories (NRMSIRs) Bloomberg Municipal Repository 100 Business Park Drive Skillman, NJ 08558 Phone: (609) 279-3225 Fax: (609) 279-5962 hLtp://www.bloomberg.con-i/markets/rates/municontacts.html Email: Munis@Bloomberg.co DPC Data Inc. One Executive Drive Fort Lee, NJ 07024 Phone: (201) 346-0701 Fax: (201) 947-0107 http://www.MuniFILINGS.com Email: nrmsir(aa)dpcdata.com Interactive Data Pricing and Reference Data, Inc. Attn: NRMSIR 100 William Street, 15th Floor New York, NY 10038 Phone: 212-771-6999; 800-689-8466 Fax: 212-771-7390 http://www.interactivedata-prd.com Email: NRMSIR(a)interactivedata.com Standard & Poor's Securities Evaluations, Inc. 55 Water Street 45th Floor New York, NY 10041 Phone: (212) 4384595 Fax: (212) 438-3975 http://www.disclosuredirectory.standardandpoors.com/ Email: nrmsir repository@sandp.com [1� $6,100,000* PUBLIC PROJECT REVENUE REFUNDING BONDS, SERIES 2008A MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA Proposals for the purchase of $6,100,000 Public Project Revenue Refunding Bonds, Series 2008A (the "Bonds") of the Monticello Economic Development Authority, Minnesota (the "Authority") will be received at the offices of Ehlers & Associates, Inc. ("Ehlers"), 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105, Financial Advisors to the Authority, until 11:00 A.M., Central Time, and ELECTRONIC PROPOSALS will be received via PARITY, in the manner described below, until 11:00 A.M. Central Time, on January 16, 2008, at which time they will be opened, read and tabulated. The proposals will be presented to the Board of Commissioners for consideration for award at a meeting to be held at 6:00 P.M., Central Time, on the same date. The proposal offering to purchase the Bonds upon the terms specified herein and most favorable to the Authority will be accepted unless all proposals are rejected. PURPOSE The Bonds are being issued by the Authority pursuant to Minnesota Statutes, Chapters 469 and 465 to finance the full net cash advance refunding ofthe 2009 through 2015 maturities ofthe $7,555,000 Public Project Revenue Bonds, Series 2000A dated March 1, 2000. The Bonds will be special obligations of the Authority payable from and secured by a pledge of lease payments required to be made to the Authority by the City pursuant to a Lease -Purchase Agreement (the "Lease") to be entered into between the Authority and the City. THE BONDS DO NOT CONSTITUTE A GENERAL OBLIGATION OF THE AUTHORITY OR THE CITY AND ARE NOT A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. DATES AND MATURITIES The Bonds will be dated February 20, 2008, will be issued as fully registered Bonds in the denomination of $5,000 each, or any integral multiple thereof, and will mature on February 1 as follows: Year Amount* 2009 $595,000 2010 610,000 2011 945,000 Year Amount* 2012 $980,000 2013 990,000 2014 990,000 ADJUSTMENT OPTION Year Amount* 2015 $990,000 * The Authority reserves the right to increase or decrease the principal amount of the Bonds on the day of sale, in increments of $5,000 each. Increases or decreases may be made in any maturity. If any principal amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross spread per $1,000. TERM BOND OPTION All dates are inclusive. Proposals for the Bonds may contain a maturity schedule providing for any combination of serial bonds and term bonds, subject to mandatory redemption, so long as the amount of principal maturing or subject to mandatory redemption in each year conforms to the maturity schedule set forth above. E-1 INTEREST PAYMENT DATES AND RATES Interest will be payable on February 1 and August 1 of each year, commencing August 1, 2008, to the registered owners of the Bonds appearing of record in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the MSRB. All Bonds of the same maturity must bear interest from date of issue until paid at a single, uniform rate, not exceeding the rate specified for Bonds of any subsequent maturity. Each rate must be expressed in an integral multiple of 5/100 or 1/8 of 1%. BOOK -ENTRY -ONLY FORMAT Unless otherwise specified by the purchaser, the Bonds will be designated in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds, and will be responsible for maintaining a book -entry system for recording the interests of its participants and the transfers of interests between its participants. The participants will be responsible for maintaining records regarding the beneficial interests of the individual purchasers of the Bonds. So long as Cede & Co. is the registered owner of the Bonds, all payments of principal and interest will be made to the depository which, in turn, will be obligated to remit such payments to its participants for subsequent disbursement to the beneficial owners of the Bonds. PAYING AGENT/ESCROW AGENT The Authority has selected U.S. Bank National Association, St. Paul, Minnesota, to act as paying agent (the "Paying Agent/Escrow Agent). The Authority will pay the charges for Paying Agent/Escrow Agent services. The Authority reserves the right to remove the Paying Agent/Escrow Agent and to appoint a successor. REDEMPTION The Bonds are being offered without option of prior redemption, except as follows. The Bonds are subject to extraordinary redemption upon the happening of certain events of damage to or destruction or condemnation of the Site or the Facilities (as defined in the Lease referenced below) or change of law rendering the Lease unenforceable or impossible of performances, all as provided in the Lease. DELIVERY On or about February 20, 2008, the Bonds will be delivered without cost to the original purchaser at DTC. On the day of closing, the Authority will furnish to the purchaser the opinion of bond counsel hereinafter described, an arbitrage certification and certificates verifying that no litigation in any manner questioning the validity of the Bonds is then pending or, to the best knowledge of officers of the Authority, threatened. Payment for the Bonds must be received by the Authority at its designated depository on the date of closing in immediately available funds. LEGAL OPINION An opinion as to the validity of the Bonds and the exemption