ITEM 4.2 SewerOtsezF o
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Administration
City Administrator/Finance Director Flaherty
May 26, 2020
PRESENTER(S)
REVIEWED BY:
ITEM #:
Administration
Bond Counsel, Mary Ippel
4.2
STRATEGIC VISION
MEETS:
THE CITY OF OTSEGO:
Is a strong organization that is committed to leading the community through innovative
communication.
X
Has proactively expanded infrastructure to responsibly provide core services.
Is committed to delivery of quality emergency service responsive to community needs and
expectations in a cost-effective manner.
Is a social community with diverse housing, service options, and employment opportunities.
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff is recommending that the City Council approve the issuance of General Obligation Sewer Revenue
Note of 2020 in the amount of $17,273,277.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
FIS A PUBLIC HEARING REQUIRED?
No
No
BACKGROUND/JUSTIFICATION:
The City is progressing with the East Wastewater Treatment Facility Biosolids Building project, which was a
key component of the Wastewater Master Plan (the Plan), "East Solids Phase 1" supporting long term goals
and implementation phasing to meet growth expectations.
At the February 24, 2020 meeting, the City Council adopted Resolution 2020-14 accepting bids and
awarding a construction contract to Rice Lake Construction Group.
At the March 9, 2020 meeting, the City Council adopted Resolution 2020-15 approving an application to
the Minnesota Public Facilities Authority (MPFA) for a loan from the Clean Water Revolving Fund.
The City received project certification from the Minnesota Pollution Control Agency (MPCA) on April 21,
2020. Upon that certification, MPFA committed to make a loan to the City in the principal amount of
$17,273,277 and developed a Bond Purchase and Project Loan Agreement (the Agreement) as well as a
Loan Amortization Schedule, both of which are included in this packet.
The Agreement provides for an interest rate of 1.161 percent per annum. Repayment of the loan to MPFA
would commence on February 20, 2021 and matures on August 20, 2040.
The City's bond counsel, Mary Ippel with Taft, has drafted a resolution that will accept the loan offer from
MPFA and will authorize execution of the Agreement.
SUPPORTING DOCUMENTS ATTACHED: '
• Breakdown of Loan Principal Amount
• MPFA Bond Purchase and Project Loan Agreement & Amortization Schedule
• Resolution 2020-30
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PLEASE WORD MOTION AS YOU WOULD LIKE ITTO APPEAR IN THE MINUTES:
Motion to approve Resolution 2020-30 accepting the offer of the Minnesota Public Facilities Authority to
purchase a $17,273,277 General Obligation Sewer Revenue Note of 2020, providing for its issuance and
authorizing execution of a bond purchase and project loan agreement.
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FUNDING: BUDGETED:
Fund 602 — Sanitary Sewer Utility Yes
Fund 361— Sanitary Sewer Debt Service
Minnesota Public Facilities Authority
CWRF Application
Form 4a - Clean Water Project Budget (Wastewater Projects)
Applicant: City of Otsego Project: Otsego EWWTF Biosolids Building Costs based on: As -bid costs Date: 03/18/20
Start Date*
End Date
Total Requested
From
PFA
Other Funding
(name source)
Other Funding
(name source)
Other Funding
(name source)
Total
Project Cost
1. Non -Construction Costs
A. Planning
08/27/18
11/30/18
25,862
25,862
B. Design
01/14/19
04/30/20
1,309,335
1,309,335
C. Inspection/Other Engineering
02/24/20
07/16/22
1,140,000
11140,000
E. Develop Asset Management Program
TBD
TBD
10,000
10,000
F. Attorney/Financing Related Fees
3/1/2020
12/31/2020
15,000
15,000
G. Land
-
-
Non -Construction Subtotal
$ 2,500,197
$ -
$
$ -
$ 2,500,197
2. Construction Costs 111
A. Secondary Treatment (1)
02/18/20
07/15/21
13,648,600
13,648,600
B. Advanced Treatment (II)
02/18/20
07/15/21
421,000
421,000
C. Infiltration/Inflow Correction (IIIA)
D. Sewer System Rehabilitation (1116)
E. New Collector Sewers (IVA)
F. New Interceptors (IVB)
G. CSO Correction (V)
H. Storm Sewer (VI)
1. Service Connections I�1
Construction Subtotal
$ 14,069,600
$ -
$ -
$
$ 14,069,600
Contingencies (up to 5% of
3. construction subtotal
703,480
703,480
Total
$ 17,273,277
$ -
$
$
$ 17,273,277
* Provide a list of prior incurred costs (Form 4c) if the applicant will be seeking PFA reimbursement for costs incurred prior to the PFA award date.
Notes:
(1) After as -bid project costs are known, a revised Form 4 must be submitted
(2) Check with PFA loan officer regarding eligibility of private service connections.
PFA Application Form 4a CW October 2019
MINNESOTA PUBLIC FACILITIES AUTHORITY
BOND PURCHASE AND PROJECT LOAN AGREEMENT
This BOND PURCHASE AND PROJECT LOAN AGREEMENT ("the Agreement"), is between the Minnesota
Public Facilities Authority (the "Authority") and the City of Otsego ("Recipient") and is dated April 27,
2020.
The Project consists of rehabilitating the east wastewater treatment facility and expanding biosolids
processing ("the Project"). The Project is further described and detailed in the MN Pollution Control
Agency's certification(s) dated April 21, 2020 and in the Recipient's Project application which is
incorporated herein.
Program Funding for the Project
Name
Legal citations
Funding IDs,"
Amounts
Clean Water State Revolving Fund
("the Loan")
MS 446A.07;
MPFA-CWRF L�047-FY20
$17,273,277
Loan
MN Rules 7380
.0400-.0480
Clean Water State Revolving Fund
("the Principal
MS 446A.07
MPFA-CWRF-G-047-FY20
$0
Principal Forgiveness Grant
Forgiveness
Grant")
�i �
/�
Total Authority Project Financing:
$17,273,277
ARTICLE 1— TERMS AND CONDITIONS
Section 1.1 Terms. (a) General: The Authority,\ hereby commits; subject to the availability of funds and
the conditions and legal citations herein set forth, to provide SEVENTEEN MILLION TWO HUNDRED
SEVENTY THREE THOUSAND TWO HUNDRED SEVENTY-SEVEN DOLLARS ($17,273,277) to the Recipient
for the purpose of financing eligible -costs of the Project.
