05.02 - USDA Water Bond Refunding

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POST ISSUANCE The issuance of these bonds will result in post-issuance compliance responsibilities. The �•.- COMPLIANCE: responsibilities lie in two primary areas: i) compliance with federal arbitrage requirements and ii) compliance with secondary disclosure requirements. Federal arbitraae requirements include a wide range of implications that have been taken into account as your issue has been structured. Post-issuance compliance responsibilities for your tax-exempt issue include both rebate and yield restriction provisions of the IRS Code. In very general terms the arbitrage requirements control the earnings on unexpended bond proceeds, including investment earnings, moneys held for debt service payments (which are considered to be proceeds under the IRS regulations), and/or reseroes. An issue qualifies for a small issuer exception from rebate if it is sold by a municipality with general taxing powers that issues $5 million or less of certain tax-exempt obligations in a calendar year. The City expects to qualify as a small issuer for 2012. Yield restriction provisions will still apply to the debt service fund and any proceeds that remain unspent after three years and these funds should be monitored throughout the life of the issue. Secondarv disclosure requirements result from an SEC requirement that underwriters provide ongoing disclosure information to investors. To meet this requirement, any prospective underwriter will require the City to commit to providing the information needed to comply under a continuing disclosure agreement. The City has less than $10 million of outstanding obligations. Therefore, the SEC allows the City to choose "limited disclosure" for this issue, which requires the City to enter into a Continuing Disclosure Certificate pursuant to which they will covenant to provide certain financial information or operating data that is customarily prepared and is publicly available and notices of certain material � events to the limited extent required by SEC Rule 15C-12(d)(2). Springsted can assist the City with their post-issuance compliance. Contracts to provide these services will be provided to the City under separate cover. SUPPLEMENTAL Supplementary information will be available to staff including detailed terms and conditions INFORMATION AND of sale, comprehensive structuring schedules and information to assist in meeting post- BOND RECORD: issuance compliance responsibilities. Upon completion of the financing, a bond record will be provided that contains pertinent documents and final debt service calculations for the transaction. PURPOSE: Proceeds of the Bonds will be used to refund the January 1, 2013 through 2040 maturities of the City's General Obligation Bonds, Series 2000A, dated October 18, 2000 and currently outstanding in the principal amount of $1,325,604 (the "Series 2000A Bonds" or "Prior Bonds"). The refunding transaction is being conducted as a current refunding, in which the proceeds of the Bonds will be used within 90 days of bond settlement to redeem the outstanding principal on the Prior Bonds. The refunding transaction is being undertaken to achieve interest cost savings to the City. The Series 2000A Bonds were originally issued to pay at maturity the City's outstanding General Obligation Loan Anticipation Bonds of 1999, originally issued to defray the cost of improvements to the City's sanitary sewer and water system. AUTHORITY: Statutorv Authoritv: The Bonds are being issued pursuant to Minnesota Statutes, 475 and 444. � �:;= Springsted Page2