from taxation of the interest thereon will be furnished by Kennedy & Graven, Chartered, Minneapolis, Minnesota, bond counsel to the Authority, and will accompany the Bonds. The legal opinion will state that the Bonds are valid and binding special obligations of the Authority enforceable in accordance with their terms, except to the extent to which enforceability may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. E-2 SUBMISSION OF PROPOSALS Proposals must not be for less than $6,025,740 plus accrued interest on the principal sum of $6,100,000 from date of original issue of the Bonds to date of delivery. A signed proposal form must be submitted to Ehlers prior to the time established above for the opening of proposals as follows: 1) In a sealed envelope as described herein; or 2) A facsimile submission to Ehlers, Facsimile Number (651) 697-8555; or 3) Electronically via PARITY in accordance with this Terms of Proposal until 11:00 A.M. Central Time, but no proposal will be received after the time for receiving proposals specified above. To the extent any instructions or directions set forth in PARITY conflict with this Terms of Proposal, the terms of this Terms of Proposal shall control. For further information about PARITY, potential bidders may contact Ehlers or i -Deal LLC at 1359 Broadway, 2°d Floor, New York, New York 10018, Telephone (212) 849-502 L. Proposals must be submitted to Ehlers via one of the methods described above and must be received prior to the time established above for the opening of proposals. Each proposal must be unconditional except as to legality. Neither the Authority nor Ehlers shall be responsible for any failure to receive a facsimile submission. A good faith deposit (the "Deposit") in the amount of $122,000, complying with the provisions below, must be submitted with each proposal. The Deposit must be in the form of a certified or cashier's check, or a financial surety bond or a wire transfer of funds to U. S. Trust Company, N.A., Greenwich, Connecticut, ABA No. 0210-01318 for further credit to Ehlers, Bond Issue Escrow Account No. 850-788-1. The Deposit will be retained by the Authority as liquidated damages if the proposal is accepted and the bidder fails to comply therewith. The Deposit will be returned to the Purchaser at the closing for the Bonds. The Deposit, payable to the Authority, shall be retained in the offices of Ehlers with the same effect as if delivered to the Authority. Alternatively, bidders may wire the Deposit to U. S. Trust Company, N.A., Greenwich, Connecticut, ABA No. 0210-01318 for credit to Ehlers Bond Issue Escrow Account, No. 850-788-1. The Authority and any bidder who chooses to so wire the Deposit hereby agree irrevocably that Ehlers shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: 1) All income earned thereon shall be retained by the escrow holder as payment for its expenses; 2) If the proposal is not accepted, Ehlers shall, at its expense, promptly return the Deposit amount to the losing bidder; 3) If the proposal is accepted, the Deposit shall be returned to the purchaser at the closing; 4) Ehlers shall bear all costs of maintaining the escrow account and returning the funds to the bidder; 5) Ehlers shall not be an insurer of the Deposit amount and shall have no liability hereunder except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and 6) FDIC insurance on deposits within the escrow account shall be limited to $100,000 per bidder. If a financial surety bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the Authority. Such bond must be submitted to Ehlers prior to the opening of the proposals. Such bond must identify each bidder whose Deposit is guaranteed by such financial surety bond. If the Bonds are awarded to a bidder using a financial surety bond, then that purchaser is required to submit its Deposit to Ehlers in the form of a certified or cashier's check or wire transfer as instructed by Ehlers not later than 3:00 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the financial surety bond may be drawn by the Authority to satisfy the Deposit requirement. The amount securing the successful proposal will be retained as liquidated damages if the proposal is accepted and the bidder fails to comply therewith. No proposal can be withdrawn after the time set for receiving proposals unless the meeting of the Authority scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. E-3 AWARD The Bonds will be awarded to the bidder offering the lowest interest rate to be determined on a True Interest Cost (TIC) basis. The Authority's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. In the event of a tie, the sale of the Bonds will be awarded by lot. The Authority reserves the right to reject any and all proposals and to waive any informality in any proposal. BONDINSURANCE If the Bonds are qualified for any bond insurance policy, the purchase of such policy shall be at the sole option and expense of the purchaser of the Bonds. Any cost for such insurance policy is to be paid by the purchaser, except that, if the Authority requested and received a rating on the Bonds from a rating agency, the Authority will pay that rating fee. Any rating agency fees not requested by the Authority are the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after the Bonds are awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. CUSIP NUMBERS The Authority will assume no obligation for the assignment or printing of CUSIP numbers on the Bonds or for the correctness of any numbers printed thereon, but will permit such numbers to be printed at the expense of the purchaser, if the purchaser waives any delay in delivery occasioned thereby. QUALIFIED TAX-EXEMPT OBLIGATIONS The Authority will designate the Bonds as qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. CONTINUING DISCLOSURE hl order to assist the Underwriters in complying with the provisions of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 the Authority will enter into an undertaking (the "Undertaking") for the benefit of the holders of the Bonds. A description of the details and terms of the Undertaking is set forth in the