(b) Loan: The Loan shall be ev dnced 6ythe Note described in Section 1.4 of this Agreement (the
"Note"). The final maturity date of the Loan will be August 20, 2040. The aggregate principal amount of
the Loan disbursed and outst\ndi\ng will .bear interest/and servicing fees collectively at the rate of 1.161%
per annum accruing from and after the date of the Note through the date on which no principal of the
Loan remains unpaid and all accrued interest and servicing fees thereon have been paid.
(c) Grant(s): The< rincipal Forgive ess Grant is granted and is not required to be repaid except as
otherwise provided`in Article 9 of tf is Agreement.
Section 1.2 Authority Sources of/Funds. (a) The Recipient acknowledges that the Authority may use the
proceeds of one or more series of the Authority's revenue bonds (the "Bonds"), federal capitalization
grants, proceeds of state general obligation bonds, state appropriations from the Clean Water Legacy
Fund, or other funds of the Authority, or a combination thereof, to fund the Agreement.
(b) At the written request of the Recipient, the Authority will provide information with respect to the
funding of the Agreement, from time to time.
(c) Allocation and pledging of Loan: The Authority may, at any time, pledge the Loan as security for its
Bonds. The Authority in its sole discretion may allocate the Loan to one or more sources of funds and
may from time to time reallocate the Loan to one or more different sources of funds, including one or
more different series of Bonds (whether or not that series of Bonds refunded the series of Bonds to
which the Loan was originally allocated), or may sell the Loan if permitted by the documents relating to
its Bonds.
CWRF_Otsego_01 Page 1 of 13
Section 1.3 Disbursements. (a) Delivery of Note: No funds will be disbursed by the Authority to the
Recipient until the Recipient has delivered its Note to the Authority as set forth in section 1.4.
(b) All Recipient disbursement requests will be subject to Authority approval and will be disbursed on a
cost reimbursement basis, consistent with the budget presented in the Recipient's application. The
Authority may withhold or disallow all or part of the amount requested if the Authority determines the
request is not in compliance with this Agreement, applicable federal and state laws, regulations or rules
as then in effect.
(c) The Authority will disburse funds pursuant to approved disbursement requests complying with the
provisions of this Agreement. Each disbursement request must be for eligible costs for completed work
on the Project and must be submitted on or before the deadlines established, by the Authority and on a
form prescribed by the Authority. Each disbursement request must indlude supporting invoices and
billing statements and be signed by an employee or elected official of the'Recipient.
(d) The Authority will reimburse the Recipient for eligible Project costs incurred,prior to the execution of
this Agreement only to the extent approved in connection With the Authority's approval of the
Recipient's application. i
(e) The Authority will make disbursements to the Recipient within 330 days of receipt of the Recipient's
request, unless the Authority determines to withhold disbursement in accordance with the provisions of
this Agreement. The Authority will endeavor to- -pay disbursement requests submitted by the Recipient
not later than the 15th day of the month by the,last day of the Same'
.month.
(f) If the entire amount specified in Section 1.1 is not fuJ y` is ursed'by June 30, 2023 the Authority will
not make any further disbursements. Inthatevent orxiffinal eligible Project costs are less than the total
financing amount specified in Section 1.1; he un isbursed balance of the Principal Forgiveness Grant
will be cancelled, and the undisbursed bal. ce oftIe\(.oan will be applied to the outstanding principal
installments of the Loan on d pre rata basis-or-as_othel-,wise determined by the Authority. The Authority
will revise Exhibit A to this Agreement,-reflectthereduction in principal amount and promptly deliver
a copy to the Recipient. -
Section 1.4 Security/(a) The Red ient mU`St issue to the Authority its General Obligation Revenue Note
to evidence its'ob(igation to repaYthe Loan. The Authority will not disburse funds to the Recipient under
this Agreement' until the Recipient delivers to the Authority the executed Note, a certified copy of
resolutions or other, authority,,by/the appropriate governing body or bodies as have authorized the
execution and performance of this Agreement and the Note in accordance with applicable law, and all
opinions, certificates and documents requested by, and in a form acceptable to, the Authority.
(b) The Recipient represents and agrees that the Note is a general obligation debt of the Recipient and
will be shown as such on its financial statements and be treated in all respects as a general obligation
debt of the Recipient. For purposes of permitting sale of the Note to the Authority, the Authority
represents that it is a "board, department or agency of the State of Minnesota within the meaning of
Minnesota Statutes, Section 475.60, subdivision 2, clause (4), as amended.
(c) The obligations of the Recipient under the Note evidence amounts payable under the Loan. Each
payment made pursuant to the Note will be deemed to be a credit against the corresponding obligation
of the Recipient under the Loan and any such payment will fulfill the Recipient's obligation to pay that
amount hereunder.
CWRF_Otsego_01 Page 2 of 13
(d) The Recipient agrees to impose and collect rates and charges in compliance with Minnesota Statutes
and in accordance with the Recipient's service charge system, so that sufficient gross revenues are
available, together with other sources as may be applicable, for the payment of system costs, including
operation and maintenance expenses and principal, interest and servicing fees due on any outstanding
debt payable from those revenues. The Recipient agrees to annually review and ensure that the gross
revenues are sufficient for the payment of all system costs.
Section 1.5 Mandatory Payments. (a) The Recipient must repay the principal amount of the Loan,
together with accrued interest and servicing fees, in the amounts and on the dates set forth in Exhibit A
attached hereto (notwithstanding the rate of disbursement of the proceeds of the Loan), subject to
adjustment as set forth in Section 1.3 or 1.6. The interest payment shown on Exhibit A is for
informational purposes only; the actual interest payment will be the amount of interest which has
accrued to the date of payment. The Authority will be entitled to retain for/its own purposes any interest
earnings on Loan proceeds that are not disbursed and will not bepbljgated to credit any such interest
earnings against any required repayment of principal or payment/,of interestland servicing fees. Any
payment of principal or interest received by the Authority in,.excess of the amounts set forth in Exhibit
A, as then in effect, which is not a mandatory payment as,designated in paragraph\'(b), or not expressly
designated by the Recipient to be treated as an optional prepayment -,may, in the sole discretion of the
Authority, be (i) held without interest payable by the Authority angApplied to a future payment due on
the Loan in a manner determined by the Authority, (ii) treated as/a prepayment of principal on the Loan,
or (iii) returned to the Recipient as an overpayment. Other than `p epayments, the Authority will apply
any payments received under the Note as follows first to the payment of any costs or expenses incurred
by the Authority in enforcing any provision of the., Note or this Agreement; second, to the payment of
accrued and unpaid interest and servicing fees on,tlhe 4pte; and third, to the payment of principal of the
Note then due.
