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$1,850,000 GO 2010B - Destroy 020128
Table of Contents $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B City of New Hope, Minnesota Section 1. • Post Sale Report • Bid Tabulation • Executed Proposal Form • Results of Sale Presented to City Council on October 25, 2010 • Resolution Awarding the Sale of the Bonds Section 2. Documents Related to Final Financing Details including: • Closing Memorandum • Schedule of Principal and Interest Payments • Tax Levy Calculation • Refunding Comparison Analysis • Paying Agent Fee Schedule Section 3. Arbitrage Documents • Officers' Certificate • IRS Form 8038-G Section 4. Presale Documents Authorizing the Issuance and Sale • Presale Report Section 5. • Legal Opinion • Closing Documents • Specimen Bond Section 6. • Continuing Disclosure Requirements Section 7. • Final Official Statement Section 8. • Credit Rating Report Section 9. • General Certificate as to Organization and Financial Condition of the Issuer Section 10. • Hennepin County Auditor's Certificate as to Taxes and Taxable Property Debt Issuance Services Post Sale Report City of New Hope, Minnesota $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B Dated: November 23, 2010 " EHLERS LEADERS IN PUBLIC FINANCE Overview This Bond Issue Summary Book has been compiled by Ehlers & Associates to provide a complete record of the City's issuance of $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B. Sections of Special Importance Following we have highlighted some sections of the Bond Issue Summary Book that will be of particular importance to you and have listed important responsibilities of you, the Issuer, throughout the life of the issue. Financing Details: Section 2 includes a copy of the Closing Memo detailing the distribution of the net proceeds and debt service payment instructions and the schedule of principal and interest payments. If at any time you have questions regarding repayment of the Bonds, do nothesitate to call Bruce Kimmel orDebbie Holmes at (651) 697-8500. Arbitrage Requirements: This issue is subject to certain arbitrage provisions of the Internal Revenue Code of 1986 and related Treasury regulations. The City has NOT retained Ehlers to assist in complying with the arbitrage requirements of this issue. Therefore, Ehlers shall have no liability with respect to the City's actions or omissions involving the arbitrage provisions of the Internal Revenue Code of 1986 and related Treasury regulations. The Officers' Certificate is included in Section 3 of this book. Continuing Disclosure: The City entered into a Continuing Disclosure Undertaking for this issue for which it is responsible for providing annually certain updated annual financial information and to provide notice of the occurrence of certain "material events." It is imperative you familiarize yourself with these requirements which are in effect as long as the issue is outstanding. A detailed explanation of your responsibilities are found in the Continuing Disclosure section of the Sale Resolution. Please contact us at Ehlers at (651) 697-8500 if you have questions. Credit Rating: Standard & Poor's assigned this issue a "AA" rating. The credit rating report included in this book details the agency's analysis for rating this issue. Post Sale Report for City of New Hope, Minnesota $1.250,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B Page 2 Summary of Bond Issue Details Date of Sale: Date of Bonds: Credit Rating: Principal Due: Interest Payments: Optional Redemption: October 25, 2010 November 23, 2010 Underlying Standard & Poor's Rating: "AA" February 1, 2012 through February 1, 2022 August 1, 2011 and semiannually thereafter. Bonds maturing February 1, 2021 and thereafter are subject to call for prior redemption on February 1, 2020 and any date thereafter at par. Term Bonds/ Certain of the maturities of these Bonds have been designated Mandatory Redemption: as Tenn Bonds which are each subject to Mandatory Redemption. Details of the Tenn Bonds can be found on the cover of the Final Official Statement and are additionally noted on the Schedule of Principal and Interest Payments found in Section 2. Bond Trust Services Corporation in Roseville, Minnesota, as Paying Agent for these Bonds, will send a mandatory Notice of Call to The Depository Trust Company at least 45 days prior to the call date for each required notification. If you discontinue using a paying agent for this issue or if you select another.irm to act as paying agent, you will be responsible for publishing the mandatory call notices. Call Ehlers if you need assistance in drafting and mailing the required notices. Purchase Price: $1,856,267.52 True Interest Rate: 2.2449% Arbitrage Yield Rate: Pursuant to current U.S. Treasury regulations, the arbitrage interest rate is 2.0806219%. Continuing Disclosure Type: Limited Continuing Disclosure Requirements. See the Continuing Disclosure section of the Sale Resolution for details. Purchaser: Wells Fargo Advisors, St. Louis, Missouri Post Sale Report for City of New Hope, Minnesota $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds. Series 20108 Page 3 Registration/Depository: The Bonds have been issued as fully registered book -entry -only securities and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York, to which principal and interest payments on the Bonds will be made. Paying Agent: Bond Trust Services Corporation, Roseville, Minnesota will remit the principal and interest payments directly to The Depository Trust Company. Bond Counsel: Dorsey & Whitney LLP in Minneapolis, Minnesota Financial Advisors: Ehlers 3060 Centre Pointe Drive Roseville, Minnesota 55113 Phone: (651) 697-8500 Fax: (651) 697-8555 Web Site: www.ehlers-inc.com Post Sale Report for City of New Hope, Minnesota $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds. Series 2010B Page 4 BID TABULATION $1,900,000* General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B CITY OF NEW HOPE, MINNESOTA SALE: October 25, 2010 AWARD: WELLS FARGO ADVISORS RATING: Standard & Poor's Credit Markets "AA" BBI: 3.84% NET TRUE NAME OF BIDDER MATURITY RATE REOFFERING PRICE INTEREST INTEREST (February 1) YIELD COST RATE WELLS FARGO ADVISORS St. Louis, Missouri CRONIN & COMPANY, INC. Minneapolis, Minnesota 2012 2.000% 0.650% 2013 2.000% 0.850% 2014 2.000% 1.100% 2015 2.000% 1.350% 2016 2.000% 1.600% 2017 2.000% 1.900% 2018 2.150% 2.150% 2019 2.400% 2.400% 2020 2.600% 2.600% 2021` 3.000% 3.000% 2022` 3.000% 3.000% 2012 2.000% 2013 2.000% 2014 2.000% 2015 2.000% 2016 2.000% 2017 2.250% 2018 2.500% 2019 3.000% 2020 3.000% 2021 3.000% 2022 3.000% $1,906,461.50 $243,945.31 2.2439% $1,930,090.15 $246,789.57 2.2485% `Subsequent to bid opening the issue size decreased to $1,850,000 with the 2012 maturity decreased $5,000 to $170,000,the 2013 maturity decreased $10,000 to $180,000, the 2014 maturity decreased $5,000 to $185,000, the 2015 maturity decreased $5,000 to $190,000, the 2017 maturity decreased $5,000 to $195,000, the 2018 maturity decreased $5,000 to $200,000, the 2019 maturity decreased $5,000 to $205,000, and the 2020 maturity decreased $10,000 to $205,000 in maturity value. Adjusted Price - $1,856,267.52 Adjusted Net Interest Cost - $238,081.37 Adjusted TIC - 2.2449% *$125,000 Term Bond due 2022 with mandatory redemption in 2021 (Adjusted amount $125,000) EHLERS LEADERS IN PUBLIC FINANCE WWW.ehle"S-InC.COC71 Minnesota phone 651-697-8500 3060 Centre Pointe Drive Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville, MN 5511 3-11 22 PROPOSALFORM October 25, 2010 The City Council City of New Hope, Minnesota RE*, $1,900,000` General Obligation Certificates of indebtedness and Refunding Bonds, Series 2010B DATED: November 23, 2010 For all or nrno of the above Bonds, in accordance with the Terms of Proposal and terms of the, Global Book -Entry system as stated in this Preliminary Official Statement, we will pay you $ 1906,461.50 (not less than S1,881,000) plus acerced interest to date of delivery for fully registered Bonds bearing interest rates and maturing in the stated years as follows: 2.00 %due 2012 2.00 %due 2016 2.60 %due 2020 2,00 %due 2013 2.00 %due 2017 3,00 %due 2021 2.00 %due 2014 215 %due 2018 3.00 %due 2022T 2.00 %due 2015 2.40 %due 2019 * The City reserves the right to increase or decrease the priocipal amountunci the Bonds amounts are othe day ed, thepurchaseprice f $5,000 each. increases or decreases may be made in any maturity. if any principal will be adjusted to maintain the same gross spread per $1,000. We unclose our good faith deposit in the amount of $38,000, to be held by you pending delivery and payment. Alternatively, we have provided a financial surety bond or have wired our good faith deposit tothe KleinBapk;1550 Audubon Road, Chaska, Minnesota, ABA No. 091915654 for credit Ehlers & Associates Good Faith Account No..3208138. 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 October 14, 2010. This proposal is for prompt acceptance and is conditional upon deposit of said Bonds to The Depository Trost Company, New York, New York, in accordance with the Terms of Proposal. Delivery is anticipated to be on or about November 23, 2010. This proposal is subject to the City's covenant and agreement to enter into awritten undertakingto 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 City with the reoffering price of the Bonds within 24 hours of the proposal acceptance. II \ '4�4 A /11 Award will be on a true interest cost basis, According to our cont utations h� as dci computation being controlling in the award), the total dollar interest cost (including any discount or less mm) computed from November 23, 2010 of the above proposal is $243,945.31 and the true interest cast (TIC) is 2.2439%. The foregoing offer is hereby accepted by and on behalf of the City Council of the City of New Hope, Minnesota, on October 25, 2010. BY. By. Title: 'title- -subsequent to bid opening the Issue size decreased to $1,650,000 with the 2012 mahrnty decreased 55.000 to $170,ODO,the 2013 maturity decreased $10,000 to 5760,000, the 2014 maturity decreased $5,000 to $165.000, the 2015 maturity decreased $5,00010 $190,000, the 2017 maturity deOroased decreased ed 5105, 0to 0he 20100 inmaturity wddecreased $5,000 to $200,000, the 2019 maturiH-daaeased $5,000 to $205,000, and a 202 maturity AdJusted price - $1.656,267.52 Adjusted Net Interest Cost • $236,001.37 Adjusted TIC - 224490A EHLERS LEADERS IN PUBLIC FINANCE Debt Issuance Services October 25, 2010 Sale Report City of New Hope, Minnesota Minnesota phone 651-697-8500 3060 Centre Pointe Drive Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville, MN 55113-1122 Debt Issuance Services City of New Hope, MN Results of Bond Sale — October 25, 2010 $1,850,000* General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B Purpose: To fund the acquisition of a new fire engine and effecting a current refunding of the 2012 through 2022 maturities of the City's $850,000 General Obligation Storm Sewer Revenue Bonds, Series 2002A, dated April 1, 2002 Rating: Number of Bids: Low Bidder: True Interest Cost: Interest Savings from Lowest to Highest Bid: Summary of Results: Principal Amount A: Net Proceeds: Discount Allowance: Cost of Issuance: True Interest Cost: Coupons: Savings: Savings Percentage: Closing Date: Standard & Poor's "AA" 4 Wells Fargo Advisors, St. Louis, Missouri 2.2439% Low Bid High Bid Interest Savings 2.2439% 2.3824% $16,289.77 Projected Results of Sale Difference $1,900,000 $1,850,000 -$50,000 $1,844,811 $1,824,278 -$20,533 $20,900 $16,133 $0 $34,250 $31,990 -$2,260 2.5806% 2.2449% -0.34% 75%-3.15% .65%-3.00% $77,882.00 $90,253.00 $12,371 11.476% 12.986% 1.510% November 23, 2010 Council Action: Resolution Relating To $1,850,000 (Revised) General Obligation Certificates Of Indebtedness And Refunding Bonds, Series 2010B; Awarding The Sale, Fixing The Form And Details And Providing For The Execution And Delivery Thereof And Security Therefor And Levying Ad Valorem Taxes For The Payment Thereof Attachments: • Bid Tabulation • Bond Resolution (Distributed in Council Packets) The size of the bond issue changed from the projected amount due to a reduction in bond proceeds needed, reduction in underwriters' discount, and a decrease in costs of issuance. vnNw.ehlers-inc.com EH LE RS Minnesota phone 651-697-8500 3060 Centre Pointe Drive LEADERS IN PUBLIC FINANCE Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville, MN 5511 3-11 22 CERTIFICATION OF MINUTES RELATING TO $1,850,000 GENERAL OBLIGATION CERTIFICATES OF INDEBTEDNESS AND REFUNDING BONDS, SERIES 2010B Issuer: City of New Hope, Minnesota Governing body: City Council Kind, date, time and place of meeting: A regular meeting held on October 25, 2010, at 7:00 o'clock P.M., at the New Hope City Hall. Members present: Hemken, Elder, Hoffe, Lammle, Stauner Members absent: None Documents attached: Minutes of said meeting (including): Pages 1 through RESOLUTION NO. 2010-149 RESOLUTION RELATING TO $1,850,000 GENERAL OBLIGATION CERTIFICATES OF INDEBTEDNESS AND REFUNDING BONDS, SERIES 201013; AWARDING THE SALE, FIXING THE FORM AND DETAILS AND PROVIDING FOR THE EXECUTION AND DELIVERY THEREOF AND SECURITY THEREFOR AND LEVYING AD VALOREM TAXES FOR THE PAYMENT THEREOF I, the undersigned, being the duly qualified and acting recording officer of the public corporation issuing the obligations referred to in the title of this certificate, certify that the documents attached hereto, as described above, have been carefully compared with the original records of the corporation in my legal custody, from which they have been transcribed; that the documents are a correct and complete transcript of the minutes of a meeting of the governing body of the corporation, and correct and complete copies of all resolutions and other actions taken and of all documents approved by the governing body at the meeting, insofar as they relate to the obligations; and that the meeting was duly held by the governing body at the time and place and was attended throughout by the members indicated above, pursuant to call and notice given as required by law. WITNESS my hand officially as such recording officer this 27th day of October, 2010. GtiL� � Valerie Leone, City Clerk It was reported that two (2) proposals had been received prior to 10:00 A.M., Central Time today for the purchase of the $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B of the City in accordance with the Official Statement distributed by the City to potential purchasers of the Bonds. The proposals have been read and tabulated, and the terms of each have been determined to be as follows: Bid for Interest Net Interest Name of Bidder Principal Rates Cost [See Attached] BID TABULATION $1,900,000* General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B CITY OF NEW HOPE, MINNESOTA SALE: October 25, 2010 AWARD: WELLS FARGO ADVISORS RATING: Standard & Poor's Credit Markets "AA" BBI: 3.84% NET TRUE NAME OF BIDDER MATURITY RATE REOFFERING PRICE INTEREST INTEREST (February 1) YIELD COST RATE WELLS FARGO ADVISORS St. Louis, Missouri CRONIN & COMPANY, INC. Minneapolis, Minnesota 2012 2.000% 0.650% 2013 2.000% 0.850% 2014 2.000% 1.100% 2015 2.000% 1.350% 2016 2.000% 1.600% 2017 2.000% 1.900% 2018 2.150% 2.150% 2019 2.400% 2.400% 2020 2.600% 2.600% 2021* 3.000% 3.000% 2022* 3.000% 3.000% 2012 2.000% 2013 2.000% 2014 2.000% 2015 2.000% 2016 2.000% 2017 2.250% 2018 2.500% 2019 3.000% 2020 3.000% 2021 3.000% 2022 3.000% $1,906,461.50 $243,945.31 2.2439% $1,930,090.15 $246,789.57 2.2485% *Subsequent to bid opening the issue size decreased to $1,850,000 with the 2012 maturity decreased $5,000 to $170,000,the 2013 maturity decreased $10,000 to $180,000, the 2014 maturity decreased $5,000 to $185,000, the 2015 maturity decreased $5,000 to $190,000, the 2017 maturity decreased $5,000 to $195,000, the 2018 maturity decreased $5,000 to $200,000, the 2019 maturity decreased $5,000 to $205,000, and the 2020 maturity decreased $10,000 to $205,000 in maturity value. Adjusted Price - $1,856,267.52 Adjusted Net Interest Cost- $238,081.37 Adjusted TIC -2.2449% *$125,000 Term Bond due 2022 with mandatory redemption in 2021 (Adjusted amount $125,000) EHLERS LEADERS IN PUBLIC FINANCE www.ehlers-hacom Minnesota phone 651-697-8500 3060 Centre Pointe Drive Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville, MN 55113-1122 Councihnember Elder then introduced the following resolution and moved its adoption: RESOLUTION NO. 2010-149 RESOLUTION RELATING TO $1,850,000 GENERAL OBLIGATION CERTIFICATES OF INDEBTEDNESS AND REFUNDING BONDS, SERIES 2010B; AWARDING THE SALE, FIXING THE FORM AND DETAILS AND PROVIDING FOR THE EXECUTION AND DELIVERY THEREOF AND SECURITY THEREFOR AND LEVYING AD VALOREM TAXES FOR THE PAYMENT THEREOF BE IT RESOLVED by the City Council of the City of New Hope, Minnesota (the "City"), as follows: Section 1. Recitals. Authorization and Sale of Bonds 1.01. Authorization. The City has presently outstanding its General Obligation Storm Sewer Revenue Bonds, Series 2002A, initially dated as of April 1, 2002 (the "Prior Bonds"). The Series 2002A Bonds were issued pursuant to Minnesota Statutes, Section 475.65 and are payable primarily out of the net revenues (the "Net Revenues") to be derived from the municipal storm sewer utility of the City (the "System"). This Council hereby determines that it is in the best interest of the City to issue its $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 201013 (the "Bonds") for the purpose of (i) currently refunding on February 1, 2011 all of the outstanding Prior Bonds maturing after February 1, 2011 (the "Refunded Bonds"), and (ii) the purchase of capital equipment, including a fire engine and related equipment by the City. The portion of the Bonds issued to refund the Refunded Bonds are referred to as the "Storm Sewer Bonds" and are issued pursuant to the Minnesota Statutes, Section 444.075 and Chapter 475, and the portion of the Bonds issued to finance the purchase of capital equipment by the City are designated as the "Equipment Bonds" and are issued pursuant to Minnesota Statutes, Section 412.301 and Chapter 475. The allocation of the Bonds for this purpose is set forth in Section 2.01 hereof. The amount of the Equipment Bonds does not exceed 0.25 percent of the market value of taxable property in the City. 1.02. Sale of Bonds. The City has retained Ehlers & Associates, Inc., an independent financial advisor, to assist the City in connection with the sale of the Bonds. The Bonds are being sold pursuant to Minnesota Statutes, Section 475.60, Subdivision 2, paragraph (9), without meeting the requirements for public sale under Minnesota Statutes, Section 475.60, Subdivision 1. Pursuant to the Terms and Conditions of Sale for the Bonds, two (2) proposals for the purchase of the Bonds were received at or before the time specified for receipt of proposals. The proposals have been opened and publicly read and considered, and the purchase price, interest rates and true interest cost under the terms of each bid have been determined. The most favorable proposal received is that of Wells Fargo Advisors, of St. Louis, Missouri (the "Purchaser"), to purchase the Bonds at a price of $1,856,267.52, the Bonds to bear interest at the rates set forth in Section 2.01. The proposal is hereby accepted, and the Mayor and the City Manager are hereby authorized and directed to execute a contract on the part of the City for the sale of the Bonds with the Purchaser. The good faith checks of the unsuccessful bidders shall be returned forthwith. 1.03. Performance of Requirements. All acts, conditions and things which are required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed precedent to and in the valid issuance of the Bonds having been done, existing, having happened and having been performed, it is now necessary for this Council to establish the form and terms of the Bonds, to provide security therefor and to issue the Bonds forthwith. Section 2. Form of Bonds. The Bonds shall be prepared in substantially the following form: UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF NEW HOPE GENERAL OBLIGATION CERTIFICATE OF INDEBTEDNESS AND REFUNDING BOND, SERIES 2010B Interest Rate Maturity Date of CUSIP Original Issue February 1, 20_ November 23, 2010 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: DOLLARS THE CITY OF NEW HOPE, Hennepin County, Minnesota (the "City"), acknowledges itself to be indebted and, for value received, hereby promises to pay to the registered owner named above, or registered assigns, the principal amount specified above, on the maturity date specified above, with interest thereon from the date of original issue specified above, or from the most recent interest payment date to which interest has been paid or duly provided for, at the annual rate specified above. Interest hereon is payable on February 1 and August 1 in each year, commencing August 1, 2011, to the person in whose name this Bond is registered at the close of business on the 15th day (whether or not a business day) of the immediately preceding month, all subject to the provisions referred to herein with respect to the redemption of the principal of this Bond before maturity. The interest hereon and, upon presentation and surrender hereof, the principal hereof, are payable in lawful money of the United States of America by check or draft of Bond Trust Services Corporation, in St. Paul, Minnesota, as Bond Registrar, Transfer Agent and Paying Agent (the "Bond Registrar"), or its successor designated under the Resolution described herein. -2- This Bond is one of an issue in the aggregate principal amount of $1,850,000 (the `Bonds"), issued pursuant to a resolution adopted by the City Council on October 25, 2010 (the "Resolution"), for the purpose of refunding bonds issued to finance improvements to the City's storm sewer utility and financing the purchase of capital equipment by the City, and is issued pursuant to and in full conformity with the provisions of the Constitution and laws of the State of Minnesota thereunto enabling, including Minnesota Statutes, Section 444.075 and Section 412.301 and Minnesota Statutes, Chapter 475. The Bonds are issuable only as fully registered bonds in denominations of $5,000 or any multiple thereof, of single maturities. The Bonds of this series are issuable only as fully registered Bonds, in denominations of $5,000 or any multiple thereof, of single maturities. Bonds maturing in the years 2012 through 2018 are payable on their respective stated maturity dates without option of prior payment, but Bonds having stated maturity dates in 2019 and later years are each subject to redemption and prepayment, at the option of the City and in whole or in part, and if in part, in the maturities selected by the City and, within a maturity, in $5,000 principal amounts selected by lot, on February 1, 2018 and on any date thereafter, at a price equal to the principal amount thereof to be redeemed plus accrued interest to the date of redemption. Bonds maturing in the year 2022 shall be subject to mandatory redemption prior to maturity by lot pursuant to the mandatory sinking fund requirements of the Resolution on February 1 in the years and in the principal amounts set forth in the Resolution at a redemption price equal to the stated principal amount thereof to be redeemed plus interest accrued thereon to the redemption date, without premium. Notice of redemption shall be given as provided in the following paragraph. At least thirty days prior to the date set for redemption of any Bond, notice of the call for redemption will be mailed to the Bond Registrar and to the registered owner of each Bond to be redeemed at his address appearing in the Bond Register, but no defect in or failure to give such mailed notice of redemption shall affect the validity of the proceedings for the redemption of any Bond not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of the Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price herein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Bond or portions of Bonds shall cease to bear interest. Upon the partial redemption of any Bond, a new Bond or Bonds will be delivered to the registered owner without charge, representing the remaining principal amount outstanding. The Bonds have been designated by the City as "qualified tax-exempt obligations" pursuant to Section 265(b) of the Internal Revenue Code of 1986, as amended. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Bond Registrar, by the registered owner hereof in person or by his attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar, duly executed by the registered owner or his attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange, the City will -3- cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City and the Bond Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order to make it a valid and binding general obligation of the City in accordance with its terms, have been done, do exist, have happened and have been performed as so required; that, prior to the issuance hereof the City has pledged to the payment of the principal of and interest on the Bonds so much of the net revenues of the City's storm sewer utility as shall be required to pay the principal and interest on the portion of the Bonds issued to refund the bonds issued to finance improvements to the City's storm sewer utility; that, prior to the issuance hereof the City has levied or agreed to levy ad valorem taxes on all taxable property in the City, collectible in the years and amounts required to produce sums not less than 5% in excess of the principal of and interest on the portion of the Bonds issued to finance the purchase of capital equipment as such principal and interest respectively become due, and has appropriated such taxes to the payment of such principal and interest; that if necessary for payment of the principal and interest on this Bond, additional ad valorem taxes are required to be levied upon all taxable property in the City, without limitation as to rate or amount; and that the issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional or statutory limitation of indebtedness. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon shall have been executed by the Bond Registrar by the manual signature of a person authorized to sign on its behalf. IN WITNESS WHEREOF, the City of New Hope, Hennepin County, Minnesota, by its City Council, has caused this Bond to be executed by the signatures of the Mayor and the City Manager and has caused this Bond to be dated as of the date set forth below. City Manager CITY OF NEW HOPE ME Mayor CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. Date of Authentication: BOND TRUST SERVICES CORPORATION, St. Paul, Minnesota, as Bond Registrar a Authorized Representative The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in fall according to applicable laws or regulations: TEN COM — — as tenants in common TEN ENT — — as tenants by the entireties JT TEN — — as joint tenants with right of survivorship and not as tenants in common UNIF TRANS MIN ACT....... Custodian........... (Cust) (Minor) under Uniform Transfers to Minors Act...................... (State) Additional abbreviations may also be used. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: -5- PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: Signature(s) must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Bond Registrar, which requirements include membership or participation in the Securities Transfer Association Medallion Program (STAMP) or such other "signature guaranty program" as may be determined by the Bond Registrar in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. NOTICE: The signature(s) to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration, enlargement or any change whatsoever. [End of Bond Form.] Section 3. Bond Terms, Execution and Delivery. 3.01. Maturities, Interest Rates, Denominations Payment Dating of Bonds. The Bonds shall be designated General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B, shall be originally dated as of November 23, 2010, shall be in the denomination of $5,000 each, or any integral multiple thereof, shall mature on February I in the respective years and amounts stated below, and shall bear interest, computed on the basis of a 360 -day year consisting of twelve 30 -day months, from November 23, 2010 until paid or duly called for redemption at the respective annual rates set forth opposite such years and amounts, as follows: Year Amount Rate Year Amount Rate 2012 $170,000 2.00% 2017 $195,000 2.00% 2013 180,000 2.00 2018 200,000 2.15 2014 185,000 2.00 2019 205,000 2.40 2015 190,000 2.00 2020 205,000 2.60 2016 195,000 2.00 2022 375,000 3.00 The Bonds shall be issuable only in fully registered form. The interest thereon and, upon surrender of each Bond, the principal amount thereof, shall be payable by check or draft issued by the Registrar for the Bonds appointed herein. IM The portion of the Bonds maturing in the following years and amounts constitute the Storm Sewer Bonds: Year Amount Rate Year Amount Rate 2012 $45,000 2.00% 2018 $55,000 2.15% 2013 50,000 2.00 2019 60,000 2.40 2014 50,000 2.00 2020 55,000 2.60 2015 55,000 2.00 2021 60,000 3.00 2016 55,000 2.00 2022 65,000 3.00 2017 55,000 2.00 The portion of the Bonds maturing in the following years and amounts constitute the Equipment Bonds: Year Amount Rate Year Amount Rate 2012 $125,000 2.00% 2017 $140,000 2.00% 2013 130,000 2.00 2018 145,000 2.15 2014 135,000 2.00 2019 145,000 2.40 2015 135,000 2.00 2020 150,000 2.60 2016 140,000 2.00 3.02. Interest Payment Dates. Interest on the Bonds shall be payable on February 1 and August 1 in each year, commencing August 1, 2011, to the owners thereof as such appear of record in the bond register as of the close of business on the fifteenth day of the immediately preceding month, whether or not such day is a business day. 3.03. Registration. The City shall appoint, and shall maintain, a bond registrar, transfer agent and paying agent (the "Registrar"). The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: (a) Re ister. The Registrar shall keep at its principal office a bond register in which the Registrar shall provide for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. (b) Transfer of Bonds. Upon surrender to the Registrar for transfer of any Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until such interest payment date. -7- (c) Exchange of Bonds. Whenever any Bond is surrendered by the registered owner for exchange, the Registrar shall authenticate and deliver one or more new Bonds of a like aggregate principal amount, interest rate and maturity, as requested by the registered owner or the owner's attorney duly authorized in writing. (d) Cancellation. All Bonds surrendered upon any transfer or exchange shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When any Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name any Bond is at any time registered in the bond register as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Bond and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the City upon such Bond to the extent of the sum or sums so paid. (g) Taxes, Fees and Charges. For every transfer or exchange of Bonds (except for an exchange upon a partial redemption of a Bond), the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. (h) Mutilated, Lost, Stolen or Destroyed Bonds. In case any Bond shall become mutilated or be lost, stolen or destroyed, the Registrar shall deliver a new Bond of like amount, number, interest rate, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any such Bond lost, stolen or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Bond lost, stolen or destroyed, upon receipt by the Registrar of evidence satisfactory to it that such Bond was lost, stolen or destroyed, and of the ownership thereof, and upon receipt by the Registrar of an appropriate bond or indemnity in form, substance and amount satisfactory to it, in which both the City and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the City. If the mutilated, lost, stolen or destroyed Bond has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Bond prior to payment. (i) Authenticating Agent. The Registrar is hereby designated authenticating agent for the Bonds, within the meaning of Minnesota Statutes, Section 475.55, Subdivision 1. 3.04. Appointment of Initial Registrar. The City hereby appoints Bond Trust Services Corporation in St. Paul, Minnesota, as the initial Registrar. The Mayor and City Manager are authorized to execute and deliver, on behalf of the City, a contract with Bond Trust Services Corporation, as Registrar. Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized by law to conduct such business, such corporation shall be authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove any Registrar upon thirty (30) days' notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar shall deliver all cash and Bonds in its possession to the successor Registrar. On or before each principal or interest due date, without further order of this Council, the Finance Director shall transmit to the Registrar from the 2010B Improvement Bond Fund described in Section 5 hereof, moneys sufficient for the payment of all principal and interest then due. 3.05. Redemption. (a) Bonds maturing in the years 2012 through 2018 are payable on their respective stated maturity dates without option of prior payment, but Bonds maturing in 2019 and later years are each subject to redemption, at the option of the City and in whole or in part, and if in part, in the maturities selected by the City and, within any maturity, in $5,000 principal amounts selected by the Registrar by lot, on February 1, 2018 and on any date thereafter, at a redemption price equal to the principal amount thereof to be redeemed plus accrued interest to the date of redemption. (b) Bonds maturing in the year 2022 shall be subject to mandatory sinking fund redemption by lot at a redemption price equal to the principal amount of the Bonds to be so redeemed plus interest accrued thereon to the date fixed for redemption, on February 1, in the years and principal amounts set forth below: Year Amount 2021 $60,000 2022* 65,000 *Final Maturity In the event that any Bonds maturing in the year 2022 are redeemed pursuant to (a) above by the City and canceled by the Registrar and not reissued, the Bonds maturing in the year 2022 so redeemed and canceled may be applied by the City as a credit against the Bonds to be redeemed pursuant to this subsection (b), such credit to be equal to the principal amount of the Bonds maturing in the year 2022 so redeemed or canceled provided that the City has notified the Register not less than thirty-five (35) days prior to the redemption date of its election to apply such Bonds as a credit. (c) At least thirty days prior to the date set for redemption of any Bond, the City shall cause notice of the call for redemption to be mailed to the Registrar and to the registered owner of each Bond to be redeemed, but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. The notice of redemption shall specify the redemption date, ME redemption price, the numbers, interest rates and CUSIP numbers of the Bonds to be redeemed and the place at which the Bonds are to be surrendered for payment, which is the principal office of the Registrar. Official notice of redemption having been given as aforesaid, the Bonds or portions thereof so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions thereof shall cease to bear interest. Bonds in a denomination larger than $5,000 may be redeemed in part in any integral multiple of $5,000. The owner of any Bond redeemed in part shall receive without charge, upon surrender of such Bond to the Registrar, one or more new Bonds in authorized denominations equal in principal amount to be unredeemed portion of the Bond so surrendered. 3.06. Preparation and Delivery. The Bonds shall be prepared under the direction of the City Manager and shall be executed on behalf of the City by the signatures of the Mayor and the City Manager; provided that said signatures may be printed, engraved, or lithographed facsimiles thereof. In case any officer whose signature, or a facsimile of whose signature, shall appear on the Bonds shall cease to be such officer before the delivery of any Bond, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such officer bad remained in office until delivery. Notwithstanding such execution, no Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication on such Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on each Bond shall be conclusive evidence that it has been authenticated and delivered under this Resolution. When the Bonds have been so executed and authenticated, they shall be delivered by the City Manager to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Purchaser shall not be obligated to see to the application of the purchase price. 3.07. Securities Depository. (a) For purposes of this Section the following terms shall have the following meanings: "Beneficial Owner" shall mean, whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant, or such person's subrogee. "Cede & Co." shall mean Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Bonds. "DTC" shall mean The Depository Trust Company of New York, New York. "Participant" shall mean any broker-dealer, bank or other financial institution for which DTC holds Bonds as securities depository. "Representation Letter" shall mean the Representation Letter from the City to DTC with respect to the procedures of DTC presently on file with DTC. -10- (b) The Bonds shall be initially issued as separately authenticated fully registered bonds, and one Bond shall be issued in the principal amount of each stated maturity of the Bonds. Upon initial issuance, the ownership of such Bonds shall be registered in the bond register in the name of Cede & Co., as nominee of DTC. The Registrar and the City may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal of or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed, if any, giving any notice permitted or required to be given to registered owners of Bonds under this resolution, registering the transfer of Bonds, and for all other purposes whatsoever; and neither the Registrar nor the City shall be affected by any notice to the contrary. Neither the Registrar nor the City shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any Participant, or any other person which is not shown on the bond register as being a registered owner of any Bonds, with respect to the accuracy of any records maintained by DTC or any Participant, with respect to the payment by DTC or any Participant of any amount with respect to the principal of or interest on the Bonds, with respect to any notice which is permitted or required to be given to owners of Bonds under this resolution, with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or with respect to any consent given or other action taken by DTC as registered owner of the Bonds. So long as any Bond is registered in the name of Cede & Co., as nominee of DTC, the Registrar shall pay all principal of and interest on such Bond, and shall give all notices with respect to such Bond, only to Cede & Co. in accordance with the Representation Letter, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than DTC shall receive an authenticated Bond for each separate stated maturity evidencing the obligation of the City to make payments of principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the Bonds will be transferable to such new nominee in accordance with paragraph (d) hereof. (c) In the event the City determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bonds in the form of bond certificates, the City may notify DTC and the Registrar, whereupon DTC shall notify the Participants of the availability through DTC of Bonds in the form of certificates. In such event, the Bonds will be transferable in accordance with paragraph (d) hereof. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and the Registrar and discharging its responsibilities with respect thereto under applicable law. In such event the Bonds will be transferable in accordance with paragraph (d) hereof. (d) In the event that any transfer or exchange of Bonds is permitted under paragraph (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this resolution. In the event Bonds in the form of certificates are issued to owners other than Cede & Co., its successor as nominee for DTC as owner of all the Bonds, or another securities depository as owner of all the Bonds, the provisions of this resolution shall also apply to all matters relating thereto, including, without limitation, the printing of such Bonds in the form of bond certificates and the method of payment of principal of and interest on such Bonds in the form of bond certificates. -11- Section 4. Redemption of Refunded Bonds. Proceeds of the Bonds are irrevocably appropriated to pay and redeem the Refunded Bonds on February 1, 2011. Section 5. Security Provisions 5.01. 