Official Statement. The Authority has complied in all material respects with any undertaking previously entered into by it under the Rule. INFORMATION FROM PURCHASER The successful purchaser will be required to provide, in a timely manner, certain information relating to the initial offering prices of the Bonds necessary to compute the yield on the Bonds pursuant to the provisions of the Internal Revenue Code of 1986, as amended. E-4 PRELIMINARY OFFICIAL STATEMENT Underwriters may obtain a copy of the Preliminary Official Statement relating to the Bonds prior to the proposal opening by request from Ehlers at www.ehlers-inc.com by connecting to the link to the Bond Sales. The Syndicate Manager will be provided with 85 copies of the Final Official Statement within seven business days of the proposal acceptance. Additional copies of the Final Official Statement will be available at a cost of $10.00 per copy. Information for bidders and proposal forms may be obtained from Ehlers at 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105, Telephone (651) 697-8500. By Order of the Board of Commissioners Angela Schumann, Authority Secretary Monticello Economic Development Authority, Minnesota E-5 PROPOSALFORM The Board of Commissioners January 16, 2008 Monticello Economic Development Authority, Minnesota RE: $6,100,000* Public Project Revenue Refunding Bonds, Series 2008A DATED: February 20, 2008 For all or none of the above Bonds, in accordance with the Terms of Proposal and terms of the Global Book -Entry System (unless otherwise specified by the purchaser) as stated in this Preliminary Official Statement, we will pay you $ (not less than $6,025,740) plus accrued interest to date of delivery for fully registered Bonds bearing interest rates and maturing in the stated years as follows: % due 2009 % due 2010 % due 2011 % due 2012 % due 2013 % due 2014 % due 2015 * The Authority reserves the right to increase or decrease the principal amount of the Bonds on the day of sale, in increments of $5,000 each. Increases or decreases may be made in any maturity. If any principal amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross spread per $1,000. We enclose our good faith deposit in the amount of $122,000, to be held by you pending delivery and payment. Alternatively, we have provided a financial surety bond or have wired our good faith deposit to the U. S. Trust Company, N.A., Greenwich, CT, ABA No. 0210-01318, for further credit to Ehlers & Associates, Inc. Bond Issue Escrow Account No. 850-788-1. If our proposal is not accepted, said deposit shall be promptly returned to us. If the good faith deposit is wired to such escrow account, we agree to the conditions and duties of Ehlers & Associates, Inc., as escrow holder of the good faith deposit, pursuant to this Preliminary Official Statement dated January 3, 2008. This proposal is for prompt acceptance and is conditional upon deposit of said Bonds to The Depository Trust Company, New York, New York, in accordance with the Terms of Proposal. Delivery is anticipated to be on or about February 20, 2008. This proposal is subject to the Authority's covenant and agreement to enter into a written undertaking to provide continuing disclosure under Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 as described in the Preliminary Official Statement for this Issue. We have received and reviewed the Preliminary Official Statement and have submitted our requests for additional information or corrections to the Final Official Statement. As Syndicate Manager, we agree to provide the Authority with the reoffering price of the Bonds within 24 hours of the proposal acceptance. Account Manager: By: Account Members: Award will be on a true interest cost basis. According to our computations (the correct computation being controlling in the award), the total dollar interest cost (including any discount or less any premium) computed from February 20, 2008 of the above proposal is $ and the true interest cost (TIC) is %. --------------------------------------------------------------------------------- The foregoing offer is hereby accepted by and on behalf of the Board of Commissioners of the Monticello Economic Development Authority, Minnesota, on January 16, 2008. By: By: Title: Title: PROPOSALFORM The Board of Commissioners January 16, 2008 Monticello Economic Development Authority, .Minnesota RE: $6,100,000* Public Project Revenue Refunding Bonds, Series 2008A DATED: February 20, 2008 For all or none of the above Bonds, in accordance with the Terms of Proposal. and terms of the Global .Book -Entry System (unless otherwise specified by the purchaser) as stated in this Preliminary Official Statement, we will pay you $ Z100,000.00 (not less than $6,025,740) plus accrued interest to date of delivery for ful.ly.regi.stered Bonds bearing interest rates and maturing in the stated years as follows: 3_20 % due 2009 3.20 % due 2012 3.20 % due 2015 due 2010 3.20 % due 2013 3.20 % 'due 2011 3.20 % due 2014 The Authority reserves the right to increase or decrease the principal amount of the Bonds on the day of sale, in increments of $5,000 each. Increases or decreases may be made in any maturity. If any principal. amounts are adjusted, the purchase price proposed. will be adjusted to maintain the same gross spread. per $1,000. We enclose our good faith deposit in the amount of $122,000, to be held by you pending delivery and payment. Alternatively, we have provided a financial surety bond or have wired our good faith deposit to the U. S. Trust Company, N.A., Greenwich, CT, ABA No. 0210-01318, for further credit to Elilers & Associates, Inc. Bond Issue Escrow Account No. 850-788-1. If our proposal is not accepted, said deposit shall be promptly returned to us. If'the good faith deposit is wired to such escrow account, we agree to the conditions and duties of Ehlers & .Associates, Inc., as escrow holder ofthe good faith deposit, pursuant to this Preliminary Official Statement dated January 3, 2008. This proposal, is for prompt acceptance and is conditional upon deposit of said Bonds to The Depository Trust Company, New York, New York, in accordance with