(b) If the Recipient has pledged to the repament of'the Loan revenues subject to prepayment or lump -
sum payments by a third party, such/as"special assessments or connection charges from another
municipality, the Recipient will notify the Authority immediately upon receipt of any such payment. The
Authority, in its sole.,discretion, may direct the Recipient to use the funds for the payment of eligible
construction costs"of'the Project�or, 'to transmit the funds to the Authority for payment on the Loan,
immediately orat`a later date.`�Qny such,payment received by the Authority may be applied to reduce
each unpaid annual principal installment of the Loan in the proportion that such installment bears to the
total of all unpaid principal installments, or, in the sole discretion of the Authority, may be applied to
one or more future principal payments on the Loan in a manner determined by the Authority.
Section 1.6 Optional Prepayments. (a) The Recipient may not prepay the Loan except upon written
consent of the Authority. If the Authority has consented, then upon 45 days' prior written notice to the
Authority (or such lesser period as the Authority may accept), the Recipient may prepay the Loan and
the Note, in whole or in part, on any February 20 or August 20 at a redemption price equal to the principal
amount to be prepaid, together with accrued interest and servicing fees thereon to the redemption date
and a premium equal to all fees and expenses of the Authority, if any, in connection with the
prepayment, including any fees, expenses or other costs relating to the payment and redemption of the
Bonds as determined by the Authority.
(b) The Authority may require that the Recipient, at its sole cost and expense, deliver to the Authority
an opinion from a law firm, selected by the Authority, having a national reputation in the field of
municipal finance law whose legal opinions are generally accepted by purchasers of municipal bonds
CWRF_Otsego_01 Page 3 of 13
("Bond Counsel") to the effect that such prepayment will not cause the interest on the Note to be
included in the gross income of the recipient thereof for federal income tax purposes.
(c) The Authority will apply any amount paid by the Recipient to prepay all or a portion of the Note as
follows: first, to the payment of fees, expenses and other costs of the Authority as provided in
Subsection (a); second, to the payment of interest and servicing fees on the principal amount of the Note
to be prepaid; and, third, to the principal of the Note. The principal amount of a partial prepayment will,
in the sole discretion of the Authority, (i) be applied to one or more future principal payments of the
Loan in a manner determined by the Authority, or (ii) be applied to reduce each unpaid annual principal
installment of the Loan in the proportion that such installment bears to the total of all unpaid principal
installments (i.e., the remaining principal payment schedule shall be re -amortized to provide
proportionately reduced principal payments in each year).
ARTICLE 2 — RECIPIENT RESPONSIBILITIES AND PROJECT COMPLIANCE
Section 2.1 Recipient Responsibilities with Respect to the Project. (a) The'Recipient must meet all
requirements in the project application submitted to the Authority as to compliance with federal and
state laws, rules and regulations and include in any contract or subcontract 'related to the Project
provisions requiring contractor and subcontractor compliance with applicable state and federal laws.
The requirements in that application are hereby incorporated. by reference.
(b) The Recipient agrees to commence constru6tion and complete'the Project with reasonable diligence,
regardless of the sufficiency of loans or grants`therefor from the Aut)ority to pay eligible project costs.
(c) The Recipient will not enter into.a-sale, lease, transfer or other use agreement of any part of the
Project, or change the use of the Pr'oject,,\Without the�prior written approval of the Authority if that sale,
lease, transfer, agreement or change in useould (i),violate the covenants set forth in Article 3 or Article
4, or (ii) violate the conditi=,,(the//"EPA")-
er wich.any capit--V tion grants were furnished by the United States
Environmental Protection or.(ijif otherwise violate any terms or conditions of this
Agreement.
(d) The Recipient m .fist maintain adequate property insurance coverage for the Project in those amounts
and with those limits as it deterrilin\\es in good faith to be reasonable or in those amounts and with those
limits as the Authbrity may require from time to time. The Recipient may substitute adequate, actuarially
sound self-insurance._or,risk retention program(s) for property insurance coverage, so long as such
program(s) are consistent with.-a/pplicable laws and state and federal regulations.
(e) The Recipient must complete the Project in accordance with all applicable federal, state and local
statutes, rules, regulations, ordinances, reporting requirements, approvals, and state agency
certifications governing the design and construction of the Project, and operate the Project's system in
compliance with all applicable federal and state laws and regulations and permit requirements.
(f) The Recipient agrees to exert all reasonable efforts to investigate claims that the Recipient may have
against third parties with respect to the construction of the Project and, in appropriate circumstances,
take whatever action, including legal action, the Recipient reasonably determines to be appropriate.
(g) Clean Water Legacy logo: This subsection is intentionally left blank.
CWRF_0tsego_01 Page 4 of 13
Section 2.2 Construction Compliance. (a) State prevailing wages: The Recipient must comply with the
provisions of prevailing wage requirements set forth in Minnesota Statutes, Sections 177.41 to 177.44,
as then in effect.
(b) Federal prevailing wages: In addition to the prevailing wage requirements under Subsection (a), the
Recipient must comply with, and require that all laborers and mechanics employed by contractors and
subcontractors on the Project be paid wages at rates not less than those prevailing on projects of a
similar character in the locality as determined by the Secretary of Labor in accordance with, the Davis -
Bacon Act (40 U.S.C., sec. 276a through 276a-5), as amended.
(c) Federal American Iron and Steel: The Recipient will comply with the,American Iron and Steel
requirements of Section 608 of the Federal Water Pollution Control Act, -unless the Project is granted a
waiver from the EPA.