2010B Equipment Account. There is hereby established in the official books and records of the City, a separate General Obligation Bonds, Series 2010B Capital Equipment Account (the "Equipment Account'). The City hereby appropriates to the Equipment Account all proceeds of the Bonds received from the Purchaser allocated to the Equipment Bonds and to pay costs of issuance of the Bonds pursuant to Section 9 hereof. The Equipment Account shall be used solely to pay the costs of capital equipment (as defined in Minnesota Statutes, Section 412.301) having a useful life as long as the terms of the Equipment Bonds, and to pay costs of issuance of the Bonds. After payment of all such costs, the Equipment Account shall be discontinued and any proceeds of the Bonds remaining therein shall be credited to the Equipment Bond Fund described in Section 5.02 hereof. 5.02. 2010B Equipment Bond Fund. So long as any of the Equipment Bonds are outstanding and any principal of or interest thereon unpaid, the Finance Director shall maintain a separate and special bookkeeping fund designated "2010B Equipment Bond Fund" (the "Equipment Bond Fund") to be used for no purpose other than the payment of the principal of and interest on the Equipment Bonds. If the balance in the Equipment Bond Fund is at any time insufficient to pay all interest and principal then due on all bonds payable therefrom, the payment shall be made from any fund of the City which is available for that purpose, subject to reimbursement from the Equipment Bond Fund when the balance therein is sufficient, and the Council covenants and agrees that it will each year levy a sufficient amount to take care of any accumulated or anticipated deficiency, which levy is not subject to any constitutional or statutory tax limitation. 5.03. 2010B Storm Sewer Bond Fund. The Storm Sewer Bonds shall be payable from a separate General Obligation Storm Sewer Bonds, Series 2010B Bond Fund (the "Storm Sewer Bond Fund"), which the City agrees to maintain until the Storm Sewer Bonds have been paid in full. If the moneys in the Storm Sewer Bond Fund should at any time be insufficient to pay principal and interest due on the Storm Sewer Bonds, such amounts shall be paid from other moneys on hand in other funds of the City, which other funds shall be reimbursed therefor from subsequent receipts of Net Revenues appropriated to the Storm Sewer Bond Fund and, if necessary, from the proceeds of the taxes levied for the Storm Sewer Bond Fund. The City Finance Director shall deposit in the Storm Sewer Bond Fund the proceeds of all taxes levied and all other money which may at any time be received for or appropriated to the payment of the Storm Sewer Bonds and interest, including the Net Revenues herein pledged and appropriated to the Storm Sewer Bond Fund, all collections of any ad valorem taxes levied for the payment of the Storm Sewer Bonds, and all other moneys received for or appropriated to the payment of the Storm Sewer Bonds and interest thereon. The City hereby covenants and agrees with the holders from time to time of the Bonds that so long as any of the Storm Sewer Bonds are outstanding, the City will impose and collect reasonable charges for the service, use and availability of the System to the City and its inhabitants according to schedules calculated to produce net revenues which, will be sufficient to -12- pay all principal and interest when due on the Storm Sewer Bonds and all other obligations payable from the Net Revenues. Net Revenues, to the extent necessary, are hereby irrevocably pledged and appropriated to the payment of the principal of the Storm Sewer Bonds and interest thereon on a parity with the existing pledge of the Net Revenues to pay outstanding obligations of the City; provided that nothing herein shall preclude the City from hereafter making further pledges and appropriations of Net Revenues for the payment of additional obligations of the City hereafter authorized if the City Council determines before the authorization of such additional obligations that the estimated Net Revenues will be sufficient, together with any other sources pledged to or projected to be used, for the payment of the principal of and interest on the Storm, Sewer Bonds and paid therefrom and such additional obligations. Such further pledges and appropriations of said Net Revenues may be made superior or subordinate to or on a parity with the pledge and appropriation herein made, as to the application of Net Revenues received from time to time. 5.04. Pledee of Taxing Powers. For the prompt and full payment of the principal of and interest on the Bonds as such payments respectively become due, the full faith, credit and unlimited taxing powers of the City shall be and are hereby irrevocably pledged. In order to produce aggregate amounts not less than 5% in excess of the amounts needed to meet when due the principal and interest payments on the Equipment Bonds, ad valorem taxes are hereby levied on all taxable property in the City, the taxes to be levied and collected in the following years and amounts: Levy Years Collection Years Amount See attached levy calculation The taxes shall be irrepealable as long as any of the Equipment Bonds are outstanding and unpaid, provided that the City reserves the right and power to reduce the tax levies from other legally available funds, in accordance with the provisions of Minnesota Statutes, Section 475.61. Section 6. Defeasance. When all of the Bonds have been discharged as provided in this section, all pledges, covenants and other rights granted by this resolution to the holders of the Bonds shall cease. The City may discharge its obligations with respect to any Bonds which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full; or, if any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued from the due date to the date of such deposit. The City may also discharge its obligations with respect to any prepayable Bonds called for redemption on any date when they are prepayable according to their terms, by depositing with the Registrar on or before that date an amount equal to the principal, interest and redemption premium, if any, which are then due, provided that notice of such redemption has been duly given as provided herein. The City may also at any time discharge its obligations with respect to any Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a bank qualified by law as an escrow agent for this purpose, cash or securities which are -13- "ax Levy Calculation For: City of New Hope, Minnesota $1,850,000 General Dated Date: 11/23/2010 Certificates of Indebtedness and Refunding Bonds, Series 20108 EQUIPMENT PORTION ONLY Levy Year Collect Year Pay Year Total P & I P & I x 105% Net Levy 2010 / 2011 / 2012 156,621.47 164,452.54 164,452.54 2011 / 2012 / 2013 154,097.50 161,802.38 161,802.38 2012 / 2013 / 2014 156,497.50 164,322.38 164,322.38 2013 / 2014 / 2015 153,797.50 161,487.38 161,487.38 2014 / 2015 / 2016 156,097.50 163,902.38 163,902.38 2011 / 2012 / 2013 153,297.50 160,962.38 160,962.38 2016 / 2017 / 2018 155,497.50 163,272.38 163,272.38 2017 / 2018 / 2019 152,380.00 159,999.00 159,999.00 2018 / 2019 / 2020 153,900.00 161,595.00 161,595.00 I mals 1,392,186.47 1,461, 795.79 1,461, 795.79 FREERS & ASSOCIATES INC authorized by law to be so deposited, bearing interest payable at such time and at such rates and maturing or callable at the holder's option on such dates as shall be required to pay all principal, interest and redemption premiums to become due thereon to maturity or said redemption date. Section 7. County Auditor Registration Certification of Proceedings Investment of Money, Arbitrage and Official Statement. 7.01. County Auditor Registration. The City Clerk is hereby authorized and directed to file a certified copy of this Resolution with the County Auditor of Hennepin County, together with such other information as the County Auditor shall require, and to obtain from the County Auditor a certificate that the Bonds have been entered on his bond register and the taxes described in Section 5.07 hereof have been levied as required by law. 7.02. Certification of Proceedings. The officers of the City and the County Auditor of Hennepin County are hereby authorized and directed to prepare and furnish to the Purchaser and to Dorsey & Whitney LLP, Bond Counsel to the City, certified copies of all proceedings and records of the City, and such other affidavits, certificates and information as may be required to show the facts relating to the legality and marketability of the Bonds as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the facts recited therein. 7.03. Covenant. The City covenants and agrees with the registered owners of the Bonds, that it will not take, or permit to be taken by any of its officers, employees or agents, any action which would cause the interest payable on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the "Code") and Regulations promulgated thereunder (the "Regulations") as are enacted or promulgated and in effect on the date of issuance of the Bonds, and covenants to take any and all actions within its powers to ensure that the interest on the Bonds will not become includable in gross income of the recipient under the Code and the Regulations. The facilities financed by the Bonds shall at all times during the term of the Bonds be owned and maintained by the City and the City shall not enter into any lease, use agreement, management agreement, capacity agreement or other agreement or contract with any nongovernmental person relating to the use of the facilities financed by the Bonds, or security for the payment of the Bonds which might cause the Bonds to be considered "private activity bonds" or "private loan bonds" pursuant to Section 141 of the Code. 7.04. Arbitrage Rebate. For purposes of complying with the requirements of Section 148(f)(4)(C) of the Code relating to the exemption of certain small governmental units from the rebate requirements of the Code, the City represents that: (i) the City is a governmental unit with general taxing powers; (ii) the Equipment Bonds are not "private activity bonds" as defined in Section 141 of the Code (Private Activity Bonds);ninety-five percent of the net proceeds of the Bonds are to be used for the local governmental purposes of the City; and -14- (iii) the aggregate face amount of all tax-exempt bonds (other than Private Activity Bonds and any refunding bonds not taken into account under Section 148(1)(D)(iii) of the Code) issued by the City in calendar year in which the Equipment Bonds are to be issued is not reasonably expected to exceed $5,000,000. Therefore, pursuant to the provisions of Section 148(f)(4)(C) of the Code, the City shall not be required to comply with the arbitrage rebate requirements of paragraphs (2) and (3) of Section 148(f) of the Code with respect to the Equipment Bonds. It is hereby determined that the Bonds issued to refund the Refunded Bonds qualify for the "small issuer' exemption from arbitrage rebate set forth in Section 148(f)(4)(D) of the Code, as modified by Section 148(f)(4)(D)(v) of the Code since: (i) the Refunded Bonds qualified for the exception from arbitrage rebate provided by Section 148(f)(4)(D)(i) of the Code; (ii) the aggregate face amount of the bonds issued to refund the Refunded Bonds does not exceed $5,000,000; (iii) the average maturity of the Bonds issued to refund the Refunded Bonds does not exceed the remaining weighted average maturity of the Refunded Bonds; and (iv) no Bond has a maturity date which is later than the date which is 30 years after the date the Refunded Bonds were issued. Therefore, pursuant to the provisions of Section 148(f)(4)(D) of the Code, the City shall not be required to comply with the arbitrage rebate requirements of paragraphs (2) and (3) of Section 148(f) of the Code with respect to the portion of the Bonds issued to refund the Refunded Bonds. 7.05. Interest Disallowance. The City hereby designates the Bonds as "qualified tax- exempt obligations" for purpose of Section 265(b) of the Code relating to the disallowance of interest expenses for financial institutions. The City represents that in calendar year 2010 it does not reasonable expect to issue tax-exempt obligations which are not private activity bonds (not treating qualified 501(c)(3) bonds under Section 145 of the Code as private activity bonds for purposes of this representation) in an amount in excess of $30,000,000, excluding any tax- exempt obligations which are refundings of a "qualified tax-exempt obligation" which are not taken into account for this purpose under Section 265(b)(3)(D)(ii) of the Code. 7.06. Official Statement. The Official Statement relating to the Bonds, dated October 14, 2010, prepared and distributed on behalf of the City by Ehlers & Associates, Inc., is hereby approved. Ehlers & Associates, Inc., is hereby authorized of behalf of the City to prepare and distribute to the Purchaser a supplement to the Official Statement listing the offering price, the interest rates, other information relating to the Bonds required to be included in the Official Statement by Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. Within seven business days from the date hereof, the City -15- shall deliver to the Purchaser 30 copies of the Official Statement and such supplement. The officers of the City are hereby authorized and directed to execute such certificates as may be appropriate concerning the accuracy, completeness and sufficiency of the Official Statement. The officers of the City are hereby authorized and directed to execute such certificates as may be appropriate concerning the accuracy, completeness and sufficiency of the Official Statement. Section 8. Continuing Disclosure. (a) Purpose and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit the original purchaser and other participating underwriters in the primary offering of the Bonds to comply with amendments to Rule 15c2-12 promulgated by the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2-12), relating to continuing disclosure (as in effect and interpreted from time to time, the "Rule"), which will enhance the marketability of the Bonds, the City hereby makes the following covenants and agreements for the benefit of the Owners (as hereinafter defined) from time to time of the Outstanding Bonds. The City is the only "obligated person" in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. If the City fails to comply with any provisions of this Section 8, any person aggrieved thereby, including the Owners of any Outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of any agreement or covenant contained in this Section 8, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder to the extent permitted by law. Notwithstanding anything to the contrary contained herein, in no event shall a default under this Section 8 constitute a default under the Bonds or under any other provision of this resolution. As used in this Section 8, "Owner" or `Bondowner" means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any "Beneficial Owner" (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, `Beneficial Owner" means, in respect of a Bond, any person or entity which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of the Bond for federal income tax purposes. As used herein, "Outstanding" when used as of any particular time with reference to Bonds means all Bonds theretofore, or thereupon being, authenticated and delivered by the Registrar under this Resolution except (i) Bonds theretofore canceled by the Registrar or surrendered to the Registrar for cancellation; (ii) Bonds with respect to which the liability of the City has been discharged in accordance with Section 6 hereof; and (iii) Bonds for the transfer or exchange or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Registrar pursuant to this Resolution. 16- (b) Information To Be Disclosed. The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: (1) on or before 365 days after the end of each fiscal year of the City, commencing with the fiscal year ending December 31, 2011 the following financial information and operating data in respect of the City (the "Disclosure Information"): (A) the audited financial statements of the City for such fiscal year, accompanied by the audit report and opinion of the accountant or government auditor relating thereto, as permitted or required by the laws of the State of Minnesota, containing balance sheets as of the end of such fiscal year and a statement of operations, changes in fund balances and cash flows for the fiscal year then ended, showing in comparative form such figures for the preceding fiscal year of the City, prepared in accordance with generally accepted accounting principles promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under Minnesota law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof, and certified as to accuracy and completeness in all material respects by the fiscal officer of the City; and (B) To the extent not included in the financial statements referred to in paragraph (A) hereof, the information for such fiscal year or for the period most recently available of the type set forth below, which information may be unaudited, but is to be certified as to accuracy and completeness in all material respects by the City's financial officer to the best of his or her knowledge, which certification may be based on the reliability of information obtained from governmental or third party sources: • Current Property Valuations • Direct Debt • Tax Levies and Collections • Population Trend • Employment/Unemployment Notwithstanding the foregoing paragraph, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within 10 days after the receipt thereof, the City shall provide the audited financial statements. -17- Any or all of the Disclosure Information may be incorporated by reference, if it is updated as required hereby, from other documents, including official statements, which have been submitted to each of the repositories hereinafter referred to under subsection (b) or the SEC. if the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The City shall clearly identify in the Disclosure Information each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be a Material Fact (as defined in paragraph (2) hereof), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this Section 8 is amended as permitted by this paragraph (b)(1) or subsection (d), then the City shall include in the next Disclosure Information to be delivered hereunder, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner, notice of the occurrence of any of the following events which is a Material Fact (as hereinafter defined): (A) Principal and interest payment delinquencies; (B) Non-payment related defaults; (C) Unscheduled draws on debt service reserves reflecting financial difficulties; (D) Unscheduled draws on credit enhancements reflecting financial difficulties; (E) Substitution of credit or liquidity providers, or their failure to perform; (F) Adverse tax opinions or events affecting the tax-exempt status of the security; (G) Modifications to rights of security holders; (H) Bond calls; (I) Defeasances; (J) Release, substitution, or sale of property securing repayment of the securities; and (K) Rating changes. As used herein, a "Material Fact' is a fact as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to I" buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed hereunder or information generally available to the public. Notwithstanding the foregoing sentence, a "Material Fact' is also an event that would be deemed "material" for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information required under paragraph (b)(1) at the time specified thereunder; (B) the amendment or supplementing of this Section 8 pursuant to subsection (d), together with a copy of such amendment or supplement and any explanation provided by the City under subsection (d)(2); (C) the termination of the obligations of the City under this Section 8 pursuant to subsection (d); (D) any change in the accounting principles pursuant to which the financial statements constituting a portion of the Disclosure Information are prepared; and (E) any change in the fiscal year of the City. (c) Manner of Disclosure. The City agrees to make available the information described in subsection (b) as follows: (1) The City agrees to make available to the MSRB, in an electric format as prescribed by the MSRB from time to time, the information described in subsection (b). (2) The City further agrees to make available, by electronic transmission, overnight delivery, mail or other means, as appropriate, the information described in subsection (b) to any rating agency then maintaining a rating of the Bonds at the request of the City and, at the expense of such Bondowner, to any Bondowner who requests in writing such information, at the time of transmission under paragraph (1) of this subsection (c), or, if such information is transmitted with a subsequent time of release, at the time such information is to be released. (3) All documents provided to the MSRB pursuant to this subsection (c) shall be accompanied by identifying information as prescribed by the MSRB from time to time. -19- (d) Term; Amendments; Interpretation (1) The covenants of the City in this Section 8 shall remain in effect so long as any Bonds are Outstanding. Notwithstanding the preceding sentence, however, the obligations of the City under this Section 8 shall terminate and be without further effect as of any date on which the City delivers to the Registrar an opinion of Bond Counsel to the effect that, because of legislative action or final judicial or administrative actions or proceedings, the failure of the City to comply with the requirements of this Section 8 will not cause participating underwriters in the primary offering of the Bonds to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended, or any statutes or laws successory thereto or amendatory thereof. (2) This Section 8 (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (c)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of the City Council filed in the office of the City Clerk of the City accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that: (i) such amendment or supplement (a) is made in connection with a change in circumstances that arises from a change in law or regulation or a change in the identity, nature or status of the City or the type of operations conducted by the City, or (b) is required by, or better complies with, the provisions of paragraph (b)(5) of the Rule; (ii) this Section 8 as so amended or supplemented would have complied with the requirements of paragraph (b)(5) of the Rule at the time of the primary offering of the Bonds, giving effect to any change in circumstances applicable under clause (i)(a) and assuming that the Rule as in effect and interpreted at the time of the amendment or supplement was in effect at the time of the primary offering; and (iii) such amendment or supplement does not materially impair the interests of the Bondowners under the Rule. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) This Section 8 is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so as to satisfy the requirements of paragraph (b)(5) of the Rule. -20- Section 9. Authorization of Payment of Certain Costs of Issuance of the Bonds. The City authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses to Resource Bank & Trust Company, Minneapolis, Minnesota, on the closing date for further distribution as directed by the City's financial advisor, Ehlers & Associates, Inc. Attest: Mayor City Clerk The motion for the adoption of the foregoing resolution was duly seconded by Councilmember Hoffe, and upon vote being taken thereon, the following voted in favor thereof: Hemken, Elder, Hoffe, Lammle and Stauner; and the following voted against the same: none; whereupon said resolution was declared duly passed and adopted, and was signed by the Mayor which signature was attested by the City Clerk. -21- COUNTY AUDITOR'S CERTIFICATE AS TO REGISTRATION OF BONDS AND TAX LEVY CITY OF NEW HOPE, MINNESOTA I, the undersigned, being the duly qualified and acting County Auditor of Hennepin County, Minnesota, hereby certify that there has been filed in my office a certified copy of a resolution of the City Council of the City of New Hope, in said County, adopted October 25, 2010, awarding the sale, fixing the form and details and providing for the execution, delivery and security of $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B, of the City, to be dated, as of November 23, 2010 and levying taxes for the payment of principal of and interest on said Bonds. I further certify that said Bonds have been entered on my bond register and the tax required by law for payment of the Bonds has been levied and filed, as required by Minnesota Statutes, Sections 475.61 to 475.63. WITNESS my hand and official seal this 1--2 day of 2010. ©EPL" Hennepin County Auditor (SEAL) A Debt Issuance Services Closing Memorandum City of New Hope, Minnesota $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B Dated: November 23, 2010 it EHLERS LEADERS IN PUBLIC FINANCE Uosing Memorandum TO: Steve McDonald, smcdonald@aemcpas.com Kirk McDonald, krnedonald@ci.new-hope.mn.us FROM: Bruce Kimmel and Debbie Holmes DATE: November 19, 2010 SUBJECT: City of New Hope, Minnesota $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B Date of Bonds: November 23, 2010 Following are details regarding the closing for the above issue. Please call if you have any questions. Closing Date: November 23, 2010 Wire Instructions In connection with the above closing, proceeds will be wired by the purchaser, Wells Fargo Advisors, as follows: Wire Instructions Amount Wired I) Wells Fargo Bank, N.A., Minneapolis, MN, ABA No. 091000019 for credit: $1,824,277.52 City of New Hope Acct No. 8021134 2) KleinBank, 1550 Audubon Road, Chaska, Minnesota, ABA No. 091915654 for 31,990.00 credit: Ehlers & Associates Bond Issuance Account No. 3183595.' Total Proceeds $1,856,267.52 KleinBank will issue checks to pay the issuance costs listed on the following page. Closing Memorandum for City of New Hope. Minnesota $1,550,000 General Obligation Certificates of Indebtedness and Refunding Bonds. Series 20108 Page 1 Calculation and Distribution of Net Proceeds Calculation of Net Proceeds Par Amount of the Bonds $1,850,000.00 Plus: Underwriter's Premium' 6,267.52 Less: Costs of Issuance` Ehlers & Associates, Inc. (Financial Advisor) $21,000.00 Dorsey & Whitney LLP (Bond Counsel) 6,500.00 Standard & Poors (Rating Agency) 3,840.00 Bond Trust Services Corporation (Paying Agent) 650.00 Total Costs of Issuance (31,990.00) Net Proceeds $1,824.277.52 Distribution of Net Proceeds Deposit to Equipment Account $1,229,414.41 Deposit to Current Refunding Fund 594,863.11 Distribution of Net Proceeds $1,824.277.52 The Underwriter's Premium is calculated by taking the Reoffering Premium of $22,400.25 and subtracting the Underwriter's Discount of $16,132.73. KleinBank will pay the costs of issuance from the proceeds wired to them. �) Closing Memorandum for City of New Hope. Minnesota $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010E Page 2 Debt Service Payments for the $850,000 General Obligation Storm Sewer Revenue Bonds, Series 2002A On February 1, 2011, the City will use a portion of the net proceeds of the Series 201013 Bonds to redeem the 2012 through 2022 maturities of the $850,000 General Obligation Storm Sewer Revenue Bonds, Series 2002A. The City will make the scheduled debt service payment due on February 1, 2011 from the Debt Service Fund for the Series 2002A Bonds. Debt Service Payments for the $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B Source of Payment The Bonds are general obligations of the City for which its full faith, credit and taxing powers are pledged without limitation as to rate or amount. Principal and interest on the Refunding Portion of the Bonds will be paid entirely from net revenues of the storm sewer system which is owned and operated by the City. Principal and interest on the Equipment Portion of the Bonds will be paid from ad valorem property taxes levied in an amount sufficient to provide not less than 105% of principal and interest on the Equipment Portion of the Bonds. Should the revenues pledged for payment of the Bonds be insufficient to pay the principal and interest as the same shall become due, the City is required to pay maturing principal and interest from moneys on band in any other fund of the City not pledged for another purpose and/or to levy a tax for this purpose upon all the taxable property in the City, without limitation as to rate or amount. A copy of the Bond Resolution will be included in the Bond Issue Summary Book which will be provided to you after the closing. Schedule of Principal and Interest Payments The Schedule of Principal and Interest Payments including respective CUSIP numbers as well as the Tax Levy Calculation follows this memorandum. Payment Instructions for Obligations Issued in Book -Entry -Only Form with a Paying Agent The Bonds have been issued in 'Book -Entry -Only" form, and the City has named Bond Trust Services Corporation of Roseville, Minnesota to be the Paying Agent for the Bonds. Therefore, on a semi-annual basis the City will be invoiced by the Paying Agent for the interest and on an annual basis for the principal coming due on the Bonds. In addition, the City will be invoiced for paying agent/transfer agent charges on a regularly scheduled basis. If you have any questions regarding the closing, the calculation and use ofproceeds, or debt service payments, please call Bruce Kimmel or Debbie Holmes at (651) 697-8500. Closing Memorandum for City of New Hope. M'.^:nesota &1.050.000 General Obligation Certificates of Indebtedness and Refunding Bonds. Series 2010B Page 3 n o o O O o 0 0 0 3 a N N N N N N o o y N O V n O N V M m N f0 V f0 M 1p m 10 N m ry 6 « N N N N N N N N N N N h N N O o 0 0 O O O n P n n n n n n n n n n n n n n o y d N N W OJ W M OJ nJ M M N W OJ N M O O E b N me a}vvrnov evv a arnm NN m M O O (O !p N N t0 l0 N Ol � a w _ n o S S o S S (D o S N N m v a` E d N O O O O O O O O O O N d N y N N N N N N O O O O Q p n N N N N N N O O O O p y O O O O O O N N N N C ~ (O O W N (O n W A r c] N N x � n D m C r N N N N N N N N N N N 10 N O O O O O O O O N W N N N N N N N N N N N N N O O O O O O O O p w N y N O N N O O N N O O V V D7 N M O O O O O O O O O O O O O O O O O O O O O O O O O O co O O O O O O O O O /1 G e z O O 6 w v N X Y N Q m U O W (7 N N R N 3 L N N A m b m m m m U U U U U U y U a « N d m o 0 0 0 0 0 0 0 0 o m y N o 0 0 0 0 0 0 0 o O m d N O O O O O O O O O O M y jp y N Cl! O O O O O O O N N N V J q N(O O) N M O O n O] M d— jL H N N N N N N N N N O N O J O U N O z O O O O O O O O O O O O O O O O O O O O O O 0) V c0 O O O O O O O O O O O O O O O O O O O O O N � N O O O O O O O O O O O O O O oMNNNmrnm oo.- Oo�p �nmwrnm m H dey � orooi i6 v v riw� moi oir �.iom� ui v y � N g N y `o a m TQ 9 9 m Z q > N d m O O O O O O O O O O O O O O O O O O O O O n C N O O O O O O O O O O O O O O O O O O O O O W O 'p woo ..... O O O O O O O O O O N N N N N m C (O O O O O O N N N N O O N N O OV V n n n n V d u rnmIp�NNrnmoo� ooN�nmNrnm m E m � oai Ngo coa v�+i oi� moi oir r� 6v.-.- v y y C N d C 9 q d N 9 O O O O O O O O O O O L C m S S S S S S r d w S S « R � y > T o d m o 0 0 0 0 0 0 0 0 0 0 o a N U O O O O O O O O O O O O A p � O� O� O� O� O� OOO'O Y d O" O S S S S S S S O O S O U O O N O N N O m m O N O C p N N T O) O) O O O N N NW L d O a N N N � d G = d c '-Do A fir. c E b m W: �: N z N n n m N m rn o o Q � N c Jo d E q ` — N N N N N 2= $ d j� A 9 W N W N m N� (� � N N N� N W N W N W N N N d b W• is a o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 w 5 o n a m U w fax Levy Calculation For: of New Hope, Minnesota ,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B Dated Date: 11/23/2010 EQUIPMENT PORTION ONLY Levy Collect Pay Total P & I Net Year Year Year P &I x 105% Levy 2010 / 2011 / 2012 156,621.47 164,452.54 164,452.54 2011 / 2012 / 2013 154,097.50 161,802.38 161,802.38 2012 / 2013 / 2014 156,497.50 164,322.38 164,322.38 2013 / 2014 / 2015 153,797.50 161,487.38 161,487.38 2014 / 2015 / 2016 156,097.50 163,902.38 163,902.38 2011 / 2012 / 2013 153,297.50 160,962.38 160,962.38 2016 / 2017 / 2018 155,497.50 163,272.38 163,272.38 2017 / 2018 / 2019 152,380.00 159,999.00 159,999.00 2018 / 2019 / 2020 153,900.00 161,595.00 161,595.00 Totals 1,392,186.47 1,461, 795.79 1,461, 795.79 FREERS 6 ASSOCIATES INC $1,850,000 G.O. Certificates of Indebtedness & Refunding Bonds, Series 2010 Issue Summary - New Money & Current Refunding of 1 $850,000 G.O. Storm Sew Project Summary Dated 11123/2010 1 Delivered 11123/2010 Cur Ref Issue 2002 New Money Summary Total Sources $611,227.75 $1,261,172.50 $1,872,400.25 Uses Of Funds Total Underwriter's Discount (0.872%) 5,275.84 10,856.89 16,132.73 Costs oflssuance 11,088.80 20,901.20 31,990.00 Deposit to Project Construction Fund - 1,229,414A1 1,229,414.41 Deposit to Current Refunding Fund 594,863.11 - 594,863.11 Total Uses $611,227.75 $1,261,172.50 $1,872,400.25 Flow of Funds Detail State and Local Government Series (SLGS) rates for 10/25/2010 Date of OMP Candidates Primary Purpose Fund Solution Method Net Funded Net Funded Net Funded Total Cost of Investments S594,863.11 $1,229,414.41 $1,824,277.52 Interest Earnings Ca, 136.89 - 136.89 Total Draws $595,000.00 $1,229,414.41 $L824,414.41 PV Analysis Summary (Net to Net) Cashllt��c Sup ins , 77,268.9_7 - - NetPV NetPreseutAalucBenchi - --$77,268.97-�- - - Bond Yield for Arbitrage Purposes Net PV Benefit / - Refunded Principal 12.986%Net PV Benefit / - Refunding Principal 12.772% - - 14457081% 11283295% 2244981 Bond Statistics All nclusive Cost (AIC) Average Life 6.462 Years 5.325 Years 5.697 Yeats Average Coupon 2.4854315% 2.2199513% 2.3184229% Net Interest Cost(NIG) 2.4610814% 2.1397782% 2.2589556% Bond Yield for Arbitrage Purposes 2.0806219% 2.0806219% 2.0806219% True Interest Cost (TIC) 14457081% 11283295% 2244981 1 % All nclusive Cost (AIC) 2.7615443% 2.4697780% 2.5767959% 10xover Ser02A$850MG0 I Issue Summary 1 11/5/2010 1 8:19AM $1,850,000 G.O. Certificates of Indebtedness & Refunding Bonds, Series 2010 Issue Summary - New Money & Current Refunding of 1 $850,000 G.O. Storm Sew Debt Service Schedule Date Principal Coupon Interest Total P+l Fiscal Total 11/23/2010 - - - - - 08/01/2011 - - 27,968.89 27,96889 - 02/01/2012 170,000.00 2.000% 20,300.00 190,300.00 218,268.89 08/01/2012 - - 18,600.00 18,600.00 - 02/01/2013 180,000.00 2.000% 18,600.00 198,60(.00 217,200.00 08/01/2013 - - 16,800.00 16,800.00 - 02/01/2014 185,000.00 2.000% 16,800.00 201.800.00 218,600.00 08/01/2014 - - 14 950.00 14 950.00 - 02/01/2015 190,000.00 2000% 14950.00 204,950.00 219,900.00 08/01/2015 - - 13.050.00 13,050.00 - 02/01/2016 195'000f)0 2.000% 13,050.00 208,050.00 221,100.00 08/01/2016 - - 11,100.00 11.100.00 - 02/UI!2017 195,000.00 2.000% 117100.00 206,100.00 217,200.00 08/01/2017 - - 9,150.00 9,15000 - 02/01/2018 200,000.00 2.150% 9,150.00 209,150100 218,300.00 08/01/2018 - - 7,000.00 7,000.00 - 02/01/2019 205,000.00 2.400% 7,000.00 212,000.00 219,000.00 08/01/2019 - - 4,540.00 4,540.00 - 02/01/2020 205,000.00 2.600% 4,540.00 209,540.00 214,080.00 08/01/2020 - - 1,875.00 1,875.00 - 02/01/2021 60,000.00 3.000% 1,875.00 61,875.00 63,750.00 08/01/2021 - - 975.00 975.00 - 02/01/2022 65,000.00 3.000% 975.00 65,975.00 66,950.00 Total $1,850,000.00 - $244,348.89 $2,094,348.89 - Yield Statistics Bond Year Dollars _ _ _ $ tO,539.44 Average Life _ _ 5.697 Years Average Coupon 2.3184229% Net Interest Cost (NIC) 2.2589556% rive Interest Cost (TIC) _ 2 244981I% Bond Yield for Arbitrage Purposes _ 2.0806219% All Inclusive Cost (-AIC) _ 2.5767959% IRS Form 8038 Net Interest Cost 2.0904804% Weighted Average Maturity 5.670 Years New HODe. MN $605,000 - Purpose One Current Refunding of I $850,000 G.O. Stonn Sewer Revenue Bonds, Series 200 Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 11/23/2010 - - - - - 08/01/2011 - - 9,646.17 9.646.17 - 02/012012 45,000.00 2.000% 7,001.25 52,001.25 61,647.42 08/01/2012 - - 6,551.25 6,551.25 - 02/01/2013 50,000.00 2.000% 6,551.25 56.551.25 63,102.50 _08/01/2013 - - 6,051.25_ 6,051.25 - 02/01/2014 50,000.00 2.000% 6,051.25 56,051.25 62,102.50 08/01/2014 - - 5,551.25 5,551.25 - 02/01/2015 55,000.00 2.000% 5,551.25 60,551.25 66,102.50 08/01/2015 - - 5,001.25 5,001.25 - 02/01/2016 55,000.00 2900% 5,001.25 60,001.25 65,002.50 08/01/2016 - - 4,451.25 4,451.25 - 02/01/2017 55,000.00 2900% 4,451.25 59,451.25 63,902.50 08/01/2017 - - 3,901.25 3,901.25 - 02/01/2018 55,000.00 2.150% 3,901.25 58901.25 62,802.50 08/01/2018 - - 3,310.00 3,310.00 - 02/01/2019 60,000.00 2.400% 3,310.00 63,310.00 66,62090 08/01/2019 - - 2,590.00 2,590.00 - 02/01/2020 55,000.00 2.600% 2,590.00 57,590.00 _ 60,180.00 08/01/2020 - - 1,875.00 1,875.00 - 02/01/2021 60,000.00 3.000% 1,875.00 61,875.00 63,750.00 08/01/2021 - - 975.00 975.00 - 02/01/2022 65,000.00 3.000% 975.00 65,975.00 66950.00 Total $605,000.00 - $97,162.42 $702,162.42 - Bond Year Dollars Net Interest Cost (NIC) rive Interest Cost (TIC) Bond Yield for Arbitiage Purposes All Inclusive Cost (A1C) 53,909.28 6.462 Years 2.4854315% _ _2.4610814% 2.4457081 — 2.0806219% 2.7615443% IRS Form 8038 Net Interest Cost 2,3132433% Weighted Avenge Maturity 6.431 Years in xnvAr Ser mA SM0M (;n i r�,r aaranns i w snm n i a 14 AM New Hone, MN $605,000 - Purpose One Current Refunding of I $850,000 G.O. Storm Sewer Revenue Bonds, Series 200 Debt Service Comparison Net New Date Total P+I D/S Old Net D/S Savings 02/01/2011 - - - - 02/002012 61,647.42 61,647.42 69,745.011 8,097-58 02/01/2013 63.102.50 63,102.50 72,945.00 9,842.50 02/01/2014 62,102.50 62,102.50 70,875.0(] 8,772.50 02'01/2015 66,102.50 66,102.50 73,760.00 7,657.50 02/01/2016 65,002.50 --� 65,002.50 71,260.00 6,257.50_ 02/01/2017 6390 02.5- 63,902.50 73,760.00 _ 68 5o 112/01/2018 62,802.50 62,802.50 71,010.00 8.207.50 02/01/2019 66,620.00 66,620.00 73.260.00 6,640.00 02/01/2020 60-180.00 60,180.00 70,140.00 9,960.00 02/01/2021 63.750.00 63,750.00 72,020.00 8,270.00 6,646,66 Total $702,162.42 $702,162.42 $792,415.00 $90,252.58 PV Analysis Summary (Net to Net) Net PV Cashflow Savings a/ 2.762%(A1C) _ 77,268.97 Net Present Value Benefit $77,268.97 Net PV Benefit/ $595,000 Refunded Rincipal 12.986% Net PV Benefit / $605,000 Refunding Rincipal 12.772% Refunding Bond Information Refunding Dated Date 1 023/2010 Refunding Delivery Date 11/23/2010 10 xaver Ser 02A $850M GO I Cur Ref 2002 1 11/5/2010 1 8:19 AM & Associates, Inc. LeadersEhlers • ,g- New Hope, MN $605,000 - Purpose One Current Refunding of 1 $850,000 G.O. Storm Sewer Revenue Bonds, Series 200 Current Refunding Escrow Cash Date Principal Rate Interest Receipts Disbursements Balance 11/23/2010 - - - 0.11 - 0.11 02/01/2011 594,863.00 n.11a°„ 136.89 594,999-89 595,000.00 - Total $594,863.00 - $136.89 $595,000.00 $595,000.00 - Investment Parameters Investment Model [PV, GIC, o_r Securities] _ Securities _ Default investment yield target _ _ _ _ _ _ Unrestricted 1 Cash Deposit___ 0.11 Cost oflnvestrnents Purchased with Bond Proceeds _ _ _ _ _ 594,863.00 Total Cost of Investments $594,863.11 Target Cost of Investments at bond yield_ _ $592,678.23 Actual positive cu (negative) arbitrage _ _ _._ (2,184.88) Yield to Receipt_ 0.1218514% _ _ Yield for Arbitrage Purposes __ _ _ _ 2.0806219% _- State and Local Govennnem Series (SLGS) rates for - 10/25/2010 10 xover Ser 02A $850M G0 I Cur Ret2002 1 11/5/2010 1 8:19 AM New Hope, MN $605,000 - Purpose One Current Refunding of 1 $850,000 G.O. Storm Sewer Revenue Bonds, Series 200 PROOF OF GLOSS D/S SAVINGS @ 2.7615443% NEW OLD Present Date GROSS D/S GROSS D/S SAVINGS PV Factor Value 02/01/2011 - - - 1.000000Ox - 02/01/2012 61,647.42 69,745.00 8,097.58 0.9679188x 7,907.65 02/01/2013 63.102.50 72 945.00 9,842.50 0.941 7329x 9,365.51 02/01/2014 62,102.50 70.875.00 8,772.50 0.9162554x 8,124.97 02/01/2015 66.102.50 73,760.00 7,657.50 0.8914672x 6,904.31 02/01/2016 65,002.50 71,260.00 6,257.50 0.8673496x _5,494.85 02/01/2017 63 902.50 73.760.00 9,857.50 0.8438844x 8.376.02 02/01/2018 62,802.50 71.010.00 8,207.50 0.8210541x 6,785.33 02'01/2019 66,620.00 73,260.00 6,640.00 0.7988415x 5,340.93 02/01/2020 60,180.00 70,140.00 9,960.00 0.7772297x 7,767.82 02/01/2021 63,750.00 72,020.00 8,270.00 0.7562027x 6,270.87 02/01/2022 66,950.00 73.640.00 6,690.00 0.7357445x _ 4,930.72 Total $702,162.42 $792,415.00 $90,252.58 - $77,268.97 Total Refunded Date Principal Coupon Interest Total P+I Fiscal Total 08/012011 - - 14,872.50 14,872.50 - 02/01/2012 40.000.00 4.500% 14,87250 54,872.50 69,745.00 08/012012 - - 13 972.50 13,972.50 - 02/01/2013 45,000.00 4.600% 13972.50 58,972.50 72,945.00 08/012013 - - 1293250 12,937.50 - 0_2/01/20_14 45,000.00 4.700% 12,937.50 57,937.50 -� -- -- 70,875.00 - --- 08/01/2014 - - 11,880.00 11,88000 - 02/01/2015 50,000.00 5.000% 11,880.00 61.88000 73,760.00 08/01/2015 - - 10,630.00 10,63000 - 02/01/2016 50,000.00 5.000% 10,630.00 6463000 71,260.00 08/01/2016 - - 9,380.00 9,380.00 - _02/01/2017 _ _ _ _5.5,00090 5.000% 9,380.00 _ 64.380.00 73,760.00 08/01/2017 - - 8.005.00 8.005.00 - 02/01/20I8 55,000.00 5.000% 8,005.00 63.005.00 71,010.00 08/01/2018 - - 6,630.00 6,630.00 - 02/01/2019 60,000.00 5.200% 6,630.00 66,630.00 73,260.00 08/01/2019 - - 5,070.00 5,070.00 - 02/01/2020 60.0.00.00 5.200% 5,070.00 65,070.00 70,140.00 08/01/2020 - - 3,510.00 3,510.00 - 02/01/2021 65,000.00 5.200% 3,51090 68,510.00 72,020.00 08/01/2021 - - 1,820.00 1,820.00 - 02/01/2022 70,000.00 5.200% 1,820.00 71,820.00 73,640.00 Total $595,000.00 - $197,415.00 $792,415.00 - Yield Statistics Base date Ibr Avg. Life & Avg. Coupon Calculation 11/23/2010 A, cia^, Li lc 6.693 Years Acamgc Coupon 4.9572005% Weighted Average Matuity (Par Basis) 6.693 Years Refunding Bond Information NzluoI'm a Dui,d Dotc 11/23/2010 Rrlw.. D,Iic,n Dal, 11/23/2010 Ser 02A $85DM GO Stm Swr I SINGLE PURPOSE 1 1115/2010 1 8:19 AM New Hope, MN $850,000 G.O. Storm Sewer Revenue Bonds, Series 2002A Debt Service To Maturity And To Call Refunded Refunded Date Bonds D/S To Call Principal Coupon Interest DIS 02/01/2011 595,000.00 595,000.00 - - - - 02/01/2012 - - 40,000.00 4.500% 29,745.00 69,745.00 02/01/2013 - - 45,000.00 4.600% 27,945.00 72945.00 02/01/2014 - - 45,000.00 4.700% 25,875.00 70.875.00 02/01/2015 - - 50,000.00 5.000% 23,760.00 73.760.00 02/01/2016 - - 50,000.00 _.. 