the Terms of Proposal. Delivery is anticipated to be on or about February 20, 2008. This proposal is subject to the Authority's covenant and agreement to enter into a written undertaking -to provide'.' continuing disclosure under Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1.934 as described in the Preliminary Official Statement for this Issue. We have received and reviewed the Preliminary Official Statement and, have submitted our requests for additional information or corrections to the Final Official Statement, As Syndicate lvlanagcr, we agree to provide the Authority with the reoffering price of the Bonds within 24 hours of the proposal acceptance. Account Manager: Art Hyman i aT.ic of America Public Capital Corp. Account .Members: Award will be on a true interest cost basis. According to our computations (the correct computation being controlling in the award), the total dollar interest cost (including any discount or less any premium) computed from February 20, 2008 of the above proposal is $ g and the true interest cost (TIC) is 3, _)XI0, 5 .--------------------------------------------------=----- The foregoing offer is hereby accepted by and on behalf of the Board of Commissioners of the Monticello Economic Development Authority, Minnesota, on January 16, 2008, 1' By:, Title: *subsequent to bid opening the issue size was increased to $6,180,000 with the 2009 maturity increase"30,000 to $625,000; the 2010 maturity increased $25,000 to $635,000, the 2011 maturity increased $15,000 to $960,000, the 2012 maturity increased $10,000 to $990,000, the 2013 maturity increased $5,000 to $995,000, and the 2015 maturity decreased $5,000 to $985,000 in maturity value. Adjusted Price - $6,180,000.00 Adjusted Net Interest Cost - $839,002.67 Adjusted TIC - 3.2003% Low Bidder True Interest Cost Number of Bids Rating Range of Bids Total Debt Service City of Monticello EDA, Minnesota Results of Bond Sale January 16, 2008 $6,180,000* Public Project Revenue Refunding Bonds, Series 2008A Banc of America Public Capital Corp. Troy, Michigan 3.2003% 4 Bids from 6 Underwriters Moody's affirms City "A2" and assigns EDA "A3" 3.2003% to 3.SI3S% Projected 12 18 Results of Sale Variance Principal Amount $6,I00,000 $6,I80,000* +$80,000 Discount Allowed $74,260 $-0- -$74,260 Costs of Issuance $42,000 $54,055 +$I2,055 Future Savings $ I79,37S $287,760 +$108,38S Net PV Benefit 2.S4I% 4.039% +I.50% Total Required $5,983,740 $6,I2S,945 +$I42,20S True Interest Cost 4.2078% 3.2000% -I.01% Average Interest Rate 3.89% 3.20% -.69% Bond Buyer Index 4.79% 4.66% -.I3% Closing Date February 20, 2008 Board Action Accept the bid from Banc of America Public Capital Corp. and Adopt "Resolution Authorizing Acceptance of Proposal for the Sale of $6,I80,000 Public Project Revenue Refunding Bonds, Series 2008A" * The size of the bond issue changed from the projected amount due to a reduction in underwriter's discount and investment rates of escrowed securities. Attachments ■ Bid Tabulation ■ Rating Report ■ Final Debt Schedule ■ Graph, Bond Market 0 Authorizing Resolution EHLERS AW LEADERS IN PUBLIC FINANCE BID TABULATION $6,100,000* Public Project Revenue Refunding Bonds, Series 2008A MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA SALE: January 16, 2008 AWARD: BANC OF AMERICA PUBLIC CAPITAL CORP. RATING: Moody's Investors Service, Inc. "A3" BBI: 4.21% NET TRUE NAME OF BIDDER MATURITY RATE REOFFERING PRICE INTEREST INTEREST (February 1) YIELD COST RATE BANC OF AMERICA PUBLIC CAPITAL CORP. 2009 3.200% 3.200% $6,100,000.00 $834,177.78 3.2003% Troy, Michigan 2010 3.200% 3.200% 2011 3.200% 3.200% 2012 3.200% 3.200% 2013 3.200% 3.200% 2014 3.200% 3.200% 2015 3.200% 3.200% UBS INVESTMENT BANK 2009 3.000% $6,090,118.00 $869,909.67 3.3381% Dallas, Texas 2010 3.000% CITIGROUP GLOBAL MARKETS, INC. 2011 3.250% Chicago, Illinois 2012 3.250% CRONIN & CO., INC. 2013 3.250% ,neapolis, Minnesota 2014 3.250% 2015 3.500% NORTHLAND SECURITIES, INC. 2009 3.000% $6,073,358.60 $891,837.75 3.4273% Minneapolis, Minnesota 2010 3.000% 2011 3.100% 2012 3.200% 2013 3.300% 2014 3.400% 2015 3.500% RBC CAPITAL MARKETS 2009 3.500% $6,096,882.70 $915,499.24 3.5135% Minneapolis, Minnesota 2010 3.500% 2011 3.500% 2012 3.500% 2013 3.500% 2014 3.500% 2015 3.500% "Subsequent to bid opening the issue size was increased to $6,180,000 with the 2009 maturity increased $30,000 to $625,000, the 2010 maturity increased $25,000 to $635,000, the 2011 maturity increased $15,000 to $960,000, the 2012 maturity increased $10,000 to $990,000, the 2013 maturity increased $5,000 to $995,000, and the 2015 maturity decreased $5,000 to $985,000 in maturity value. Adjusted Price - $6,180,000.00 Adjusted Net Interest Cost - $839,002.67 Adiusted TIC - 3.2003% EHLERS & ASSOCIATES INC 3060 Centre Pointe Drive, Roseville, MN 55113 651.697.8500 fax 651.697.8555 www.ehlers-inc.com Offices in Roseville, MN Brookfield, WI and Lisle, IL Todd' Hagen - MonticelloEconomic Development Authority, MN Page 1 From: "GID - Moody's Investors Service" <epi@moodys.com> To: <THagen@ehlers-inc.com> Date: 1/10/2008 5:24:21 PM Subject: MonticelloEconomic Development Authority, MN MOODY'S ASSIGNS A3 RATING TO THE CITY OF MONTICELLO (MN) ECONOMIC DEVELOPMENT AUTHORITY'S (MN) $6,100,000 PUBLIC PROJECT REVENUE REFUNDING BONDS, SERIES 2008A AFFIRMS A2 RATING ON CITY OF MONTICELLO'S (MN) OUTSTANDING GENERAL OBLIGATION DEBT MonticelloEconomic Development Authority, MN Monticello (City of) MN Municipality Minnesota Moody's Rating Issue Rating Public Project Revenue Refunding Bonds, Series 2008A A3 Sale Amount $6,100,000 Expected Sale Date 01/16/08 Rating Description Lease Rental NEW YORK, January 10, 2008 -- Moody's Investor's Service has assigned an A3 rating to the City of Monticello Economic Development Authority's (MN) $6.1 million Public Project Revenue Refunding Bonds, Series 2008A. Proceeds of the bonds will be used to advance refund the 2009 through 2015 maturities of the $7,555,000 Public Project Revenue Bonds, Series 200A. The issue is secured by the City of Monticello's (MN) pledge to make lease rental payments, subject to annual appropriation, to the Economic Development