ARTICLE 3 — TAX COMPLIANCE
The Recipient acknowledges that the Note is intended; ,,,,bear interest that is7excluded from gross
income of the owner thereof for federal and State of Minnesota,income tax purposes (a "Tax-exempt
Note") and may be funded by the Authority from the proceeds of'the Authority's Bonds that are intended
to bear interest that is excluded from gross income of the, owner thereof for federal and State of
Minnesota income tax purposes ("Tax-exempt Bonds"). The 'Recipient also acknowledges that,
regardless of the source of funding, the Authority\may pledge the Loan and the related Note as security
for, and as a source of, the payment of debt service/.on any/or all of its Tax-exempt Bonds. In
consideration of these facts, the Recipient covena%ts a d agrees with the Authority, whether or not strict
compliance with those agreements -is r:gyired tq r intain the Note as a Tax-exempt Note or the
Authority's Bonds as Tax-exemptBonds, as follows: \
\>
(a) The Recipient will not take;\or; to he extent under its control, permit to be taken, any action that
would cause the Note notto-bea Tax exempt Note or any Authority Bonds not to be Tax-exempt Bonds
and will not omitifom-faking, or�cause to, be taken, any action required to maintain the Note as a Tax-
exempt Note orAt e Authority's.Bo�ds a's,fax-exempt Bonds.
(b) The Recipient 'will take all actions with respect to the Note necessary to comply with all instructions
and requests of the Authority -relating to maintaining the Authority's Bonds as Tax-exempt Bonds and
the Note as a Tax-exempt Note or compliance with the agreements set forth in this Section or in any Tax
Compliance Certificate (hereinafter defined).
(c) The Recipient will comply with all requirements of any certificate or agreement ("Tax Compliance
Certificate") executed and delivered by it in connection with the issuance of the Note.
(d) The Recipient will promptly notify the Executive Director of the Authority in writing of any action or
event which adversely affects the status of the Note as a Tax-exempt Note or any of the Authority's
Bonds as Tax-exempt Bonds.
CWRF_0tsego_01 Page 5 of 13
(e) The Recipient will not use any of the proceeds of the Loan to pay the costs of any facility used or to
be used during the term of the Loan for any private business use or to make a private loan within the
meaning of Section 141 of the Internal Revenue Code of 1986, as amended (the "Code").
(f) The Recipient will not repay the Loan from, or secure repayment of the Loan by, property used or to
be used for a private business use or payments in respect of such property within the meaning of Section
141 of the Code, except as specifically permitted in writing by the Authority.
(g) The Recipient will not establish any fund or account, otherthan a bona fide debt service fund, securing
the payment of the Tax-exempt Note or Tax-exempt Bonds or from which the Recipient reasonably
expects to pay debt service on the Loan, or in any other respect create ".gross proceeds," within the
meaning of the Code, of the Tax-exempt Note or Tax-exempt Bonds, except -'as specifically permitted in
writing by the Authority. In addition, the Recipient will not invest any gross proceeds in obligations or
deposits issued by, guaranteed by or insured by the United States/or any, agency or instrumentality
thereof if and to the extent that investment would cause the Tax -Exempt Note'or Tax-exempt Bonds to
be "federally guaranteed" within the meaning of Section 149(b,)%of the Code.
(h) The Recipient will not invest any moneys constituting,,'.gross proceeds" of the Tax-exempt Note or
Tax-exempt Bonds otherthan in a fair market, arms' length transaction and at a yield, within the meaning
of the Code, in excess of the lesser of the yield on the Tax-exempt Note or the Tax-exempt Bonds
applicable to the Loan and will apply all Loan/proceeds within f ve.,days of the receipt thereof by the
Recipient consistent with the terms of the Recipi is disbursement request.
(i) Except as permitted under Treasury Regulations; Section 1. 50-2, and Section 1.4(d) hereof, the
Recipient will not use Loan proceeds to, reimburse `itself for any payments of project costs that the
Recipient made from other funds/ if the ori�inal pa�7ent was made prior to the earlier of the issuance
of the Authority Bonds used.tdfund the Loan or -the execution and delivery of this Agreement or if the
original payment was made from the'roceeds of other debt of the Recipient.
(j) Other than as;p/rov'ided in 8ecti6n,4J hereof, the allocation by the Authority of funds it uses to
purchase the ,Loan, including clifferent series of Tax-exempt Bonds, is at the sole discretion of the
Authority and that, allocation is b�4ng on the Recipient.
(k) With respect to ahy gross proceeds of the Tax-exempt Bonds created by the Recipient, the Recipient
will be liable to the Authority for any amount the Authority is required to rebate to the United States as
excess investment earnings -pursuant to Section 148 of the Code.
The Authority may, in its sole discretion and only upon receipt of an opinion of counsel to the Authority,
waive any of the agreements set forth in this Article 3.
ARTICLE 4 — COMPLIANCE WITH STATE BOND REQUIREMENTS
Section 4.1 State Bond Financed Property. The Recipient and the Authority acknowledge and agree that
the Recipient's ownership interest in the Project, consisting of real property, and, if applicable, all
facilities located, or that will be constructed and located, on that real property, and all equipment that
is a part thereof, that was purchased with the proceeds of state general obligation bond proceeds
CWRF_0tsego_01 Page 6 of 13
constitutes "State Bond Financed Property", as that term is used in Minnesota Statutes, Section 16A.695
and the "Fourth Order Amending Order of the Commissioner of Finance Relating to Use and Sale of State
Bond Financed Property" dated July 30, 2012 (the "Order"), as such may be amended, modified,
supplemented, or replaced from time to time, and therefore the provisions contained in that statute and
order apply to the Recipient's ownership interest in the Project and any Use contracts relating thereto.
The Recipient agrees that the proceeds of the Agreement must be used, and the Project must be
operated, in a manner that complies with Minnesota Statutes, Section 16A.695 and the Order. The
Recipient must file the required state bond financed property declaration as provided in the Order and
provide a copy of the filed declaration to the Authority, unless the filing requirement is waived in writing
by the Commissioner of Minnesota Management and Budget.
Section 4.2 Lease or Management Contract. The Recipient agrees that anj lease or management or
/
similar contract (each a "Use Agreement") it enters into with respect Wproperty constituting all or a
part of the State Bond Financed Property must comply with the followmg requirements:
(a) It must be for the express purpose of carrying out a governmental program established or authorized
by law and established by official action of the Recipient.
(b) It must be approved, in writing, by the Commissioner of Minnesot Management and Budget.