5.000% 21,260.00 71260M - _ - 02/01/2017 - - 55,000.00 -_.. --__ 5.000% 18,760.00 _._ 73.760.00 02/01/2018 - - 55,000.00 5.000% 16,010.00 71,010.00 02/01/2019 - - 60,000.00 5.200% 13,260.00 73,260.00 02/01/2020 - - 60,000.00 5.200% 10,140.00 70,140.00 02/01/2021 - - 65,000.00 5.200% 7,020.00 72,020.00 02/01/2022 - - 70,000.00 5.200% 3,640.00 73,640.00 Total $595,000.00 $595,000.00 $595,000.00 - $197,415.00 $792,415.00 Yield Statistics Base date for Avg. Life & Avg. Coupon Calculation 11/23/2010 Average Lite 6.693 Yeats A, enwe Coupon 4.9572005% W'11"htcd .AN el'nge Ma1LII lir 1 Put Basis) 6.693 Yeats Refunding Bond Information Refunding Dated Date 11/23/2010 Refunding Delivery Date 11/23/2010 Ser 02A $850M GO Stta Swr I SINGLE PURPOSE 1 11/5/2010 1 8:19 AM New Hope, MN $605,000 - Purpose One Current Refunding of 1 $850,000 G.O. Storm Sewer Revenue Bonds, Series 200 Summary Of Bonds Refunded 10xover Ser02A$850MG0 1 Cur Ref2002 1 11/512010 1 8,19AM of Maturity Issue Maturity Type Bond Coupon Value Call Date Call Price Dated2/01/2011 I Delivered 2/01/2011 Ser 02A $850M GO Sum Swr Imp 02/01/2012 Serial Coupon 4.500% 40,000 02/01/2011 100.000% Ser 02A $850M GO Stan Swr Imp 02/01/2013 Serial Coupon 4.600% 45,000 02/01/2011 100.000% Ser 02A $850M GO Stm Swr Imp 02/01/2014 Serial Coupon 4.700% 45,000 02/01/2011 100.000% Ser 02A S850M GO Sun Swr Imp 02/01/2015 Serial Coupon 5.000% 50,000 02/01/2011 100.000% Ser 02A S850M GO Sun Swr Imp 02/01/2016 Serial Coupon 5.000% 50,000 02/01/2011 100.000% Ser 02A S850M GO Sun Swr Imp 02/01/2017 Serial Coupon 5.000% 55,000 02/01/2011 100.000% Ser 02A $850M GO Sun Swr Imp 02/01 /2018 Serial Coupon 5.000% 55,000 02/01/2011 100.000% Ser 02A $850M GO Sun Swr Imp 02/01/2019 Serial Coupon 5.200% 60,000 02/01/2011 100.000% Ser 02A $850M GO Sun Swr Imp 02/01/2020 Serial Coupon 5.200% 60,000 02/01/2011 100.000% Ser02A S850M GO Sun Swr Imp 02/01/2021 Serial Coupon 5.200% 65,000 02/01/2011 100.000% Ser 02A $850M GO Sun Swr Imp 02/01/2022 Serial Coupon 5.200% 70,000 02/01/2011 100.000% Subtotal - - $595,000 - - Total $595,000 10xover Ser02A$850MG0 1 Cur Ref2002 1 11/512010 1 8,19AM New Hope, MN $1,245,000 - Purpose Two New Money Equipment Certificates (Fire Truck) Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 11/23/2010 - - - - - 08/01/2011 - - 18,322.72 18,322.72 - 02/01/2012 125,000.00 2.000% 13,298.75 138,298.75 156,621.47 08/01/2012 - - 12,048.75 12,048.75 - 02/01/2013 130,000.00 2.000% 12,048.75 142,048.75 154,097.50 08/01/2013 - - 10,748.75 10,748.75 - 02/01/2014 135,000.00 2.000% 10,748.75 145,748.75 156,497.50 08/01/2014 - - 9,398.75 9,398.75 - 02/01/2015 135,000.00 2.000% 9,398.75 144,398.75 153.797.50 08/01/2015 - - 8,048.75 8,048.75 - 02/01/2016 140,000.00 2000% 8,048.75 148,048.75 156,097.50 08/01/2016 - - 6,648.75 6,648.75 - 02/01/2017 140,000.00 2000% 6,648.75 146,648.75 153,297.50 08/01/2017 - - 5,248.75 5,248.75 - 02/01/2018 145,000.00 2.150% 5,248.75 150,248.75 155,49250 08/012018 - - 3,690.00 3,690.00 - 02/01/2019 145,000.00 2.400% 3,690.00 148,690.00 152,380.00 08/01/2019 - - 1,950.00 1,950.00 - 02/01/2020 150,00000 2.600% 1,950.00 151,950.00 153,900.00 Total $1,245,000.00 - $147,186.47 $1,392,186.47 - Yield Statistics Bond Year Dollar $6,630-17 Average Life 5.325 Years Average Coupon 2.2199513% Net Interest Cost (NIC) 2.1397782% True Interest Cost (TIC) 2.1293295% Bond Yield let Arbitrage Purposes 2.0806219% All Inclusive Cost (A1C) 2.4697780% IRS Form 8038 Net )merest Cost 1.9595077 WeiAted Averaee Maturity 5.301 Years New Hope, MN $1,245,000 - Purpose Two New Money Equipment Certificates (Fire Truck) Operation Of Project Construction Fund Date Principal Rate Receipts Disbursements Cash Balance 11/23/2010 1.229.414.41 - 1,229,414.41 1,229,414.41 - Total $1,229,414.41 - $1,229,414.41 $1,229,414.41 - Investment Parameters Investment Model [PV, GIC, or Securities] GIC Default investment yield target Unrestricted Cost of Investments Purchased with Bond Proceeds 1,229,414.41 Total Cost of Investments $1,229,414.41 Target Cost of Investments at bond yield Yield to Receipt Yield for Arbitrage Purposes 10 xover Ser 02A $850M GO I New Money 1 11/5/2010 1 8:19 AM OFFICERS' CERTIFICATE We, KATHI HEMKEN and KIRK MCDONALD, hereby certify that we are the Mayor and the City Manager, respectively, of the City of New Hope, Minnesota (hereinafter, the City), and that: 1. In our capacity as such officers, we have caused true and correct facsimiles of our signatures as such officers to be affixed to $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B, dated, as originally issued, as of November 23, 2010 (hereinafter, the Bonds). We are now, and were on November 23, 2010, duly qualified and acting as such officers and duly authorized to execute the Bonds, and we ratify, confirm and adopt the facsimile signatures on each and all of the Bonds as the true and proper signatures for the execution thereof. 2. The Bonds mature on the dates, bear interest at the rates and are substantially in the form prescribed by a resolution duly adopted by the City Council of the City on October 25, 2010, entitled "Resolution Relating to $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 201013; Awarding the Sale, Fixing the Form and Details and Providing for the Execution and Delivery Thereof and Security Therefor and Levying Ad Valorem Taxes for the Payment Thereof," (hereinafter, the Resolution). The Bonds have been in all respects duly executed for delivery pursuant to authority conferred upon as such officers; that no obligations other than the Bonds have been issued pursuant to such authority; that none of the proceedings or records which have been certified to the purchaser of the Bonds or to the attorneys rendering an opinion as to the validity of the Bonds has been in any manner repealed, amended or changed, except as shown in the proofs so furnished; and that there has been no material change in the financial condition of the City or the facts affecting the Bonds except as shown on the proofs so furnished. The Resolution has not been amended or repealed. 3. We have delivered the Bonds to Bond Trust Services Corporation (the Registrar) for authentication and delivery to The Depository Trust Company on behalf of Wells Fargo Advisors, in St. Louis, Missouri (the Purchaser). None of the proceedings or records which have been certified to the Purchaser or to Dorsey & Whitney LLP, the attorneys rendering an opinion as to the validity of the Bonds has been in any manner repealed, amended or changed. There has been no material change in the financial condition of the City or the facts affecting the Bonds. 4. No litigation of any nature is now pending or, to the best of our knowledge, threatened, seeking to restrain or enjoin the issuance or delivery of the Bonds, or the levy or collection of any ad valorem taxes to pay the interest on or principal of the Bonds, or in any manner questioning the authority or proceedings for the issuance of the Bonds or the application of the proceeds thereof, or affecting the validity of the Bonds or questioning the corporate existence or boundaries of the City or the title of any of the present officers thereof to their respective offices. 4. The Official Statement, dated October 14, 2010, relating to the Bonds, as amended by the Addendum thereto, dated October 26, 2010, prepared by the City, did not as of the date thereof and does not as of the date hereof contain any misstatement of a material fact or omit to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances under which they were made; provided that we make no comment regarding information provided by the purchaser of the Bonds for inclusion in the Official Statement relating to the purchase and the reoffering prices of the Bonds. 6. On the basis of facts, estimates and circumstances in existence on the date of issue of the Bonds, the proceeds of the issue will not be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of applicable provisions of Section 148 of the Internal Revenue Code of 1986, as amended (hereinafter the Code) and of Sections 1.148-1 through 11 and 1.150-1 of the Income Tax Regulations, as amended to the date hereof; and that the facts and circumstances upon which this certificate is based are as follows: (a) The Bonds are being issued (i) to finance the purchase of capital equipment, including a fire engine and related equipment by the City (hereinafter, the Equipment) and (ii) to refund the 2012 through 2022 maturities, aggregating $595,000 in principal amount, of the outstanding General Obligation Storm Sewer Revenue Bonds, Series 2002A, dated April 1, 2002 (hereinafter, the Refunded Bonds). The portion of the Bonds issued to refund the Refunded Bonds is designated as the "Storm Sewer Bonds" and the portion of the Bonds issued to finance the purchase of the Equipment designated as the "Equipment Bonds," and the allocation of the maturities of the Bonds for such purpose is set forth in Section 3.01 of the Resolution. The Refunded Bonds will be paid and redeemed on February 1, 2011 at a redemption price of the principal amount thereof plus accrued interest. February 1, 2011 is the earliest date on which the Refunded Bonds can be called for redemption. (b) The proceeds received from the sale of the Bonds ($1,856,267,52, plus accrued interest of $-0-) will be applied as follows: (i) $1,229,414.41 of proceeds of the Bonds will be used to pay the costs of the Equipment; (ii) $594,863.11 of proceeds of the Bonds will be used, together with anticipated investment income thereon of $136.89, to redeem the principal amount of the Refunded Bonds on February 1, 2011; (iii) $31,990.00 of proceeds of the Bonds to be used to pay bond issuance expenses; (iv) $-0- of the proceeds of the Bonds will be deposited in the Storm Sewer Bond Fund established on the books of the City pursuant to Section 5 of the Resolution (hereinafter, the Storm Sewer Bond Fund) and applied to pay a portion of the interest due on the Storm Sewer Bonds on August 1, 2011; and -2- (iv) $-0- of the proceeds of the Bonds will be deposited in the Equipment Bond Fund established on the books of the City pursuant to Section 5 of the Resolution (hereinafter, the Equipment Bond Fund) and applied to pay a portion of the interest due on the Equipment Bonds on August 1, 2011. (c) Pursuant to the provisions of Section 1.148-9(h) of the Regulations, the Bonds, which are otherwise a single issue pursuant the provisions of the Section 1.150- I (c)(1) of the Regulations, are being treated as a multipurpose issue, one "issue" to refund the Refunded Bonds and one "issue" to finance the Equipment. The sources and uses of funds necessary to accomplish the refunding of the Refunded Bonds and to finance the Equipment is shown on Appendix I attached hereto, and the portion of the Bonds that constitutes the Refunding Bonds and the portion of the Bonds that constitutes the New Money Bonds are shown on Appendix It hereto. The aggregate principal amount of the Bonds to be applied to refund the Refunded Bonds does not exceed the amount reasonably necessary to accomplish the governmental purposes of the Bonds. The excess gross proceeds of the Bonds, if any, are not expected to exceed I% of the sale proceeds of the Bonds. No other proceeds, including replacement proceeds, of the Refunded Bonds are available to be applied to the refunding of the Refunded Bonds. All sale and investment proceeds of the Refunded Bonds have been expended as of the date hereof for the governmental purposes of said issues. The Bonds have been allocated among its separate purposes in accordance with the provisions of Section 1.148-9(h)(4) of the Regulations, as shown on Appendix I attached hereto and as provided in the Resolution. In accordance with Section 1. 1 48-9(h)(4)(v)(B) of the Regulations, the portion of the Bonds allocated to the refunding of the Refunded Bonds reflects aggregate principal and interest payable in each bond year that is less than the aggregate principal and interest payable on the Refunded Bonds in each bond year. The purpose of refunding the Refunded Bonds is to enable the City to achieve a debt service savings of $90,252.58 ($77,268.97) on a present value basis. (d) The Bonds have been sold at public sale. To the best of our knowledge, the price paid by the purchasers thereof is reasonable under customary standards applied in the market. (e) Proceeds of the Bonds to be used to pay costs of issuance will be expended for such purpose within 90 days of the date hereof. (f) The net sale proceeds of the Bonds, plus investment earnings thereon, do not exceed the amount to be spent by the City for the Equipment, accomplish the refunding of the Refunded Bonds and to pay costs of issuance of the Bonds. Property financed or refinanced with the proceeds of the Bonds is not expected to be sold or disposed of, in whole or in part, prior to the last maturity date of the Bonds. (g) The City expects to spend on the Equipment, within three years from the date hereof, all of that portion of the net sale and investment proceeds of the Bonds to be allocated thereto and such proceeds may be invested without yield restriction during such three year period. Any amount not so expended by three years from the date hereof will, -3- pending expenditure, be invested at a yield which does not exceed the yield on the Bonds computed in accordance with Section 148 of the Code (2.0806219% per annum) (the Bond Yield), unless the City determines to take advantage of the provisions of Section 1.148-5(c) relating to yield reduction payments. (h) The principal of and interest on the Equipment Bonds are payable from the Equipment Bond Fund. The City expects to use only the Equipment Bond Fund to pay principal of or interest on the Equipment Bonds. The taxes pledged to the Equipment Bond Fund by the Resolution are expected to produce amounts sufficient to pay all principal of and interest on the Equipment Bonds when due. Based upon the revenues appropriated to the Equipment Bond Fund pursuant to the Resolution, the amounts on deposit in the Equipment Bond Fund from time to time are not expected to exceed the sum of (a) the amounts to be paid out from the Equipment Bond Fund through the next following February 1 plus a reasonable carryover not exceeding one -twelfth of the debt service payable from the Equipment Bond Fund in the immediately preceding 12 months. (i) The principal of and interest on the Storm Sewer Bonds are payable from the Storm Sewer Bond Fund. The City expects to use only the Storm Sewer Bond Fund to pay principal of or interest on the Storm Sewer Bonds. The revenues and taxes pledged to the Storm Sewer Bond Fund by the Resolution are expected to produce amounts sufficient to pay all principal of and interest on the Storm Bonds when due. Based upon the revenues appropriated to the Storm Sewer Bond Fund pursuant to the Resolution, the amounts on deposit in the Storm Sewer Bond Fund from time to time are not expected to exceed the sum of (a) the amounts to be paid out from the Storm Sewer Bond Fund through the next following February 1 plus a reasonable carryover not exceeding one - twelfth of the debt service payable from the Storm Sewer Bond Fund in the immediately preceding 12 months. 0) The Bonds are not "hedge bonds" as defined in Section 148(g) of the Code, since the City expended all expendable proceeds of the bonds refunded by the Refunded Bonds on the projects for which such bonds were issued within 3 years of the date of issuance thereof and none of the proceeds of such bonds were invested in nonpurpose investments with a substantially guaranteed yield of 4 years or more. (k) None of the proceeds of the Bonds will be used to reimburse the City for costs of the Equipment paid prior to the date of issuance of the Bonds unless the City shall have fully complied with the provisions of Section 1.150-2 of the Regulations with respect to such reimbursed amounts. (1) The average maturity of the Bonds does not exceed 120% of the average reasonably expected economic life of the facilities financed with the proceeds of the Refunded Bonds and the Equipment. It is not expect that any replacement proceeds will arise subsequent to the issuance of the Bonds. (1) There are no governmental obligations of the City (i) issued at substantially the same time as the Bonds, (ii) sold pursuant to a common plan of financing with the -4- Bonds and (iii) that will be paid out of substantially the same source of funds (or that will have substantially the same claim to be paid out of substantially the same source of funds) as will be used to pay the Bonds. (n) In Section 7.03 of the Resolution the City has covenanted and agreed with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action that would cause the interest on the Bonds to become subject to taxation under the Code and the Treasury Regulations promulgated thereunder, and to take certain actions related to compliance with the arbitrage rebate provisions of Section 148(f) of the Code with respect to the Bonds. (o) For purposes of complying with the requirements of Section 148(f)(4)(C) of the Code relating to the exemption of certain small governmental units from the rebate requirements of the Code, the City represents that: (i) the City is a governmental unit with general taxing powers; (ii) the Equipment Bonds are not "private activity bonds" as defined in Section 141 of the Code (Private Activity Bonds);ninety-five percent of the net proceeds of the Bonds are to be used for the local governmental purposes of the City; and (iii) the aggregate face amount of all tax-exempt bonds (other than Private Activity Bonds and any refunding bonds not taken into account under Section 148(f)(D)(iii) of the Code) issued by the City in calendar year in which the Equipment Bonds are to be issued is not reasonably expected to exceed $5,000,000. Therefore, pursuant to the provisions of Section 148(f)(4)(C) of the Code, the City shall not be required to comply with the arbitrage rebate requirements of paragraphs (2) and (3) of Section 148(f) of the Code with respect to the Equipment Bonds. (p) The Bonds issued to refund the Refunded Bonds qualify for the "small issuer" exemption from arbitrage rebate set forth in Section 148(f)(4)(D) of the Code, as modified by Section 148(f)(4)(D)(v) of the Code since: (i) the Refunded Bonds qualified for the exception from arbitrage rebate provided by Section 148(f)(4)(D)(i) of the Code; (ii) the aggregate face amount of the bonds issued to refund the Refunded Bonds does not exceed $5,000,000; (iii) the average maturity of the Bonds issued to refund the Refunded Bonds does not exceed the remaining weighted average maturity of the Refunded Bonds; and -5- (iv) no Bond has a maturity date which is later than the date which is 30 years after the date the Refunded Bonds were issued. Therefore, pursuant to the provisions of Section 148(f)(4)(D) of the Code, the City shall not be required to comply with the arbitrage rebate requirements of paragraphs (2) and (3) of Section 148(f) of the Code with respect to the portion of the Bonds issued to refund the Refunded Bonds. (q) To the best of the knowledge and belief of the undersigned, the expectations of the City, as set forth above, are reasonable, and there are no present facts, estimates or circumstances which would change the foregoing expectations. (r) The Commissioner of the Internal Revenue Service has not published notice in the Internal Revenue Bulletin that the City is disqualified with respect to arbitrage certifications. The City has not been notified by the Commissioner of any intent to publish such notice. (s) We are the officers of the City responsible for the issuance of the Bonds. 7. We are now, and were on November 23, 2010, the duly qualified and acting Mayor and City Manager and duly authorized to execute the Bonds. WITNESS our hands and the seal of the City, this 23rd day of November, 2010. CITY OF NEW HOPE, MINNESOTA Mayor City Manager M APPENDIX I SOURCES AND USES Sources of Funds Par Amount of Bonds Reoffering Premium TOTAL SOURCES Uses of Funds Costs of Issuance (including Underwriter's Discount) Deposit to Construction Fund Deposit to Current Refunding Fund $1,850,000.00 22,400.25 1.872.400.25 $ 48,122.73 1,229,414.41 594 863.11 TOTAL USES $1.872.400.25 APPENDIX II $605 000 Principal Amount - Storm Sewer Bonds Year Amount Year Amount 2012 $45,000 2018 $55,000 2013 50,000 2019 60,000 2014 50,000 2020 55,000 2015 55,000 2021 60,000 2016 55,000 2022 65,000 2017 55,000 $1,245, 000 Principal Amount - Equipment Bonds Year Amount Year Amount 2012 $125,000 2017 $140,000 2013 130,000 2018 145,000 2014 135,000 2019 145,000 2015 135,000 2020 150,000 2016 140,000 803Q�G Information Return for Tax -Exempt Governmental Obligations Form 8 ► Under Internal Revenue Code section 149(e) OMB No. 1545-0720 (Rev. May 2010) ► See separate instructions. - Depadmsm of the Treasury Caution: If the issuerice is under $100,000, use Form 8038 -GC. Lt -81 Revenue Servlcs p JjMM Reporting Authority If Amended Return, check here ► EJ 1 Issuer's name - 2 Iwuel's enrlolar ldaNscatlon rxxrbar lBM City of New Hoe 41 .6008870 3 Number and street (or P.O. box 8 met Is not delivered to street address) Roomrsuite. 4 Report number (For IRS use Only) 4401 X Ion Avenue North - 3 5 Cfly, town, or post office, state, and ZIP code - 6 Date of Issue New Hope, Minnesota 55428 - November 23, 2010 7 Name of Issue 8 CUSIP number General Obligation Certificates of Indebtedness and Refunding Bonds, Series 20108 - 64544P C06 9 Name and title of officer of the Issuer crother person whom the IRS may call for more Information 10 Telephone number of officer or other person Kirk McDonald CI Manager - ( 763 ) 531-5100 the 11 Education . . . . . . . . . . . . . . . . . . . . . . . . 11 ': (e) Yield 12 Health and hospital . . . . . . . . .. . . . . . . . . . . . . . . . 12 . 13 Transportation . . . . . . : . . . . . . . . . . . . . . 13 - 14 Public safety . . . . . . . . . . . . . . . . . . . . . . . 14 15 Environment (including. sewage bonds). . . ... . . . . . . . . .. .. . . 15 611,228 16 - Housing . . . ... . . . . . . ... 16 Description of Refunded Bonds Complete this part only for refunding bonds. 17 Utilities . - . '. . . . . 17 18 Other. Describe ► Capital Equ)pment 18 1,261,172 19 If obligations are TANs or RANs, check only box 19a .. ► ❑ r �.,_-; If obligations are BANS, check only box 19b ► ❑ �; 20 If obligations are in the form of a lease or installment sale, check box .. ► ❑ . ,.,, „ (a) Final maturity date 0e) Isaua price (c) Statedredemptbn pr(ce at maturity (rq weighted average maturity ': (e) Yield 21 1 2/1/2022 1 $ 1,872,4001 $ 1,850,0001 5.670 years. 1 2.0806 % MUM Uses of Proceeds of Bond Issue(including underwriters' discount 22 Proceeds used for accrued Interest. . . . . . . . . . . 23 Issue price of entire issue (enter amount from line 21, column (b)) . '23, 24 Proceeds used for bond issuance costs (including underwriters' discount) 24 48,123 25 Proceeds used for credit enhancement . . . . . . . 25 26 Proceeds allocated to reasonably required reserve or replacement fund . 26 27 Proceeds used to currently refund prior issues . . . . . . . . . 27 594,863 28 Proceeds used to advance refund prior issues . .... . . . . . . 28 29 Total (add lines 24 through 28) , . und 30 Nonrefin roceeds of issue- subtract line 29 from line 23 and enter amount here 22 0 1,872,400 642,986 29 30 1,229,414 Description of Refunded Bonds Complete this part only for refunding bonds. 31 Enter the remaining weighted- average maturity of the bonds to be currently refunded . . . ► 6.693 years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . . ► years 33 Enter the last date on which the refunded bonds will be called (MM/DD/YYYY) . . . . . -► 02/01/2011 34 Enter the date(s) the refunded bonds were issued ► (MM/DD/Yy1'Y) 04/01/2002 For Privacy Act and Paperwork Reduction Act Notice, see separate instructions. cat. No. 63773s Form 8038-G (Rev. 5-2010) Form 35 Enter the amount of the state volume cap allocated to the issue under section 141(bx5) . . . 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract - (GIC) (see Instructions) . . . . . . . . . . . . . . . . . . . . . . 137a b Enter the final maturity date of the GIC Ili,37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units . . . . . . . . . . . . . . . . . . . . . . b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the name of the issuer ► - and the date of the issue ► 36 If the issuer has designated the issue under section.265(b)(3)(B)(i)(III) (small issuer exception), check box . . . . 0-0 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . . . ► ❑ 40 If the issuer has identified a hedge, check box . . . . . . . . . . . . . . . . . . . . . . . ► ❑ Untler pennies of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge Signature and bel' they a tnre, correct, and complete. I further declare that I consent to the IRS's disclosure of the Issuer's return information, as necessary and to prpc s ro t�q@r\son t I have a d above. // / (� Consent ' ► \ \l� ��/ `-'+! t lJ ' Kirk McDonald, City Manager Signature of Issuer's authod re sen rive D e Typo or print name and title Paid Preparer's Date Preparer's SSN or F nN - Check if Preparer's signature �% %Q self -em d ❑ P01067942 Use &I Firm's name (or ' Dorsey & Whkne LLP EIN 41 0223337 y aadddrreess. and z coda' 50 South 6th St, Ste 1500, Minneapolis, MN 55402 i Phone no. ( 612) 340-2962 Form 8038-6 (Rev. 6-2010) ■ El F-1 EHLERS LEADERS IN PUBLIC FINANCE September 7, 2010 Pre -Sale Report for $1,900,000 General Obligation Certificates of Indebtedness & Refunding Bonds, Series 2010B Debt Issuance Services www.ehlers-inc.com Minnesota phone 651-697-8500 3060 Centre Pointe Drive Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville, MN 55113-1122 ■ ❑ ❑ Debt Issuance Services Details of Proposed Debt Proposed Issue: $1,900,000 General Obligation Refunding Bonds, Series 201 OB Purpose: Two purposes are contemplated in the 2010B Bonds: 1. To provide funds sufficient for a current refunding on February 1, 2011 of all of the City's callable G.O. Storm Sewer Revenue Bonds, Series 2002A; 2. To provide funds for the acquisition of a City fire engine and related equipment. The specific allocation of costs for each project is attached to this report. Series 2002A Refunding: The City's 2002A Bonds were issued in the amount of $850,000, of which $595,000 payable February 2012 through 2022 is currently callable. By replacing existing interest rates of 4.50% to 5.20% with new rates estimated at 0.75% to 3.35%, this refunding is projected to yield future savings of roughly $72,000, or an average of $6,500 annually for 11 years. This savings expressed in present value terms is approximately 9.4% of the refunded 2002A debt service (note: 3% is a common savings threshold). The Equipment Certificate portion of the 2010B Bonds will be structured with a first interest payment in August 2011, and level annual debt service (principal and interest) of approximately $160,000 in the nine years ending February 2012 through 2020. The City will include this new debt service in its budget for Fiscal Year 2011. Authority: The Bonds are being issued pursuant to Minnesota Statues, Chapter 475. The 2010B Bonds are also being issued pursuant to Minnesota Statues, Chapter 444 (utility revenue -backed debt). Funding Source(s): The City will pay debt service on the Series 2002A Refunding portion of the 2010B Bonds with the same revenue streams as have been used for the 2002A Bonds. The City will pay debt service on the Equipment Certificate portion with a general property tax levy. Risk Factors: If the City expected to pay off the remaining 2002A Bonds in the next year or two, we would not recommend a current refunding because the upfront costs of the transaction would not offset by the future interest cost savings required to accomplish the refunding. We do not believe the City has any such plans to redeem this debt outside of the proposed refunding. 0 Presale Report — City of New Hope, Minnesota September 7, 2010 Page 2 Debt Issuance Services Arbitrage Monitoring: The Internal Revenue Service is becoming more active in surveying municipal issuers. Although arbitrage earnings on bond proceeds will not be a factor because of how the 2010B Bonds will be used for the 2002A refunding and the City's anticipated fire equipment purchase, the City will still need to keep its debt service funds within IRS parameters to avoid penalties tied to carrying too high of a balance during the life of the issue. Rating: The City carries a Standard & Poor's "AA" credit rating on its outstanding bonds. A rating request will be made for this issue. Bank Qualification: Because the City is issuing less than $30,000,000 in the calendar year, the City will be able to designate the Bonds as "bank qualified" obligations. Bank qualified status broadens the market for the Bonds, which can result in lower interest rates. Term/Call Feature: The 2010B Bonds are being issued for a total of 11.25 years. Interest is payable each six months beginning August 1, 2011. Principal is payable annually, with principal starting February 1, 2012. The 2010B Bonds maturing February 1, 2019 through 2022 will be subject to prepayment at the discretion of the City on February 1, 2018 or any date thereafter. Other Ehlers will continue to monitor the City's debt refunding opportunities. Considerations: Proposed Debt Issuance Schedule Pre -Sale Review by Council: Distribute Official Statement: Conference with Rating Agency: City Council Meeting to Award Sale of the Bonds: Estimated Closing Date: Attachments September 7 and 13, 2010 Week of September 27, 2010 Week of October 11, 2010 October 25, 2010 November 10, 2010 (tentative) Draft Resolution Authorizing Ehlers to Proceed With Bond Sale Estimated Sources and Uses of 2010B Bond Funds (numbered page 1) Estimated 2010B Bond Debt Service Schedule (page 2) Estimated Refunding Comparisons to 2002A Debt Service (pages 5, 6 and 7) Estimated Debt Service Schedule for 2010 Equipment Certificates (page 8) 0 Presale Report — City of New Hope, Minnesota September 7, 2010 Page 3 M- ❑ ❑ Ehlers Contacts: Financial Advisors: Bruce Kimmel Dave Callister Debt Issuance Services (651)697-8572 (651)697-8553 Bond Analysts: Diana Lockard (651) 697-8534 Debbie Holmes (651) 697-8536 Bond Sale Coordinator: Alicia Aulwes (651)697-8523 The Official Statement for this financing will be provided to the City Council Members for review prior to the proposed bond sale date of October 25, 2010. 0 Presale Report — City of New Hope, Minnesota September 7, 2010 Page 4 E ❑ ❑ -- Council Member Debt Issuance Services Resolution No. introduced the following resolution and moved its adoption: Resolution Providing for the Sale of $1,900,000 General Obligation Certificates of Indebtedness & Refunding Bonds, Series 2010B A. WHEREAS, the City Council of the City of New Hope, Minnesota, has heretofore determined that it is necessary and expedient to issue the City's $1,900,000 General Obligation Certificates of Indebtedness & Refunding Bonds, Series 2010B (the 'Bonds"), to refund the City's G.O. Storm Sewer Revenue Bonds, Series 2002A Bonds, and to finance the acquisition of capital equipment for the City, and B. WHEREAS, the City has retained Ehlers & Associates, Inc., in Roseville, Minnesota ("Ehlers"), as its independent financial advisor for the Bonds and is therefore authorized to solicit proposals in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9); NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of New Hope, Minnesota, as follows: 1. Authorization; Findings. The City Council hereby authorizes Ehlers to solicit proposals for the sale of the Bonds. 2. Meeting; Proposal Opening. The City Council shall meet at 7:00 p.m. on Monday, October 25, 2010, for the purpose of considering sealed proposals for and awarding the sale of the Bonds. 3. Official Statement. In connection with said sale, the officers or employees of the City are hereby authorized to cooperate with Ehlers and participate in the preparation of an official statement for the Bonds and to execute and deliver it on behalf of the City upon its completion. The motion for the adoption of the foregoing resolution was duly seconded by Council Member and, after full discussion thereof and upon a vote being taken thereon, the following Council Members voted in favor thereof: and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. Dated this day of City Clerk 0ORSEY" City of New Hope New Hope, Minnesota Wells Fargo Advisors St. Louis, Missouri Re: $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B City of New Hope, Hennepin County, Minnesota Ladies and Gentlemen: As Bond Counsel in connection with the authorization, issuance and sale by the City of New Hope, Hennepin County, Minnesota (the "City"), of its General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B dated, as originally issued, as of November 23, 2010, in the total principal amount of $1,850,000 (the "Bonds"), we have examined certified copies of certain proceedings taken, and certain affidavits and certificates furnished, by the City in the authorization, sale and issuance of the Bonds, including the form of the Bonds. As to questions of fact material to our opinion we have assumed the authenticity of and relied upon the proceedings, affidavits and certificates furnished to us without undertaking to verify the same by independent investigation. From our examination of such proceedings, affidavits and certificates, and based upon laws, regulations, rulings and decisions in effect on the date hereof, it is our opinion that: 1. The Bonds are valid and binding general obligations of the City enforceable in accordance with their terms. 2. The principal of and interest on the Bonds are payable from net revenues of the City's storm sewer utility and from ad valorem taxes levied on all taxable property in the City, and, to any extent not so paid, from additional ad valorem taxes required by law to be levied on all taxable property in the City without limitation of rate or amount. 3. Interest on the Bonds (a) is not includable in gross income for federal income tax purposes or in taxable net income of individuals, estates or trusts for Minnesota income tax purposes; (b) is includable in taxable income of corporations and financial institutions for purposes of the Minnesota franchise tax; (c) is not an item of tax preference includable in alternative minimum taxable income for purposes of the federal alternative minimum tax applicable to all taxpayers or the Minnesota alternative minimum tax applicable to individuals, estates and trusts; and (d) is includable in adjusted current earnings of corporations in determining alternative minimum taxable income for purposes of the federal alternative minimum tax. DORSEY & WHITNEY LLP • WWW.DORSEY.COM • T 612.340.2600 • F 612.340.2868 SUITE 1500 • 50 SOUTH SIXTH STREET MINNEAPOLIS, MINNESOTA 55402-1498 USA CANADA EUROPE ASIA -PACIFIC OORSEY" City of St. Anthony Wells Fargo Advisors Page 2 4. The City has designated the Bond as a "qualified tax-exempt obligation" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), and, financial institutions described in Section 265(b)(5) of the Code may treat the Bond for purposes of Section 265(b)(2) and 291(e)(1)(B) of the Code as if it was acquired on August 7, 1986. The opinions expressed in paragraphs 1 and 2 are subject as to enforceability to the effect of any state or federal laws relating to bankruptcy, insolvency, reorganization, moratorium or creditors' rights and the exercise of judicial discretion. The opinion set forth in paragraphs 3 and 4 are subject to the condition that the City comply with all the 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, excluded from gross income for federal income tax purposes, and the Bonds be and continue to be qualified tax-exempt obligations. The City has covenanted in the resolution authorizing the issuance of the Bonds to comply with these continuing requirements. Failure of the City to comply with these requirements may result in the inclusion of interest on the Bonds in federal gross income and in Minnesota taxable net income, retroactive to the date of issuance of the Bonds. Except as stated in this opinion, we express no opinion regarding federal, state or other tax consequences to owners of the Bonds. We have not been asked, and have not undertaken, to review the accuracy, completeness or sufficiency of any offering materials relating to the Bonds, and accordingly, we express no opinion with respect thereto. Dated: November 23, 2010. Very truly yours, 4 "i'd&,,/ DORSEY & WHITNEY LLP CERTIFICATE AND RECEIPT OF CITY MANAGER I, Kirk McDonald, being the duly qualified and acting City Manager of the City of New Hope, Hennepin County, Minnesota, hereby certify and acknowledge that on the date of this instrument I received from Wells Fargo Advisors, of St. Louis, Missouri, as purchaser thereof, the purchase price for the $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B (the Bonds), dated as of November 23, 2010, said purchase price being computed as follows: Purchase price of Bonds $1,856,267.52 Accrued interest from November 23, 2010 to the date hereof 0 Total Purchase Price 1.856.267.52 and that I thereupon, as Bond Registrar, delivered the Bonds to the Purchaser. WITNESS my hand officially as such Finance Director this 23`d day of November, 2010. Kirk McDonald, City Manager REQUEST AND AUTHORIZATION Bond Trust Services Corporation 3060 Centre Pointe Drive Roseville, MN 55113 Gentlemen: You are hereby requested and authorized forthwith to execute the Certificate of Authentication printed on the $1,$50,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B, initially dated as of November 23, 2010, of the City of New Hope, Minnesota (the City), and to deliver the Bonds to The Depository Trust Company, on behalf of Wells Fargo Advisors, of St. Louis, Missouri, as purchaser thereof, all in accordance with a resolution adopted by the City Council on October 25, 2010 (the Resolution) relating to said Bonds. We transmit to you herewith the Bonds described above, which have been duly executed on behalf of the City, and a copy of the Resolution. We request that you acknowledge receipt of the Bonds and the resolution by signing the receipt at the bottom of this page and by returning a copy hereof so signed to the City. Dated: November 23, 2010. CITY OF NEW HOPE Its City Manager Received the Bonds described above and the Resolution this 23`d day of November, 2010. BOND TRUST SERVICES CORPORATION J By Its CERTIFICATE OF EHLERS & ASSOCIATES, INC. The undersigned officer of Ehlers & Associates Inc. hereby certifies: 1. Ehlers & Associates Inc., is acting as financial consultant in connection with the issuance by the City of New Hope, Minnesota (the City), of its $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B, dated, as originally issued, as of November 23, 2010 (the Bonds). The information contained in this Certificate is correct, to the best of our knowledge, and is made in reliance upon certain information provided to us by the City and the original purchaser of the Bonds. 2. The bid accepted by the City for the purchase of the Bonds is a reasonable bid under customary standards applicable in the municipal bond market. 3. The yield on the Bonds to maturity, based on the information supplied by the Purchaser in the Certificate of Purchaser is 2.0806219%. The yield on the Bonds has been calculated, as provided in Section 1.148-4(b) of the Treasury Regulations as that discount rate that, when used in computing the present value of all unconditional payments of principal, interest and fees for qualified guaranties on the Bonds and amounts reasonably expected to be paid as fees for qualified guaranties on the Bonds, produces an amount equal to the present value, using the same discount rate, of the aggregate issue price of the Bonds as of the issue date. The "issue price" of the Bonds is $1,872,400.25, which is the initial offering price of the Bonds to the public, as shown by the Certificate of Purchaser. 4. The weighted average maturity of the Bonds, based on the issue price of each stated maturity of the Bonds from their date of issue (not on the basis of the principal amount of the Bonds or from their dated date), is 5.670years, and the weighted average maturity of the bonds refunded by the Bonds is 6.693 years. 