Authority (EDA), pursuant to a lease agreement. The A3 rating reflects the essentiality of the project, the annual risk of non -appropriation, and the credit quality inherent in the general obligation rating of the City of Monticello. Concurrently, Moody's has affirmed the A2 rating on $42.7 million of the city's outstanding general obligation debt. The A2 general obligation rating affirmation reflects the city's moderate and quickly growing tax base favorably located along the high growth corridor between Minneapolis (rated Aa1/stable outlook) and St. Cloud (rated Aa3), healthy reserve levels, balanced against notable tax base concentration, below average wealth levels and a high level of rapidly retired debt. LEASE PAYMENTS FOR ESSENTIAL MULTI-PURPOSE BUILDING SUBJECT TO ANNUAL APPROPRIATION Moody's believes the legal provisions contained within a ground lease, trust indenture and lease agreement provide adequate security for bondholders. The City of Monticello and the Monticello EDA have entered into a lease agreement in which the city will make lease payments sufficient to cover debt service. Lease payments are scheduled to be transferred directly to the Trustee three days prior to debt service payments, an important measure given the absence of a debt service reserve fund. The lease is annually renewable, subject to Todd Hagen - MonticelloEconomic bevelopment Authority, MN Page 21 appropriation. The Ground Lease between the city and the EDA extends until all lease payments are made by the city. Although the city is under no obligation to levy property taxes to support lease payments, the city has expressed to Moody's its intention to make lease payments from any available revenue source. FAVORABLE LOCATION IN STRATEGIC GROWTH CORRIDOR Located 45 miles northwest of Minneapolis along 1-94, the city of Monticello encompasses 5.37 square miles in Wright County (GO rated Al). The city's moderate $1.321 billion tax base has grown at a rapid 12.4% five year average annual rate, driven by both new construction and annexation activity. Population growth has been similarly rapid, growing 59.2% from 1990 to 2000, and growing an additional estimated 45.1 % since 2000. City officials report a majority of the population commutes to the Minneapolis metropolitan area for employment. In response to recent rapid development, a comprehensive land use plan is under deliberation and expected to be approved by March of 2008. The proposed plan includes slower growth assumptions and less directed development in favor of development plan directed by the market. As development occurs, the city has annexed land from within Monticello Township through an orderly annexation agreement. The agreement identifies up to 8,000 acres of the surrounding Township to be eventually incorporated over the long run. Residential development has slowed significantly in the past year; in 2004 building permits for 532 single family homes were issued while as of November 16, 2007, only 43 permits were issued in 2007. At the same time, recent rapid residential development has spurred notable commercial development in the past two years, offsetting some of the current slowdown in residential development. Given the city's favorable geographic location and the proximity to the future Northstar line (approximately three miles), Moody's believes the tax base will experience continued and sustained growth. While city wealth levels are notably below state levels, Moody's expects they will likely improve with the next decennial census. Wright County's September unemployment rate of 4.9% was slightly above the state's 4.7%, which in turn is slightly above the national rate of 4.7%. Taxbase concentration exists with the presence of Xcel Energy (senior unsecured rated Baal) Monticello Nuclear Station, which represented 19.3% of taxable values in 2007. This percentage has dropped considerably over the last decade. The 545 MW nuclear power plant, operating since 1971, is reaching maturity and is among the older nuclear generating facilities nationwide. Due to recent changes to the laws regarding the valuation of utility property, Xcel's valuation will be reduced; reductions will be phased in at 20% in 2007, 50% in 2008 and 100% in 2009. Offsetting some of these concerns, city officials report Xcel has recently had its application to continue operations approved for an additional 20 years and Xcel is in the process of expanding, building additional storage for nuclear waste on site, insuring at least intermediate term viability for this significant portion of the tax base. As recently as 1997, Xcel comprised an even more substantial 75% of the city's full valuation. The dominance of this single taxpayer within the city's taxbase should continue to diminish due to statutory changes in valuation formulas as well as ongoing growth due to both development and annexation but future credit evaluations will be dependent on the degree to which Xcel's dominance is reduced and how the city manages the transition. AMPLE RESERVE LEVELS EXPECTED TO CONTINUE Todd Hagen - MonticelloEconomic Development Authority, MN - Page 3 The city is currently reviewing and updating its major financial policies, including policies concerning long range financial planning, interfund transfers and general fund reserves. A revised investment policy is expected to be presented this month. The city's current informal goal for General Fund reserves is 45% to 48% of revenues. Historically, the city has maintained sizeable and liquid General Fund balances, typically above 75% of revenues. The city posted a $617,000 operating deficit in fiscal 2004 which officials attribute to one-time engineering related expenses. In both fiscal 2005 and fiscal 2006 the General Fund posted surpluses of approximately 5% of operating revenues. With this, the city recorded a $5.4 million General Fund balance at the end of fiscal 2006, or a healthy 78.4% of General Fund revenues. City officials expect to record an additional operating surplus in fiscal 2007 and have budgeted for balanced operations for fiscal 2008. Moody's believes that given the city's maintenance of healthy