(c) It must be for a term, including any renewals -that are solely at the option of the lessee or manager,
that is substantially less than the useful life, of the property subject to that lease or management
contract, but may allow renewal beyond that term upon determination by the Recipient that the use
continues to carry out the governmental program.
(d) It must be terminable by the Recipient i) the ot�er,contracting party defaults under the contract, or
if the governmental program, is�terminated/or changed:,,
(e) It must provide for oversight b� the' Recipient of the operation of the property that is the subject of
the Use Agreement
(f) It must specif(cally identify toot' statute that provides the Recipient authority to enter into the Use
Agreement.
(g) It must contain a provisionstatmg that the Use Agreement is being entered into in order to carry out
a governmental program,and must specifically identify the governmental program.
Section 4.3 Sale. The Recipient must not sell any property constituting all or a part of the State Bond
Financed Property unless the sale complies with the following requirements:
(a) The Recipient determines by official action that the property is no longer usable or needed by the
Recipient to carry out the governmental program for which it was acquired or constructed.
(b) The sale must be made as authorized by law.
(c) The sale must be for fair market value as defined in Minnesota Statutes, Section 16A.695 as then in
effect.
CWRF_Otsego_01 Page 7 of 13
(d) The Recipient obtains the prior written consent of the Commissioner of Minnesota Management and
Budget.
Section 4.4 Changes to Minnesota Statute 16A.695 or the Order. In the event that Minnesota Statutes
Section 16A.695 or the Order is amended in a manner that reduces any requirement imposed upon the
Recipient, or if the Recipient's interest in the State Bond Financed Property is exempt from Minnesota
Statutes, Section 16A.695 or the Order, then upon written request by the Recipient, the Authority will
enter into and execute an amendment to this Agreement to implement that amendment to, or exempt
the interest in the Project from, Minnesota Statutes, Section 16A.695 and the Order.
Section 4.5 Waiver. The Authority may waive the requirements of Article 4 at any time upon
determination by the Authority, and after notifying the Commissioner of,*nesota Management and
Budget, that the Project has not been and will not be funded from the proceeds of state general
obligation bonds.
ARTICLE 5 — DISCLOSURE/
Section 5.1 Information for Disclosure Documents. (a) Th�,,Recipient agrees to provide to the Authority
such information with respect to the Recipient, its duties; operations and functions as may be reasonably
requested by the Authority, and hereby consents to its inclusion%in the Authority's official statement(s)
used in connection with issuance and sale or the re -marketing of'its Bonds or continuing disclosure with
respect to its Bonds (collectively, the "Disclosure Documents");whether or not all or a portion of the
proceeds of Bonds were or will be loaned to the,Recipient.
j
(b) At the request of the Authority; the Recipient wi 1 ertify and represent that the information with
respect to the Recipient in any %iscl6sure'Doicument des not contain any untrue statement of a material
fact or omit to state a material "fact necessary to make the statements made, in light of the circumstances
\:
under which they were made, not mjsleading; provided, however, that in no event will the Authority
require the Recipient to make any representation about any other information in the Disclosure
Documents or as to,any_Disclosure'Document in its entirety. If for any reason the Recipient determines
that it is not able to�make that,certification and representation, it will provide to the Authority the
information for (nclusion in t e Disclosure Documents necessary for the Recipient to make the
certification and representation.
(c) If at any time during the period ending 90 days after the date the Recipient provides information to
Authority for inclusion in a Disclosure Document any event occurs that the Recipient believes would
cause the information with respect to the Recipient in the Disclosure Document to omit a material fact
or make the statements therein misleading, the Recipient agrees to promptly notify the Authority in
writing of that event and provide information for inclusion in the Disclosure Document or an amendment
thereof or a supplement thereto. At the request of the Authority, the Recipient will also provide the
certification and representation required in (b) above with respect to that information.
(d) The Recipient agrees to provide such information as may be reasonably requested by any rating
agency in connection with rating the Bonds of the Authority.
Section 5.2 Continuing Disclosure. If the Authority, in its sole discretion, determines, at any time prior
to payment of the Loan in full, (i) that the Recipient is a material "obligated person," as the term
CWRF_Otsego_01 Page 8 of 13
"obligated person" is defined in Rule 15c2-12 promulgated by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended or supplemented, including any successor
regulation or statute thereto ("Rule 15c2-12") or (ii) that an event has occurred with respect to the
Recipient or the Loan that must be disclosed under Rule 15c2-12, or (iii) that any other action of the
Recipient has occurred which the Authority determines in its sole discretion is material to an investor in
the Bonds, the Recipient covenants that it will authorize and provide to the Authority, for inclusion in a
Disclosure Document, all statements and information relating to the Recipient deemed material by the
Authority for the purpose of satisfying Rule 15c2-12 as well as Rule 10b-5 promulgated pursuant to the
Securities Exchange Act of 1934, as amended or supplemented, including any successor regulation or
statute thereto ("Rule 10b-5"), including certificates and written representations of the Recipient
evidencing satisfaction of the requirements of Rule 15c2-12 and Rule 101:!5, The Authority, in its sole
discretion and as set forth in a resolution or official statement of the Authority, will determine materiality
under each of clause (i) and clause (iii) pursuant to criteria established from time to time. The Recipient
further covenants that, if determined to be such a material obligated,persoh,,it will execute and deliver
a continuing disclosure agreement, in that form as the Authority, determines to be necessary, desirable
or convenient, in its sole discretion, for the purpose of meeting the requirements of Rule 15c2-12.
Pursuant to the terms and provisions of that continuing/disclosure agreement,/the Recipient will
thereafter provide ongoing disclosure with respect to all'annual;and event information and financial
statements relating to the Recipient required by a continuing disclosure undertaking under Rule 15c-12.
The Recipient further agrees that the Authority will have the right to disclose any information about the
Recipient or the Loan, whether or not receiv 'd from the Recipierit,,determined by the Authority in its
sole discretion, to be material with respect to any\ of its Bonds.