5. The terns used herein have the meanings given them in Section 148 of the Code, applicable Treasury Regulations or in the Instructions for IRS Form 8038—G (Rev. May 2010). Dated: November 23, 2010. EHLERS & ASSOCIATES INC. By Its Paying Agent Administrator CERTIFICATE OF PURCHASER The undersigned officer of Wells Fargo Advisors, St. Louis, Missouri, which has purchased the $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B (the Bonds) of the City of New Hope, Minnesota, originally dated as of November 23, 2010, hereby certifies that: (1) All of the Bonds have been the subject of a bona fide initial offering to the general public, excluding bond houses, brokers or other persons or organizations acting in the capacity of underwriters or wholesalers (the General Public), at the respective prices or yields (the Offering Prices or Yields) relating to the Bonds set forth in the Official Statement dated October 14, 2010 and the Addendum thereto dated October 26, 2010, relating to the Bonds (the Official Statement). (2) As of the date of sale of the Bonds (the Sale Date), based upon the then - prevailing market conditions, we reasonably expected that at least 10 percent of each maturity of the Bonds would be sold to the General Public at the Offering Prices or Yields, and we had no reason to believe that any of the Bonds would initially be sold to the General Public at prices greater or yields lower than the Offering Prices or Yields, as the case may be. (3) As of the date hereof, the Purchaser has sold at least 10 percent of each maturity of the Bonds to the General Public at the Offering Prices or Yields, with the exception of Bonds maturing in the year 2022. In the case of the Bonds maturing in the year 2022, we represent that the absence of initial sales at or below the Offering Prices or Yields is consistent with our reasonable expectations as of the Sale Date described in paragraph (2), but our inability to actually sell such Bonds at their Offering Prices or Yields has resulted from changes in market conditions. We understand that the representations contained herein may be relied upon by the City in making certain of the representations contained in a certificate as to tax matters and arbitrage executed by the City in connection with the issuance of the Bonds, and we further understand that Dorsey & Whitney LLP, Bond Counsel to the City, may rely upon this certificate, among other things, in providing an opinion with respect to the exclusion from gross income of the interest on the Bonds and the determination of yield on the Bonds for arbitrage purposes; provided however, that nothing herein represents our interpretation of any laws or regulations under the Internal Revenue Code of 1986, as amended. Dated: November 23, 2010. WELLS FARGO ADVISORS [Signature Page — Certificate of Purchaser] CERTIFICATE OF REGISTRAR The undersigned officer hereby certifies and declares that I am duly elected, qualified and acting as such as of the date hereof, of Bond Trust Services Corporation, in Roseville, Minnesota (the Registrar) and that: 1. The Registrar has been designated by resolution of the City Council of the City of New Hope, Minnesota (the City), adopted on October 25, 2010 (the Bond Resolution), a copy of which has been furnished to the Registrar, to act as paying agent, registrar and transfer agent for $1,850,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B, dated November 23, 2010 (the Bonds) of the City and has been designated to execute the certificates of authentication on the Bonds on behalf of the City as an authenticating agent. The Registrar shall comply with all obligations imposed upon it pursuant to the Bond Resolution. 2. The Registrar is duly organized and existing as a banking association pursuant to the laws of the United States and has full power and authority to act as bond registrar and to execute the certificates of authentication and thereby authenticate the Bonds as an authenticating agent. 3. The Registrar has received from the City ten (10) fully executed and unauthenticated Bonds consisting of Bond Nos. R-1 through R-10, and has verified the principal amounts, interest rates, maturity dates, and CUSIP numbers set forth on each of the Bonds, and the same are all true and correct. On the date hereof . On the date hereof the Registrar has authenticated and delivered to The Depository Trust Company, on behalf of Wells Fargo Advisors (the Purchaser), $1,850,000 in principal amount of Bonds, maturing and bearing interest as set forth in the Bond Resolution. 4. Each and all of the Bonds so authenticated and delivered were registered, on the face thereof and also in the register maintained by the Registrar, in the name of Cede & Co., as nominee for The Depository Trust Company, as designated by the Purchaser. Dated: November 23, 2010. BOND TRUST SERVICES CORPORATION, as Registrar By Its Paying Agent Administrator EXHIIT A CERTIFIED RESOLUTIONS 1. Carol L. Sweeney, Cashier of Bond Trust Services Corporation, Roseville, MN, a Limited Purpose Trust Company (the "Bank"), do certify that the following resolutions were adopted by the Board of Directors of Bond Trust Services Corporation on February 20, 2004, and that the same are in effect as of the date hereof and have not been modified, amended or revoked. WHEREAS, it is appropriate and in furtherance of business goals and efficiency to authorize certain employees within the corporate trust department to sign and countersign certain documents. RESOLVED, that the following individuals be and are hereby authorized to sign or countersign on behalf of Bond Trust Services Corporation and its affiliates for the sole and express purpose of acting in their respective capacities as transfer agents or registrar for certificates of stock or as trustees or authenticating agents for bond certificates, equipment trust certificates, notes and similar securities and while acting as servicing agent in the performance of these duties. FURTHER RESOLVED, that such individuals shall act until their respective successors are appointed and qualify. IN WITNESS WHEREOF, 1 have set my hand on November 23 2010. Carol L. Sweeney, Cas r RESOLUTIONS OF THE BOARD OF DIRECTORS OF BOND TRUST SERVICES CORPORATION (December 18, 2009) Authorized Agents WHEREAS, it is appropriate and in furtherance of business goals and efficiency to authorize certain employees within the corporate trust department to sign and countersign certain documents. RESOLVED, that the following individuals be and are hereby authorized to sign or countersign on behalf of Bond Trust Services Corporation and its affiliates for the sole and express purpose of acting in their respective capacities as transfer agents or registrar for certificates of stock or as trustees or authenticating agents of bond certificates, equipment trust certificates, notes and similar securities and while acting as servicing agent in the performance of these duties: Debra Peterson Connie Kuck Carol Sweeney Nancy DeMarais Steven Apfelbacher FURTHER RESOLVED, that such individuals shall act until their respective successors are appointed and qualify. �»s UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF NEW HOPE GENERAL OBLIGATION CERTIFICATE OF INDEBTEDNESS AND REFUNDING BOND, SERIES 2010B Interest Rate Maturity Date of CUSIP Original Issue % February 1, 20 November 10, 2010 64544P _ REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: THOUSAND DOLLARS THE CITY OF NEW HOPE, Hennepin County, Minnesota (the "City"), acknowledges itself to be indebted and, for value received, hereby promises to pay to the registered owner named above, or registered assigns, the principal amount specified above, on the maturity date specified above, with interest thereon from the date of original issue specified above, or from the most recent interest payment date to which interest has been paid or duly provided for, at the annual rate specified above. Interest hereon is payable on February I and August 1 in each year, commencing August 1, 2011, to the person in whose name this Bond is registered at the close of business on the 15th day (whether or not a business day) of the immediately preceding month, all subject to the provisions referred to herein with respect to the redemption of the principal of this Bond before maturity. The interest hereon and, upon presentation and surrender hereof, the principal hereof, are payable in lawful money of the United States of America by check or draft of Bond Trust Services Corporation, in St. Paul, Minnesota, as Bond Registrar, Transfer Agent and Paying Agent (the "Bond Registrar"), or its successor designated under the Resolution described herein. This Bond is one of an issue in the aggregate principal amount of $1,850,000 (the "Bonds"), issued pursuant to a resolution adopted by the City Council on October 25, 2010 (the "Resolution"), for the purpose of refunding bonds issued to finance improvements to the City's stone sewer utility and financing the purchase of capital equipment by the City, and is issued pursuant to and in full conformity with the provisions of the Constitution and laws of the State of Minnesota thereunto enabling, including Minnesota Statutes, Section 444.075 and Section 412.301 and Minnesota Statutes, Chapter 475. The Bonds are issuable only as fully registered bonds in denominations of $5,000 or any multiple thereof, of single maturities. The Bonds of this series are issuable only as fully registered Bonds, in denominations of $5,000 or any multiple thereof, of single maturities. Bonds maturing in the years 2012 through 2018 are payable on their respective stated maturity dates without option of prior payment, but Bonds having stated maturity dates in 2019 and later years are each subject to redemption and prepayment, at the option of the City and in whole or in part, and if in part, in the maturities selected by the City and, within a maturity, in $5,000 principal amounts selected by lot, on February 1, 2018 and on any date thereafter, at a price equal to the principal amount thereof to be redeemed plus accrued interest to the date of redemption. Bonds maturing in the year 2022 shall be subject to mandatory redemption prior to maturity by lot pursuant to the mandatory sinking fund requirements of the Resolution on February l in the years and in the principal amounts set forth in the Resolution at a redemption price equal to the stated principal amount thereof to be redeemed plus interest accrued thereon to the redemption date, without premium. Notice of redemption shall be given as provided in the following paragraph. At least thirty days prior to the date set for redemption of any Bond, notice of the call for redemption will be mailed to the Bond Registrar and to the registered owner of each Bond to be redeemed at his address appearing in the Bond Register, but no defect in or failure to give such mailed notice of redemption shall affect the validity of the proceedings for the redemption of any Bond not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of the Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price herein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Bond or portions of Bonds shall cease to bear interest. Upon the partial redemption of any Bond, a new Bond or Bonds will be delivered to the registered owner without charge, representing the remaining principal amount outstanding. The Bonds have been designated by the City as "qualified tax-exempt obligations" pursuant to Section 265(b) of the Internal Revenue Code of 1986, as amended. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Bond Registrar, by the registered owner hereof in person or by his attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar, duly executed by the registered owner or his attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange, the City will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City and the Bond Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order 2 to make it a valid and binding general obligation of the City in accordance with its terns, have been done, do exist, have happened and have been performed as so required; that, prior to the issuance hereof the City has pledged to the payment of the principal of and interest on the Bonds so much of the net revenues of the City's storm sewer utility as shall be required to pay the principal and interest on the portion of the Bonds issued to refund the bonds issued to finance improvements to the City's storm sewer utility; that, prior to the issuance hereof the City has levied or agreed to levy ad valorem taxes on all taxable property in the City, collectible in the years and amounts required to produce sums not less than 5% in excess of the principal of and interest on the portion of the Bonds issued to finance the purchase of capital equipment as such principal and interest respectively become due, and has appropriated such taxes to the payment of such principal and interest; that if necessary for payment of the principal and interest on this Bond, additional ad valorem taxes are required to be levied upon all taxable property in the City, without limitation as to rate or amount; and that the issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional or statutory limitation of indebtedness. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon shall have been executed by the Bond Registrar by the manual signature of a person authorized to sign on its behalf. IN WITNESS WHEREOF, the City of New Hope, Hennepin County, Minnesota, by its City Council, has caused this Bond to be executed by the signatures of the Mayor and the City Manager and has caused this Bond to be dated as of the date set forth below. CITY OF NEW HOPE City Manager Mayor CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. Date of Authentication: BOND TRUST SERVICES CORPORATION, St. Paul, Minnesota, as Bond Registrar Authorized Representative The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM — — as tenants in common TEN ENT — — as tenants by the entireties JT TEN -- as joint tenants with right of survivorship and not as tenants in common UNIF TRANS MIN ACT....... Custodian........... (Gust) (Minor) under Uniform Transfers to Minors Act...................... (State) Additional abbreviations may also be used. El ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: Signature(s) must be guaranteed;by an "eligible guarantor institution" meeting the requirements of the Bond Registrar, which requirements include membership or participation in the Securities Transfer Association Medallion Program (STAMP) or such other "signature guaranty program" as may be determined by the Bond Registrar in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. NOTICE: The signature(s) to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration, enlargement or any change whatsoever. Continuing Disclosure Requirements Compliance with Limited Continuing Disclosure Requirements In orderto comply with SEC Rule 15c2-12 (the "Rule"), pursuant to the Resolution adopted October 25, 2010 the City has covenanted (the "Undertaking") to provide certain financial information relating to the City annually and to provide notices of the occurrence of certain material events to the Municipal Securities Rulemaking Board by filing at www.enmia.msrb.org. The specific nature of the Undertaking, as well as the information to be contained in the notices of material events is set forth in the Sale Resolution included in Section 1. In the event of a failure of the City to comply with any provision as outlined, any holder of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order. You are responsible for reporting any of the material events listed below and in the Continuing Disclosure section of the Sale Resolution. It is imperative that you become familiar with what constitutes a material event. However, other events may occur that may be deemed "material" to the owners of these Bonds. If any one of the listed events occurs in relation to the above issue or if you are unsure whether some "event" is material, you may call Ehlers to discuss whether the event is "material," and for guidance on how to prepare the notice and report it properly. Following are the material events which require immediate notification under SEC Rule 15c2 -12(b)(5): 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit of liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the securities; 7. Modification to rights of holders of the Securities; 8. Securities calls; 9. Defeasances; 10. Release, substitution or sale of property securing repayment of the Securities; and 11. Rating changes; 12. Failure to provide annual financial information as required; 13. Other material events. economy; • Good income levels and very strong market value per capita indicators; Maintenance of very strong financial reserves; and • Moderate overall debt burden. The city's full faith and credit GO pledge secures the bonds. Officials indicate they plan to use proceeds to purchase a new fire engine and refund portions of the city's series 2002A GO storm sewer revenue bonds for interest cost savings. New Hope is located in Hennepin County ('AAA' GO debt rating), approximately 12 miles RatingsDirect northwest of downtown Minneapolis. The city's population, an estimated 20,718, has been Publication Date relatively stable since the 2000 U.S. Census, in our view. Residents have access to a deep and 21, 2010 diverse economic base with ample employment opportunities in the Minneapolis -St Paul metropolitan area. Residents also have access to jobs in the city itself, which serves as the New Hope, Minnesota Primary Credit Analysts: Credit Profile Caroline West Chicago US$l3 mil GO carts of indebtness & rfdg bads ser 20106 dtd 11013/2010 due 07/01/2072 312-233-7047 Long Term Rating AA/Stable New caroline_west® New Hope GO sta ndardandpoors.com .ondary Credit Analysts: Long Term Rating AA/Stable Affirmed ,ice Yocom Chicago (1)312-233.7056 blakeyoucomO standardandpoors.com Rationale Standard & Poor's Ratings Services assigned its 'AA' long-term rating to New Hope, Minn.'s series 2010B general obligation (GO) certificates of indebtedness and refunding bonds. At the same time, Standard & Poor's affirmed its 'AA' long-term rating on the city's outstanding GO debt. The rating on the bonds is stable. The rating reflects our view of the city's: • Participation in the deep, diverse Minneapolis -St Paul, Minn. (Twin Cities) metropolitan economy; • Good income levels and very strong market value per capita indicators; Maintenance of very strong financial reserves; and • Moderate overall debt burden. The city's full faith and credit GO pledge secures the bonds. Officials indicate they plan to use proceeds to purchase a new fire engine and refund portions of the city's series 2002A GO storm sewer revenue bonds for interest cost savings. New Hope is located in Hennepin County ('AAA' GO debt rating), approximately 12 miles RatingsDirect northwest of downtown Minneapolis. The city's population, an estimated 20,718, has been Publication Date relatively stable since the 2000 U.S. Census, in our view. Residents have access to a deep and 21, 2010 diverse economic base with ample employment opportunities in the Minneapolis -St Paul metropolitan area. Residents also have access to jobs in the city itself, which serves as the New Hope, Minnesota reductions in state aid. The diversity of the Minneapolis -St. Paul economic base provides further rating stability. Related Criteria And Research USPF Criteria: GO Debt, Oct. 12, 2006 www.standardandpoors.com ffiI 1 X91 911: October 20, 2010 City of New Hope 4401 Xylon Avenue North New Hope, MN 55428-4898 Attention: Mr. Kirk McDonald, City Manager 130 East Randolph Street Suite 2900 Chicago, IL 60601 tel 312 233.7001 reference no.: 1146960 Re: US$1,900,000 City of New Hope, Minnesota, General Obligation Certificates of Indebtedness and Refunding Bonds, Series2010B, dated: November 23, 2010, due: February 1, 2012-2022 Dear Mr. McDonald: Pursuant to your request for a Standard & Poor's rating on the above -referenced obligations, we have reviewed the information submitted to us and, subject to the enclosed Terms and Conditions, have assigned a rating of "AA". Standard & Poor's views the outlook for this rating as stable. A copy of the rationale supporting the rating is enclosed. The rating is not investment, financial, or other advice and you should not and cannot rely upon the rating as such. The rating is based on information supplied to us by you or by your agents but does not represent an audit. We undertake no duty of due diligence or independent verification of any information. The assignment of a rating does not create a fiduciary relationship between us and you or between us and other recipients of the rating. We have not consented to and will not consent to being named an "expert" under the applicable securities laws, including without limitation, Section 7 of the Securities Act of 1933. The rating is not a "market rating" nor is it a recommendation to buy, hold, or sell the obligations. This letter constitutes Standard & Poor's permission to you to disseminate the above -assigned rating to interested parties. Standard & Poor's reserves the right to inform its own clients, subscribers, and the public of the rating. Standard & Poor's relies on the issuer/obligor and its counsel, accountants, and other experts for the accuracy and completeness of the information submitted in connection with the rating. This rating is based on financial information and documents we received prior to the issuance of this letter. Standard & Poor's assumes that the documents you have provided to us are final. If any subsequent changes were made in the final documents, you must notify us of such changes by sending us the revised final documents with the changes clearly marked. To maintain the rating, Standard & Poor's must receive all relevant financial information as soon as such information is available. Placing us on a distribution list for this information would facilitate the process. You must promptly notify us of all material changes in the financial Mr. Kirk McDonald Page 2 October 20, 2010 information and the documents. Standard & Poor's may change, suspend, withdraw, or place on CreditWatch the rating as a result of changes in, or unavailability of, such information. Standard & Poor's reserves the right to request additional information if necessary to maintain the rating. Please send all information to: Standard & Poor's Ratings Services Public Finance Department 55 Water Street New York, NY 10041-0003 Standard & Poor's is pleased to be of service to you. For more information on Standard & Poor's, please visit our website at www.standardandpoors.com. If we can be of help in any other way, please call or contact us at nypublicfinance@standardmdpoors.com. Thank you for choosing Standard & Poor's and we look forward to working with you again. 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You irrevocably agree that, for purposes of any claim against Rating Services that may be asserted by you, your affiliates or any person asserting claims on your behalf in any dispute arising out of or relating to this Agreement, the state courts of New York located in the County of New York or the U.S. federal court for the Southern District of New York shall be the exclusive forums for such disputes and the parties hereby consent to the personal jurisdiction of such courts. PF Ratings U.S. (10/18/10) GENERAL CERTIFICATE AS TO ORGANIZATION AND FINANCIAL CONDITION AND CHECKLIST OF ITEMS NEEDED FOR THE OFFICIAL STATEMENT City of New Hope, Minnesota 1. ELECTED OFFICERS/TERMS OF OFFICE Date: Seat 20.2010 MONTH, DAY & YEAR Name/Address/E-mail* Office Current Term Commenced Current Term Expires Kathi Hemken Mayor 01/05/09 12/31/12 John Elder Council Member 01/05/09 12/31/10 Andy Hoffe Council Member 01/05/09 12/31/12 Eric Lammle Council Member 01/05/09 12/31/12 DanielStauner Council Member 01/01/07 12/31/10 Council Member Council Member This information is requested so that we can e-mail/mail the Official Statement to the home of each Council Member. You may attach a sheet listing this information. Please indicate if you would like the Official Statement sent via: e-mail_X The Mayor votes on all Council matters X only in case of a tie or U.S. mail 2. APPOINTED OFFICIALS (Cross out titles which do not apply.) Title: Name and E-mail Address: Mailing Address: City Manager: Kirk McDonald 4401 Xylon Avenue North Attach Charter Amendments New Hope, MN 55428 City Clerk: Valerie Leone City Attorney: Steve Sondrall Jensen Sondrall Persellin, P.A. 8525 Edinbrook Crossing Suite 201 Brooklyn Park, MN 55443 3. GENERAL INFORMATION Federal Tax I.D. Number 1 41-6008870 Date City incorporated 1 1953 Statutory City OR X Home Rule City 5.1 square miles Attach Charter 20,873 Attach Charter Amendments The City contains: Second and fourth Monday of each month Square miles OR 5.1 square miles Land acres 20,873 Population: Second and fourth Monday of each month 1990 U.S. Census 21,853 2000 U.S. Census 20,873 Current State Demographers Estimate 4a. COUNCIL MEETINGS Regular meetin s held: When: Second and fourth Monday of each month Where: City Hall Council Chambers Time: 7:00 P.M. 4b. SALE OF BONDS -452 The Bonds are scheduled to be sold at a meeting to beheld on Octobe 11 2010. Please mark below if this meeting will be a regular or special meeting, if the meeting will be held at the same time as listed in Item 4a, and also if the meeting will be held at a location which is different than listed in Item 4a: Regular Meeting _X_ Special Meeting Different Location: Time of Meeting the same as in Yes No Item 4a: If answered ANo@ above new time is 4c. PRIVATE ACTIVITY QUESTIONS Subject to specific exceptions provided for in the Internal Revenue Code, the interest on municipal obligations which finance private activities or provide special benefits to private entities is taxable. By answering the questions below, you will assist us in confirming that your proposed project qualifies for tax-exempt financing. You may be receiving additional questions regarding private activity from Bond Counsel. $ Do you expect that any non-governmental person or entity (e.g., a private business or individual) will have any ownership interest, leasehold interest, use arrangement, management contract, or other special legal entitlement associated with the facilities and/or equipment to be financed with the bonds? No Will bond proceeds be used to make loans to any other governmental or non-governmental entity? No $ Will any other entity make payment to the bonds, or provide their security pledge to repay the bonds? No 5. LONG-TERM BONDED INDEBTEDNESS Please review the attached schedules of bonded indebtedness and revise if necessary. Attach any principal and interest payment schedules (showing semi-annual principal and interest payments for each individual issue) for additional debt the City has outstanding. Attachment is correct. d d E O N A Y C N m V m m n m CIO N N N N q a O O O O O O O O O O O O y C N N N N N N N N N N N N w W LL a d`e �°TTT°a Tie �o y Y W m K W O N p m N W W O Wo O O O g O O O O O O O O 6 O O O y 9 Co O O O O Co O O o 0 0 Ci m N W n d' O m N n 7 0 F 6 n V N n m V h n m N e m m m n N F 0 n V N n W V n n m N m 0 0 0 0 0 0 0 0 O o 0 o O ~ C O O O N N h O N O N O O N N d 0 N m O W O IO q N P% � Cml O m W m W lV m 0 0 0 0 0 0 0 0 0 0 0 0 n 00 0 0 0 0 0 0 0 0 0 'V 0 0 0 0 0 0 0 0 0 0 0 Oo C O O ilf O N N C) C C i0 N O d N N N N n n n m m m W N m N O m O O N N O O O O m M< m M O m M N r b m Ot m m vl o M m n m M m N C 0 0 g ' 0 0 0 0 0 0 0 0 0 0 0 0 O O N N O O m N O O m O m a` N O O b T m fV fV L O O y O O C O O A d OI q a O N O O O O O O O O O O = W N N N N N N N N N N N LL A WO W La L W a d a LL_ 0 N W m 0I y C N N N N N N N N N N N N N N N N N N N N N m W a o 0 o a' o o e e e e e e o e dE dE dE a 3E a 3' O f0 N O� 7 t0 N C> W Q 7� C) t0 M O a N N Oi Y Q N A 0 Ci Q tp of O N'' Cl n ri o7 G b M 7 � M r M M Yl h O a N N M M� N N tp A A N m m O G7 (A O qq O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 T; a O C O O O O O O O O O O O O O O O O O o y Q N C� r N M 0 OD N N W tp ^ V V M M M M M N N N O tC M N N N t0 O N N Q W Q N M M N N N N N aD O r OND Nr, r 0 q 0 N N OP O r Q n 0 OND �a MVvi OiNOMtA VcuN M N m WmWww aD 0 M N N OC N M h O h A N 0 Q7 N f A- h N tO N A M N A Q AQ O o7 O N Cl! O h � A Q A% Q 6D N 1� W 0 0 0 0 0 0 0 pp pp 0 0 0 0 0 0 0 0 0 0 0 O Cl 0 0 C 0 0 Cl0 0 C 0 0 0 C 0 0 0 0 0 0 O O 0 0 0 0 O 0 0 0 0 0 0 0 0 Cl ~ C N N O N N N O N N O N N O O O O O O O O O N W O N M Q N y N O N Q m N O) O O O O O O N N N N N N N N N N M M M M N V d O 0 O N O Q h N W N a7 0) Q N h 0) N h! h N A 6 N N Q 'd C4 N M N O r Q h Q 00 Q OMN VfVOMNNOihONONN'MN fD C r r r fp fO tD N f0 N N N Q Q Q M M N � A O 01 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O O O O O O O O O O O O O O O O O O C O U C M G G G N M N O G O M M M M O O G O O C O O N M M M M M M Q Q N N N A c0 O) 01 0 0 0 0 0 m a` N M O N N M M M N M M Ql M M Q N <q (q N O N V M IMO M to ClV r Co N m cvio V M 'v �c Moio oai W � 6 O O O O O O O O O O O O O O •� 0 0 0 0 C 0 0 0 0 0 0 0 0 0 0 0 C O 1n O NJ O O 1(l In 1(l O O O 1A N O R N N N N N N N N N N m O) y C N N N N N N N N N N N N N N N N N N N N N m w i� O N M y n H a F ' c o 0 vi vi a` N O k F- E a o LL N O O N m m O O a LU as m 5 C Z � O) N O d in O m po O C m NLLf 6 O O 0. G O O O a 0 M M 2 c o ,m LL, m O) O Z o n H LL m0R m m m � R r U m CD Q L H a 0 0 N u m � n Mcoo �a rm<o of a` 9 3 O rn m m m c0� o N n0 N y N N N M M N N N M p N O O 0 Y F m A C C. O L CL m a Q N M r O m m �c 0 a o � o 0 o W OJ M (O e (O �rrovi � N c a` Q E 0 L LL Q a O vi N d Wc m a o Zdy m mN T� M O t O m N o. Mr�o rnvoo m W c L ryi OJ N M v a N O 0.01 w iz = a a` 00 0 W m o [ Z 0 W LL C R i 0 1O E N U C N N N N W Q N W 0 N LL Uvlza 0 0 N u 6. CAPITAL LEASE PURCHASE OBLIGATIONS Please include payment schedules for any capital lease purchase obligations outstanding for land, buildings, and/or equipment that will be owned by the City at the end of the lease period. N/A 7. OTHER Has the City issued any debt on behalf of a 501(c)3 non-profit corporation (i.e. nursing home, hospital, etc.) during the current calendar year? _X_ Yes, _ No (If yes, please include payment schedule). "Attachment A" Please list the total principal amount of any debt that the City anticipates issuing within this fiscal year for any types of leases, Public Facilities Loans from the State of Minnesota, and including loans the City will be issuing on behalf of a 501(c)3 non-profit corporation (i.e. nursing home, hospital, etc.). 8. FUNDS ON HAND/DEBT REDEMPTION FUNDS List ALL city cash and investments by fund, including debt redemption and utility funds or attach a copy of your most recent treasurer's report. Balances are as of 6/30/10 (most recent date available). Name of Fund Amount (cash and investments) General See Attachment Special Revenue Debt Service Capital Projects Enterprise Funds Internal Service Trust and Agency L U. ,—` i an { `( tha Corporstiou is requited to rcpleuish the amount so w:thdmaav in monthly instrtilrnents. See, 11 78�TURB tmtd: and Fungi" Amounts in tho F.-ettie find r. Qusiifred lavcNantnts, as described in Appeudk D unsex the heading ` rHE INDE1 lrtestmens" Additional Bonds Linder dre Indenture, tits l;saer, at the mq test of the Corporation, is atnF urxl to issue Additional Bonds W be issued and secured equally and ratably and on u pa&y under the Mottgage vAth the Series 2003 Bonds, cee "rHEBONDS—AddiriotL Bonds." Defessaace Upon certain terms and conditions specified in the indenture, including the deposit of ca. -Win %Ws witb the Trmctca, the Series 200-Q Bonds will be deemed to be paid and the roan Agroement and the Mortgage will be disaha.,Led prior to foe maturity or redemption thetroi See Appendix D: 'THE INDENTURE—Dische:ge of Lien." DEBT SERVICE REQUIREMENTS FOR THE SERIES 2W BONDS Annual PEd2d5 JQ,gt;�ha 2 �'7rci''a_l,4�i�uTd Aonunl Interest &-mit Dect OLroueh O soler 1 i i Ovine &bilic 2010' 5141,827.60 $141,823.60 2011 5180,000 166,312.50 346,312.50 2012 185,000 160,912.50 345,912.50 2013 195,000 154,90000 349,900.00 2014 2001,000 148,075.0^ 248,075.00 2015 210,000 140,075.00 350,075.00 2016 220,000 131,150.00 351,150.00 2017 230,000 121,250.00 351,250.00 2018 245,000 1101,325.00 355,325.00 2019 260,000 98,075.00 358,075.00 2020 270,000 94,425.00 354,425.00 s071 290,000 69175.00 359,575.00 2022 305,wo 53,625.00 358,62510 2023 325,000 36,850.00 361,850.00 202.1 345,000 18,975.00 363,975.00 ' Repre mu the ptaiod wmmcwing on. •1ts data of issuance of the Series 2009 Bonds And continuing th uglt Ocwher 1, 2010 THE CORPORATION St. 311ame 140me, Inc. (referred to generally in this OffioW Stidemest as the "CerpwaC4,C% is a ldinn-ola nattpmfit corpotation Prid an Mani.atian described in Section 501(c)i3) of the lnin W Reveuuc Cad' of 1986, as ammidtd. The mailing address of tha Co poration is! 8000 .Baez lAt Road., Now Hope, Minnesota 55428. The C Toration's genital idephone number is 163-531-5000. Questions may be dfieccted to Mr. Mike Warden., C'hi:fFinancial Olficu. For edditionr,l information with respect to frte. Corporation, sae Appendix A. -14- THE PROJECT Tl e Seties 2009 Bands are bcirg ia.,^ued to provide financing for the remodeling and rmwtation of and the covgruzatin of inip-mvements to the Corporation's existing skilied nureitug, cangiegata housing and aasitmd living 60ititc in the City ofNex Holz, biirnesota (like "2009 Proitoe, or due `Fr.a;.:ce'). Fox more information with respect to the Pitjcct, suit Appendix A: 'IVE PROJECT FACILCTIES— Rsnovation ant" Improvement Projects." See els* "S1HvM ARY OF ESTIMATED SOJ=M AND APPLICATION OF FUNMS" Lwlrw. SUMMARY OF ESTIMATED SOURCES AND APPLICATION OF FUNDS The estimated sources sail spplicatien of funds required in:,enr,eatian with the issuance of the Series 2409 Bonds ase s±uicips:Ld to be, as follows: 000P.= + 1 i r. Proet ds of""cries 2009 Bands S 3,450,000 Additional Funds of Comur etion 83,564 Tow: S 3,543,564 &Qlicatictr nfFurgLI Constructiar.Costs of2009Project S 2,751,86, Equipment 417,000 Anhitectural anO Design Fees 35,200 Dcnesit m Res--rvro Fund 181,988 imark,e $,.penes (iuciudiag legal fees, printir,I; costs, initial tutee fm;, title insurance premitunr. urdmmmlinz, Commissions, eta.) 152,764 Rounrlina &mount 3,;12 Total: $ 3,543,564 ENFORCEAHiLTI'Y OF OBLIGATIONS Thu Series 2009 Bonds are secured, equally and tsnably uO an a parity with. the Serie 2003 .Bonds, by the Lcaa Apmtnient, Ike Indenture and Nue rAurtgage. The pr:,dict[ realization of such seculity upon any default vd;l depend upon the exercise of various remedies specified cry ,be Indeutmc, the i,t:an Agreem"t and the h4cagaga Tbese and other mn edim ere in many rerpccc de{acndc;rt upon judicial actions which are often subjczi to dismbon and delay. Linder existing camatiw6unA, statutory and judicial hate, the remedies apeeified by the Indernure, the Loan Agreement and the Mortgage may not be read ly available cr utay be lirnifcd. A court may decide not to tack the specific performance of covemit; contained in such docun aha. The various legal ori. -dors to be delivered cane urcntly with the delivcry of the Series 2009 Donde will be grafi tied as to the oviGmetibility of the various 1e90 insttumeats by limitations imposed by dime and :ederal laws affecting rtrutdics and by bruj ruptey, nerganization or other tax's afreating tht eruoraeuient of creditors' rights. No %%ur: nc s carr be i ver, that The aggregate principal emcunt of fh'. Series 2M9 nonds'and Series 2003 Bonne outalaMing from time'to time constitates a realizable amount upon any foreclosure or other forced sale ofthe I tojcrt TAXEXE? 1rrtON GeacraJ In the opinion of Darsey &: Whitney IIA Mitmeoltolis, ?dJrtn+i5ota, Bond Cautscl, interest an the Series 2049 Bends, assuming ocntiauir.co,-%Aiance with certain covenants, is not includable- in gross income for perpostz. C.f Fedend in.on•.e taxrtion and, to slat &Nnie extent, in grass income or net taxable income of individuals, Must~ and estates for purposes of Minnesota state ittcame taxation (other then Minnmta franchise tuxes imposed or: -15- Company 06/30/2010 Total Total 09001 -General Fund 3,852,204.70 GF 3,852,204.70 Total 09008-CDBG 232,108.58 Special Total 09010 - Liquor Reserve 680,592.00 Special Total 09013 - Bassett Crk Watershed -5,768.15 Special Total 09014 - Shingle Crk Watershed 355.24 Special Total 09015- Econ Devlpmt Authority 1,714,151.26 Special Total 09016 - Solid Waste Mgmt 127,834.25 Special Total 09017 - Ice arena endowment fund 3,700.00 Special Total 09021 - Donations/Lion's Club 155,506.92 Special Total 09024 -Safety Camp 12,153.91 Special 2,920,634.01 Total 09114 - EDA Sinkg #6/8,85-2 873,900.09 Debt Total 09117 - EDA Sinking #10, 03-01 342,369.88 Debt Total 09118 - EDA Sinking #11, 04-1 -138,845.01 Debt Total 09119 - EDA Sinking #12, 04-2 -95,173.87 Debt Total 09140 - Fire Pension Bond 1996 -4,805.30 Debt Total 09143 - Improv Bd Redemption 3,710,567.00 Debt Total 09146- Spec Assmt Refndg-95 127,293.15 Debt 4,815,305.94 Total 09203- Street Infrastructure 2,660,976.85 Capital Project Total 09213 -EDA Constr #5,85-1 548,166.73 Capital Project Total 09214 -EDA Constr #7,86-1 906,143.67 Capital Project Total 09215 -EDA Constr #618,85-2 1,886,767.01 Capital Project Total 09216 - EDA Constr #9, 02-01 2,874.16 Capital Project Total 09217 - EDA Constr #10, 03-01 -95,200.10 Capital Project Total 09218 -EDA Constr #11, 04-1 -360,037.95 Capital Project Total 09219 - EDA Constr #12, 04-2 -185,328.33 Capital Project Total 09233 - Park Infrastructure 1;346,691.24 Capital Project Total 09242- Temporary Financing 927,320.60 Capital Project 7,638,373.88 Total 09300 -Sewer -134,845.04 Enterprise Total 09301 - Water 124,233.85 Enterprise Total 09302 - Golf Course 52,591.02 Enterprise Total 09303 - Ice Arena 414,897.84 Enterprise Total 09304 - Storm Water 1,097,087.99 Enterprise Total 09305- St Light/Signal Oprtn 133,239.06 Enterprise 1,687,204.72 Total 09402 - C Garage -Operation 6,827,430.55 Internal Total 09407 - Insurance Fund 550,990.81 Internal Total 09408 - Vacation Leave 417,502.69 Internal Total 09410 - Information Technology 205,793.75 Internal 8,001,717.80 Total 09501 - Escrow 36,114.54 Escrow Total 09503 -Agency -Pass Thru 43,986.29 Escrow 80,100.83 28,995,541.88 28,995,541.88 I H� Iln eG2 (_ 11, 9a. CITY EMPLOYEES (EXCLUDING COUNCIL MEMBERS AND VOLUNTEER FIREFIGHTERS) Full-time 84 Part-time 12 Seasonal 112 Total 208 9b. List all of the City's recognized and certified bargaining units: Bargaining Unit Expiration Date Of Current Contract L.E.L.S. Local #77 Police Officers 12/31/10 L.E.L.S. Local #273 Police Supervisors 12/31/10 I.U.O.E. Local #49 12/31/10 9c. STATUS OF EMPLOYEE CONTRACTS What is the status of any of the above contracts that have expired? 10. INSURANCE COVERAGE Does the City currently carry the required statutory amount of insurance coverage as required by state law? Yes: X No: If no, please explain: 11. LITIGATION Is any litigation currently threatened which might affect the issuance of the bonds? If none, so state. None 12. MISCELLANEOUS Has the City ever defaulted in the payment of any of its obligations? Yes: No: X If so, please state the date and describe circumstances. 13. FINANCIAL INFORMATION Please send us the following: AUDITS/FINANCIAL STATEMENTS for the City and any separate Enterprise Funds for: 2005 On file -do not send 2006 On file -do not send 2007 On file -do not send 2008 On file -do not send 2009 On file -do not send CURRENT BUDGET (2010) On file -do not send 14. Have there been any significant changes in the City=s financial position since your last audit or are there any other issues pending that could have a significant effect on the City=s financial condition? Listed below are situations for you to consider, any of which may have affected the City=s financial position. Significant increases or decreases in fund balances either experienced or anticipated. Significant court judgments imposing costs not accrued or previously anticipated. Settlements of labor contracts which may result in expenditures significantly in excess of budgeted dollars. Significant changes in accounting methods, procedures or re -statements of accounts. Yes: No: X If yes, please describe the change, the reason(s) for the change, and any action to be taken to remedy the change. 15. LIABILITIES FOR OTHER POST EMPLOYMENT BENEFITS Have you had an actuarial study completed of your OPEB liabilities since the last one completed with an actuarial valuation as of December 31, 2008? If so, please attach a copy of the study. "Attachment B" 16. REIMBURSEMENT RESOLUTION If the City has adopted a reimbursement resolution and/or a declaration of intent related to the project being financed, please attach a copy for our records. Resolution 2010-84 (adopted 5/24/10) — Attachment F 17. FINAL LEVY CERTIFICATION Please enclose copies of the City=s Final Levy Certification forms or resolutions adopting the levies for those years -- including a breakdown of the General Tax Levy, LGA and any other aids -- for: Collectible in: 2006 On file -do not send 2007 On file -do not send 2008 On file -do not send 2009 On file -do not send 2010 Enclosed ZL�Vpuuk,e E Ga!