reserves, the absence of levy limits, and that some tax payer concentration concern is offset by continued tax base growth, the city is well positioned to meet future budgetary challenges. Moody's also notes that city no longer receives local government aid, reducing the city's exposure to budgetary pressures at the state level and is subject only to an implicit rate subsidy with its OPEB liability. ABOVE AVERAGE DEBT BURDEN Moody's anticipates that the city's debt burden will continue to be manageable due to limited future general obligation borrowing plans. The city's overall debt burden is currently above average at 5.6% (3.5% direct). Principal amortization is rapid with 91.2% retired in ten years. The city has historically maintained a healthy balance in its Debt Service Reserve Fund ($9.5 million in fiscal 2006) providing additional financial flexibility, although plans to draw those reserves for debt service payments in 2008. Future debt issuances may include wastewater capital improvements of less than $1 million and a $22.6 million revenue obligation for the city's fiber optic network project in the Spring of 2008. Given rapid principal amortization and continued and sustained tax base growth, Moody's believes that the city's debt profile will remain manageable. KEY STATISTICS 2006 Population (Estimate): 11,414 (45.1 % increase since 2000) 2000 Per Capita Income as a % of State: 82.9% (89.1 % of US) 2000 Median Family Income as a % of State: 94.2% (107.0% of US) Sept 2007 Wright County Unemployment Rate: 4.9% (State: 4.7%) 2006 Full Value: $1.321 billion 2006 Full Value per Capita (Estimate): $115,777 Overall Debt Burden: 5.3% Direct Debt: 3.2% Principal amortization (10 Years): 91.2% i Todd Hagen - MonticelloEconomic Development Authority, MN Page 4 Fiscal 2006 General Fund Balance: $5.42 million (78.4% of revenues) Post -sale general obligation debt outstanding: $42.7 million ANALYSTS: David Horton, Analyst, Public Finance Group, Moody's Investors Service Rachel Cortez, Backup Analyst, Public Finance Group, Moody's Investors Service CONTACTS: Journalists: (212) 553-0376 Research Clients: (212) 553-1653 Copyright 2008, Moody's Investors Service, Inc. and/or its licensors and affiliates including Moody's Assurance Company, Inc. (together, "MOODY'S"). All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided "as is" without warranty of any kind and MOODY'S, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or City of Monticello HRA, MN $6,180,000 Lease Revenue Refunding Bonds, Series 2008 (Proposed Net Cash Refunding of $7,555,000 Public Project Revenue Bonds, Series 2000A) Sources & Uses Dated 02/20/2008 f Delivered 02/20/2008 Sources Of Funds Par Amount of Bonds $6,180,000.00 Total Sources Uses Of Funds Costs of Issuance 54,055.00 ...._......_._._....._......_.._.._ ... ....... ............... __................................................. _............................... ....._................................................................... _..........__............._......................__._............................._....._......................................... _................................._............................_............................... ........................... ...... Deposit to Net Cash Escrow Fund 6,124,432.06 Rounding Amount 1,512.94 Total Uses $6,180,000.00 07 ntcsh ref OOA $7.5M Pu I SINGLE PURPOSE 1 1/16/2008 1 11:36 AM of Monticello HRA. MN $7,555,000 Public Project Revenue Bonds, Series 2000A Prior OrgEnal Debt Service Date Principal Coupon Interest Total P+I Fiscal Total 08/01/2008 - - 175,075.00 175,075.00 - 02/01/2009 505,000.00 5.750% 175,075.00 680,075.00 855,150.00 08/01/2009 - - 160,556.25 160,556.25 - 02/01/2010 530,000.00 5.750% 160,556.25 690,556.25 851,112.50 08/01/2010 ..........................................................._.........._......_.._........_..__..-_..............__........__..........-................................................................._.........._........_.............._.........._.--___.._..__.._...._.........................................................._....-._.. - 145,318.75 145,318.75 - ..........._......_...........__................................ 02/01/2011 870,000.00 6.125% 145,318.75 1,015,318.75 1,160,637.50 08/01/2011 - - 118,675.00 118,675.00 02/01/2012 920,000.00 6.125% 118,675.00 1,038,675.00 1,157,350.00 08/01/2012 - - 90,500.00 90,500.00 02/01/2013 950,000.00 6.125% 90,500.00 1,040,500.00 1,131,000.00 08/01/2013 - - 61,406.25 61,406.25 02/01/2014 970,000.00 6.250% 61,406.25 1,031,406.25 1,092,812.50 08/01/2014 - - 31,093.75 31,093.75 02/01/2015 995,000.00 6.250% 31,093.75 1,026,093.75 1,057,187.50 Refundin5Dated Date 2/20/2008 ......................................_........................................................._.............................................................................................................................................................................................................. Refunding Delivery Date 2/20/2008 Ser OOA $7,555K Pub Proj I SINGLE PURPOSE 1 1/16/2008 1 11:36 AM City of Monticello HRA, MN $6,180,000 Lease Revenue Refunding Bonds, Series 2008 (Proposed Net Cash Refunding of $7,555,000 Public Project Revenue Bonds, Series 2000A) Debt Service Schedule Date Principal Coupon Interest Total P+1 Fiscal Total 02/20/2008 - _ 08/01/2008 - - 88,442.67 88,442.67 - 02/01/2009 625,000.00 3.200% 98,880.00 723,880.00 812,322.67 08/01/2009 - - 88,880.00 88,880.00 - 02/01/2010 ---._._.._..._.....-_............................_......._..._................................................._.. 635,000.00 _ ._... 3.200% .................__........_..._..................._..__........__._... 88,880.00 ......................._.............._..............................._...._............__......-----...._....._..._........_._...__....._........--._............_......... 723,880.00 812,760.00 08/01/2010 78,720.00 78,720.00 02/01/2011 960,000.00 3.200% 78,720.00 1,038,720.00 1,117,440.00 08/01/2011 - - 63,360.00 63,360.00 02/01/2012 990,000.00 3.200% 63,360.00 1,053,360.00 1,116,720.00 08/01/2012 - _._-_.. _._.