ARTICLE-6 — SYSTEM`REPLACEMENT FUND
This article is intentionally left black./ l ��
ARTICLE 7 - FINANCIAL RECORDS, AUDITS, REPORTS AND INSPECTIONS
Section 7.1 Financial- Record,keeping., For all expenditures made pursuant to this Agreement, the
Recipient must keep- financial accounts and records in accordance with generally accepted accounting
principles including invoices, contracts, 'receipts, vouchers and other documents sufficient to evidence
in proper detail the nature and popriety of the expenditures and any investments made with proceeds
of the Loan or other"gross p i ceeds" of the Note or the tax-exempt Bonds of the Authority. Such
accounts and records .must be,accessible and available for a minimum of six years from the date of
initiation of operation of,the� Project and for so long as the Note is outstanding for examination by
authorized representatives of the Authority, the Office of the Legislative Auditor, the Office of the State
Auditor and the EPA Office of Inspector General.
Section 7.2 Annual Financial Reports. (a) The Recipient must annually provide to the Authority for the
term of the Loan a copy of an independent audit of its financial statements. All audit reports must be
submitted within 30 days after the completion of the audit but no later than one year after the end of
the fiscal year to be audited. The audits must be conducted in accordance with generally accepted
government auditing standards and in compliance with Subpart F (Audit Requirements) of Title 2 U.S.
Code of Federal Regulations Part 200.
CWRF_Otsego_01 Page 9 of 13
(b) The Recipient must describe the Note as general obligation debt of the Recipient in its annual audited
financial statements for the term of the Loan.
Section 7.3 Annual Minority and Women Business Enterprise Report. If requested, the Recipient will
submit to the Authority, within 20 days of the end of the annual reporting period, EPA Form 5700-52A
to report on the award of prime contracts or subcontracts to any certified Minority and Women Business
Enterprise (MBE/WBE) firms until the Project is complete.
Section 7.4 General. The Recipient must submit the project reports required by the Authority on forms
prescribed by the Authority.
Section 7.5 Inspections. The Recipient, upon reasonable request by ttie!Authority, must allow the
Authority and its agents to inspect the Project. ,/ <
ARTICLE 8 — GOVERNMENT DATA PRACTICES
The Recipient agrees, with respect to any data that it possesses regarding the Projec
p g t; to comply with all
�
of the provisions and restrictions contained in the Minnesota Govern", ., ent Data Practices Act, Minnesota
Statutes, Chapter 13, that exist as of the date of this Agreement and as such may subsequently be
amended, modified or replaced from time to time.
ARTICLE 9 - DEFAULT AND REMEDIES
Section 9.1. Events of Default. Any of the, following\is arf'event of default under this Agreement:
1
(a) The Recipient does not make aloan payment whendue;
(b) The Recipient does not comply with any other provision of this Agreement or the Note after written
notice from the Authority, and for athree-month period the Recipient does not cure that default or
provide a written ,pian acceptable to the.Authority providing for that cure or, if the Authority accepts a
plan for cure, the�Recipient does riot cure that default within the time period specified therein.
Section 9.2 Remedies.Ja) If an eyed t of default described in Section 9.1(a) of this Agreement occurs, the
Authority will impose an, interest penalty as provided in Minn. Rules Part 7380.0475, Subpart 1. The
Authority may also exercise ne or more of the following remedies: (1) withhold approval of any
disbursement request, (2) reject any pending application by the Recipient for financial assistance, (3) to
the extent permitted by law, demand immediate payment of the Loan and the Note in full and, upon
such demand, the outstanding principal amount of the Loan and Note will be immediately due and
payable, with interest accrued thereon to the date of payment, or (4) exercise any other remedy
available to the Authority at law or in equity, including under Minnesota Rules, Chapter 7380, as
amended.
(b) If an event of default described in Section 9.1(b) of this Agreement occurs, the Authority will impose
an immediate increase in the interest rate on the Loan by eliminating all interest rate discounts that
were applied in determining the interest rate under Minn. Rules Part 7380.0442. The Authority may also
exercise one or more of the following remedies: (1) withhold approval of any disbursement request, (2)
CWRF_0tsego_01 Page 10 of 13
demand repayment of any grant disbursements under this Agreement, (3) reject any pending application
by the Recipient for financial assistance, (4) to the extent permitted bylaw, demand immediate payment
of the Loan and the Note in full and, upon such demand, the outstanding principal amount of the Loan
and Note will be immediately due and payable, with interest accrued thereon to the date of payment,
or (5) exercise any other remedy available to the Authority at law or in equity, including under Minnesota
Rules, Chapter 7380, as amended. If the Authority subsequently determines that the Recipient has cured
all events of default, the interest rate on any unpaid Loan principal will then revert back to the original
interest rate.
ARTICLE 10—ADMINISTRATION
Section 10.1 Amendments. Any amendments to this Agreement must, be in writing and must be
executed by the Recipient by the same officials who signed the Agreement, or their successors.
Section 10.2 Termination of Loan. The obligations of the Recipient/under,this Agreement (except the
obligations set forth in Section 2.1 (c), (d) and (e) and Article 4 h'ereof) will terminate when the Loan is
fully paid. j
Section 10.3 Fees. (a) Pursuant to Minnesota Statutes, "section 4,46X04, subdivision 5(a), the Authority
may charge application fees and loan repayment servicing fees:
(b) Application fee: The application fee is waived by the Authority.`,,
(c) Loan repayment servicing fees: The Recipieht'ackn/pwledges that the Authority may apply up to 2
percent of any loan repayment as a servicing fee\and that such fee will not increase the amount of any
repayments or extend the period,of repa ent. \ �
\ era applicable law to be given in another
Section 10.4 Notices. In addition to any nonce required and pp 8
manner, any notices required hereunder --must be in�Writing, and will be sufficient if delivered by courier
or overnight delivery service or sent by certified mail (return receipt requested), postage prepaid, to the
address of the party�to whom.it is directed. That address must be the address specified below or a
different address as'may hereafte be specjfied by either party by written notice to the other:
In the case'of the Authori y In the case of the Recipient:
Minnesota Public Facilities,Authority City of Otsego
Attention: Executive_Director Attention: Mayor
1st National Bank Building 13400 90th Street NE
332 Minnesota Street, Suite W820 Otsego, MN 55330-7259
Saint Paul, MN 55101-1378
CWRF_Otsego_01 Page 11 of 13
This page isintentionally left b"*
v /
CWRF OtseQ _ l Page l2of13
Recipient name: City of Otsego
Project Funding ID(s): MPFA-CWRF-L-047-FY20 MPFA-CWRF-G-047-FY20
The Authority and the Recipient have caused this Agreement to be duly executed by their duly authorized
undersigned representatives. Statutory Cities must execute this Agreement as provided in Minnesota
Statutes, Section 412.201, as amended. Home Rule Charter Cities must execute this Agreement as
provided in Minnesota Statutes, Chapter 410, as amended.