�vnzwt E - Ci RESOLUTION NO. 2010- 84 0 uu.3i-i or RESOLUTION RELATING TO FINANCING OF CERTAIN PROPOSED EXPENDITURES RELATING TO FIRE EQUIPMENT TO BE ACQUIRED BY THE CITY; ESTABLISHING COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS UNDER THE INTERNAL REVENUE CODE BE IT RESOLVED by the City Council of the City of New Hope as follows: 1. Recitals. (a.) The United States Department of Treasury has promulgated final regulations governing the use of proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the City for project expenditures paid by the City prior to the date of issuance of such bonds. Those regulations (Treasury Regulations, Section 1.150-2) (the "Regulations") require that the City adopt a statement of official intent to reimburse an original expenditure not later than 60 days after payment of the original expenditure. (b.)The City desires to comply with requirements of the Regulations with respect to expenditures to be made by the City for its share of the cost for the acquisition of four (4) new fire engines for use by the West Metro Fire -Rescue District (the "Equipment"). 2. Official Intent Declaration. The City proposes to make payments for certain costs of the Equipment from the City's Building Safety Fund. $625,000.00 of said costs is due August 1, 2010 with the remainder due January 2011. The City reasonably expects to reimburse any expenditures from this fund out of the proceeds of certificates of indebtedness or capital notes to be issued by the City pursuant to Minnesota Statutes, Section 412.301, in an estimated maximum aggregate principal amount of One Million Two Hundred and Fifty Thousand Dollars and no cents ($1,250,000.00) (the "Equipment Certificates") after the date the payment of such expenditures are made by the City from the City's Building Safety Fund. 3. Budgetary Matters. As of the date hereof, there are no City funds reserved, allocated on a long-term basis or otherwise set aside (or reasonably expected to be reserved, allocated on a long -tern basis or otherwise set aside including the Building Safety Fund) to provide permanent financing for the payment of the cost of the Equipment, other than pursuant to the issuance of the Equipment Certificates. The statement of intent contained in this resolution, therefore, is —1— determined to be consistent with the City's budgetary and financial circumstances as they exist or are reasonably foreseeable on the date hereof. NOW, THEREFORE, BE IT RESOLVED bythe City Council ofthe CityofNew Hope as follows: 1. The City Manager is hereby authorized and directed to pay the City's proportionate share for the acquisition of four (4) fire engines and related equipment for use by the West Metro Fire -Rescue District as approved by City Council Resolution No. 2009-104 due on August 1, 2010 in the amount of $625,000.00 from the City's Building Safety Fund. 2. The City shall subsequently issue debt in the form of Equipment Certificates or other legally equivalent form of debt to pay for the Equipment as proposed in the herein resolution and all funds used for purchase of the Equipment from the Building Safety Fund shall be reimbursed to said fund from the proceeds of the certificates of indebtedness. Dated the 24th day of May , 2010. katgheinlen, Mayor Attest: V� Valerie Leone, City Clerk PUMMEn MU GHENTI MCRTOF NEW HOPEW9-1O CRY MGRS O=ON- DEBT BEB.®UPSEE@NTFB MUM ACQULSIIIOND —2— 0 �YI.GP.�9rro'�- IS City of New Hope Notes to the Financial Statements for the Year Ended December 31, 2008 Note X. Postemployment Benefits Other Than Pensions Plan Description. The City of New Hope administers a single -employer defined benefit healthcare plan ("the Retiree Health Plan"). The plan provides lifetime healthcare Insurance for eligible retirees and their spouses through the City's group health insurance plan, which covers both active and retired members. The benefit levels, employee contributions, and employer contributions are governed by the City and can be amended by the City through the City's collective bargaining agreements with employee groups. The Retiree Health Plan does not Issue a publicly available financial report. Funding Policy. Contribution requirements also are set by Council annually. The City contributes none of the cost of current -year premiums for eligible retired plan members and their spouses. For fiscal year 2008, the City contributed $4,412 to the plan. Plan members receiving benefits contribute 100 percent of their premium costs. In fiscal year 2008, total member contributions were $4,242. Annual OPER Cost and Net OPEB Obligation. The City's annual other postemployment benefit (OPER) cost (expense) is calculated based on the annual required contribution of the employer (ARC). The City has elected to calculate the ARC and related information using the alternative measurement method permitted by GASB Statement 45 for employers In plans with fewer than one hundred total plan members. The ARC represents a level of funding that, if paid on an ongoing basis, Is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPER obligation to the Retiree Health Plan: Annual required contribution $20,748 Interest on net OPEB obligation 0 Adjustment to annual required contribution jpl Annual OPEB cost (expense) 20,748 Contributions made ,4.4121 Increase in net OPEB obligation 16,336 Net OPER obligation—beginning of year 0 Net OPER obligation—end of year 116.336 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2008 and the two preceding fiscal years were as follows: Fiscal Percentage of Net Year Annual Annual OPEB OPER Ended OPEB Cost Cost Contributed Obligation 12/31/X0 $0 0.0% $p 12/31/X1 0 0.0 a 12/31/X2 20,748 21.3 16,336 Funded Status and Funding Progress. As of December 31, 2008, the actuarial accrued liability for benefits was $187,037, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was $381,970, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 49.0 percent. The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits, Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The following simplifying assumptions were made: Retirement age for active employees—Based an the historical average retirement age for the covered group, active plan members were assumed to retire at age 60, or at the first subsequent year in which the member would qualify for benefits. Marital status—Marital status of members at the calculation date was assumed to continue throughout retirement. Mortality—Life expectancies were based on mortality tables from the National Center for Health Statistics. The 2004 United States Life Tables for Males and for Females were used. Turnover—Non-group-speciflc age -based turnover data from GASB Statement 45 were used as the basis for assigning active members a probability of remaining employed until the assumed retirement age and for developing an expected future working lifetime assumption for purposes of allocating to periods the present value of total benefits to be paid. Healthcare cost trend rate—The expected rate of increase In healthcare insurance premiums was based on projections of the Office of the Actuary at the Centers for Medicare & Medicaid Services. A rate of 6.8 percent Initially, reduced to an ultimate rate of 6.0 percent after six years, was used. Health insurance premiums -2007 health insurance premiums for retirees were used as the basis for calculation of the present value of total benefits to be paid. Inflation rate—The expected long-term inflation assumption of 3.3 percent was based on projected changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI -W) in The 2006 Annual Report of the Hoard of Trustees of the Federal Old -Age and Survivors Insurance and Disability Insurance Trust Funds for an intermediate growth scenario. Payroll growth rate—The expected long-term payroll growth rate was assumed to equal the rate of inflation. Based on the historical and expected returns of the City's short-term investment portfolio, a discount rate of 3.50 percent was used. In addition, a simplified version of the entry age actuarial cost method was used. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at December 31, 2008, was thirty years. REQUIRED SUPPLEMENTARY INFORMATION Schedule of Funding Progress for the Retiree Health Plan pcwaFla) Percentage Actuarial Valuatlon value of simplified UnfunduAAAL Entry Funded Covered of Covered Late Assets LAI Age 1VAAU Lu fk - 31 Ratio Payroll faLhl %41 Payroll 1(6 - al / cl 12/31/06 $0 $0 $0 0.0% $0 0.0% 12/31/07 0 0 0 0.0 0 0.0 12/31/08 0 187,037 187,037 0.0 301,970 49.0 2011 PROPOSED LEVY CERTIFICATION� State of Minnesota County of Hennepin City of New Hope a-,Lh , � �^ 11) (DL) yrs I Valerie Leone City Clerk of said City of New Hope hereby certify that the following Resolution was passed by the Council of said City at a duly convened meeting heldinsaid Cityon September 13 2010. On motion it was resolved that the following sums of money be raised by tax upon the taxable property in said City for the following purposes for the current year., LEVY ITEM Check Column It Item Is DebtLevy CERTIFIED LEVY* 1 General $ 7,085,735 2 Street Infrastructure 1,182,500 3. Park Infrastructure 296,000 4. EDA 85,000 5. MVHC/LGA Unallotment 428,870 6. G.O. Taxable Bonds of 1996 X 38,005 '] 2010 Fire Truck Certificates X 185,792 8. 9. 10. Total Tax Capacity Based Levy $ 9,301,902 Market Value Based Referendum Levy $ The levy amount by line item should already be reduced by Local Government Aid (LGA) and other resources used to finance your City's budget. I further certify that I have compared the foregoing with the original entry of the minutes of the Meeting so held September 13 , 2010 as the same are recorded in the Book of Records of said City,and that the same is a correct transcript therefrom. Given under my hand this 14th dayof September 2010.E City Clerk 2011 PROPOSED LEVY CERTIFICATION SEWER DISTRICT State of Minnesota County of Hennepin City of New Hope I, Valerie Leone City Clerk of said City of New Hope hereby certify that the following Resolution was passed by the Council of said City at a duty convened meeting held in said City on September 13 , 2010. On motion it was resolved that the following sums of money be raised by tax upon the taxable property in said City for the following purposes for the current year. LEVY ITEM Check Column If Item Is Debt Levy CERTIFIED LEVY" 1. Shingle Creek $ 28,080 2. 3. 4. 5. 6. 7, 8. 9. 10. Total Tax Capacity Based Levy $ 28,080 Market Value Based Referendum Levy $ l further certify that / have compared the foregoing with the original entry of the minutes of the Meeting so held September 13 , 2010 as the same are recorded in the Book of Records of said City,and that the same is a correct transcript therefrom. Given under my hand this 14th day of September 2010, City Clerk 18a. LARGER EMPLOYERS To the best of our knowledge, listed below are the larger employers located in your City. Please review/revise and add any additional manufacturing firms, hotels, medical facilities, restaurants, service providers, retailers, etc. that are not listed. Firm Name Type of Business I.S.D. No. 281 (Robbinsdale) Elementary and secondary education North Ridge Care Center/ Minnesota Masonic Homes Nursing home and senior living facilities Saint Therese Home of New Hope Nursing home and senior living facilities Paddock Laboratories, Inc. Pharmaceutical manufacturing Navarre Corporation Compute software, DVD=s, video games and accessories FYI: We will be sending out survey letters to the larger employers located in your city. The information we request will be used in the larger employer section of the Official Statement. 18b. Please review the following list of financial institutions in your community. Please note any changes in bank names, deletions, or additions. Associated Bank, National Association (Branch of Green Bay, WI) Wells Fargo Bank, National Association (Branch of Sioux Falls, SD) 19. BUILDING PERMIT DATA Review and revise the following: *Permits are as of: August 31 , 2010. 20. BOND ISSUE SUMMARY BOOK A Bond Issue Summary book which contains information pertaining to the bond issue will be prepared and provided to the City after the issue has closed. Please indicate whether you would like to receive this information in hard cover form or on a CD: Hard Cover Book: X OR CD: 2006 2007 2008 2009 2010 New Single Family Homes: No. of building permits: 4 2 0 0 0 Valuation: $1,112,780 $1,458,542 $0 $0 0 New Multiple Family Buildings: No. of building permits: 1 0 0 0 0 Valuation: $6,300,000 $0 $0 $0 0 New Commercial/Industrial: No. of building permits: 1 0 1 0 0 Valuation: $2,100,000 $0 $910,000 $0 0 No. of All Building Permits (including additions, remodelin s 578 1,627 2,560 616 278 Valuation of All Building Permits (including additions, remodelin s) $18,862,054 $17,205,133 $26,824,154 $9,043,344 8,888,170 20. BOND ISSUE SUMMARY BOOK A Bond Issue Summary book which contains information pertaining to the bond issue will be prepared and provided to the City after the issue has closed. Please indicate whether you would like to receive this information in hard cover form or on a CD: Hard Cover Book: X OR CD: STATE OF MINNESOTA COUNTY OF HENNEPIN The General Certificate as to Organization and Financial Condition and Checklist of Items for the Official Statement is true and correct to the best of my knowledge. WITNESS my hand and official seal of the City of New Hope, Minnesota this 24 day of September, 2010. Title: City Clerk (SEAL) STATE OF MINNESOTA ) CERTIFICATE AS TO TAXES AND TAXABLE PROPERTY IN )ss THE CITY OF NEW HOPE COUNTY OF HENNEPIN ) (Herein called the "TAXING DISTRICT') I hereby certify that the TAXING DISTRICT is situated wholly in this County and that: 1. CURRENT VALUATION - The market value and net tax capacity of all taxable property in the TAXING DISTRICT in this County as assessed in 2009 for the purpose of computing the rates of taxes collectible in 2010, are as follows: MARKET VALUE Real Estate 1,618,178,200 Personal Property 7,624,400 Real & Personal Property 1,625,802,600 TAX CAPACITY Residential 10,785,254 Agricultural 5,830 Public Utility 20,012,449 Railroad Operating Property 29,954 All Other Commercial & Industrial 6,566,650 Non -Homestead Residential/Multiple Dwelling 2,475,605 Commercial & Seasonal Recreational 810 Other 16,234,591 Common Area 3,946,315 Golf Course 20,180,906 Non Profit Community Assn Neighborhood Trust Total Real Estate 19,864,103 Total Personal Property 148,346 Total Real & Personal Property 20,012,449 If applicable to TAXING DISTRICT, Subtract: Captured tax capacity of tax increment district 1,181,390 10% of 200KV transmission lines Fiscal disparity contribution value 2,596,468 Tax Capacity Rate Determination Value 16,234,591 Add: Fiscal disparity distribution Value 3,946,315 Total Adjusted Net Tax Capacity 20,180,906 1 1 2. Valuation History (Real & Personal Property) Levy Year Payable Year Taxable Market Value Adjusted Net Tax Capacity 2008 2009 1,732,235,700 21,179,543 2007 2008 1,750,807,800 20,859,409 2006 2007 1,692,662,000 19,858,810 2005 2006 1,571,305,700 18,725,973 2004 2005 1,423,083,200 17,181,863 3. Top Fifteen Taxpaying Parcels (if requested) CIT' OF NEW HOPE (L Wtk Im- 0.ti% 171 35l ,�13� 11t()�Ztl� \ 1e to"1� ;'L5B1 Taxpayer Taxable Market Value Tax Capacity Property Classification Real/Personal Property ID GENEVA MANGMT SERV LLC 9,400,000 187,250 INDUSTRIAL 0811821230007 PADDOCK PROP LTD PTRSHP 7,875,000 156,750 INDUSTRIAL 1711821320008 ST THERESE HOME INC 12,338,000 154,438 APARTMENT 0611821410030 MINN MASONIC HOME NO RIDGE 12,182,000 152,275 APARTMENT 0611821430036 NEW HOPE/US SWIM PARTNERSHIP 7,600,000 151,250 COMMERCIAL 1811821110016 COBALT INDUSTRIAL REIT II 7,230,000 143,850 INDUSTRIAL 2011821310020 WINNETKA MALL LLC 7,000,000 139,250 COMMERCIAL 1811821110018 NEW HOPE DISTRBTN CTR LLC 7,000,000 139,250 INDUSTRIAL 0711821110002 LONG RIDGE INDUST PORTFOLIO 6,800,000 135,250 INDUSTRIAL 0711821120006 FLS PROPERTIES 6,650,000 132,250 INDUSTRIAL 0611821320004 LANG NELSON ASSOC 10,575,000 132,188 APARTMENT 2011821220011 WELSH CORPORATE HEADQUARTERS 6,500,000 129,250 INDUSTRIAL 0811821230009 BROADWAY LANEL/GOLLE/HOLMES 9,987,000 124,838 APARTMENT 0511821210016 ROLAND A STINSKI 5,800,000 115,250 INDUSTRIAL 0711821110001 AMB PROPERTY CORPORATION 5,700,000 113,250 INDUSTRIAL 0811821240012 2 4. Taxing Authority and Tax Rate History CITY OF NEW HOPE The TAXING DISTRICT has power to tax property situated in the following county or counties: HENNEPIN (The HOME AUDITOR is listed in capital letters.) The following governmental units within Hennepin County also have the power to levy taxes in the TAXING DISTRICT: Governmental Unit County of Hennepin City of New Hope ISD 281 Metro Mosquito Metro Council Metro Transit Three Rivers Park Dist Park Museum HCRRA Hennepin HRA 5 Year Market Value Rate History 2006 2007 2008 0.16298% 0.14295% 3 0.11842% 2009 2010 0.22209% 0.22881% 4. Taxing Authority and Tax Rate History (continued) 5 Year Tax Capacity Rate History Governmental Unit 2006 2007 2008 2009 CITY OF New Hone 2010 County of Hennepin 41.016% 39.110% 38.571% 40.413% 42.056% City of New Hope 42.375% 42.346% 41.995% 41.342% 45.542% ISD 281 28.489% 28.750% 27.243% 27.214% 28.621% Metro Mosquito 0.509% 0.499% 0.486% 0.489% 0.461% Metro Council 0.873% 0.877% 0.812% 0.817% 0.793% Metro Transit 1.542% 1.295% 1.264% 1.273% 1.366% Three Rivers Park Dist 2.830% 3.068% 3.137% 3.334% 3.499% Park Museum 0.685% 0.700% 0.719% 0.771% 0.778% HCRRA 0.559% 0.871% 0.979% 0.380% Hennepin HRA 0.241% 4 5. Bonded Indebtedness CITY OF NEW HOPE The TAXING DISTRICT and all the governmental units listed in section 3 having bonded debt, has such debt as shown below. Values shown are Adjusted Taxable Gross Tax Capacities which have been adjusted for Fiscal Disparities Contribution and Distribution, Tax Increment Captured Tax Capacity and 200 KV Transmission Lines. Taxable Net Tax Taxable Net Tax 2010 Capacity of Entire Capacity of Portion Bonded Debt Debt Service Governmental in TAXING DISTRICT as of Tax Capacity Governmental Unit Unit in County in County 12131/09 Rate County of Hennepin $1,600,479,532 $20,180,906 $877,275,000 3.500% City of New Hope 20,180,906 20,180,906 8,190,000 0.199% ISD 281 104,267,959 20,180,906 254,635,000 14.357% Metro Council ** 1,599,548,644 20,180,906 1,116,379,876 0.106% Metro Transit *"* 1,519,654,084 20,180,906 1.366% Three Rivers Park Dist 1,161,337,991 20,180,906 85,660,000 0.940% HCRRA 1,600,479,532 20,180,906 43,895,000 1.000% Most recent data available Hennepin County Value Only - Not Hanover Metropolitan Transit Debt is included in Metropolitan Council Debt 5 6. Tax Levies and Collections CITY OF NEW HOPE Levy Year/Collection Year 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 Original Gross Tax Levy $ 8,030,218.51 $ 8,030,507.23 $ 8,402,567.17 $ 8,759,765.32 $ 8,769,580.51 Property Tax Credit (354,083.71) (313,922.33) (303,124.42) (301,124.60) (305,938.61) Levy Adjustments (Abatements, Additions, Cancellations) (16,032.33) (9,851.92) (5,629.84) (6,514.17) (6,295.46) Net Tax Levy 7,660,102.47 7,706,732.98 8,093,812.91 8,452,126.55 8,457,346.44 Amount collected during collection year 7,582,360.32 7,623,003.19 7,984,889.25 8,343,629,36 8,382,201.89 Balance due at the end 77,742.15 83,729.79 108,923.66 108,497.19 75,144.55' of the collection period Delinquencies Collected (57,087.85) 70,962.39 92,373.75 85,072.96 as of: 12/31/09 Delinquencies Abated or (15,614.08) (4,517.54) 7,276.44 (1,260.73) - Cancelled as of: 12/31/08 Total Remaining 5,040.22 8,249.86 23,826.35 22,163.50 75,144.55 ✓' Outstanding as of: 12/31/09 2009/2010 Original Gross Tax Levy $ 9,093,206.04 WITNESS my hand and official seal this 11th day of March, 2010. (SEAL) County Auditor If you have any questions about information contained in this certificate, please contact Ellen Bentzen at (612) 348-9959. I ADDENDUM DATED OCTOBER 26, 2010 TO OFFICIAL STATEMENT DATED OCTOBER 14, 2010 New Issue Rating: Standard & Poor's "AA" $1,850,000 GENERAL OBLIGATION CERTIFICATES OF INDEBTEDNESS AND REFUNDING BONDS, SERIES 2010B CITY OF NEW HOPE, MINNESOTA Schedule of Maturity Dates, Principal Amounts, Interest Rates and Yields Serial Bonds Term Bonds $375,000; 3.000% Term Bond due February 1, 2022; Yield 3.000%; CUSIP No. 64544P CG6; with mandatory redemption at par in 2021 - 2022 as noted below. Redemption February Amount 2021 $60,000 2022 $65,000 Bonds maturing, or subject to mandatory redemption, on February 1, 2021 and thereafter are subject to call for prior redemption on February 1, 2020 and any date thereafter at par. Wells Fargo Advisors has agreed to purchase the Bonds from the City for an aggregate price of $1,856,267.52 plus accred interest to the date of delivery. It is expected that the Bonds will be available for delivery on or about November 23, 2010. Book -Entry -Only: This offering will be issued as fully registered Bonds and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York, to which principal and interest payments on the Bonds will be made. Paying Agent: Bond Trust Services Corporation, Roseville, Minnesota. THIS ADDENDUM TOGETHER WITH THE OFFICIAL STATEMENT DATED OCTOBER 14, 2010, SHALL CONSTITUTE A "FINAL OFFICIAL STATEMENT" OF THE ISSUER WITH RESPECT TO THE BONDS AS THAT TERM IS DEFINED IN RULE 15c2-12 OF THE SECURITIES AND EXCHANGE COMMISSION. WELLS FARGO ADVISORS St. Louis, Missouri CUSIP CUSIP Maturity Interest Base Maturity Interest Base (February1) Amount Rate Yield 64544P (February 1) Amount Rate Yield 64544P 2012 $170,000 2.000% 0.650% BW2 2017 $195,000 2.000% 1.900% CB7 2013 $180,000 2.000% 0.850% BXO 2018 $200,000 2.150% 2.150% CC5 2014 $185,000 2.000% 1.100% BY8 2019 $205,000 2.400% 2.400% CD3 2015 $190,000 2.000% 1.350% BZ5 2020 $205,000 2.600% 2.600% CEI 2016 $195,000 2.000% 1.600% CA9 Term Bonds $375,000; 3.000% Term Bond due February 1, 2022; Yield 3.000%; CUSIP No. 64544P CG6; with mandatory redemption at par in 2021 - 2022 as noted below. Redemption February Amount 2021 $60,000 2022 $65,000 Bonds maturing, or subject to mandatory redemption, on February 1, 2021 and thereafter are subject to call for prior redemption on February 1, 2020 and any date thereafter at par. Wells Fargo Advisors has agreed to purchase the Bonds from the City for an aggregate price of $1,856,267.52 plus accred interest to the date of delivery. It is expected that the Bonds will be available for delivery on or about November 23, 2010. Book -Entry -Only: This offering will be issued as fully registered Bonds and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York, to which principal and interest payments on the Bonds will be made. Paying Agent: Bond Trust Services Corporation, Roseville, Minnesota. THIS ADDENDUM TOGETHER WITH THE OFFICIAL STATEMENT DATED OCTOBER 14, 2010, SHALL CONSTITUTE A "FINAL OFFICIAL STATEMENT" OF THE ISSUER WITH RESPECT TO THE BONDS AS THAT TERM IS DEFINED IN RULE 15c2-12 OF THE SECURITIES AND EXCHANGE COMMISSION. WELLS FARGO ADVISORS St. Louis, Missouri In the opinion o(Dorsi)v & Whilnei LLP, Bard Counsel, based on presrnl federal andMirmcsam lava'. rcgalations, rulings and decisions, and assuming comptionce with cerlairr covenants, interest to be paid on the Bonar is exchided fi ore gross income for federal income tar peoposes and fi am taxable net income of individuals, estates, and musts lbr Minnesota income Fax proposes: is not an item of tax preferencefoo .federal or Minnesota aftenative minimum tax purposes: but is included in adjusted current earnings of torpor ations k"federal ahenralive minimum tax purposes. Such interest is included in taxable income for purposes ofthe Minnesota fi a chise tax on corporations and financial institutions. See "Tax Exemption and Related Tax Considerations"he, 'ein. The OF,I, will designate the Bonds as "qualified tax-exempt obligations' :for purposes of Section 265(6)(3) of the Code relating to the ability offinancial institutions to dedrul fi•onu intone for.feder'al income tax purposes, a potion ofdre interest expense that is allocable to car i ing and acquiring tax-evenopl obligation. Sections 165(a)(2) and 291 of the Cade impose additional limitations ov the deductibiliql ofsuch interest expense. New Issue Rating Application Made: Standard & Poor's PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 14, 2010 CITY OF NEW HOPE, MINNESOTA $1,900,000 GENERAL OBLIGATION CERTIFICATES OF INDEBTEDNESS AND REFUNDING BONDS, SERIES 2010B PROPOSAL OPENING: October 25, 2010, 11:00 A.M., C.T. CONSIDERATION: October 25,2010,7:00 P.M., C.T. PURPOSE/AUTHORITY/SECURITY: The $1,900,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B (the "Bonds") are being issued pursuant to Minnesota Statutes, Chapters 444 and 475, by the City of New Hope, Minnesota (the "City"), for the purpose of funding the acquisition of a new fire engine and effecting a current refunding of the 2012 through 2022 maturities of the City's $850,000 General Obligation Storm Sewer Revenue Bonds, Series 2002A, dated April 1, 2002. The Bonds will be general obligations of the City for which its full faith, credit and taxing powers are pledged. Delivery is subject to receipt of an approving legal opinion of Dorsey & Whitney LLP, Minneapolis, Minnesota. DATE OF BONDS MATURITY: November 23, 2010 February 1 as follows: Year Amount* 2012 $175,000 2013 190,000 2014 190,000 2015 195,000 Year Amount* 2016 $195,000 2017 200,000 2018 205,000 2019 210,000 Year Amount* 2020 $215,000 2021 60,000 2022 65,000 MATURITY ADJUSTMENTS: * The City 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, 2011 and semiannually thereafter. OPTIONAL REDEMPTION: Bonds maturing February 1, 2021 and thereafter are subject to call for prior redemption on February 1, 2020 and any date thereafter, at par. MINIMUM PROPOSAL: $1,881,000. GOOD FAITH DEPOSIT: $38,000. PAYING AGENT: Bond Trust Services Corporation, Roseville, Minnesota. BOOK -ENTRY -ONLY: See "Book -Entry -Only System" herein. 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 Members, together with any other information required by law, and, as supplemented, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as defined in S.E.C. Rule 15c2-12. www.ehlers-inc.com EHLERS Minnesota phone 651-697-8500 3060 Centre Pointe Drive LEADERS IN PUBLIC FINANCE Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville, MN 55113-1122 REPRESENTATIONS No dealer, broker, salesperson or other person has been authorized by the City 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 City. This Preliminary Official Statement does not constitute an offer to sell or a solicitation of an offer to buy any oirthese Bonds in anyjurisdietion 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 prepared this Preliminary Official Statement and any addenda thereto relying on information of the City 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, payable entirely by the City, 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 City 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 City 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 at least two business days prior to the sale. Requests for additional information 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" ofthe City with respect to the Bonds, as defined in S.E.C. Rule 15c2-12. Copies of the Final Official Statementwill be deliveredto 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 may be 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 famished with the following items: (1) a certificate ofthe 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 City 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 City which indicates that the City 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 ....................... I THE BONDS ........................................ 1 GENERAL ...................................... I OPTIONAL REDEMPTION ........................ 2 AUTHORITY; PURPOSE .......................... 2 ESTIMATED SOURCES AND USES ................ 3 SECURITY ..................................... 4 RATING ........................................ 4 CONTINUING DISCLOSURE ...................... 4 LEGAL OPINION ................................ 5 TAX EXEMPTION AND RELATED TAX CONSIDERATIONS ......................... 5 QUALIFIED TAX-EXEMPT OBLIGATIONS .......... 6 FINANCIAL ADVISOR ........................... 6 RISK FACTORS ................................. 6 VALUATIONS ...................................... 8 CURRENT PROPERTY VALUATIONS .............. 9 2009/10 NET TAX CAPACITY BY CLASSIFICATION . 10 TREND OF VALUATIONS ....................... 10 LARGER TAXPAYING PARCELS ................. 11 DEBT............................................. 12 DIRECT DEBT ................................. 12 SCHEDULES OF BONDED INDEBTEDNESS ........ 13 DEBT LIMIT ................................... 18 OVERLAPPING DEBT ........................... 19 DEBT RATIOS ................................. 20 DEBT PAYMENT HISTORY ...................... 20 FUTURE FINANCING ........................... 20 LEVY LIMITS .................................. 20 TAX LEVIES AND COLLECTIONS .................... 21 TAX COLLECTIONS ............................ 21 TAX CAPACITY RATES ......................... 21 THE ISSUER ....................................... 22 CITY GOVERNMENT ........................... 22 EMPLOYEES; PENSIONS; UNIONS ............... 22 LITIGATION ................................... 22 FUNDS ON HAND .............................. 23 ENTERPRISE FUNDS ........................... 24 SUMMARY GENERAL FUND INFORMATION ...... 25 GENERAL INFORMATION ........................... 26 LOCATION .................................... 26 LARGER EMPLOYERS .......................... 26 U.S. CENSUS DATA ............................. 27 EMPLOYMENT/UNEMPLOYMENT DATA ......... 27 BUILDING PERMITS ............................ 28 FINANCIAL INSTITUTIONS ..................... 28 EDUCATION ................................... 29 RQ -PATIENT MEDICAL FACILITIES ............... 29 iii EXCERPTS FROM FINANCIAL STATEMENTS ....... A-1 FORM OF LEGAL OPINION ....................... B -I BOOK -ENTRY -ONLY SYSTEM .................... C-1 FORM OF CONTINUING DISCLOSURE COVENANTS D-1 TERMS OF PROPOSAL ........................... E-1 CITY COUNCIL Kathi Hemken Mayor John Elder Council Member Andy Hoffe Council Member Eric Lammle Council Member Daniel Stauner Council Member Kirk McDonald, City Manager Valerie Leone, City Clerk PROFESSIONAL SERVICES Jensen Sondrall Persellin, P.A., City Attorney, Brooklyn Park, Minnesota Dorsey & Whitney LLP, Bond Counsel, Minneapolis, Minnesota Ehlers, Financial Advisors, Roseville, Minnesota (Other offices located in Broolfieldd. Wisconsin and Lisle,. Illinois) is, INTRODUCTORY STATEMENT This Preliminary Official Statement contains certain information regarding the City of New Hope, Minnesota (the "City") and the issuance of its $1,900,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B (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 authorizing the sale of the Bonds to be adopted by the City Council on October 25, 2010. Inquiries may be directed to Ehlers (or "the Financial Advisor"), Roseville, Minnesota, (651) 697-8500, the City's Financial Advisor. A copy of this Preliminary Official Statement may be downloaded from Ehlers' web site at www.chlers-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 November 23, 2010. 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, 2011, 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) prior to the interest payment date. 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"). (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 City has selected Bond Trust Services Corporation, Roseville, Minnesota, to act as paying agent (the "Paying Agent"). The City will pay the charges for Paying Agent services. The City reserves the right to remove the Paying Agent and to appoint a successor. OPTIONAL REDEMPTION At the option of the City, Bonds maturing on or after February 1, 2021 shall be subject to prior payment on February 1, 2020 or on any date thereafter, at a price of par plus accrued interest. Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the selection of the amounts and maturities of the Bonds to be prepaid shall be at the discretion of the City. If only part of the Bonds having a common maturity date are called for redemption, the City or Paying Agent, if any, will notify DTC of the particular amount of such maturity to be redeemed. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interest in such maturity to be redeemed. Notice of such call shall be given by mailing a notice not more than 60 days and not fewer than 30 days prior to the date fixed for redemption to the registered owner of each Bond to be redeemed at the address shown on the registration books. AUTHORITY; PURPOSE The Bonds are being issued by the City, pursuant to Minnesota Statutes, Section 412.301 and 444.075 and Chapter 475, for the purpose of financing the acquisition of a new fire engine and effecting a current refunding of the 2012 through 2022 maturities of the City's $850,000 General Obligation Storm Sewer Revenue Bonds, Series 2002A (the "Series 2002A Bonds"), dated April 1, 2002. Following are the maturities of the Series 2002A Bonds which are being refunded by this issue: Issue Being Refunded Series 2002A Bonds Date of Refunded Call Call Issue Date Price 4/01/02 2/01/11 Par Total Series 2002A Bonds Being Refunded Maturities Principal Being Interest to be Refunded Rates Refunded 2012 4.50% $ 40,000 2013 4.60% 45,000 2014 4.70% 45,000 2015 5.00% 50,000 2016 5.00% 50,000 2017 5.00% 55,000 2018 5.00% 55,000 2019 5.20% 60,000 2020 5.20% 60,000 2021 5.20% 65,000 2022 5.20% 70,000 595 000 Proceeds of the Bonds will be used to call and prepay the maturities described above and to pay all or most of the costs of issuance. The City will pay the principal a - i interest payment due on February 1, 2011 from the Debt Service Fund for the Series 2002A Bonds. ESTIMATED SOURCES AND USES Sources Equipment Refunding Total Portion Portion Bond Issue Par Amount of Bonds $1,285,000 $615,000 $1,900,000 Uses Project Costs $1,250,000 Refunding $1,250,000 Deposit to Current Refunding Fund 0 $594,811 594,811 Discount Allowance 14,135 6,765 20,900 Finance Related Expenses 23,164 11,086 34,250 Contingency (2,299) 2,338 39 Total Uses $1,285,000 $615,000 $1,900,000 Breakdown of Principal and Interest Payments: Payment Equipment Refunding Total Date Portion Portion Bond Issue 2/01/2012 $ 130,000 $ 45,000 $175,000 2/01/2013 135,000 55,000 190,000 2/01/2014 140,000 50,000 190,000 2/01/2015 140,000 55,000 195,000 2/01/2016 140,000 55,000 195,000 2/01/2017 145,000 55,000 200,000 2/01/2018 150,000 55,000 205,000 2/01/2019 150,000 60,000 210,000 2/01/2020 155,000 60,000 215,000 2/01/2021 60,000 60,000 2/01/2022 65,000 65,000 Total $1,285,000 $615,000 $1,900,000 3 SECURITY The Bonds are general obligations of the City for which its full faith, credit and taxing powers are pledged without limitation as to rate or amount. Principal and interest on the Refunding Portion of the Bonds will be paid entirely from net revenues of the storm sewer system which is owned and operated by the City. Principal and interest on the Equipment Portion of the Bonds will be paid from ad valorem property taxes levied in an amount sufficient to provide not less than 105% of principal and interest on the Equipment Portion of the Bonds. Should the revenues pledged for payment of the Bonds be insufficient to pay the principal and interest as the same shall become due, the City is required to pay maturing principal and interest from moneys on hand in any other fund of the City not pledged for another purpose and/or to levy a tax for this purpose upon all the taxable property in the City, without limitation as to rate or amount. RATING The City has requested a rating on this issue from Standard & Poor's, 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 Standard & Poor's. 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 permit bidders for the Bonds and other participating underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule"), the City will covenant and agree, for the benefit of the registered holders and beneficial owners from time to time of the outstanding Bonds, in the resolution awarding the sale and prescribing the terms of the Bonds, to provide certain financial information, and other financial information and operating data if customarily prepared and publicly available, to the Municipal Securities Rulemaking Board, and to provide notice of the occurrence of certain events, if material, as hereinafter described (the "Disclosure Covenants"). The City is the only "obligated person" in respect of the Bonds within the meaning of the Rule and, giving effect to the issuance of the Bonds, there will not be more than $10 million in principal amount of municipal securities outstanding on the date of issuance of the Bonds as to which the City is an obligated person (excluding municipal securities exempt from the Rule under paragraph (d)(1) thereof). The information to be provided, the events as to which notice is to be given, if material, and summary of other provisions of the Disclosure Covenants, including termination, amendment and remedies, are set forth in Appendix D to this Official Statement. The City has complied in all material respects with any undertaking previously entered into by it under the Rule. Breach of the Disclosure Covenants will not constitute a default or an "Event of Default" under the Bonds or the Resolution. A broker or dealer is to consider a known breach of the Disclosure Covenants, however, before recommending the purchase or sale of the Bonds in the secondary market. Thus, a failure on the part of the City to observe the Disclosure Covenants may adversely affect the transferability and liquidity of the Bonds and their market price. 4 LEGAL OPINION An opinion as to the validity of the Bonds and the exemption from taxation of the interest thereon will be furnished by Dorsey & Whitney LLP, Minneapolis, Minnesota, bond counsel to the City, and will accompany the Bonds. The legal opinion will state that the Bonds are valid and binding general obligations of the City 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, insolvency, reorganization, moratorium or creditors' rights generally. TAX EXEMPTION AND RELATED TAX CONSIDERATIONS Tax Exemption It is the opinion of Dorsey & Whitney LLP, Bond Counsel, based on present federal and Minnesota laws, regulations, rulings and decisions, and on certifications to be furnished at closing, and assuming compliance by the City with certain covenants (the "Tax Covenants"), that interest to be paid on the Bonds is excluded from gross income for federal income tax purposes and from taxable net income of individuals, estates, and trusts for Minnesota income tax purposes. Such interest is, however, included in taxable income for purposes of Minnesota franchise taxes imposed on corporations and financial institutions. Certain provisions of the Internal Revenue Code of 1986, as amended (the "Code"), however, impose continuing requirements that must be met after the issuance of the Bonds in order for interest thereon to be and remain not includable in federal gross income and in Minnesota taxable net income of individuals, estates and trusts. These requirements include, but are not limited to, provisions regarding the use of Bond proceeds and the facilities financed with such proceeds; restrictions on the investment of Bond proceeds and other amounts; and provisions requiring that certain investment earnings be rebated periodically to the federal government. Noncompliance with such requirements may cause interest on the Bonds to be includable in federal gross income or in Minnesota taxable net income retroactively to their date of issue. Compliance with the Tax Covenants will satisfy the current requirements of the Code with respect to exemption of interest on the Bonds. No provision has been made for redemption of or for an increase in the interest rate on the Bonds in the event that interest on the Bonds becomes includable in federal gross income or in Minnesota taxable net income. Related Tax Considerations Interest on the Bonds is not an item of tax preference for federal or Minnesota alternative minimum tax purposes, but it is included in adjusted current earnings of corporations for purposes ofthe federal alternative minimum tax. Section 86 of the Code and corresponding provisions of Minnesota law require recipients of certain social security and railroad retirement benefits to take interest on the Bonds into account in determining the taxability of such benefits. Passive investment income, including interest on the Bonds, may be subject to taxation under section 1375 of the Code, and corresponding provisions of Minnesota law, for an S corporation that has accumulated earnings and profits at the close of the taxable year, if more than 25 percent of its gross receipts is passive investment income. Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds (see "QUALIFIED TAX-EXEMPT OBLIGATIONS" herein for provisions relating to certain financial institutions), and Minnesota law similarly denies a deduction for such interest in the case of individuals, estates and trusts. Indebtedness may be allocated to the Bonds for this purpose even though not directly traceable to the purchase of the Bonds. Federal and Minnesota laws also restrict the deductibility of other expenses allocable to the Bonds. Because of the Code's basis reduction rules for amortizable bond premium, Bondholders who acquire Bonds at a premium might recognize taxable gain upon sale of the Bonds, even if the Bonds are sold for an amount equal to or less than their original cost. The market value and marketability of the Bonds maybe adversely affected by future changes in federal or Minnesota tax treatment of interest on the Bonds or by future reductions in income tax rates. THE FOREGOING IS NOT INTENDED TO BE AN EXHAUSTIVE DISCUSSION OF COLLATERAL TAX CONSEQUENCES ARISING FROM OWNERSHIP OR DISPOSITION OF THE BondS OR RECEIPT OF INTEREST ON THE BondS. PROSPECTIVE PURCHASERS OR BOND HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO COLLATERAL TAX CONSEQUENCES AND APPLICABLE STATE AND LOCAL TAX RULES IN STATES OTHER THAN MINNESOTA. QUALIFIED TAX-EXEMPT OBLIGATIONS The City will designate the Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code relating to the ability of financial institutions to deduct from income for federal income tax purposes, a portion of the interest expense that is allocable to tax-exempt obligations. Sections 265(a)(2) and 291 of the Code impose additional limitations on the deductibility of such interest expense. FINANCIAL ADVISOR Ehlers has served as Financial Advisor to the City 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. Taxes: The Bonds of this offering are general obligations of the City, the ultimate payment of which rests in the City's ability to levy and collect sufficient taxes to pay debt service should other revenue be insufficient. State Actions: Many elements of local government finance, including the issuance of debt and the levy of property taxes, are controlled by state government. Past and future actions of the State 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. Ratings; Interest Rates: In the future, the City's credit rating may be reduced or withdrawn, or interest rates for this type of obligation may rise generally, either possibility resulting in a reduction in the value of the Bonds for resale prior to maturity. 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 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. Continuing Disclosure: A failure by the City 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 of Minnesota 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 City 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. VALUATIONS 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' 2007/08 First $500,000 - 1.00% Over $500,000 - 1.25% First $500,000 HGA - 1.00% Over $500,000 HGA - 1.25% First $790,000- 0.55%2 Over $790,000 - 1.00%2 Land - 1.00%2 First $500,000 - 1.00%' Over $500,000 - 1.25%' 1 unit - I st $500,000 - Over $500,000 2-3 units - 1.25% 4 or more - 1.25% Small City ° - 1.25% 2008/09 First $500,000 - 1.00% Over $500,000 - 1.25% First $500,000 HGA - 1.00% Over $500,000 HGA - 1.25% First $890,000 - 0.50% 2 Over $890,000 - 1.00% 2 Land - 1.00%2 First $500,000 - 1.00%' Over $500,000 - 1.25%' 1.00% 1 unit - I st $500,000 - 1.25% Over $500,000 2-3 units - 1.25% 4 or more- 1.25% Small City ° - 1.25% 2009/10 First $500,000 - 1.00% Over $500,000 - 1.25% First $500,000 HGA - 1.00% Over $500,000 HGA - 1.25% First $1,010,000 - 0.50%' -- Over $1,010,000 - 1.00%2 Land - 1.00%' First $500,000 - 1.00%' Over $500,000 - 1.25%' 1.00% 1 unit - I st $500,000 - 1.00% - 1.25% Over $500,000 - 1.25% 2-3 units - 1.25% 4 or more - 1.25% Small City ° - 1.25""% First $150,000 - 1.50% First $150,000 - 1.50% First $150,000 - 1.50% Over $150,000 - 2.00% Over $150,000 - 2.00% Over $150,000 - 2.00% 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 lax. 4 The estimated market value of utility property is determined by the Minnesota Department of Revenue. CURRENT PROPERTY VALUATIONS Estimated Full Value of Taxable Property, 2009/10 Real Estate Personal Property Total Valuation Less: Captured Tax Increment Tax Capacity' Fiscal Disparities Contribution' Taxable Net Tax Capacity Plus: Fiscal Disparities Distribution' Adjusted Taxable Net Tax Capacity $1,655,463,708 ' 2009/10 Assessor's 2009/10 Taxable Net Tax Market Value Capacity $1,618,178,200 $19,864,103 7,624,400 148,346 $1,625,802,600 $20,012,449 (1,181,390) (2,596,468) $16,234,591 3,946,315 $ 20,180,906 According to the Minnesota Department of Revenue, the Assessor's Taxable Market Value (the "ATMV") for the City of New Hope is about 98.2% 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 0.982 and adding personal property and mobile home ATMV, if any, results in an "Estimated Full Value of Taxable Property" for the City of $1,655,463,708. '- The captured tax increment value shown above represents the captured net tax capacity of tax increment financing districts in the City of New Hope. ' Each community in the seven -county metropolitan area contributes 40% of the growth in its commercial - industrial property tax base since 1972 to an area pool which is then distributed among the municipalities on the basis ofpopulation, special needs, etc. Each governmental unit makes a contribution and receives a distribution -- sometimes gaining and sometimes contributing net tax capacity for tax purposes. 2009/10 NET TAX CAPACITY DV CLASSIFICATION Residential homestead Agricultural Commercial/industrial Railroad operating property Non -homestead residential Commercial & residential seasonal/ree. Personal property Total TREND OF VALUATIONS 2009/10 Net Tax Capacity $10,785,254 5,830 6,566,650 29,954 2,475,605 810 148,346 $20,012,449 Percent of Total Net Tax Capacity 53.89% 0.03% 32.81% 0.15% 12.37% 0.00% 0.74% 100.00% Adjusted Assessor's Taxable Levy Taxable Net Tax Year Market Value Capacity' 2005/06 $1,571,305,700 $16,078,259 2006/07 1,692,662,000 17,052,108 2007/08 1,750,807,800 17,461,217 2008/09 1,732,235,700 17,357,938 2009/10 1,625,802,600 20,012,449 2009/10 Net Tax Capacity $10,785,254 5,830 6,566,650 29,954 2,475,605 810 148,346 $20,012,449 Percent of Total Net Tax Capacity 53.89% 0.03% 32.81% 0.15% 12.37% 0.00% 0.74% 100.00% Adjusted Taxable Net Tax Percent +/- in Assessor's Capacity= Taxable Market Value $18,725,973 +10.42% 19,858,810 + 7.72% 20,859,409 + 3.44% 21,179,543 -1.06% 20,180,906 -6.14% ' Net Tax Capacity is before fiscal disparities adjustments and includes tax increment values. Y Adjusted Taxable Net Tax Capacity is after fiscal disparities adjustments and does not include tax increment values. 10 LARGER TAXPAYING PARCELS' Source: Current Property Valuations, Net Tax Capacity by Classification, Trend of Valuations and Larger Taxpaying Parcels have been furnished by Hennepin County. Hennepin County has provided only the ten largest taxpayingparcels which appear on the tax rolls of the County, and therefore the information stated above may not be reflective of the entire valuation of all parcels and may not include all classifications of property. 2009/10 2009/10 Assessor's Taxable Net Tax Taxpayer Type of Property Market Value Capacity Geneva Management Service LLC Industrial $ 9,400,000 $187,250 Paddock Property Ltd Partnership Industrial 7,875,000 156,750 St. Therese Home Inc. Apartment 12,338,000 154,438 Minn Masonic Home No Ridge Apartment 12,182,000 152,275 New Hope/US Swim Partnership Commercial 7,600,000 151,250 Cobalt Industrial Reit ll Industrial 7,230,000 143,850 Winnetka Mall LLC Commercial 7,000,000 139,250 New Hope Distribution Center LLC Industrial 7,000,000 139,250 Long Ridge Industrial Portfolio Industrial 6,800,000 135,250 FLS Properties Industrial 6,650,000 132,250 Source: Current Property Valuations, Net Tax Capacity by Classification, Trend of Valuations and Larger Taxpaying Parcels have been furnished by Hennepin County. Hennepin County has provided only the ten largest taxpayingparcels which appear on the tax rolls of the County, and therefore the information stated above may not be reflective of the entire valuation of all parcels and may not include all classifications of property. DEBT DIRECT DEBT' General Obligation Debt (see schedules following) Total g.o. debt being paid from revenues $1,730,000 Total g.o. debt being paid from tax increment revenues 4,605,000 Total g.o. debt being paid from taxes 35,000 Total g.o. debt being paid from revenues and taxes (the Bonds of this offering) 1,900,000 Total General Obligation Debt $8,270,000 Lease Purchase Obligations (see schedule following) Total lease purchase obligations paid by annual appropriationS2 $ 20,390 ' Outstanding debt is as of the dated date of the Bonds. z Non -general obligation debt has not been included in the debt ratios. 12 W E Q F L � A LU Z a� a Z m Z y c rL d m CL O o a 2 D 0 c W m ao Z O u n LL d O 0 d N O M W d rn Y C N M Q N N r 0 OI ry N q 9 O O� ry 0 0 0 0 0 0 0 N W N N N N N N N N N LL d OJ Q (� Ol N �O OI Ih O O e N CO] YNI (n0 n� m m 001 W O mo ........... 6 C 0 0 0 0 0 0 0 0 0 0 C q O O i0 V] O N O O O N O O �i Q h N N N Q Ol N N Q N 10 O N O f0 W O (O a W O) f d (7 N CO C> m N N N r (7 r rn at N• rn O Nt 0✓ O rn d N C N N N W O W W W t0 OJ � G m N N O 10 O t0 OJ O (O Q W 0) CJ N W CI p N C1 N r (7 n W b 0 0 0 0 0 0 0 0 0 0 0 O 0 6 .......... 0 O C O O 10 O 10 N 10 O O N 10 O d f7 N N N Nin v�v>inQ min inQ � o W N N W M A N N N 1 N O W 0 0 0 0 0 0 0 0 0 0 0 O 6 O O O O O O O O O O O O 0 0 0 0 0 0 6 n 0 e N OI Y C � N lel Q N 10 n W A N N U C H ry ry ry N N N N N N N IL W 13 O O E Q 0 N rn O N m C L d a d N d G � `m 3 0 N O N O O N � a a` y m N n 0 e N OI Y C � N lel Q N 10 n W A N N U C H ry ry ry N N N N N N N IL W 13 O O E Q 0 N rn O N m C L d a d d OI Y C � N M O N b r OJ OI O N M Q N t0 r O M O N N N N N N N N N N M M y C N N N N N N N N N N N N N N N N N N N N N H W IL a o 0 o e e e v e o e o 0 � M.n iv ooN �n rnrnaN Qmv �rnYoM o v�rirNrc'i oiv oco oi�wroi Monro e � � NNMMQ in v�co r rmmrnrnrnm o ME 0 0 0 0 0 0 0 0 0 .... 0 0 0 0 0 0 0 0 M O OJ l(1 N OJ (O M m Ln IfJ Q M N O d M M N RI N M r m r r N O t0 M � Oe N r N r N (9 N O� M M 01 M m OI m 0I O N N N� X 0 0 �n M M M M M M M M M M M Q Q Q Q � •- � � - � (O M M r O N V (O (O r (p In M OJ In OI N O N m Q OJ N d dO O O O O O O O0000000000... O o n O O O O O O O O O O O O O O O O O O O O O O a 14 1 d O ro O N O Q r� W M N O Q N r T N r N r N r (O O M i0 h N Q� (D f0 N M m ro r Q r Q of Q d C �r�OmmcNo envoi v`ni vNievQc�+�nNmvoiN m 0 0 LL. 0 0 M n O O O O O O O O O O » u O O O O O O O O O O O O L M O O O N M M O O O N N N N O O O O O O O O ' d M O YJ m M M M VI M M N M M Q N h d M r h N N m O M O] N M N S M 01 5 N � �ornrnmrco �n inQ N� r o o Q o 0 0 W o 0 v Q n 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o�o�oo���000��o M T y O N M M S—N— M d m ry a N N N N N N N N N O O O O O O O O O O O O O O O O O O O O O LL 14 1 m O n rn m r a ro � M M 15 :I A m o a O o o 0 r V O O C - ul VI M M a` N d X W r E Q o r LL w m m 0 `N m m N v a y LU c .9 Z a v m o rL N m O rn Q o m 0 m `� W c d CL p O F M n o 0 0 0 O v c in �n Z L p a W m O Z O 9 N LL 00 a c m rn OB m Y d d O Uin0< 15 :I G � a o _ mo E m A q a O O O O O O O O O O O O U C N N N N N N N N N N N N y W IL a e e o 0 o e e e o 0 0 0 a O N N N m r N O N m m 0 o O 01 01 N M Q IO 1� W O Of O R O O O O O O S 0 0 0 0 0 0 O O O O O •� a 0 0 0 0 0 0 0 0 0 0 0 U O O (O (O m O f0 N M N r LL W I� A (O N M m OI A O r 1� N f0 M (p C4,6 M N N t0 6) N N y N O7 M M W O m w W O) M Q m 41 O O m [O m O (O N M N F y m 1� 01 r (O N M m A 01 O 1l N y a 0 0 0 0 0 0 0 0 0 0 0 F, O o 0 o 0 0 0 0 0 0 0 0 O C m O O N N O m O l0 O � O a` m O O m N N N N m W w m 0wm0 `m mr m �coN M wmrno n E C N M M M M N N m Cq w N - N y - N W R O O O O O O O O O O O O O 6 0 0 0 0 0 0 0 o O O O O 0 0 0 0 0 0 0 0 0 0 0 O O N O a w w N N N N W U m o'v v o 0 0 0 0 0 0 0 0 0 0 W 16 m rn a5 rM�oo in �o 'go rrno d y a s o N O m _ ra �mmco 0 W W M N m N N 0 O a s o N O m _ r N min ap m c _ a O d O _ n 'V nvoo m ry Fa„ O N M t0 M 3 C C - I� CO M O N c a` Q E 0 LL Q a c- F- s w �coNo m w N o W = m N O Zns m Z,_ a 0 C 9 C Oa. O o M o a c m v o o m W C ._ N � •V (O N M t0 M Q d L_SI W LL C 1� OJ M N 0 O o Wm m Z 0 Y N LL a d v o T d m > c e N n Q p Vr O y a E a o Q N U W N N N N O N u U fn Q 17 c 0 a 0 n a Q m c c Q O O CL 0 z E a 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 3% of the Assessor's Taxable Market Value of all taxable property within its boundaries. "Net debt" (Minnesota Statutes, Section 475.5 1, 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 1-4 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 $1,625,802,600 Multiply by 3% 0.03 Statutory Debt Limit $ 48,774,078 Less: Long -Term Debt Outstanding Being Paid Solely from Taxes (includes a portion of the Bonds of this offering) (1,320,000) Unused Debt Limit $ 47,454,078 The $1,285,000 General Obligation Equipment Certificate portion of the Bonds of this offering are subject to the debt limit. E OVERLAPPING DEBT' Taxing District Hennepin County I.S.D. No. 281 (Robbinsdale) Metropolitan Council Three Rivers Park District City's Share of Total Overlapping Debt 2009/10 Adjusted Taxable Net Tax Capacity $1,600,479,532 104,267,959 3,553,445,725 1,161,337,991 Only those taxing jurisdictions with general obligation debt outstanding are included in this section. Does not include non -general obligation debt, self-supporting general obligation revenue debt, short -tern general obligation debt, or general obligation tax/aid anticipation certificates of indebtedness. 2 Hennepin County also has General Obligation Solid Waste Revenue Bonds outstanding which are payable entirely from the County's solid waste enterprise fund; General Obligation Bonds (Century Plaza Debt) which are expected to be paid from building rental fees from County departments and non -County tenants; and General Obligation Ice Arena Revenue Bonds which are expected to be paid from building rental payments from Augsburg College. These issues have not been included in the overlapping debt or debt ratios. 3 The above debt includes all outstanding general obligation debt supported by taxes of the Metropolitan Council. The Council also has general obligation sewer revenue, wastewater revenue, and radio revenue bonds and lease obligations outstanding all of which are supported entirely by revenues and have not been included in the Overlapping Debt or Debt Ratios sections. 19 City's % In Total Proportionate City G.O. Debt Share 1.2609% 2 $755,035,000 $ 9,520,453 19.3548% 172,465,000 33,380,340 0.5679% 3 167,600,000 951,842 1.7377% 73,985,000 1,285,659 $45,138,294 Only those taxing jurisdictions with general obligation debt outstanding are included in this section. Does not include non -general obligation debt, self-supporting general obligation revenue debt, short -tern general obligation debt, or general obligation tax/aid anticipation certificates of indebtedness. 2 Hennepin County also has General Obligation Solid Waste Revenue Bonds outstanding which are payable entirely from the County's solid waste enterprise fund; General Obligation Bonds (Century Plaza Debt) which are expected to be paid from building rental fees from County departments and non -County tenants; and General Obligation Ice Arena Revenue Bonds which are expected to be paid from building rental payments from Augsburg College. These issues have not been included in the overlapping debt or debt ratios. 3 The above debt includes all outstanding general obligation debt supported by taxes of the Metropolitan Council. The Council also has general obligation sewer revenue, wastewater revenue, and radio revenue bonds and lease obligations outstanding all of which are supported entirely by revenues and have not been included in the Overlapping Debt or Debt Ratios sections. 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 reports no plans for additional financing in the next three months. LEVY LIMITS The State Legislature has periodically imposed limitations on the ability of municipalities to levy property taxes. In 2008, the Legislature imposed levy limits for all counties and all cities over 2,500 population for budget years 2009, 2010 and 2011. These limitations do not apply to taxes levied to pay debt service on general obligation bonds of the City or to pay bonds of another governmental unit. For more detailed information about Minnesota levy limits, contact the Minnesota Department of Revenue or Ehlers & Associates. Funds on hand for debt redemption (available forpayment ofprincipal 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. Includes the portion of the Bonds of this offering payable entirely from revenues ($615,000 G.O. Storm Sewer Revenue portion). 20 Debt/Estimated Full Value of Debt/20,718 Taxable Property Estimated G.O. Debt ($1,655,463,708) Population Direct G.O. Debt Being Paid From: Revenues $ 1,730,000 Tax Increment Revenues 4,605,000 Taxes 35,000 Revenues & Taxes 1,900,000 Total General Obligation Debt $ 8,270,000 Less: Funds on Hand' (122,488) Less: G.O. Debt Paid Entirely from Revenues2 (2,345,000) Net General Obligation Debt $ 5,802,512 0.35% $280.07 City's Share of Total Overlapping Debt $45,138,294 2.73% $2,178.70 DEBT PAYMENT HISTORY The City has never defaulted in the payment of principal and interest on its debt. FUTURE FINANCING The City reports no plans for additional financing in the next three months. LEVY LIMITS The State Legislature has periodically imposed limitations on the ability of municipalities to levy property taxes. In 2008, the Legislature imposed levy limits for all counties and all cities over 2,500 population for budget years 2009, 2010 and 2011. These limitations do not apply to taxes levied to pay debt service on general obligation bonds of the City or to pay bonds of another governmental unit. For more detailed information about Minnesota levy limits, contact the Minnesota Department of Revenue or Ehlers & Associates. Funds on hand for debt redemption (available forpayment ofprincipal 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. Includes the portion of the Bonds of this offering payable entirely from revenues ($615,000 G.O. Storm Sewer Revenue portion). 20 TAX COLLECTIONS TAX LEVIES AND COLLECTIONS Certified Tax Year Levy' 2005/06 $ 8,029,931 2006/07 8,402,096 2007/08 8,759,354 2008/09 8,768,965 2009/10 8,768,965 Total Collected Collected 2007/08 Following Year to Date' % Collected $7,946,201 $8,021,681 99.90% 8,293,172 8,378,270 99.72% 8,650,857 8,737,191 99.75% 8,693,820 8,693,820 99.14% ------------------ ------------------- In 0.000% process of collection_ 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 RATES' Hennepin County City of New Hope I.S.D. No. 281 (Robbinsdale) Hennepin County HRA Hennepin County RRA Metropolitan Council Metropolitan Mosquito Metropolitan Transit Park Museum Three Rivers Park District Referendum Market Value Rates: I.S.D. No. 281 (Robbinsdale) 2005/06 2006/07 2007/08 2008/09 2009/10 41.016% 39.110% 38.571% 40.413% 42.056% 42.375% 42.346% 41.995% 41.342% 45.542% 28.489% 28.750% 27.243% 27.214% 28.621% 0.000% 0.000% 0.000% 0.000% 0.241% 0.559% 0.871% 0.979% 0.380% 0.000% 0.873% 0.877% 0.812% 0.817% 0.793% 0.509% 0.499% 0.486% 0.489% 0.461% 1.542% 1.295% 1.264% 1.273% 1.366% 0.685% 0.700% 0.719% 0.771% 0.778% 2.830% 3.068% 3.137% 3.334% 3.499% 0.16298% 0.14295% 0.11842% 0.22209% 0.22881% Source: Tax Collections and Tax Capacity Rates have been furnished by Hennepin County. This reflects the Final Levy Certification of the City after all adjustments have been made. ' Collections are through December 31, 2009. 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 ISSUER CITY GOVERNMENT The City of New Hope was organized as a municipality in 1953. 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 Manager and City Clerk are responsible for administrative details and financial records. EMPLOYEES; PENSIONS; UNIONS The City currently has 84 full-time, 12 part-time and 112 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 L.E.L.S. Local #77 Police Officers L.E.L.S. Local 9273 Police Supervisors 1.U.O.E. Local #49 LITIGATION Expiration Date of Current Contract December 31, 2010 December 31, 2010 December 31, 2010 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. 22 FUNDS ON HAND (As of June 30, 2010) 23 Total Cash Fund and Investments General $ 3,852,205 Special Revenue 2,920,634 Debt Service 4,815,306 Capital Projects 7,638,374 Enterprise Funds 1,687,205 Internal 8,001,718 Escrow 80,101 Total Funds on Hand $28,995,542 23 ENTERPRISE FUNDS Cash flows for the City's enterprise funds have been as follows as of December 31 each year Golf Course Total Operating Revenues 2007 2008 2009 Water and Sewer (407,266) (349,496) (335,816) Total Operating Revenues $4,858,972 $5,151,776 $5,110,945 Less: Operating Expenses (4,895,395) (4,861,765) (5,165,685) Operating Income $ (36,423) $ 290,011 $ (54,740) Plus: Depreciation 193,357 246,010 182,683 Revenues Available for Debt Service $ 156,934 $ 536,021 $ 127,943 Golf Course Total Operating Revenues $ 338,971 $ 330,782 $ 345,550 Less: Operating Expenses (407,266) (349,496) (335,816) Operating Income $ (68,295) $ (18,714) $ 9,734 Plus: Depreciation 46,766 47,057 45,461 Revenues Available for Debt Service $ (21,529) $ 28,343 $ 55,195 Ice Arena Total Operating Revenues $ 607,659 $ 655,832 $ 723,476 Less: Operating Expenses (718,802) (774,152) (680,276) Operating Income $ (111,143) $ (118,320) $ 43,200 Plus: Depreciation 96,706 101,614 101,613 Revenues Available for Debt Service $(14,437) $ (16,706) $ 144,813 Storm Water Total Operating Revenues $ 922,850 $ 951,699 $ 933,828 Less: Operating Expenses (307,046) (288,445) (316,216) Operating Income $ 615,804 $ 663,254 $ 617,612 Plus: Depreciation 52,082 52,679 54,558 Revenues Available for Debt Service $ 667,886 $ 715,933 $ 672,170 Street Lighting Total Operating Revenues $ 116,940 $ 133,634 $ 149,339 Less: Operating Expenses (126,779) (121,661) (127,031) Operating Income $ (9,839) $ 11,973 $ 22,308 Plus: Depreciation 0 0 0 Revenues Available for Debt Service i_19,8391 $ 11,973 $ 22,308 24 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 2009 audited financial statement. COMBINED STATEMENT Revenue Property taxes Franchise taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines Other Total Revenue Expenditures Current General government Public safety Public works Culture and recreation Total Expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses) FISCAL YEAR ENDING DECEMBER 31 2005 2006 2007 2008 2009 $ 5,071,687 $ 5,368,368 $ 6,087,808 $ 6,228,780 $ 6,524,813 296,816 295,431 314,543 312,308 340,497 0 3,017 3,615 7,293 2,203 398,843 289,534 332,351 415,012 226,303 1,124,979 1,200,712 741,307 960,620 1,298,631 808,144 829,308 954,186 916,889 948,074 240,273 266,750 247,794 285,255 236,173 206,489 252 554 304,682 255,309 148,774 $ 8,147,231 $ 8,505,674 $ 8,986,286 $ 9,381,466 $ 9,725,468 $ 1,054,957 $1,095,531 $1,176,580 $ 1,302,294 $ 1,183,593 4,588,929 4,730,022 5,271,537 5,867,739 5,922,454 960,101 825,199 883,268 830,900 740,014 1,507,246 1,602,386 1,633,251 1,677,660 1,693,043 $ 8,111,233 $ 8,253,138 $ 8,964,636 $ 9,678,593 $ 9,539,104 $ 35,998 $ 252,536 $ 21,650 $ (297,127) $ 186,364 Transfers in $ 0 $ 0 $ 0 $ 0 $ 215,510 Transfers (out) 0 0 0 0 0 Total Other Financing Sources (Uses) $ 0 $ 0 $ 0 $ 0 $ 215,510 Excess of revenues and other financing sources over(under)expenditures and other financing $ 35,998 $ 252,536 $ 21,650 $ (297,127) $ 401,874 uses General Fund Balance January 1 3,939,420 3,975,418 4,227,954 4,249,604 3,952,477 Prior Period Adjustment 0 0 0 0 0 Residual Equity Transfer in (out) 0 0 0 0 0 General Fund Balance December 31 $ 3,975,418 $ 4,227,954 $ 4,249,604 $ 3,952,477 $ 4,354,351 DETAILS OF DECEMBER 31 FUND BALANCE Reserved $ 0 $ 0$ 0$ 0$ 0 Unreserved: Designated 3,459,180 3,850,483 4,130,721 3,952,477 4,349,310 Undesignated 516,238 377,471 118,883 0 5,041 Total $ 3,975,418 $ 4.227,954 $ 4,249,604 $ 3,952,477 $ 4,354,351 25 GENERAL INFORMATION LOCATION The City of New Hope, with a current estimated population of 20,718 and comprising an area of 5.1 square miles, is located approximately 12 miles northwest of the City of Minneapolis. LARGER EMPLOYERS Larger employers in the City include the following Source: Written andtelephone survey (March, 2010),DirectoriesUSA andthe Minnesota Department of Employment and Economic Development. ' Includes full-time, part-time and seasonal. IOU No. of Firm Type of Business/Product Employees' I.S.D. No. 281 (Robbinsdale) Elementary and secondary education North Ridge Care Center/ Nursing home and senior living facilities 808 Minnesota Masonic Homes Saint Therese Home of New Hope Nursing home and senior living facilities 602 Paddock Laboratories, Inc. Pharmaceutical and medicine manufacturing 557 Navarre Corporation Computer software, DVD's, video games and accessories 372 Source: Written andtelephone survey (March, 2010),DirectoriesUSA andthe Minnesota Department of Employment and Economic Development. ' Includes full-time, part-time and seasonal. IOU U.S. CENSUS DATA Population I rend: City of New Hope, Minnesota 1990 U.S. Census 21,853 2000 U.S. Census 20,873 Current estimate' 20,718 Percent of Change 1990 - 2000 -4.48% Income and Age Statistics Housing Statistics City of New Hope 1990 2000 Percent of Change All Housing Units 8,795 8,744 -0.58% Source: 1990 and 2000 Census of Population and Housing. EMPLOYMENT/UNEMPLOYMENT DATA Rates are not compiled for individual communities within counties. Average EmploVment Year City of Hennepin State of 2007 New Hope County Minnesota 1999 per capita income $23,562 $28,789 $23,198 1999 median household income $46,795 $51,711 $47,111 1999 median family income $60,424 $65,985 $56,874 2000 median gross rent $687 $654 $566 2000 median value owner occupied housing $136,600 $143,400 $122,400 2000 median age 38.3 yrs. 34.9 yrs. 35.4 yrs. Housing Statistics City of New Hope 1990 2000 Percent of Change All Housing Units 8,795 8,744 -0.58% Source: 1990 and 2000 Census of Population and Housing. EMPLOYMENT/UNEMPLOYMENT DATA Rates are not compiled for individual communities within counties. Average EmploVment Year Hennepin County 2006 626,862 2007 629,593 2008 627,744 2009 612,707 2010, August 628,082 Average Unemulovment Hennepin County State of Minnesota 3.6% 4.1% 4.1% 4.6% 4.9% 5.4% 7.4% 8.0% 6.9% 6.9% Source: Minnesota Department of Employment and Economic Development. Source: Metropolitan Council website. 27 BUILDING PERMITS FINANCIAL INSTITUTIONS Financial institutions located in the City include the following: Associated Bank, National Association (Branch of Green Bay, Wisconsin) Wells Fargo Bank, National Association (Branch of Sioux Falls, South Dakota) Source: American Financial Directory. ' As of August 31, 2010. 28 2006 2007 2008 2009 2010' New Single Family Homes No. of building permits 4 2 0 0 0 Valuation $1,112,780 $1,458,542 $0 $0 $0 New Multiple Family Buildings No. of building permits 1 0 0 0 0 Valuation $6,300,000 $0 $0 $0 $0 New Commercial/Industrial No. of building permits 1 0 1 0 0 Valuation $2,100,000 $0 $910,000 $0 $0 No of All Building Permits 578 1,627 2,560 616 278 (including additions and reniodelings) Valuation of All Building Permits $18,862,054 $17,205,133 $26,824,154 $9,043,344 $8,888,170 (including additions and reniodelings) FINANCIAL INSTITUTIONS Financial institutions located in the City include the following: Associated Bank, National Association (Branch of Green Bay, Wisconsin) Wells Fargo Bank, National Association (Branch of Sioux Falls, South Dakota) Source: American Financial Directory. ' As of August 31, 2010. 28 EDUCATION Independent School District No. 281 (Robbinsdale) provides education for 11,936 students in grades K through 12. The District, with 2,000 employees, owns and/or operates 13 schools, 4 of which are located in the City of New Hope. Teachers' contracts in the District are currently settled. IN-PATIENT MEDICAL FACILITIES IN THE CITY Name of Facility Good Samaritan Society Ambassador North Ridge Care Center Saint Therese Home of New Hope MTAI Minnehaha Creek Type of Facility No. of Beds Nursing Home 85 Nursing Home 397 Nursing Home 302 Supervised Living Facility 5 Source: Minnesota Department of Health and the American Hospital Directory. NdMinnsota\New Hope\Debt Issuance\OS\BISUM\201OBS1900M.Oct (GO Cert & Rcfund)\os.rnir (New Hope 207OB).wpd FA=alyst f3i Beffill Al FBI WMI EXCERPTS FROM FINANCIAL STATEMENTS Reproduced on the following pages are excerpts from the City's audited Financial Statements for the fiscal year ending December 31, 2009. The Financial Statements have been prepared by the City 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 eu=u ^fid°� 'a = oV a. .�:E ��gE o•3 9 a E E d K °o z o S > E E o c ,tam_ °.o �_ 'oe S48e Ewmc o�C <UaEvy' Gq Q c V.2 8.3 . c 6 3 c y� a _r hB E E .. 4 E&� uyw.m 6 z EFF n=EE E� 3oy cEr` S'xb'•`ii E E'P Ea H L o " _ - - u- '°q�c �iggg533g9 �. �o" t,_x= $ill a - �„ e 5:g6� `E E$�'� d=os' mho ov°g :�wbm �$ .� k_9Sc ve� - 9 c n •• u a y .^_ u= Y¢ '$ '° 8 w �ci °3Wg„ r� ae.z"e -20 Qem 8 e A�t F B �y c- i dU a 3u s- °c��T ce%' @E - �.g f a03Y s two ¢��n aveEcc �=r O �9M. E's Ucs'_c i-�O�a A-2 Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary funds financial statements provide separate information for each of the enterprise operations. Conversely, the internal service funds are combined into a single aggregated presentation. Individual fund data for internal service funds is provided in the form of combining statements elsewhere in this report. Fiduciary Funds — Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary foods is much like that used for proprietary funds. Notes to Basic Financial Statements — The notes to basic financial statements provide additional information that is essential to obtaining a full understanding of the data provided in the government -wide and fund financial statements. GOVERNMENT -WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. The City's assets exceeded its liabilities by $56,063,720 at the end of 2009. The largest portion of the City's net assets (46 percent) reflects its investment in capital assets (e.g. land, buildings, machinery and equipment, and infrastructure) less any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other resources, since the capital assets themselves cannot be used to liquidate these liabilities. City of New Hope's Net Assets At the end of 2009, the City was able to report positive balances in all three categories of net assets, both for the City as a whole and for its separate governmental and business -type activities. A-3 Governmental Activities Business -]rye Activities Total 2009 2008 2009 2008 2009 2008 Current and other assets $34,909,537 $33,176,731 $ 2,000,315 $ 2,130,639 $36,909,852 $35,307,370 Capital assets 17,476,454 17,637,025 11,666,444 11,638,223 29,142,898 29,275,248 Total assets 52,385,991 50,813,756 13,666,759 13,768,862 66,052,750 64,582,618 Long -tens liabilities 6,462,700 7,528,757 2,276,671 2,632,710 8,739,371 10,161,467 Other liabilities 905,229 683,852 344,430 704,503 1,249,659 1,388,355 Total liabilities 7,367,929 8,212,609 2,621,101 3,337,213 9,989,030 11,549,822 Net assets Invested in capital assets, net of related debt 16,411,454 16,099,860 9,395,068 9,008,538 25,806,522 25,108,398 Restricted 19,454,696 17,857,296 — — 19,454,696 17,857,296 Unrestricted 9,151.912 8,643,991 1,650,590 1,423,111 10,802,502 10,067,102 Total net assets $45,018,062 $42,601,147 $11,045.658 $10,431,649 $56,063,720 $53,032.796 At the end of 2009, the City was able to report positive balances in all three categories of net assets, both for the City as a whole and for its separate governmental and business -type activities. A-3 During 2009, the City's net assets increased by $3,030,924. The majority of the increase occurred in governmental activities ($2.4 million of the $3.0 million increase). Within governmental activities, the City's bonded debt decreased while the current assets increased. The effect of reducing debt and maintaining current assets is a net increase in net assets. Key elements of the net increase are as follows: City of New Hope's Changes in Net Assets Expenses Governmental Activities Business -Type Activities Total 2009 2008 2009 2008 2009 2008 Revenues 2,492,386 Public safety 6,218,996 5,988,010 - - Program revenues 5,988,010 Public works 1,291,983 1,381,386 - - Charges for services $ 1,710,308 $ 1,895,268 $ 7,293,823 $ 7,251,370 $ 9,004,131 $ 9,146,638 Operating grants and 1,967,129 Interest on long-term debt 275,532 340,081 - - contributions 586,508 388,166 66,609 16,250 653,117 404,416 Capital grants and 4,915,929 Golf course - - - 369,579 383,521 contributions 117,544 63,947 75,209 16,353 192,753 80,300 General revenues 780,816 Storm water - - 393,118 361,542 Property taxes 10,023,080 10,252,215 - - 10,023,080 10,252,215 Franchise taxes 438,744 441,133 - - 438,744 441,133 General aids and grants 755,762 666,543 - - 755,762 666,543 Other 870,245 1,089,584 27,234 37,481 897.479 1,127,065 Total revenues 14,502,191 14,796,856 7,462,875 7,321,454 21,965,066 22,118,310 Expenses General government 2,244,977 2,492,386 - - 2,244,977 2,492,386 Public safety 6,218,996 5,988,010 - - 6,218,996 5,988,010 Public works 1,291,983 1,381,386 - - 1,291,983 1,381,386 Culture and recreation 2,053,788 1,967,129 - - 2,053,788 1,967,129 Interest on long-term debt 275,532 340,081 - - 275,532 340,081 Water and sewer - - 5,265,147 4,915,929 5,265,147 4,915,929 Golf course - - - 369,579 383,521 369,579 383,521 Ice arena - - 694,039 780,816 694,039 780,816 Storm water - - 393,118 361,542 393,118 361,542 Street lighting - - 126,983 121,912 126,983 121,912 Total expenses 12,085,276 12,168,992 6,848,866 6,563.720 18,934,142 18,732,712 Increase in net assets before transfers 2,416,915 2,627,864 614,009 757,734 3,030,924 3,385,598 Transfers - (30,067) 30,067 Increase in net assets 2,416,915 2,597,797 614,009 787,801 3,030,924 3,385,598 Net assets - beginning 42.601.147 40,003,350 10,431,649 9,643,848 53,032,796 49,647,198 Net assets - ending $45,018,062 $42,601,147 $11.045,658 $10,431,649 $56.063,720 $53,032.796 The activity in both governmental and business type activities was consistent when comparing results from 2008 to 2009. The City did not consider any of the changes from year to year significant when compared with total revenues or expenses. A-4 $6,500,000 $ 6,000,000 $5,500,000 $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $ 2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Expenses and Program Revenues — Governmental Activities General Public Safety Public Works Culture and Interest on Government Recreation Long -Term Debt ■ Expenses O Program Revenues The programs in the General Fund make up the majority of the expenses in the governmental activities. A-5 Revenues by Source — Governmental Activities General Aids Charges for and Grants Services 5% r12% \ I Operating Grants and 4% Other 6% IaxesCapital Grants 72% and Contributions I% The program revenues generated by governmental activities include basic services such as licenses and permits, zoning and development fees, and recreation program fees. The total program revenues provided from the governmental activities were $2,414,360, and this represents 17 percent of the cost of the programs they fund. EXPENSES AND PROGRAM REVENUES —BUSINESS -TYPE ACTIVITIES Business -type activities increased the City's net assets by $614,009. The rates for each of the City's utility services and recreation facilities are reviewed annually and adjusted by the City Council to assure operating costs are independently sufficient to cover their own operating expenses and provide for their own capital equipment replacement needs. Capital grants and contributions may be necessary for the future replacement of facility needs as the current and projected future rates will not be sufficient for their ultimate replacement. Program revenues exceeded program expenses for the business -type activities during 2009 by $586,775. This excess was approximately 9 percent of the $6.8 million total expenses. Investment earnings of $27,234 also contributed to the increase in net assets. $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Expenses and Program Revenues — Business -Type Activities Water and Sewer Golf Ice Arena Storm Water Street Lighting ®Expenses ■Program Revenues M REVENUES BY SOURCE— BUSINESS -TYPE ACTIVITIES The City operates four utility services, accounted for in three enterprise funds. The City's water and sewer services are accounted for in one fund, and segregating water distribution costs from sewage collection and disposal costs are accounted for in separate departmental financial reports. The shared costs of administration and debt service are accounted for in a third departmental report for further cost control and rate setting analysis. Water and Sewer Fund net assets decreased by $44,275 during 2009. The Water and Sewer Fund expended almost $121,000 on infrastructure improvements in 2009 to accompany the ongoing street improvement projects. Overall, the cash position decreased by $500,909 in 2009. This decrease was funded with borrowing from other funds. The City's storm water utility ended the year with an increase of $704,433 in net assets, which included a $60,219 capital contribution. The Storm Water Fund rates are set to recover the capital costs of infrastructure completed through the sale of various utility revenue bonds with debt service requirements spread over the next 14 years. The street lighting system utility ended the year with an increase of $24,167 in net assets from operations. The operating costs of the street lighting system are adequately covered by current rates. There is no long-term replacement liability to the City as the ownership of the streetligbts resides with the private electric utility company. The City operates two recreational facilities as enterprise activities, and rates are set to be both competitive in the marketplace and self-supporting from their user fees. The current rates generally cover daily operating costs at both facilities, but fall short of providing coverage for facility depreciation rates for the long-term need of total facility replacement. Charges for services totaled $345,550 and $723,476 in the Golf Course and Ice Arena Funds, respectively. Operating revenues exceeded total operating expenses, which includes full depreciation charges, by $9,734 for the golf course and $43,200 for the ice arena. Operating Grants and Contributions 1% Revenues by Source — Business -Type Activities Capital Grants and Contributions 1% Unrestricted "nvestment Earnings <1% A-7 Services 98% k °..° El b v a v' 1�ncoar� �axo`-' v v c o u$.`= o"'_ c ms e„ ma"L c yL°m•� .2 JE lc a� ..5°0° E`ys ac3-cEe u �.o �ysa O yELB V� iE 16 F -m gc�d98'; LL'"a a oc w 3� Y3 a? z i^^g �aC is w_n 3mm v #'a 2c� < uNuc ;Y �o='36ma°8' 'n cE Eid a° �sd�GmAo3Nn5.2` V v`a uy �8� u u-�o c m vcE`-mc .c=K�=E= � An uu omao-�.`a ma Ow.wN 0 am$ad�mv'.:. ^,w p o r_q = E E qp RFj a >'c 1 c p S=,d A�_ _s A a„o�`o��=Wf =a 9emy �9 Et'`.°.oF Via„ s3mau m aid 23 Pg m E.E vi�`oO m$i,gE '°8 �E �¢� m Ev°g d o� a.3 ^ E E .2_ w�aw$�rv'o 'aatl3o3c .Wo U'eC cPi oa 3E m ga3 m ;m�°p e g��sm ca o=e .e �w $ -m a�3 `'°= �ym.e r� 0.6 bis o �c gry orn"SY c3 '`-c`ca�s G ,�oe�-.$ KY'' amd �fi Eym ` ,2 u�P"ge��c3F"�E fib mi^fi aA ud e;mtl5`' e „a�$ r''<=oE c$$•' -8. s6 a Ba a.E� �.�E- o4$oR<t QooeL£ 't'L3a gcS Y ',a �oP'$-_ E Noim> ^$.-cE73 E _E os°._ UYa -E+. ” m A-8 City of New Hope's Capital Assets Additional information on the City's capital assets is located in Note 4 of the notes to basic financial statements. Long -Term Debt — At the end of 2009, the City had total bonded debt outstanding in the amount of $8,195,000. Of this amount, $225,000 will be paid from general property taxes and $4,795,000 from redevelopment district tax increments. Special assessment bonds outstanding at year-end totaled $910,000. The remaining $2,265,000 of outstanding bonds at year-end were revenue bonds, for which the City has pledged revenue streams from the golf course, water and sewer utility, and storm water utility for all principal and interest payments due on these bonds. The debt service funds have total fund balances of $6,450,295, all of which is designated for the payment of debt service. The City has intentionally shifted the philosophy for financing major street improvements away from debt financing to the pay-as-you-go philosophy. The City established the Street and Park Infrastructure Capital Projects Funds in 2001 with dedicated portions of the property tax levy, thereby eliminating this type of debt issuance. The City issued no new bonds in 2009. The City maintains an Al rating from Moody's Investors Service. W Governmental Activities Business -Type Activities Total 2009 2008 2009 2008 2009 2008 Land S 994,268 $ 994,268 $ 485,043 $ 485,043 $ 1,479,311 $ 1,479,311 Construction in progress 1,853,981 1,513,795 1,045,332 915,245 2,899,313 2,429,040 Buildings and structures 9,153,714 9,120,314 6,590,148 6,590,148 15,743,862 15,710,462 Vehicles and equipment 6,936,762 6,632,723 2,032,027 2,032,026 8,968,789 8,664,749 Improvements other than buildings 11,705,336 11,490,948 8,699,280 8,416,832 20,404,616 19,907,780 Less accumulated depreciation (13,167,607) (12,115,023) (7,185,386) (6,801,071) (20,352,993) (18,916,094) Net total $17,476,454 $17.637,025 511,666,444 $11,638,223 $29,142,898 $29,275,248 Additional information on the City's capital assets is located in Note 4 of the notes to basic financial statements. Long -Term Debt — At the end of 2009, the City had total bonded debt outstanding in the amount of $8,195,000. Of this amount, $225,000 will be paid from general property taxes and $4,795,000 from redevelopment district tax increments. Special assessment bonds outstanding at year-end totaled $910,000. The remaining $2,265,000 of outstanding bonds at year-end were revenue bonds, for which the City has pledged revenue streams from the golf course, water and sewer utility, and storm water utility for all principal and interest payments due on these bonds. The debt service funds have total fund balances of $6,450,295, all of which is designated for the payment of debt service. The City has intentionally shifted the philosophy for financing major street improvements away from debt financing to the pay-as-you-go philosophy. The City established the Street and Park Infrastructure Capital Projects Funds in 2001 with dedicated portions of the property tax levy, thereby eliminating this type of debt issuance. The City issued no new bonds in 2009. The City maintains an Al rating from Moody's Investors Service. W City of New Hope's Outstanding Bonded Debt General Obligation and Revenue Bonds (in thousands) The City's total bonded debt decreased by $1,435,000 or approximately 15 percent during 2009. Additional information on the City's debt is located in Note 5 of the notes to basic financial statements. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES Economic factors affect the preparation of annual budgets. The following factors were considered in preparing the City's budget for 2010: The state imposed additional unallotments of local government aid (LGA) and market value homestead credit at the end of 2009. The City's budget considered that only $44,807 of LGA would be received compared to the certified LGA of $771,554. The City has identified options to address this shortfall. Rates for water, sewer, and storm water utility services were reviewed and revised for 2010 to provide revenues sufficient to cover the expenditures for each service. The City implemented a tiered conservation rate structure beginning in 2010. The labor market has changed over the past year as unemployment has increased in this challenging economy. However, it is important that the City retain skilled and competent staff as it continues to charge staff with "doing more with less." The City has non-union employees as well as three employee groups represented by labor agreements. The non-union employees received wage adjustments of 1.5 percent in January and 1.5 percent in July 2009 and no across the board increase in 2010. The police supervisor's labor agreement began January 1, 2009 and will expire at December 31, 2010. In 2009, the police supervisors received a 1.5 percent adjustment in July and no adjustment in 2010. The police officers labor agreement began January 1, 2009 and will expire December 31, 2010. The police officers received a 1.5 percent adjustment in January 2009 and a 1.5 percent adjustment in July 2009. The police officers' 2009-2010 contract included a wage re -opener for 2010 and through negotiations between the City and the union, including mediation with a mediator from the State of Minnesota Bureau of Mediation Services (BMS), an agreement which included a zero percent increase for 2010 was reached. Lastly, the labor agreement for maintenance workers and mechanics represented by Local #49 ran from January 1, 2008 to December 31, 2009. As this contract was negotiated in early 2008, it included a 3 percent wage adjustment for 2009. Negotiations with Local #49 for a 2010 agreement has included mediation with a BMS mediator where a tentative agreement was reached; however, this agreement was voted down by the membership. The City continues to work towards an agreement with Local #49 for 2010. A-10 Governmental Business -Type Activities Activities Total 2009 2008 2009 2008 2009 2008 General obligation bonds $ 225 $ 605 $ - $ - $ 225 $ 605 General obligation tax increment bonds 4,795 5,360 - - 4,795 5,360 Special assessment debt with governmental commitment 910 1,045 - - 910 1,045 Revenue bonds - - 2,265 2,620 2,265 2,620 Total $ 5,930 $ 7,010 $ 2,265 $ 2,620 $ 8,195 $ 9,630 The City's total bonded debt decreased by $1,435,000 or approximately 15 percent during 2009. Additional information on the City's debt is located in Note 5 of the notes to basic financial statements. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES Economic factors affect the preparation of annual budgets. The following factors were considered in preparing the City's budget for 2010: The state imposed additional unallotments of local government aid (LGA) and market value homestead credit at the end of 2009. The City's budget considered that only $44,807 of LGA would be received compared to the certified LGA of $771,554. The City has identified options to address this shortfall. Rates for water, sewer, and storm water utility services were reviewed and revised for 2010 to provide revenues sufficient to cover the expenditures for each service. The City implemented a tiered conservation rate structure beginning in 2010. The labor market has changed over the past year as unemployment has increased in this challenging economy. However, it is important that the City retain skilled and competent staff as it continues to charge staff with "doing more with less." The City has non-union employees as well as three employee groups represented by labor agreements. The non-union employees received wage adjustments of 1.5 percent in January and 1.5 percent in July 2009 and no across the board increase in 2010. The police supervisor's labor agreement began January 1, 2009 and will expire at December 31, 2010. In 2009, the police supervisors received a 1.5 percent adjustment in July and no adjustment in 2010. The police officers labor agreement began January 1, 2009 and will expire December 31, 2010. The police officers received a 1.5 percent adjustment in January 2009 and a 1.5 percent adjustment in July 2009. The police officers' 2009-2010 contract included a wage re -opener for 2010 and through negotiations between the City and the union, including mediation with a mediator from the State of Minnesota Bureau of Mediation Services (BMS), an agreement which included a zero percent increase for 2010 was reached. Lastly, the labor agreement for maintenance workers and mechanics represented by Local #49 ran from January 1, 2008 to December 31, 2009. As this contract was negotiated in early 2008, it included a 3 percent wage adjustment for 2009. Negotiations with Local #49 for a 2010 agreement has included mediation with a BMS mediator where a tentative agreement was reached; however, this agreement was voted down by the membership. The City continues to work towards an agreement with Local #49 for 2010. A-10 The City's pay plan philosophy attempts to maintain a middle of the range comparison to cities of equal size and nature of services within the metropolitan area. The City's contribution towards insurance for family coverage was $700 in 2009. Health insurance premiums increased by 18 percent in 2010 due to the City's utilization statistics. In 2010, the City's contribution increased to $875 for family coverage and $700 for single coverage. Employees can choose from a co -pay plan or two high -deductible plans with varying levels of deductibles and out of pocket maximums which impact the employee's contribution towards the monthly premium. REQUESTS FOR INFORMATION This report is designed to provide a general overview of the City's finances for all of those with an interest in the government's finances. Questions and comments regarding any of the information provided in this report should be addressed to: City of New Hope, Attention: Finance Department, 4401 Xylon Avenue North, New Hope, Minnesota 55428. /_1311 CITY OF NEW HOPE Statement of Net Assets as of December 31, 2009 (With Partial Comparative Information as of December 31, 2008) A-12 Governmental Business -Type Totals Activities Activities 2009 2008 Assets Cash and temporary investments $ 29,697,529 $ 807,245 $ 30,504,774 $ 29,004,172 Receivables Unremitted taxes and special assessments 165,929 - 165,929 91,290 Delinquent taxes 121,235 - 121,235 195,048 Delinquent special assessments 3,075 - 3,075 2,682 Deferred special assessments 481,385 209,029 690,414 767,117 Accrued interest 256,323 - 256,323 286,582 Accounts 774,108 906,144 1,680,252 1,623,717 Internal balances 210,916 (210,916) - - Due from other governmental units 227,071 43,316 270,387 181,351 Inventory 50,705 56,990 107,695 91,231 Prepaid items 59,799 75 59,874 - Land held for resale 2,433,162 - 2,433,162 2,433,162 Deferred charges 53,742 19,923 73,665 87,951 Investment in joint ventures 374,558 168,509 543,067 543,067 Capital assets Land and construction in progress 2,848,249 1,530,375 4,378,624 3,908,351 Depreciable assets, net of accumulated depreciation 14,628,205 10,136,069 24,764,274 25,366,897 Total assets $ 52,385,991 $ 13,666,759 $ 66,052,750 $ 64,582,618 Liabilities Accounts and contacts payable $ 418,862 $ 185,123 $ 603,985 $ 428,865 Accrued interest payable 92,312 47,366 139,678 157,932 Accrued expenses 249,534 21,361 270,895 173,356 Due to other govemmental units 144,521 90,580 235,101 628,202 Noncurrent liabilities - due within one year Bonds payable 515,000 365,000 880,000 1,435,000 Capital leases payable - 7,405 7,405 6,991 Compensated absences 505,621 - 505,621 505,446 Noncurrent liabilities- due in more than one year Net OPEB liability 27,079 5,295 32,374 16,336 Bonds payable 5,415,000 1,900,000 7,315,000 8,195,000 Unamortized bond discounts - (20,785) (20,785) (24,467) Capital losses payable - 19,756 19,756 27,161 Total liabilities 7,367,929 2,621,101 9,989,030 11,549,822 Net &%sets Invested in capital assets, net of related debt 16,411,454 9,395,068 25,806,522 25,108,398 Restricted for Debt service 6,730,905 - 6,730,905 6,942,838 Capital acquisitions 5,376,453 - 5,376,453 6,034,376 Community development 7,347,338 - 7,347,338 4,880,082 Unrestricted 9,151,912 1,650,590 10,802,502 10,067,102 Total net assets 45,018,062 11,045,658 56,063,720 53.032,796 Total liabilities and net assets $ 52,385,991 $ 13,666,759 $ 66,052,750 $ 64.582,618 A-12 CITY OF NEW HOPE Statement of Activities Year Ended December 31, 2009 (With Partial Comparative Information for the Year Ended December 31, 2008) Net assets - beginning 42601,147 10,431,649 53,032,796 49,647,198 Net assets - ending $45,018062 $11,045,658 $56,063,720 $53,032,7% A-13 Program Revenues Net (Expense) Revenue and Changes in Net Assets Operating Capital Business - Charges for Gants and Grants and Governmental Type Totals FunctionsrPrognms Expenses Services Contributions Contributions Activities Activities 2009 2008 Governmental activities General govenunent S 2,244,977 $1,048,549 $ 197,673 S 20,211 S (978,544) S - $ (978,544) S(1,160.495) Public safety 6,219,996 134,680 235,945 - (5,848,371) - (5,848,371) (5,613,900) Public works 1,291,983 - 144,028 97,333 (1,050,622) - (1,0$0,622) (1,330,276) Culture and recreation 2,053,788 527,079 8,862 - (1,517,847) - (1,517,1147) (1,376,859) Interest and fiscal charges 275,532 - - - (275,532) (275,532) (340,081) Total govunmental activities 12,085,276 1,710,308 586,508 117,544 (9,670,916) - (9,670,916) (9,821,611) Business -type activities Water and sewer 5,265,147 5,141,131 - 14,990 - (109,026) (109,026) 276,302 Golf course 369,579 345,550 700 - - (23,329) (23,329) (36,489) Icc arena 694,039 723,975 - - - 29,936 29,936 (121,439) Stem water 393,118 933,828 65,909 60,219 - 666,838 666,838 590,157 Street lighting 126,983 149,339 - - 22,356 22,356 11,722 Total business -type activities 6,848,866 7,293,823 66,609 75,209 - 586,775 586,775 720,253 Total governmental and business -type activities $18,934,142 $9,004,131 $ 653,117 $ 192,753 (9,670,916) 586,775 (9,084,141) (9,101,358) General revenues Property taxes 10,023,080 - 10,023,080 10,252,215 Franchise taxes 438,744 - 439,744 441,133 General aids and grants - unrestricted 755,762 - 755,762 666,543 Other general revenues 146,680 - 146,680 96,911 Invesunent earnings 723,565 27,234 750799 1,030,154 Total general revenues 12,087,831 27,234 12,115,065 12,486,956 Change in net assets 2,416,915 614,009 3,030,924 3,385,598 Net assets - beginning 42601,147 10,431,649 53,032,796 49,647,198 Net assets - ending $45,018062 $11,045,658 $56,063,720 $53,032,7% A-13 \ 6& A / \ ) !' , ! _ {; � 2i ( \ § ■ - !!:| ,I. | ` - ! f _S2 \\ 6& CITY OF NEW HOPE Reconciliation of the Balance Sheet to the Statement of Net Assets Governmental Funds as of December 31, 2009 (With Partial Comparative Information as of December 31, 200 8) 2009 2008 Total fund balances — governmental funds $ 24,088,269 $ 21,914,108 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported as assets in governmental funds. Cost of capital assets 21,685,226 21,077,228 Less accumulated depreciation (7,159,397) (6,357,426) Long-term liabilities such as bonds payable are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. (5,930,000) (6,815,000) Certain revenues (including delinquent taxes and special assessments) are included in net assets, but are excluded from fund balances until they are available to liquidate liabilities of the current period. 1,026,618 1,248,771 Governmental funds report debt issuance costs and discounts as expenditures and other financing uses at the time of issuance. Issuance costs and discounts are reported as unamortized assets in the government -wide financial statements. 53,742 64,680 Accrued interest payable is included in net assets, but is excluded from fund balances until due and payable. (92,312) (103,743) Internal service funds are used by management to charge certain costs to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Assets. Internal service fund net assets included in governmental activities 10,760,442 11,088,826 Internal balances for internal services used by business -type activities 210,916 109,145 The City's investment in a joint venture is not a financial resource and, therefore, is not reported as an asset in the governmental funds, but is included in the Statement of Net Assets. 374,558 374,558 Total net assets — governmental activities A-15 $ 45,018,062 $ 42,601,147 ! { ! ! (£! }!!!)«&!! &uu 2!)� «» } £§f}4;R4! #r!§7 ■!; q ) k 4 \\ § !!_, ; !!:-:- (- ) - k ! { ! ! (£! }!!!)«&!! &uu 2!)� «» } CITY OF NEW HOPE Reconciliation of the Statement of Revenue, Expenditures, and Changes in Fund Balances to the Statement of Activities Governmental Funds Year Ended December 31, 2009 (With Partial Comparative Information for the Year Ended December 31, 2008) 2009 Total net change in fund balances — governmental funds $ 2,174,161 Amounts reported for governmental activities in the Statement of Activities are different because: Capital outlays are reported in governmental funds as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. Capital outlays Depreciation expense Repayment of long-term liabilities is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets. Interest on long-term debt in the Statement of Activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the Statement of Activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. Governmental funds report debt issuance costs and discounts as expenditures and other financing uses at the time of issuance. Issuance costs and discounts are reported as unamortized assets in the government -wide financial statements. Certain revenues (including notes receivable, delinquent taxes, and special assessments) are included in the change in net assets, but are excluded from the change in fund balances until they are available to liquidate liabilities of the current period. Internal service funds are used by management to charge certain costs to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities in the government -wide financial statements. Internal service fund activity included in governmental activities Internal balances for internal service activity for business -type activities Change in net assets — governmental activities A-17 2008 354,628 607,998 1,868,105 (801,971) (810,090) 885,000 820,000 11,431 39,600 (10,938) (10,790) (222,153) (126,640) (328,384) 433,199 101,771 29,785 $ 2,416,915 $ 2,597,797 y0 W v A w I V M R N O N r L v V e O N Q r M b N IC�f n C iW � K � oce OOH M N r EOq C C M1 M N N M1 b N M N C U Q M 0• 0 1 1 1 1 Cdi M1 1 r 0 0 0 0 0 0 o C I p MN O O M i_ oo a r m m m v o m w y �M1 �bv�m o`�inoe r r e N M OJ b O r D'J fn N N M r I .O a M1 N O N b vi M V O O O A P V O i C I t _ N N P N� r �• C r b Vl N N Q C Q � p P O m O b S Q w M yMj r pJ � M O _O n .A Q n Vl .� N O AI N O N • W N vl ry q F W ra "y rn O m o b O V m w M C ft OJ N Vl P h b b D � 67 �+ w a� C y N U V 4 U N W u V �J: vti a E 5.S .. o .c coo c CD j G 2 q� V K O X U F H F m A-18 i v 69 T O W CITY OF NEW HOPE Statement of Net Assets PropsieteryPto is an oMecember 31, 2009 A -I9 Goveramcatal Business -Type Activities - Enterprise Funds Activities Water and Street Internal Sewer Golf Course I. Areas Sam Water lighting Totals Service Funds Assets Current assets Cash and Investments S - S 57,799 $ 276,341 S 327,287 $ 145,818 S 807,245 $ 9,519,456 Receivables Deferred special assessments 171,027 - - 35,436 2,566 209,029 - Ac,ounts 780,649 300 24,636 93,175 7.384 906,144 30,693 Due from other (ands - - - 885,438 - 885,438 - Due from othergovernments] units 5,211 - 38,105 - - 43,316 22,141 Inventory 44,925 12,065 - - - 56,990 50,705 Prepaid items - - 75 75 Total current assets 1,001,812 70,164 339,157 1,341,336 155,768 2,908,237 8,622,995 NoMoMal wants Deferred ebarges- bond issues" cons 4,107 2,894 - 12,922 - 19,923 - Invmroantinjoint venture 163,509 - - - - 168,509 - capitel assets Iand - 250,625 - 234,411 - 485,043 95,647 Construction in progress 674,950 - - 370,382 - 1,045.332 - Buildings and structures - 973,145 5,617,003 - - 6,590,148 2,944,155 Vehicles and equipmmt 1,685,906 149,758 196.363 - - 2,032,027 5,929,033 Improvements other than buildings 5,726,159 106,694 - 2,866,428 - 8,699,280 - Len aoaanutateddepreciatioa 3503441 (717,029)26(.17,196) (345,720) - (7,185,386) (6,008,210) Tom] capital assets, net of depreciation 4,531 573 763,193 3,196,170 3,125,508 11,666,444 2950,625 Total noaewr nt assets 4,754,189 766,087 3,196,170 3,138,430 11,854,876 2,950,625 Tocol assets $5,756,001 $ 836,251 $3,S35,327 $4,479,766 $ 155,768 $14,]63,113 $11,573,620 liabilities Current liabilities Accounts and contracts payable S 75,005 $ 1,686 S 48,465 S 48,538 S 11,429 S 185,123 S 123,774 Attract interest 13¢78 10,552 - 23,536 - 47,366 - Accrued expmm 13$68 1,093 7,000 - - 21,361 76,255 Due to other funds 885,438 - - - - 885,438 - Due W other govervmeats 78,529 - 11,742 270 40 90,580 80,449 Accrued wtupeomted absences - current - - - - - - 505,621 Vase payable - current - - 7,405 - - 7,405 - Bonds payable -current 142,100 25,000 197.900 365,000 Total cmrvst liabilities 1,207,617 38,331 74,612 270,244 11,469 1,602,273 786,099 N9anurrml liabilities Net OPEB liability 2,873 759 1,244 419 - 5,295 27,079 [.ewe payable - - 19,756 - - 19,756 - Bonds payable, act oftmam"Gzed discounts 562,385 370,423 - 945,907 1,879,215 Total noncesrent liabilities 565,759 371,182 21,000 946,326 1,904,266 27,079 Total liabilities 1,773,375 409,513 95,612 1,216,570 11,469 3,506,539 813,178 Net nasals Invested in capital assets, ad of rchdcd debt 3,876598 367,770 3,169,009 1,981,701 - 9,395,068 2,950,625 Unrestricted 106,039 58%8 270,706 1,281,495 144.799 1,961,506 7,809,817 Total ad¢Scale 3,982,626 426,738 3,439,715 3,263,196 144,299 11,256,574 10,760,442 Total liabilities and act assets 556756,001 S 336,251133.35.327 54,479,766 g 155,768 $14,763,113 $11,573,620 Total net assets- enterprise funds $11,256,574 Adjustment to re0"t the consolidation of internal service fund activities related to the enterprise Ponds (210,916) Net assets- business -type activities SI I,D45,658 A -I9 CITY OF NEW HOPE Statement of Revenue, Expenses, and Changes in Fund Net Assts Proprietary Funds Year Ended December 31, 2009 _ Governmental Business -Type Activities- Enterprise Funds Activities Water and Street Internal Sewer Golf Course Ice Arena Storm Water Lighting Touts Service Funds Operating revenue Charges for services $5,091,866 S 252,401 $ 703,347 S 933,828 S 149,339 S 7,13D,781 S - Billings mdepartments - - - - - - 2,463,147 Rends - 21,710 - - - 21,710 - Concessions and sales - 63,175 18,529 - - 81,704 - Other 19,079 U64 1,600 28,943 82,946 Total operating revenue 5,110,945 345,550 723,476 933,828 149,339 7,263,138 2,546,093 Operating expenses Cost of goods sold - 30,749 - - - 30,749 - personal services 607,900 166,119 263,128 65,910 3,734 1,106,791 1,550,232 Water purchased 2,103,482 - - - - 2,103,482 - Cleaning and waste removal 1,476,036 - - - - 1,476,036 - Supplies and maintenance 726,714 93,487 315,535 195,748 123,297 1,454,781 264,351 Other services and charges - - - - - - 808,976 Depreciation 182,683 45,461 101,613 54,558 - 384,315 420,284 Building sent 68,870 - - - - 68,870 Total operating expenses 5,165,685 335,816 680,276 316,216 127,031 6,625,024 3,043,843 Operating income (loss) (54,740) 9,734 43,200 617,612 22,308 638,114 (497,750) Nonopersting revenues (expenses) intergovernmental revenue - - - 65,909 - 65,909 - investment earnings - 871 2,644 21,860 1,859 27,234 207,626 Property taxes - - - - - - 197,925 Other income 45,176 - 499 - - 45,675 2,673 Grein on sale of capital assets - - - - - - 16,735 Donations - 700 - - - 700 - interest expense (32,364) (25,452) - (57225) - (115,041) (2,925) Bond issuance costs (2,347) (741) (3,942) (7,030) ToW nonopensting revenues (expenses) 10,465 (24,622) 39143 26,602 1,859 17,447 422,D34 Income (loss) before contributions and transfers (44275) (14,888) 46,343 644,214 24,167 655,561 (75,716) Contributions and transfers Capital contributions - - - 60,219 - 60,219 - Trsnsfers(out) - - - - - (252,668) Change in net assets (44275) (14,888) 46,343 704,433 24,167 715,780 (328,384) Netassets Beginning ofycar 4,026,901 441,626 3,393,372 2,558,763 120,132 10,540,794 11,088,826 End of year S 3,982,626 S 426,738 S 3 439 715 $ 3263,196 E 144,294 S 11256,574 S 10,760,442 Change in M assets - enterprise funds $ 715,780 Adjustment to reflect the consolidation of internal service fund activities related to the enterprise funds (101,771) Change in net asses- business -type activities $ 614,009 A-20 u o l 0 N I b N O AI W H 8 P 1 e h N O b I I QPQ o I Q P O O N v� V a I l i II a O C 1 0 1 1 I I o O o P O O �O P VO1 N A-21 I I I q II P P P r r O N ml r N V P U 7 S W Gp N A-22 .- �`�k cli } f 2` \ \ 91} \ !!! e!7 � \_! k � \k f4 {] !s , |\)E)k)) \§ /}\){\ * 2 !: ;lo ,= A-22 Assets Cash and investments Liabilities Accounts payable CITY OF NEW HOPE Statement of Fiduciary Net Assets Agency Fund Year Ended December 31, 2009 A-23 Pass -Through Grant Fund $ 35,240 S 35,240 $ u 36 @ $ 5 3 ve GSS 8 'u9 a e� u pE te-B a.�u-� YSa 3e .u�u Vi=m �mSo€ e� ffi°v <=='-s �ce'�5 EScF�9 -a " �y 5 .=_ipso �gffi5 C 0��;" u oW5 �ffi@y> 33 �q9 pug" '83 ffi :�_ °�ooa�'G� 'yc.95 �'�i 1-= 85moffi-• ly5 g c 2 a 8 x cc " a@@ i 'Sz a Be " g�MS x =' a a 5.6 rice "° g 8Y C �.5 e:a -0 MS s a E 5E �ag2 m.s 'a `U a°UBS�w°s 55Es� yas5x> cY xy$g"£ "e8a -E4q23,R""m ..E� s55 C' Ems bg8 so gss= e'g so �u.au g V i 8°m5 3Cv =yag3E 83 v8,su 8oE a=o5- 'Mso o S865w 3�E` 55x; `?9�h a 3=�: �eie -�53Y °u �Y5_��g 3 �szmmy- a3y'x Ey'S 69 sane = 5e�9 -83" 6„7 Ea p <,15 °E 8 & 5g 9e , -gg 8< w mfgg za'0Fb [.. � `.?'�=�m m ��" 5= �E.ELYeg � S,`°�m �+�. •t :s8 '8�8V5 .�y g.vwEa 3 � eE a �EeE�og . s92 �i3=`= 'Y8" .E �uEm�3e thd m95,g kL•E �S 39oc "? �$`-'=-'`' Sti'a'S p 0SE E ° H °Cy ? r" 4� 0 59� eE mx S E�Yo 8E5"q � W �" �a°ioa•5d� co"� o '��j3 a`°XX - 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J-9 qe - s = �€� Sne 2'e 8 a .a ; @mfg =3 -s;8 _�3 "C _ w'.o ,��` a„8 'em a � C3 .9 ssC 6 ni 6°a 3oE °: 6'F p E ° w 3H 3 °E gig II-CC'a o=,o_ t' - ,S `5 21 Ye =E - C `2€ SEE 3; o,Eu Pfiy =SNo 2 E n 98a2 .9.E ?3 3E E EE °gmAl e9A .3� #ga 9g8 my my9Ee m559 Y'2 °geo '€. m#�3 850 in .s a 1 eII - mesa g z = Ss Al a ° 53 a u. �2 a u= *4 9 E e E 33 w s c °s° 3 3 S _ 4 ° 5° <° a E 3 6 9 e .5 ” 3 � ee °ia='S E � � = a = ` m � & S'Dy pec c' S 6.Pc+ E 5 d 3 0 W e°:e Via- B-5.� "' O` =m.9 ado tt3da ssx 11 (55 zany `09 r e em .sem €"$ as MCI,, m$u5$� =i=3 € gB es 'y A-25 �9H€ as�`° Amo Lam= E c' -o Ce o9W yq"S3gam. ta es :e '�s5=35 5 wQo b2 _ ,Et9 e o�3 58s" cS EDE 9 e9 °c.P ._meg aof gy�ry ea a >=L DUc ° N°Eg Eo.t S.0 �„o§8$1Hcoo °'eE E9go cm 9E.y ah8 _ 0 9§mu_y 6a._•3S' d4 3„g i- 'c IN 4'B Y5'' W9 mgE E Meg as osw q ss a c6o—d- t cis":S v_tg i seam s oi's EI�57 � z15.�ss Sec E c� c �� y Ep�U•a'L gm 93 a _ ES �E c g E Z i E ._ u m o e 5 �ri QE's E« °H 8” � tg �"' aE5 ,eE '20 E= j•`° 3°0.,d9�°mE $� $` aj<3 £ 'ia.se�9r 5 g ° Yuri E zH�g W� o$ e 2 rc_ 5 S DE �„g i•'��^_ : EHBm e E � Eg '= �� R ase c.ug UE G1 r�3 a= zE=�—uuc- 6 xos'£ A-26 .2 x'.'88 �s"�•"c @@38x `-u 3 tee° M,5 i•'ag 011 'a ua"� CieE 0 LESS ffiU ��L s83om � 5�s e}J''� $dam 'ss $ 8� Rivy �• $ �.SY 2<„ vn e � T 66.32 he � - �Na =.0 ,t,'AMg m sm aom o u.b.9 93 a m Xcy�3 c'm ell Eo a'6 u y m S g m gTi $v#C'z E g.9 a O ril .a W amWg Al °p mi F°`m `o 1`-•dmf3 1-'�mw `n�fi w._ F Xw mxu VVfr Z 6 U r_mn $dam EE 2<„ "_ u � T 66.32 he � - �Na �? a' o 93 •Z E�y ell 2-A m mn a O ril .a W amWg Al °p sf � 9' •- �5 i � — y p 5 F y •�' � °$ �m C4�a0 $-KA y� m'J 1u ® D V'V mi 9 TL Z, 09 r_mn NOTE 2 — CASH AND INVESTMENTS (CONTINUED) Cash and investments are presented in the financial statements as follows: Cash and temporary investments — Statement of Net Assets $ 30,504,774 Cash and temporary investments — Statement of Fiduciary Net Assets 35,240 Total $ 30,540,014 B. Deposits In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks authorized by the City Council, including checking accounts and certificates of deposit. The following is considered the most significant risk associated with deposits: Custodial Credit Risk — In the case of deposits, this is the risk that in the event of a bank failure, the City's deposits may be lost. Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury bills, notes, and bonds; issues of U.S. government agencies; general obligations rated "A" or better; revenue obligations rated "AA" or better; irrevocable standard letters of credit issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. The City has no additional deposit policies addressing custodial credit risk. At year-end, the carrying amount of the City's deposits was $5,506,918 while the balance on the bank records was $5,760,269. At December 31, 2009, all deposits were fully covered by federal depository insurance, surety bonds, or by collateral held by the City's agent in the City's name. C. Investments The City has the following investments at year-end: Investment Type Credit Risk Raling A¢enw Interest Risk— Maturity Lest Then 1 1 to 5 Duration in Years 5 to 10 More Than 10 Total U.S. agency debt securities Federal Home Loan Bank AAA S&P S — $ 3,005,940 $ — $1,002,500 S 4,009,440 Federal Home Loan Mortgage Corporation AAA S&P — 5,858,343 122,733 — 5,981,076 Federal National Mortgage Assodatiun AAA S&P — 2,085,346 4,070,772 2,988,604 9,144,722 State and local debt securities AAA S&P 20,053 — — — 20,053 State and local debt securities MIO 1 Moody's 1,000,930 — — — 1,000,930 Negotiable certificates of deposit N/R N/A 285,655 2,539,515 — — 2,825,170 investment pooWntutual funds Money market mutual funds AAAm S&P 2,049.955 — — 2,049.955 Total investments $3,356,593 $ 13,489 144 $4,193,505 $3,991,104 $25,030.346 N/A — Not Applicable NIR — Not Rated A-28 NOTE 2 — CASH AND INVESTMENTS (CONTINUED) Investments are subject to various risks, the following of which are considered the most significant: Custodial Credit Risk — For investments, this is the risk that in the event of a failure of the counterparty to an investment transaction (typically a broker-dealer) the City would not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City's investment policies do not formally address this risk, but the City typically limits its exposure by purchasing insured or registered investments, or by the control of who holds the securities. Credit Risk — This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limit the City's investments to direct obligations or obligations guaranteed by the United States or its agencies; shares of investment companies registered under the Federal Investment Company Act of 1940 that receive the highest credit rating, are rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a final maturity of 13 months or less; general obligations rated "A" or better; revenue obligations rated "AA" or better; general obligations of the Minnesota Housing Finance Agency rated "A" or better; bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System; commercial paper issued by United States corporations or their Canadian subsidiaries, rated of the highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank, domestic branch of a foreign bank, or a United States insurance company, and with a credit quality in one of the top two highest categories; repurchase or reverse purchase agreements and securities lending agreements with financial institutions qualified as a "depository" by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; that are a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; or certain Minnesota securities broker-dealers. The City's investment policies do not further address credit risk. Concentration Risk — This is the risk associated with investing a significant portion of the City's investment (considered 5 percent or more) in the securities of a single issuer, excluding U.S. guaranteed investments (such as treasuries), investment pools, and mutual funds. The City's investment policies do not limit the concentration of investments. As of December 31, 2009, the City had invested 5 percent or more of its total investment portfolio in securities issued by the following federal agencies: Federal Home Loan Bank — 16 percent, Federal Home Loan Mortgage Corporation — 24 percent, and Federal National Mortgage Association — 37 percent. Interest Rate Risk — This is the risk of potential variability in the fair value of fixed rate investments resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The City's investment policies do not limit the duration of investments. NOTE 3 — INTERFUND BALANCES AND TRANSACTIONS A. Advances To/From Other Funds In 2009, the Economic Development Authority Special Revenue Fund made an interfund loan to the HRA Construction Capital Projects Fund to finance the purchase of land held for resale by the HRA. The advance will be repaid in equal installments over a period of 20 years, and bears an interest rate of 4.0 percent. At December 31, 2009 the balance of the advance (due in more than one year) was $2,266,474. The portion of this advance that is due in one year, $84,978, is included in interfund receivable/payables. A-29 NOTE 3 — INTERFUND BALANCES AND TRANSACTIONS (CONTINUED) B. Interfund Receivables and Payables Individual fund interfund receivables and payables balances at year-end were as follows: Due From Other Funds Due To Other Funds Amount Economic Development Authority Special Revenue Fund Storm Water Enterprise Fund HRA Construction Capital Projects Fund $ 84,879 Water and Sewer Enterprise Fund $ 885,438 The Water and Sewer Enterprise Fund balances were to eliminate a temporary cash deficit at year-end. C. Interfund Transfers Transfer In Transfer Out Amount General Fund Economic Development Authority Special Revenue Fund $ 28,000 General Fund Internal Service Funds 187,510 Economic Development Authority Nonmajor governmental funds 167,233 Special Revenue Fund HRA Construction Capital Projects Fund Nonmajor governmental funds 408,865 Nonmajor governmental funds HRA Construction Capital Projects Fund 158,948 Nonmajor governmental funds Nonmajor governmental funds 221,079 Nonmajor governmental funds Internal Service Funds 65.158 $ 1,236,793 Interfund transfers allow the City to allocate financial resources to the funds that receive benefits from services provided by another fund. Additional transfers were made to close the LIRA Administration Special Revenue Fund and various debt service funds. All of the 2009 transfers are considered routine and consistent with previous practices. A-30 NOTE 4 — CAPITAL ASSETS Capital asset activity for the year ended December 31, 2009 was as follows: A. Governmental Activities Less accumulated depreciation on Buildings and structures Balance— (266,069) — (4,358,830) Vehicles and equipment (5,034,973) Beginning 169,671 (5,313,060) Improvements other than buildings Balance - (508,428) -of Year Additions Deletions End of Year Capital assets, not depreciated Land $ 994,268 $ — $ — $ 994,268 Construction in progress 1,513,795 409,669 (69,483) 1,853,981 Capital assets, depreciated Buildings and structures 9,120,314 33,400 — 9,153,714 Vehicles and equipment 6,632,723 477,953 (173,914) 6,936,762 Improvements other than buildings 11,490,948 214,388 — 11,705,336 Total capital assets 29,752,048 1,135,410 (243,397) 30,644,061 Less accumulated depreciation on Buildings and structures (4,092,761) (266,069) — (4,358,830) Vehicles and equipment (5,034,973) (447,758) 169,671 (5,313,060) Improvements other than buildings (1987,289) (508,428) — (3,495,717) Total accumulated depreciation (12,115,023) (1,222,255) 169,671 (13,167,607) Net capital assets $ 17,637,025 $ (86,845) $ (73,726) $ 17,476,454 B. Business -Type Activities A-31 Balance — Beginning Balance — ofYear Additions Deletions End of Year Capital assets, not depreciated Land $ 485,043 $ — $ — $ 485,043 Construction in progress 915,245 226,161 (96,074) 1,045,332 Capital assets, depreciated Buildings and structures 6,590,148 — — 6,590,148 Vehicles and equipment 2,032,026 1 — 2,032,027 Improvements other than buildings 8,416,832 282,448 — 8,699,280 Total capital assets 18,439,294 508,610 (96,074) 18,851,830 Less accumulated depreciation on Buildings and structures (2,796,344) (133,305) — (2,929,649) Vehicles and equipment (1,026,779) (11,251) — (1,038,030) Improvements other than buildings (2,977,948) (239,759) (3,217,707) Total accumulated depreciation (6,801,071) (384,315) (7,185,386) Net capital assets $ 11,638,223 $ 124,295 $ (96,074) $ 11,666,444 A-31 NOTE 4 - CAPITAL ASSETS (CONTINUED) Depreciation expense for the year ended December 31, 2009 was charged to the following functions of the primary government: Governmental activities General government $ 115,599 Public safety 72,858 Public works 382,209 Culture and recreation 231,305 Capital assets held by the City's internal service funds are charged to the various functions based on their usage of the assets 420,284 Total depreciation expense - governmental activities $ 1.222,255 Business -type activities Water and sewer $ 182,683 Golf course 45,461 Ice arena 101,613 Storm water 54,558 Total depreciation expense - business -type activities S 384,315 NOTE 5 - LONGTERM LL4,BILITIES A. Bonds and Certificates of Indebtedness Payable The City has the following types of bonded debt outstanding at December 31, 2009: special assessment improvement bonds with governmental commitment, tax increment bonds, general obligation bonds and certificates, and revenue bonds. Bonds and certificates of indebtedness payable at year-end are summarized as follows: Govemmentel activities G.O. Special Assessment Bonds improvement Bonds of 1999 GO. tax increment binds General Obligation Tex Increment Bonds of 2004 General Obligation Tan Increment Bonds of 20,05 G.O. bonds vid certificates 1996 General Obligation- Taxable - Bonds 1998 Refunding Bonds Total governmental activity long-term liabilities Business -type activities Revenue bonds 1995 Storm Water Revenue Bonds 1999 Utility/storm Water Revenue Bonds 1999 Utility/Water and Sewer Revenue Bonds 2000 Golf Course Gross Revenue Bonds 2002 Storm Water Revenue Bonds Total business -type activity long-term liabilities Final Intere¢ Maturity Balance- Due in Onginal Issue Rate lame Data Date End of Year One Year $2,205,000 4.00.4.75% 05)01/1999 02/012019 S 910,000 $ 135,000 S4,080,000 1.25-4.30% 04/01/2009 02/012025 3,460,000 165,000 S 1,370,000 4.65-5.65% 03)012005 02/012031 1,335,000 25,000 4,795,000 190,000 S 380,000 6.5085% 03101/1996 02/012011 70,000 35,000 S 1,510,000 4.00-4.40% 03/01/1998 02/012010 155,000 155.000 225X0 190,000 S 1,200,000 4.50-5.40% 12/01/1995 $ 800,000 3.65-4.605'. 05/01/1999 $2,150,000 3.65-4.60% 05/01/1999 5 600,000 6.125-6.509/6 04/012000 S 850,000 4.00-5.20% 04/012002 A-32 55.930.000 S 515,000 02/012011 S 215,000 $ 105,000 02/012014 264,610 52,900 021012014 710,390 142,100 02/012020 400,000 25,000 02/012022 675,000 40,000 52.265 ,000 $ 365,000 NOTE 5 - LONG-TERM LIABILITIES (CONTINUED) B. Descriptions of Bonds and Certificates of Indebtedness • Special Assessment Bonds - These bonds were issued to finance various improvements and are payable primarily from special assessments levied on the properties benefiting from the improvements funded by these issues. Any deficiencies in revenue to fund these issues will be provided from general property taxes. • Tax Increment Bonds - The City has established tax increment financing districts and has issued general obligation tax increment bonds in accordance with Minnesota Statutes. It is anticipated that the tax increment revenues, derived from the captured assessed value of property in the tax increment district, will provide substantially all funds necessary to retire the bond principal and interest. In addition, future tax levies may be placed on the tax rolls annually as scheduled for supplementary financing. • General Obligation Bonds - These bonds were issued to finance various improvements and will be repaid primarily with ad valorem tax levies. • Revenue Bonds - These bonds were issued for improvements or projects that directly benefit the respective enterprise funds. This debt issue will be repaid from revenue sources of the benefiting enterprise funds. C. Minimum Debt Payments Minimum annual principal and interest payments to maturity for bonds and certificates of indebtedness payable are as follows: Governmental Activities: Year Ending Special Assessment Bonds Tax Increment Bonds General Obliaation Bonds December 31. Principal Interest Principal Interest Principal Interest 2010 $ 135,000 $ 38,298 $ 190,000 $ 199,299 $ 190,000 $ 6,998 2011 135,000 32,425 195,000 193,736 35,000 1,199 2012 135,000 26,418 205,000 187,353 - - 2013 135,000 20,309 210,000 180,258 - - 2014 135,000 14,133 215,000 172,781 - - 2015-2019 235,000 17,389 1,220,OOD 731,304 - - 2020-2024 - - 1,590,OOD 442,206 - - 2025-2029 - - 770,000 132,210 - - 2030-2031 200,000 11,320 $ 910,000 $ 148,972 $ 4,795,000 $ 2,250,467 $ 225,000 $ 8,197 Business -Type Activities: Year Ending Revenue Bonds Payable December 31, Principal Interest 2010 $ 365,000 $ 105,056 2011 375,000 87,348 2012 265,000 72,035 2013 270,000 59,401 2014 275,000 46,357 2015-2019 470,000 135,736 2020-2022 245,000 17,355 $ 2,265,000 $ 523,288 A-33 NOTE 5 - LONGTERM LIABILITIES (CONTINUED) D. Capital Lease On July 1, 2008, the City purchased an energy optimization system through a capital lease agreement. The equipment was capitalized at a value of $38,892 in the Ice Arena Enterprise Fund. The lease requires 60 monthly payments through June of 2013, at which point the equipment may be purchased for $l. Future minimum lease payments to be paid from the Ice Arena Enterprise Fund are as follows: Year Ending December 31 2010 S 8,819 2011 8,819 2012 8,819 2013 3,675 Total minimum payments 30,132 Less amount representing interest (2,971) Present value of minimum lease payments $ 27,161 E. Changes in Long -Term Liabilities Governmental activities Special assessment bonds Tax increment bonds General obligation bonds and certificates Compensated absences Net Business -type activities Revenue bonds Less bond discounts Capital lease Net December 31, December 31, Due Within 2008 Additions Retirements 2009 One Year $ 1,045,000 $ - $ 135,000 $ 910,000 $ 135,000 5,360,000 - 565,000 4,795,000 190,000 605,000 - 380,000 225,000 190,000 505,446 484,840 484,665 505,621 505,621 $ 7,515,446 $ 484,840 $ 1,564,665 $ 6,435,621 $ 1,020,621 $ 2,620,000 $ - $ 355,000 $ 2,265,000 $ 365,000 24,467 - 3,682 20,785 - 34,152 - 6,991 27,161 7,405 $ 2,629,685 $ - $ 358,309 $ 2,271,376 $ 372,405 Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for internal service funds are included as part of the above totals for governmental activities. F. Conduit Debt At times, the City has issued industrial revenue bonds to provide financial assistance to private sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector entity served by the bond issuance. The City is not obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2009, there were five series of industrial revenue bonds outstanding. The original issue amounts totaled $12,910,000 and have been reduced through annual payments and partial call prepayments. The outstanding balance as of December 31, 2009 is undetermined. A-34 NOTE 6 — DEFINED BENEFIT PENSION PLANS — STATE-WIDE A. Plan Description All full-time and certain part-time employees of the City are covered by defined benefit plans administered by the Public Employees' Retirement Association (PERA) of Minnesota. 