___ _47,520.00 47,520.00 _- 02/01/2013 995,000.00 3.200% 47,520.00 1,042,520.00 1,090,040.00 08/01/2013 - - 31,600.00 31,600.00 02/01/2014 990,000.00 3.200% 31,600.00 1,021,600.00 1,053,200.00 08/01/2014 - - 15,760.00 15,760.00 02/01/2015 985,000.00 3_200% 15,760.00 1,000,760.00 1,016,520.00 Total $6,180,000.00 - $839,002.67 $7,019,002.67 Yield Statistics Bond Year Dollars$26,218.83 _ _.....____._._.._..._-...._ .............................._ .___�_ _ __ .___.._.._. AverageLife.................................._............................ ......................... _................................... _............... ........... ............ ..................... ...... ............. .................... .......................... _.... _............... ......... _.............................. 4.243 Years ..........._.................... AveFKe Coupon _-...._ .._ .._-. _ _�___..__........ .. _ .. __...... .... _ 3.2000000% Net Interest Cost (NIC) — 3.2000000% True Interest Cost (TIC) ...... ............ ._......._........... ... ._...... .. .................. ......................... _.... ......................_..._......._...._..........I.....__._..................... 3.2003047% Bond Yield for Arbitrage Purposes_y _ 3.2003047% AI1.Inclusive Cost (AIC) .................. ......... _. _.. 3.4266720% IRS Form 8038 Net Interest Cost 3.2000000% Weighted Average Maturity 4.243 Years 07 ntcsh ref OOA $7.5M Pu I SINGLE PURPOSE 1 1/16/2008 1 11:36 AM City of Monticello HRA, MN $6,180,000 Lease Revenue Refunding Bonds, Series 2008 (Proposed Net Cash Refunding of $7,555,000 Public Project Revenue Bonds, Series 2000A) Debt Service Comparison Date Total P+I Net New D/S Old Net D/S Savings 02/01/2009 812,322.67 810,809.73 855,150.00 44,340.27 02/01/2010 812,760.00 812,760.00 851,112.50 38,352.50 02/01/2011 1,117,440.00 1,117,440.00 1,160,637.50 43,197.50 02/01/2012 1,116,720.00 1,116,720.00 1,157,350.00 40,630.00 02/01/2013...............-..................................................._._1,090,040.00 _....._... ................. _..__0 _40......_.._ .........._......._......._........._............._..._..._1,090,040 :00......__......__...._..__....__............._..............._ .. -.....0.....0 1,131,000.00..--__..._.......I........._._.................._.._......_._._40,960.00. _.. _..._..........._0 .._0,96 .00 02/01/2014 1,053,200.00 1,053,200.00 1,092,812.50 39,612.50 02/01/2015 1,016,520.00 1,016,520.00 1,057,187.50 40,667.50 Total $7,019,002.67 $7,017,489.73 $7,305,250.00 $287,760.27 PV Analysis Summary (Net to Net) Gross PV Debt Service Savings.._............. 258,569.27 Net PV Cashflow Savings @ 3.200%(Bond Yield).... ���_.._..._..__..._ _ 258,569.27 Contend or Rounding Amount .................... Net Present Value Benefit 2.94 Net PV Benefit / $6,438,569.27 PV Refunded Debt Service 4.039% ........................................................................................................._......................_................._............._.............................._.............................................................................................................._.........._.........................................................................................................._....... Net PV Benefit / $5,740,000 Refunded Principal... 4.531% Net PV Benefit/ $6,180,000 Refunding Principal.. 4.208% Refunding Bond information Refunding Dated Date 2/20/2008 Refunding Delivery Date 2/20/2008 07 ntcsh ref GOA $7.5M Pu I SINGLE PURPOSE 1 1/16/2008 1 11:36 AM City of Monticello HRA, MN $6,180,000 Lease Revenue Refunding Bonds, Series 2008 (Proposed Net Cash Refunding of $7,555,000 Public Project Revenue Bonds, Series 2000A) Escrow Fund Cashflow Investment Parameters Investment Model (PV, GIC, or Securities] Securities Default investment field tar et �_..._...._.__�.. ----� Bond Yield ...... ........ ....................................._.........._B_........................................... .......................... ._.................. ................... .............. ...... ........... ..... ..._.............................. .......... ........... .................... .._............. ....... .......... .......... ............... _.................._......... ._................................ ............ _................................. __... Cash Deposit 0.06 Cost of Investments Purchased with Bond Proceeds 6,124,432.00 ....... ........ _..................._............................................................................................................................ ....._............................................................................. _._....................................._................._............................................................................._............................ -...................... _.._............................ ..._......_............... Total Cost of Investments $6,124,432.06 Target Cost of Investments at bond }yield _ $6,057,964.37 .._..__....__._.._.....__._._._. __�____.._...._..______......_.._...___.___._......._.____.....__ Actual positive or (negative arbitra a (66,467.69) .............................................. _8 ..............9 ...................... _................... .................................................... _.................... _.................... ........ .. .. ............. .................. . Yieldto Rec...I t._....._........................................................ Yield for Arbitra8e Purposes State and Local Government Series (SLGS) rates for 07 ntcsh ref OOA $7.5M Pu I SINGLE PURPOSE 1 1/16/2008 1 11:36 AM 2.5795730% 3.2003047% Cash Date Principal Rate Interest Receipts Disbursements Balance 02/20/2008 - - - 0.06 - 0.06 08/01/2008 111,378.00 3.040% 63,697.41 175,075.41 175,075.00 0.47 02/01/2009 594,571.00 2.850% 85,504.18 680,075.18 680,075.00 0.65 08/01/2009 91,118.00 2.740% 69,438.58 160,556.58 160,556.25 0.98 02/01/2010 5,327,365.00 2.560% 68,190.27 5,395,555.27 5,395,556.25 Total $6,124,432.00 - $286,830.44 $6,411,262.50 $6,411,262.50 Investment Parameters Investment Model (PV, GIC, or Securities] Securities Default investment field tar et �_..._...._.