RECIPIENT: We have read and we agree to all
of the above provisions of this Agreement.
By
Title Jessica Stockamp
Mayor
Date
MINNESOTA PUBLIC FACILITIES AUTHORITY:
Im
Title Steve Gro e, or delegate
Chair
funds Kav
By Minnesota
Title Adam Flaherty \\
Administrator
RED: Individual signing certifies that
been encumbered as required by
Statute 16A.
PO date 04/27/20
POID(s) B2401:3000002858-2860
CW RF_Otsego_01
Page 13 of 13
MN Public Facilities Authority
Exhibit A
Clean Water State Revolving Fund
Loan Amortization Schedule
Otsego - cw01
MPFA-CWRF-L-047-FY20
17,273,277.00
Rate: 1.161 %
Biosolids improvements at east WWTF
Date:
Maturity: 08/20/40
Type of Note:
Tax Exempt
final loan amount:
17,273,277.00
Date Effective Source
Disbursement
Repayment
Interest
Principal
Loan Balance
Ann[ Debt Sry
projected 05/27/20 Op Res
17,273,277.00
17,273,277.00
02/20/21
146,507.63
146,507.63
17,273,277.00
08/20/21
230,548.37
100,271.37
130,277.00
17,143,000.00
377,056.00
02/20/22
99,515.12
99,515.12
17,143,000.00
08/20/22
911,515.12
99,515.12
812,000.00
16,331,000.00
1,011,030.24
02/20/23
94,801.46
94,801.46
16,331,000.00
08/20/23
915,801.46
94,801.46
821,000.00
15,510,000.00
1,010,602.92
02/20/24
90,035.55
90,035.55
15,510,000.00
08/20/24
921,035.55
90,035.55
831,000.00
14,679,000.00
1,011,071.10
02/20/25
85,211.60
85,211.60
14,679,000.00
08/20/25
925,211.60
85,211.60
840,000.00
13,839,000.00
1,010,423.20
02/20/26
80,335.40
80,335.40
13,839,000.00
08/20/26
930,335.40
80,335.40
850,000.00
12,989,000.00
1,010,670.80
02/20/27
75,401.15
75,401.15
12,989,000.00
08/20/27
935,401.15
75,401.15
860,000.00
12,129,000.00
1,010,802.30
02/20/28
70,408.85
70,408.85
12,129,000.00
08/20/28
940,408.85
70,408.85
870,000.00
11,259,000.00
1,010,817.70
02/20/29
65,358.50
65,358.50
11,259,000.00
08/20/29
945,358.50
65,358.50
880,000.00
10,379,000.00
1,010,717.00
02/20/30
60,250.10
60,250.10
10,379,000.00
08/20/30
950,250.10
60,250.10
890,000.00
9,489,000.00
1,010,500.20
02/20/31
55,083.65
55,083.65
9,489,000.00
08/20/31
955,083.65
55,083.65
900,000.00
8,589,000.00
1,010,167.30
02/20/32
49,859.15
49,859.15
8,589,000.00
08/20/32
960,859.15
49,859.15
911,000.00
7,678,000.00
1,010,718.30
02/20/33
44,570.79
44,570.79
7,678,000.00
08/20133
965,570.79
44,570.79
921,000.00
6,757,000.00
1,010,141.58
02/20134
39,224.39
39,224.39
6,757,000.00
08/20/34
971,224.39
39,224.39
932,000.00
5,825,000.00
1,010,448.78
02/20/35
33,814.13
33,814.13
5,825,000.00
08/20/35
976,814.13
33,814.13
943,000.00
4,882,000.00
1,010,628.26
02/20/36
28,340.01
28,340.01
4,882,000.00
08/20/36
982,340.01
28,340.01
954,000.00
3,928,000.00
1,010,680.02
02/20/37
22,802.04
22,802.04
3,928,000.00
08/20/37
987,802.04
22,802.04
965,000.00
2,963,000.00
1,010,604.08
02/20/38
17,200.22
17,200.22
2,963,000.00
08/20/38
993,200.22
17,200.22
976,000.00
1,987,000.00
1,010,400.44
02/20/39
11,534.54
11,534.54
1,987,000.00
08/20/39
999,534.54
11,534.54
988,000.00
999,000.00
1,011,069.08
02/20/40
5,799.20
5,799.20
999,000.00
08/20/40
1,004,799.20
5,799.20
999,000.00
-
1,010,598.40
totals
17,273,277.00
19,579,147.70
2,305,870.70
17,273,277.00
19,579,147.70
cw_0tsego_01
04/24/20
page 1 of 1
EXTRACT OF MINUTES OF A MEETING
CITY COUNCIL OF THE
CITY OF OTSEGO, MINNESOTA
HELD: MAY 26, 2020
Pursuant to due call and notice thereof, a regular or special meeting of the City Council
of the City of Otsego, Wright County, Minnesota, was duly held at the Prairie Center on May 26,
2020, at 7:00 P.M., for the purpose in part of awarding the sale of a $17,273,277 General
Obligation Sewer Revenue Note of 2020.