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. These plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters, and peace officers who qualify for membership by statute are covered by PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by state statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step -rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years of service and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For PEPFF members, the annuity accrual rate is 3 percent for each year of service. For all PEPFF members and for PERF members hired prior to July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. Normal retirement age is 55 for PEPFF members, and 65 for Basic and Coordinated Plan members hived prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated members hired on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement. There are different types of annuities available to members upon retirement. A single -life annuity is a lifetime annuity that ceases upon the death of the retiree—no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits, but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for PERF and PEPFF. That report may be obtained on the internet at www.mnpera.org, by writing to PERA at 60 Empire Drive, Suite 200, St. Paul, Minnesota 55103-2088, or by calling (651) 296-7460 or (800) 652-9026. A-35 NOTE 6 — DEFINED BENEFIT PENSION PLANS — STATE-WIDE (CONTINUED) B. Funding Policy Minnesota Statute, Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the State Legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members were required to contribute 9.1 percent and 6.0 percent, respectively, of their annual covered salary in 2009. PEPFF members were required to contribute 9.4 percent of their annual covered salary in 2009. The City was required to contribute the following percentages of annual covered payroll in 2009: 11.78 percent for Basic Plan PERF members, 6.75 percent for Coordinated Plan PERF members, and 14.1 percent for PEPFF members. Employer contribution rates for the Coordinated Plan will increase to 7.00 percent, effective January 1, 2010. The City's contributions, which were equal to the contractually required contributions for each year as set by state statutes, to PERF for the years ended December 31, 2009, 2008, and 2007 were $231,739, $236,699, and $222,565, respectively. The City's contributions to PEPFF for the years ended December 31, 2009, 2008, and 2007 were $307,857, $277,898, and $233,440, respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statutes. NOTE 7 — FUND BALANCE RESERVES AND DESIGNATIONS At December 31, 2009, the City has recorded the following reservations and designations of fund balances: Governmental funds Major funds General Fund Designated for working capital Economic Development Authority Special Revenue Fund Reserved for advances Improvement Bond Redemption Debt Service Fund Designated for debt services BRA Construction Capital Projects Fund Reserved for land held for resale Designated for capital acquisitions Street Infrastructure Capital Projects Fund Designated for capital acquisitions Nonmajor funds Special revenue funds Designated for housing projects Debt service funds Designated for debt services Capital projects funds Designated for capital acquisitions Total nonmajor funds Total all funds A-36 Reserved Designated — $ 4,349,310 2,266,474 — 3,795,253 2,433,162 - - 356,888 — 2,701,710 229,024 2,655,042 2,258,990 5,143,056 $ 4,699,636 $ 16,346,217 NOTE 8 — JOINT VENTURES AND GOVERNED ORGANIZATIONS A. Joint Ventures 1. The City is a party to a joint powers agreement through which the Golden Valley, Crystal, and New Hope Joint Water Commission (JWC) is formed. The agreement provides for the operation and ownership of a water supply, distribution, and support system in and for the cities of Golden Valley, Crystal, and New Hope. The City purchases water used by its residents from the JWC and shares in the JWC's operation, maintenance, repair, and replacement costs based on its water usage. As provided for in the joint powers agreement, in the event of termination, all real and personal property and cash held by the JWC would be divided among the members by unanimous consent. Such division would be based on refunded monetary contributions made to the JWC by the member cities. Over the years, the costs of construction have been allocated among the member cities, generally on the basis of water purchased. These costs were expensed as incurred by the City in the cost of water purchased. The City has no information on the total construction costs it has paid. Based on the above, the City has not recorded an interest in the JWC up to the present time. The asset recorded in the Water and Sewer Fund as an investment in the JWC represents the accumulated contributions for working capital. This amount approximates the City's share in the JWC fund balance at December 31, 2009. The following financial information is taken from the JWC's audited financial statements for the year ended December 31, 2009: Total assets $ 1,920,293 Total liabilities $ 610,197 Total net assets $ 1,310,096 Total revenue $ 7,145,660 Total expenses $ 7,046,924 The City's share of JWC's total revenue for the year ended December 31, 2009 was $2,094,193 or 29 percent. JWC financial statements are available from the City of Golden Valley, attention: Finance Department, 7800 Golden Valley Road, Golden Valley, Minnesota 55427-4508. 2. By a resolution dated August 25, 1997, the City Council approved entering into an agreement by which a joint powers fire department would be established by merging the fire departments of the cities of New Hope and Crystal. A joint and cooperative agreement created the joint powers fire department effective January 2, 1998, and operations began in July 1998, under the name West Metro Fire -Rescue District (the District). As required by the agreement, the City transferred fine department equipment to the District while retaining its rights to these assets in the event of the District's dissolution. The equipment had a net book value of $374,558, and this amount is shown as "Investment in Joint Venture" in the government -wide financial statements under governmental activities. The District's financial statements for the period ended December 31, 2009 are available at the District office located at: 4251 Xylon Avenue North, New Hope, Minnesota 55428. According tc formula in the agreement, the City's share of the District's budget is 48 percent. Payments to the District in 2009 totaled $994,371. A-37 NOTE 8—JOINT VENTURES AND GOVERNED ORGANIZATIONS (CONTINUED) B. Jointly Controlled Organizations 1. Bassett Creek Watershed Management Commission (BCWMC) The City is one of nine member cities of the BCWMC, a joint powers organization formed to assist its members' preservation and use of natural water storage and retention systems. The City's 2009 contribution to the BCWMC for its fiscal year ended January 31, 2010 was $24,445, representing 5.4 percent of members' contributions for the year. 2. Shingle Creek Watershed Management Commission (SCWMC) The City is one of nine member cities of the SCWMC, a joint powers organization formed to assist its members' preservation and use of natural water storage and retention systems. The City's contribution to the SCWMC for its fiscal year ended December 31, 2009 was $23,978, representing 7.9 percent of members' contributions for the year. 3. Pets Under Police Security (PUPS) The City has entered into a joint and cooperative agreement with five other cities to create an organization which provides efficient and economical impoundment of animals in a jointly owned and operated facility. In addition to monthly operating fees, the City pays administration fees, which amounted to $7,500 in 2009. 4. Hennepin Recycling Group (HRG) The City is party to a joint powers agreement with two other cities to create an organization to collect, recycle, and dispose of solid waste in compliance with the Minnesota Waste Management Act. HRG contracts for collection and recycling activities and the City is billed for services provided to its residents. In 2009, total charges of $202,286 were incurred for these services. 5. Local Government Information Systems (LOGIS) The City is one of over 30 local government units in Minnesota making up a consortium that have joined together to provide one another with a full service data processing solution. Fees paid to the consortium are based on the level of service required and the applications utilized. In 2009, the City incurred charges of $326,925 for application support, systems development, Internet access, and network support services. NOTE 9 — COMMITMENTS AND CONTINGENCIES A. Construction During the year ended December 31, 2009, the City contracted for several capital projects. At year-end, the total outstanding construction contracts totaled $36,441. B. Federal and State Receivables Amounts recorded or receivable from federal and state agencies are subject to agency audit and adjustment. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of claims which may be disallowed by the grantor agencies cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. A-38 NOTE 9 — COMMITMENTS AND CONTINGENCIES (CONTINUED) C. Legal Claims The City has the usual and customary type of miscellaneous legal claims pending at year-end. Although the lawsuits are not presently determinable, the City's management believes that the City will not incur any material monetary loss resulting from these claims. No loss has been recorded on the City's financial statements relating to these claims. NOTE 10 —SUBSEQUENT EVENTS In May 2010, the City sold $1,580,000 of General Obligation Utility Revenue Bonds, Series 2010A. The bonds bear interest ranging from 2.00 to 3.25 percent, and have a final maturity of February 1, 2021. NOTE 11— OTHER POST -EMPLOYMENT BENEFITS PLAN A. Plan Description The City administers a single -employer defined benefit healthcare plan ("the Retiree Health Plan"). The plan provides lifetime healthcare insurance for eligible retirees and their spouses through the City's group health insurance plan, which covers both active and retired members. The benefit levels, employee contributions, and employer contributions are governed by the City and can be amended by the City through the City's collective bargaining agreements with employee groups. The Retiree Health Plan does not issue a publicly available financial report. The benefits provided are as follows: Post -Employment Insurance Benefits — All retirees of the City have the option under state law to continue their medical insurance coverage through the City from the time of retirement until the employee reaches the age of eligibility for Medicare. For members of all employee groups, the retiree must pay the full premium to continue coverage for medical insurance. The City is legally required to include any retirees for whom it provides health insurance coverage in the same insurance pool as its active employees, whether the premiums are paid by the City or the retiree. Consequently, participating retirees are considered to receive a secondary benefit known as an "implicit rate subsidy." This benefit relates to the assumption that the retiree is receiving a more favorable premium rate than they would otherwise be able to obtain if purchasing insurance on their own, due to being included in the same pool with the City's younger and statistically healthier active employees. B. Funding Policy Contribution requirements are also set by the City Council annually on a pay-as-you-go basis. The City contributes none of the cost of current year premiums for eligible retired plan members and their spouses except for the implicit rate subsidy described above. For fiscal year 2009, the City contributed $4,721 to the plan. Plan members receiving benefits contribute 100 percent of their premium costs. In fiscal year 2009, total member contributions were $9,133. A-39 NOTE 11- OTHER POST -EMPLOYMENT BENEFITS PLAN (CONTINUED) C. Annual OPEB Cost and Net OPEB Obligation The City's annual OPEB cost (expense) is calculated based on the annual required contribution of the employer (ARC). The City has elected to calculate the ARC and related information using the alternative measurement method permitted by GASB Statement No. 45 for employers in plans with fewer than 100 total plan members. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation to the Retiree Health Plan: Annual required contribution $ 20,748 Interest on net OPEB obligation 572 Adjustment to annual required contribution (561) Annual OPEB cost (expense) 20,759 Contributions made (4,721) Increase in net OPEB obligation 16,038 Net OPEB obligation - beginning of year 16,336 Net OPEB obligation - end of year $ 32,374 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the year are as follows: Fish Percentage of Year Ended Annual Employer Annual OPEB Net OPEB December 31, OPEB Cost Contribution Cost Contributed Obligation 2008 $ 20,748 $ 4,412 21.3% $ 16,336 2009 $ 20,759 $ 4,721 22.7% $ 16,038 D. Funded Status and Funding Progress As of December 31, 2008, the actuarial accrued liability for benefits was $187,037, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was $6,256,409 and the ratio of the unfunded actuarial accrued liability to the covered payroll was 3.0 percent. The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Schedule of Funding Progress, presented as required supplementary information following the notes to basic financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. A-40 NOTE 11— OTHER POST -EMPLOYMENT BENEFITS PLAN (CONTINUED) E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The following simplifying assumptions were made Retirement Age for Active Employees — Based on the historical average retirement age for the covered group, active plan members were assumed to retire at age 60, or at the fust subsequent year in which the member would qualify for benefits. Marital Status — Marital status of members at the calculation date was assumed to continue throughout retirement. Mortality — Life expectancies were based on mortality tables from the National Center for Health Statistics. The 2004 United States Life Tables for Males and for Females were used. Turnover — Non -group -specific age -based turnover data from GASB Statement No. 45 was used as the basis for assigning active members a probability of remaining employed until the assumed retirement age and for developing an expected future working lifetime assumption for purposes of allocating to periods the present value of total benefits to be paid. Healthcare Cost Trend Rate — The expected rate of increase in healthcare insurance premiums was based on projections of the Office of the Actuary at the Centers for Medicare & Medicaid Services. A rate of 6.8 percent initially, reduced to an ultimate rate of 6.0 percent after six years, was used. Health Insurance Premiums — 2007 health insurance premiums for retirees were used as the basis for calculation of the present value of total benefits to be paid. Inflation Rate — The expected long-term inflation assumption of 3.3 percent was based on projected changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI -W) in the 2006 Annual Report of the Board of Trustees of the Federal Old -Age and Survivors Insurance and Disability Insurance Trust Funds for an intermediate growth scenario. Payroll Growth Rate —The expected long-term payroll growth rate was assumed to equal the rate of inflation. Based on the historical and expected returns of the City's short-term investment portfolio, a discount rate of 3.5 percent was used. In addition, a simplified version of the entry age actuarial cost method was used. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at December 31, 2009 was 28 years. A-41 CITY OF NEW HOPE General Fund Comparative Balance Sheet as of December 31, 2009 and 2008 Assets 2009 2008 Cash and investments $ 3,910,596 $ 3,549,218 Receivables 171,367 133,794 Unremitted taxes and special assessments 156,974 75,138 Delinquent taxes 121,235 191,946 Delinquent special assessments 299 78 Deferred special assessments 2,535 4,279 Accrued interest 256,323 286,582 Accounts 95,079 157,707 Due from other governmental units 204,717 155,042 Prepaid items 59,799 — Total assets $ 4,807,557 $ 4,419,990 Liabilities and Fund Balances Liabilities Accounts and contracts payable $ 135,791 $ 60,503 Accrued expenditures 171,367 133,794 Due to other governmental units 21,978 55,070 Deferred revenue 124,070 218,146 Total liabilities 453,206 467,513 Fund balances Unreserved Designated for working capital 4,349,310 3,952,477 Undesignated 5,041 — Total fund balances 4,354,351 3,952,477 Total liabilities and fund balances $ 4,807,557 $ 4,419,990 A-42 CITY OF NEW HOPE General Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances Budget and Actual (continued) Year Ended December 31, 2009 (With Comparative Actual Amounts for the Year Ended December 31, 2008) (continued) 0FA 2009 2008 Over (Under) Final Budget Actual Budget Actual Expenditures (continued) Public safety Police Personal services 3,465,033 3,291,498 (173,535) 3,274,777 Supplies 58,565 60,319 1,754 71,132 Other services and charges 941,600 932,680 (8,920) 870,727 Capital outlay 21,900 10,479 (11,421) 32,445 Police reserves Personal services 11,210 11,247 37 12,677 Supplies 4,970 6,231 1,261 5,324 Other services and charges 16,573 15,025 (1,548) 14,740 Fire and safety Personal services 6,289 978 (5,311) 2,667 Supplies - 69 69 - Other services and charges 1,028,261 1,022,723 (5,538) 1,021,109 Animal control Personal services 87,125 83,599 (3,526) 79,055 Supplies 1,195 1,567 372 195 Other services and charges 34,041 31,318 (2,723) 30,634 Protective inspection Personal services 392,561 335,907 (56,654) 334,035 Supplies 6,250 2,547 (3,703) 3,547 Other services and charges 117,382 116,267 (1,115) 114,675 Total public safety 6,192,955 5,922,454 (270,501) 5,867,739 Public works Street maintenance Personal services 448,987 303,796 (145,191) 347,450 Supplies 89,100 59,310 (29,790) 101,957 Other services and charges 327,150 360,963 33,813 364,494 Engineering Other services and charges 15,000 15,945 945 16,999 Total public works 880,237 740,014 (140,223) 830,900 Culture and recreation Recreation Personal services 513,842 572,482 58,640 506,725 Supplies 50,956 54,056 3,100 55,824 Other services and charges 198,416 174,146 (24,270) 197,537 (continued) 0FA CITY OF NEW HOPE General Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances Budget and Actual (continued) Year Ended December 31, 2009 (With Comparative Actual Amounts for the Year Ended December 31, 2008) Expenditures (continued) Culture and recreation (continued) Parks Personal services Supplies Other services and charges Swimming pool Personal services Supplies Other services and charges Capital outlay Total culture and recreation Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses) Transfers in Net change in fund balances Fund balances Beginning of year 2009 2008 Over(Under) Final Budget Actual Budget Actual 394,326 356,576 (37,750) 347,642 33,000 26,061 (6,939) 28,393 312,432 319,666 7,234 314,064 133,535 106,409 (27,126) 126,714 39,400 37,598 (1,802) 37,952 61,486 46,049 (15,437) 62,620 5,000 — (5,000) 189 1,742,393 7693,043 (49,350) 1,677,660 9,848,818 9,539,104 (309,714) 9,678,593 (238,233) 186,364 424,597 (297,127) 215,510 215,510 — _ $ (22,723) 401,874 $ 424,597 (297,127) 3,952,477 4,249,604 End of year $ 4,354,351 $ 3,952,477 A-46 APPENDIX B FORM OF LEGAL OPINION )) HORSEY DORSEY d WHITNEY LLP City of New Hope New Hope, Minnesota [Original Purchaser] Re: $1,900,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B City of New Hope, Hennepin County, Minnesota Ladies and Gentlemen: As Bond Counsel in connection with the authorization, issuance and sale by the City of New Hope, Hennepin County, Minnesota (the "City"), of its General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B dated, as originally issued, as of November 10, 2010, in the total principal amount of $1,900,000 (the "Bonds"), we have examined certified copies of certain proceedings taken, and certain affidavits and certificates furnished, by the City in the authorization, sale and issuance of the Bonds, including the form of the Bonds. As to questions of fact material to our opinion we have assumed the authenticity of and relied upon the proceedings, affidavits and certificates furnished to us without undertaking to verify the same by independent investigation. From our examination of such proceedings, affidavits and certificates, and based upon laws, regulations, rulings and decisions in effect on the date hereof, it is our opinion that: The Bonds are valid and binding general obligations of the City enforceable in accordance with their terms. 2. The principal of and interest on the Bonds are payable from net revenues of the City's storm sewer utility and from ad valorem taxes levied on all taxable property in the City, and, to any extent not so paid, from additional ad valorem taxes required by law to be levied on all taxable property in the City without limitation of rate or amount. 3. Interest on the Bonds (a) is not includable in gross income for federal income tax purposes or in taxable net income of individuals, estates or trusts for Minnesota income tax purposes; (b) is includable in taxable income of corporations and financial institutions for purposes of the Minnesota franchise tax; (c) is not an item of tax preference includable in alternative minimum taxable income for purposes of the federal alternative minimum tax applicable to all taxpayers or the Minnesota alternative minimum tax applicable to individuals, estates and trusts; and (d) is includable in adjusted current earnings of corporations in determining alternative minimum taxable income for purposes of the federal alternative minimum tax. 4. The City has designated the Bond as a "qualified tax-exempt obligation" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), and, financial institutions described in Section 265(b)(5) of the Code may treat the Bond for purposes of Section 265(b)(2) and 291(e)(1)(B) of the Code as if it was acquired on August 7, 1986. I:BI The opinions expressed in paragraphs I and 2 are subject as to enforceability to the effect of any state or federal laws relating to bankruptcy, insolvency, reorganization, moratorium or creditors' rights and the exercise of judicial discretion. The opinion set forth in paragraphs 3 and 4 are subject to the condition that the City comply with all the 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, excluded from gross income for federal income tax purposes, and the Bonds be and continue to be qualified tax-exempt obligations. The City has covenanted in the resolution authorizing the issuance of the Bonds to comply with these continuing requirements. Failure of the City to comply with these requirements may result in the inclusion of interest on the Bonds in federal gross income and in Minnesota taxable net income, retroactive to the date of issuance of the Bonds. Except as stated in this opinion, we express no opinion regarding federal, state or other tax consequences to owners of the Bonds. We have not been asked, and have not undertaken, to review the accuracy, completeness or sufficiency of any offering materials relating to the Bonds, and accordingly, we express no opinion with respect thereto. Dated: November_, 2010. Very truly yours, M 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 issue of] the Securities, [each] in the aggregate principal amount of such issue, and will be deposited with DTC. [If, however, the aggregate principal amount of [any] issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.] 2. DTC, the world's largest securities 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 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants")deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has 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.dtcc.com and www.dtc.org. 3. 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 tum 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 Director 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 behalf of 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 the 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 MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). A. 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 City 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, Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 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 [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 depository with respect to the Securities at any time by giving reasonable notice to the City or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 12. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. C-2 IA\"»A2101) iK'A07 FORM OF CONTINUING DISCLOSURE COVENANTS (Excerpts From Sale Resolution) In order to permit bidders for the Bonds and other participating underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (as in effect and interpreted from time to time, the "Rule"), the City will covenant and agree in the Bond Resolution, for the benefit of the Owners (as hereinafter defined) from time to time of any Bonds which are Outstanding, to provide annual reports of specified information and notice of the occurrence of certain events, if material, as hereinafter described (the "Disclosure Covenants"). The City is the only "obligated person" in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. The City has complied in all material respects with any undertaking previously entered into by it under the Rule. Breach of the Disclosure Covenants will not constitute a default under the Bond Resolution or the Bonds. A broker or dealer is to consider a known breach of the Disclosure Covenants, however, before recommending the purchase or sale of Bonds in the secondary market. Thus, a failure on the part of the City to observe the Disclosure Covenants may adversely affect the transferability and liquidity of the Bonds and their market price. As used herein, "Owner" or `Bondowner" means, in respect of a Bond, the registered holder or holders thereof appearing in the bond register maintained by the Registrar or any `Beneficial Owner" (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, `Beneficial Owner" means, in respect of a Bond, any person or entity which (i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of the Bond for federal income tax purposes. As used herein, a "Material Fact" is a fact as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed under the Disclosure Covenants or information generally available to the public. Notwithstanding the foregoing sentence, a "Material Fact" is also an event that would be deemed "material" for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. Information To Be Disclosed The City will provide, in the manner set forth under "Manner of Disclosure" below, either directly or indirectly through an agent designated by the City, the following information at the following times: Annual Information As soon as available, but not later than 365 days after the end of each fiscal year of the City, commencing with the fiscal year ending December 31, 2011, the following financial information and operating data (the "Disclosure Information"): (A) The audited financial statements of the City for such fiscal year, accompanied by the audit report and opinion of the accountant or government auditor relating thereto, as permitted or required by the laws of the State of Minnesota, which financial statements shall D-1 contain balance sheets as of the end of such fiscal year and a statement of operations, changes in fund balances and cash flows for the fiscal year then ended, showing in comparative form such figures for the preceding fiscal year of the City, prepared in accordance with generally accepted accounting principles promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under Minnesota law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof, and certified as to accuracy and completeness in all material respects by the fiscal officer of the City; and (B) To the extent not included in the financial statements referred to in paragraph (A) hereof, information of the type set forth below, which information may be unaudited, but is to be certified as to accuracy and completeness in all material respects by the City's financial officer to the best of his or her knowledge, which certification may be based on the reliability of information obtained from governmental or other third party sources: Current Property Valuations; Direct Debt; Tax Levies and Collections; Population Trend; Employment/Unemployment. Notwithstanding the foregoing paragraph, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within 10 days afterthe receiptthereof, the City shall provide the audited financial statements. Any or all of the Disclosure Information may be incorporated, if it is updated as required by the Disclosure Covenants, by reference from other documents, including official statements. If the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board (the "MSRB"). If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed orbeen discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be a Material Fact, then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or the Disclosure Covenants are amended as permitted by the Bond Resolution, then the City is to include in the next Disclosure Information to be delivered under the Disclosure Covenants, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. D-2 Certain Material Events In a timely manner, notice of the occurrence of any of the following events which is a Material Fact (the "Material Events"): (1) Principal and interest payment delinquencies; (2) Non-payment related defaults; (3) 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 security; (7) Modifications to rights of security holders; (8) Bond calls; (9) Defeasances; (10) Release, substitution, or sale of property securing repayment of the securities; and (11) Rating changes. Certain Other Information In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information at the time specified under "Annual Information" above; (B) the amendment or supplementing of the Disclosure Covenants pursuant to the Bond Resolution, together with a copy of such amendment or supplement and any explanation provided by the City under the Disclosure Covenants; (C) the termination of the obligations of the City under the Disclosure Covenants pursuant to the Bond Resolution; (D) any change in the accounting principles pursuant to which the financial statements constituting a portion of the Disclosure Information [or the audited financial statements, if any, furnished pursuant to the Disclosure Covenants] are prepared; and (E) any change in the fiscal year of the City. D-3 Manner of Disclosure The City agrees to make available the information under "Infonnation To Be Disclosed" above as follows: (1) To MSRB, in an electronic form and accompanied by identifying information, all as prescribed by the MSRB from time to time,. (2) By electronic transmission, overnight delivery, mail or other means, as appropriate to any rating agency then maintaining a rating of the Bonds at the request of the City and, at the expense of such Bondowner, to any Bondowner who requests in writing such information, at the time of transmission to MSRB under paragraph (1) above, or, if such information is transmitted with a subsequent time of release, at the time such information is to be released. Term The Disclosure Covenants shall remain in effect until all Bonds have been paid or defeased under the Bond Resolution. Notwithstanding the preceding sentence, however, the Disclosure Covenants shall terminate and be without further effect as of any date on which the City delivers to the Registrar an opinion of Bond Counsel to the effect that, because of legislative action or final judicial or administrative actions or proceedings, the failure of the City to comply with the Disclosure Covenants will not cause participating underwriters in the primary offering of the Bonds to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended, or any statutes or laws successory thereto or amendatory thereof. Amendments; Interpretation The Disclosure Covenants (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to or the consent of the Owners of any Bonds, by a resolution of the governing body of the City filed with the Registrar accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that: (i) such amendment or supplement (a) is made in connection with a change in circumstances that arises from a change in law or regulation or a change in the identity, nature or status of the City or the type of operations conducted by the City, or (b) is required by, or better complies with, the provisions of paragraph (b)(5) of the Rule; (ii) the Disclosure Covenants as so amended or supplemented would have complied with the requirements of paragraph (b)(5) of the Rule at the time of the primary offering of the Bonds, giving effect to any change in circumstances applicable under clause (i)(a) and assuming that the Rule as in effect and interpreted at the time of the amendment or supplement was in effect at the time of the primary offering; and (iii) such amendment or supplement does not materially impair the interests of the Bondowners under the Rule. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. The Disclosure Covenants are to be construed so as to satisfy the requirements of paragraph (b)(5) of the Rule. Default; Remedies If the City fails to comply with any of the Disclosure Covenants, any person aggrieved thereby, including the Owners of any Outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of any such covenant. Direct, indirect, consequential and punitive damages shall not be recoverable, however, for any default thereunder to the extent permitted by law. In no event shall a default under the Disclosure Covenants constitute a default under the Bonds or under any other provision of the Bond Resolution. /t\:»kqIRDA $1,900,000' GENERAL OBLIGATION CERTIFICATES OF INDEBTEDNESS AND REFUNDING BONDS, SERIES 20108 CITY OF NEW HOPE, MINNESOTA Proposals for the purchase of $1,900,000 General Obligation Certificates of Indebtedness and Refunding Bonds, Series 2010B (the 'Bonds") of the City of New Hope, Minnesota (the "City") will be received at the offices of Ehlers & Associates, Inc. ("Ehlers"), 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105, Financial Advisors to the City, 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 October 25, 2010, at which time they will be opened, read and tabulated. The proposals will be presented to the City Council for consideration for award at a meeting to be held at 7:00 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 City will be accepted unless all proposals are rejected. PURPOSE The Bonds are being issued pursuant to Minnesota Statutes, Section 412.301 and 444.075 and Chapter 475, by the City, for the purpose of funding the acquisition of a new fire engine and effecting a current refunding of the 2012 through 2022 maturities of the City's $850,000 General Obligation Storm Sewer Revenue Bonds, Series 2002A, dated April 1, 2002. The Bonds will be general obligations of the City for which its full faith, credit and taxing powers are pledged. DATES AND MATURITIES The Bonds will be dated November 23, 2010, 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* 2012 $175,000 2013 190,000 2014 190,000 2015 195,000 Year Amount* 2016 $195,000 2017 200,000 2018 205,000 2019 210,000 ADJUSTMENT OPTION Year Amount* 2020 $215,000 2021 60,000 2022 65,000 * The City 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 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. All dates are inclusive. E-1 INTEREST PAYMENT DATES AND RATES Interest will be payable on February 1 and August 1 of each year, commencing August 1, 2011, 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 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 The City has selected Bond Trust Services Corporation, Roseville, Minnesota, to act as paying agent (the "Paying Agent"). The City will pay the charges for Paying Agent services. The City reserves the right to remove the Paying Agent and to appoint a successor. OPTIONAL REDEMPTION At the option of the City, Bonds maturing on or after February 1, 2021 shall be subject to prior payment on February 1, 2020 or on any date thereafter, at a price of par plus accrued interest. Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the selection of the amounts and maturities of the Bonds to be prepaid shall be at the discretion of the City. If only part of the Bonds having a common maturity date are called for redemption, the City or Paying Agent, if any, will notify DTC of the particular amount of such maturity to be redeemed. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interest in such maturity to be redeemed. Notice of such call shall be given by mailing a notice not more than 60 days and not fewer than 30 days prior to the date fixed for redemption to the registered owner of each Bond to be redeemed at the address shown on the registration books. DELIVERY On or about November 23, 2010, the Bonds will be delivered without cost to the original purchaser at DTC. On the day of closing, the City 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 City, threatened. Payment for the Bonds must be received by the City at its designated depository on the date of closing in immediately available funds. E-2 LEGAL OPINION An opinion as to the validity of the Bonds and the exemption from taxation of the interest thereon will be furnished by Dorsey & Whitney LLP, Minneapolis, Minnesota, bond counsel to the City, and will accompany the Bonds. The legal opinion will state that the Bonds are valid and binding general obligations of the City 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, insolvency, reorganization, moratorium or creditors' rights generally. SUBMISSION OF PROPOSALS Proposals must not be for less than $1,881,000 plus accrued interest on the principal sum of $1,900,000 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 Floor, New York, New York 10018, Telephone (212) 849-5021. 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 City nor Ehlers shall be responsible for any failure to receive a facsimile submission. A good faith deposit (the "Deposit") in the amount of $38,000, 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 KleinBank, 1550 Audubon Road, Chaska, Minnesota, ABA No. 091915654 for credit: Ehlers & Associates Good Faith Account No. 3208138. The Deposit will be retained by the City 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 City, shall be retained in the offices of Ehlers with the same effect as if delivered to the City. Alternatively, bidders may wire the Deposit to KleinBank,1550 Audubon Road, Chaska, Minnesota, ABA No. 091915654 for credit: Ehlers & Associates Good Faith Account No. 3208138. The City 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 $250,000 per bidder. E-3 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 City. 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 bidder 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 City 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 City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. 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 City'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 City 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. Any cost for such insurance policy is to be paid by the purchaser, except that, if the City requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any rating agency fees not requested by the City 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 City 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 TheCity will designate the Bonds as qualified tax-exempt obligations for purposes of Section 265(b)(3) ofthe Internal Revenue Code of 1986, as amended. CONTINUING DISCLOSURE In order to permit bidders for the Bonds and other participating underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Cotmnission under the Securities Exchange Act of 1934 (the "Rule"), the City will covenant and agree, for the benefit of the registered holders and berl4cial owners from time to time of the outstanding Bonds, in the resolution awarding the sale and prescribing the rms of the Bonds, to provide certain financial information, and other financial information and operating data if customarily prepared and publicly available, to the Municipal Securities Rulemaking Board, and notice of the occurrence of certain events, if material. The City is the only "obligated person" in respect of the Bonds within the meaning of the Rule and, giving effect to the issuance of the Bonds, there will not be more than $10 million in principal amount of municipal securities outstanding on the date of issuance of the Bonds as to which the City is E-4 an obligated person (excluding municipal securities exempt from the Rule under paragraph (d)(1) thereof). A description of the undertaking is set forth in the Official Statement. Failure of the City to enter into an undertaking substantially similar to that described in the Official Statement would relieve the successful bidder of its obligation to purchase the Bonds. The City 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. PRELIMINARY OFFICIAL STATEMENT Bidders may obtain a copy of the Preliminary Official Statement relating to the Bonds prior to the proposal opening by request from Ehlers at www.chlers-inc.com by connecting to the link to the Bond Sales. The Syndicate Manager will be provided with an electronic copy and up to 10 printed copies upon request 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 City Council Valerie Leone, City Clerk City of New Hope, Minnesota E-5