__�.. ----� Bond Yield ...... ........ ....................................._.........._B_........................................... .......................... ._.................. ................... .............. ...... ........... ..... ..._.............................. .......... ........... .................... .._............. ....... .......... .......... ............... _.................._......... ._................................ ............ _................................. __... Cash Deposit 0.06 Cost of Investments Purchased with Bond Proceeds 6,124,432.00 ....... ........ _..................._............................................................................................................................ ....._............................................................................. _._....................................._................._............................................................................._............................ -...................... _.._............................ ..._......_............... Total Cost of Investments $6,124,432.06 Target Cost of Investments at bond }yield _ $6,057,964.37 .._..__....__._.._.....__._._._. __�____.._...._..______......_.._...___.___._......._.____.....__ Actual positive or (negative arbitra a (66,467.69) .............................................. _8 ..............9 ...................... _................... .................................................... _.................... _.................... ........ .. .. ............. .................. . Yieldto Rec...I t._....._........................................................ Yield for Arbitra8e Purposes State and Local Government Series (SLGS) rates for 07 ntcsh ref OOA $7.5M Pu I SINGLE PURPOSE 1 1/16/2008 1 11:36 AM 2.5795730% 3.2003047% M N c- 0 m w r-_ (D LO Nt T- T' - % IU03JOd CD • co • • .. Co 70 ' u �� iso®►�� RESOLUTION NO. CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION AUTHORIZING ACCEPTANCE OF PROPOSAL FOR THE SALE OF PUBLIC PROJECT REVENUE REFUNDING BONDS, SERIES 2008A (CITY OF MONTICELLO, MINNESOTA LEASE OBLIGATION) BE IT RESOLVED By the Board of Commissioners of the City of Monticello Economic Development Authority (the "Authority"), as follows: Section 1. Recitals. 1.01. The City of Monticello, Minnesota (the "City") is authorized by Minnesota Statutes, Section 465.71, as amended, to acquire real and personal property under lease -purchase agreements. 1.02. Pursuant to a Ground Lease, dated as of December 1, 1998 and amended as of March 1, 2000, between the City and the Housing and Redevelopment Authority in and for the City of Monticello, Minnesota (the "HRA"), the HRA acquired a leasehold interest from the City in certain property located within the City (the "Site"). 1.03. Pursuant to a Lease -Purchase Agreement, dated as of December 1, 1998 between the HRA and the City, the HRA leased the Site to the City in connection with the acquisition, construction and equipping of a community center, armory and city hall (the "Facilities") financed by the issuance of the HRA's $7,385,000 Temporary Public Project Revenue Bonds, Series 1998 (the "Series 1998 Bonds"). 1.04. The HRA refunded the Series 1998 Bonds by the issuance of its $7,555,000 Public Project Revenue Bonds, Series 2000A (the "Series 2000A Bonds"), which issuance required an Amendment No. 1 to the Lease -Purchase Agreement, dated as of March 1, 2000. 1.05. By Resolution No. 2007-85, adopted on October 22, 2007, the City Council of the City transferred the control, authority and operation of all projects of the HRA, including the Series 2000A Bonds and all agreements related thereto, to the Authority, pursuant to Minnesota Statutes, Section 469.094, Subdivision 2. 1.06. The Authority is authorized by Minnesota Statutes, Chapter 469, as amended, to issue and sell revenue bonds to finance the construction of the Facilities and related costs, and to issue bonds to refund such bonds. 1.07. In order to refund the Series 2000A Bonds in advance of maturity, the Authority authorized Ehlers & Associates, as financial advisor to the Authority, to solicit proposals for the sale of a series of revenue bonds in the aggregate principal amount of $6,180,000, designated as "Public Project Revenue Refunding Bonds, Series 2008A (City of Monticello, Minnesota Lease 327442v1 AJP MN190-128 Obligation)" (the "Bonds"), pursuant to a resolution adopted by the Authority on December 18, 2007. 1.08. The Authority's terms of proposal for the sale of the Bonds assumed a public sale of the Bonds and issuance thereof pursuant to a trust indenture, to be entered into by the Authority and a bond trustee. 1.09. The Authority received a commitment letter from Banc of America Public Capital Corp (the "Purchaser") on January 16, 2008 (the "Commitment"), requesting private placement of the Bonds with the Purchaser. 1.10. The Commitment does not include elements typically required of a public sale of lease -revenue bonds, such as a trust indenture, trustee, or paying agent. Section 2. Authorization. 2.01. The proposal of the Purchaser, substantially in the form contained in the Commitment on file with the Authority, is hereby approved, and the Authority's Executive Director is authorized to execute the Commitment. 2.02. Issuance and delivery of the Bonds to the Purchaser is contingent upon the Authority and the City Council of the City approving the terms of the sale of the Bonds in a sale resolution, as well as related documents related to the lease of the Site and the Facilities and an escrow agreement between the Authority and an escrow agent. 2.03. The Authority shall consider the terms of the sale of the Bonds at its next scheduled regular meeting or a special meeting called as soon as practicable after the adoption of this Resolution. (The remainder of this page is intentionally left blank.) 327442vi AJP MN190-128 2 Approved by the Board of Commissioners of the City of Monticello Economic Development Authority this 16th day of January, 2008. President ATTEST: Secretary 327442v1 AJP MN190-128