The following members were present:
and the following were absent:
Member introduced the following resolution and moved its adoption:
RESOLUTION NO.2020-30
RESOLUTION ACCEPTING THE OFFER OF THE MINNESOTA PUBLIC FACILITIES
AUTHORITY TO PURCHASE A $17,273,277 GENERAL OBLIGATION SEWER REVENUE
NOTE OF 2020, PROVIDING FOR ITS ISSUANCE AND AUTHORIZING EXECUTION OF
A BOND PURCHASE AND PROJECT LOAN AGREEMENT
A. WHEREAS, the City Council of the City of Otsego, Minnesota (the "City"), has
heretofore applied for a loan from the Minnesota Public Facilities Authority (the "PFA") to
provide financing pursuant to Minnesota Statutes, Chapters 475 and Sections 115.46 and
444.075, for rehabilitating the east wastewater treatment facility and expanding biosolids
processing, as detailed in the Minnesota Pollution Control Agency's certification dated, April 21,
2020 (the "Project"); and
B. WHEREAS, the PEA is authorized pursuant to Minnesota Statutes,
Chapter 446A, as amended, to issue its bonds (the "PFA Bonds") and to use the proceeds thereof,
together with certain other funds, to provide loans and other assistance to municipalities to fund
eligible costs of construction of publicly owned clean water systems in accordance with the
federal Clean Water Act; and
C. WHEREAS, the City has applied for a loan from the PFA pursuant to such
program and the PFA has committed to make a loan to the City in the principal amount of
$17,273,277, to be disbursed and repaid in accordance with the terms of a Minnesota Public
Facilities Authority Bond Purchase and Project Loan Agreement dated April 27, 2020 (the
"Bond Purchase and Project Loan Agreement"), a copy of which has been presented to the
Council and is on file with the Administrator -Finance Director; and
D. WHEREAS, the $17,273,277 General Obligation Sewer Revenue Note of 2020
(the "Note") of the City is tax-exempt, and in addition the City will need to assure the tax -
exemption of the PFA Bonds; and
1')4ng110..1
E. WHEREAS, in accordance with Minnesota Statutes, Section 475.60, Subdivision
2(4), the City is authorized to issue obligations to a board, department or agency of the State of
Minnesota by negotiation and without advertisement for bids and the PFA is, and has represented
that it is, a board, department or agency of the State of Minnesota; and
F. WHEREAS, the City owns and operates a municipal water utility system (the
"Water System") and a municipal sanitary sewer utility system (the "Sewer System" and together
with the Water System, the "System"), as separate revenue producing public utilities; and
G. WHEREAS, the net revenues of the System are pledged to the payment of the
City's (i) outstanding General Obligation Water and Sewer Revenue Refunding Bonds, Series
2010C, in the original principal amount of $21,300,000, dated November 1, 2010; and (ii)
outstanding General Obligation Water and Sewer Revenue Refunding Bonds, Series 2019A, in
the original principal amount of $3,525,000, dated December 19, 2019 (the "Outstanding System
Bonds"); and
H. WHEREAS, a contract or contracts for the Project have been made by the City
with the approval of the PFA and all other state and federal agencies of which approval is
required:
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Otsego, Wright
County, Minnesota, as follows:
1. Acceptance of Offer; Pam. The offer of the PFA to purchase a $17,273,277
General Obligation Sewer Revenue Note of 2020 of the City (the "Note"), at the rate of interest
hereinafter set forth, and to pay therefor the sum of $17,273,277 as provided below, is hereby
accepted, and the sale of the Note is hereby awarded to the PFA. Payment for the Note shall be
disbursed in installments as eligible costs of the Project are reimbursed or paid, all as provided in
the Bond Purchase and Project Loan Agreement.
2. Title,• Date; Denomination; Interest Rates; Maturities. The Note shall be a fully
registered negotiable obligation, shall be titled "General Obligation Sewer Revenue Note of
2020," shall be dated as of the date of delivery and shall be issued forthwith. The Note shall be
in the principal amount of $17,273,277, or so much thereof as shall be disbursed pursuant to the
Bond Purchase and Project Loan Agreement, shall bear interest on so much of the principal
amount of the Note as may be disbursed and remains unpaid until the principal amount of the
Note has been paid or has been provided for, at the rate of 1.161% per annum (calculated on the
basis of a 360-day year of twelve 30-day months). Interest on the Note is payable semi-annually
on February 20 and August 20, commencing February 20, 2021. Interest starts accruing as of the
date of the initial disbursement. Principal on the Note shall mature on August 20 of the years
and in the installments as follows:
Year
Amount
Year
Amount
2021
$130,277
2031
$900,000
2022
812,000
2032
911,000
2023
821,000
2033
921,000
Year
Amount
Year
Amount
2024
831,000
2034
932,000
2025
840,000
2035
943,000
2026
850,000
2036
954,000
2027
860,000
2037
965,000
2028
870,000
2038
976,000
2029
880,000
2039
988,000
2030
890,000
2040
999,000
Interest shall accrue only on the aggregate amount of the Note which has been disbursed
and is unpaid under the Bond Purchase and Project Loan Agreement. The principal installments
shall be paid in the amounts scheduled above even if at the time of payment the full principal
amount of the Note has not been disbursed; provided that if the full principal amount of the Note
is never disbursed, the amount of the principal not disbursed shall be applied to reduce each
unpaid principal installment in the proportion that such installment bears to the total of all unpaid
principal installments (i.e., the remaining principal payment schedule shall be reamortized to
provide similarly level annual installments of total debt service payments). Principal, interest
and any premium due under the Note will be paid on each payment date by wire payment, or by
check or draft mailed at least five business days prior to the payment date to the person in whose
name the Note is registered, in any coin or currency of the United States which at the time of
payment is legal tender for public and private debts.
Interest on the Note includes amounts treated by the PFA as service fees.
3. Purpose; Cost. The proceeds of the Note shall provide funds to finance
construction of the Project. The total cost of the construction of the Project, including legal and
other professional charges, publication and printing costs, interest accruing on money borrowed
for the Project before the collection of net revenues pledged and appropriated therefor, and all
other costs necessarily incurred and to be incurred from the inception to the completion of the
Project, is estimated to be at least equal to the amount of the Note. The City covenants that it
shall do all things and perform all acts required of it to assure that work on the Project proceeds
with due diligence to completion and that any and all permits and studies required under law for
the Project are obtained.
4. Redemption. The Note shall be subject to redemption and prepayment in whole
or in part at the option of the City, subject to the written consent of the PFA, or mandatorily as
provided in the Bond Purchase and Project Loan Agreement.
5. Registration of Note. At the time of issuance and delivery of the Note, the officer
of the City performing the functions of the treasurer (the "Administrator -Finance Director") shall
register the Note in the name of the payee in a note register which the Administrator -Finance
Director and the officer's successors in office shall maintain for the purpose of registering the
ownership of the Note. The Note shall be prepared for execution with an appropriate text and
spaces for notation of registration. The force and effect of such registration shall be as stated in
the form of Note hereinafter set forth. Payment of principal installments and interest, whether
upon redemption or otherwise, made with respect to the Note, may be made to the registered
holder thereof or to the registered holder's legal representative, without presentation or surrender
of the Note.
6. Form of Note. The Note, together with the Certificate of Registration attached
thereto, shall be in substantially the following form:
M
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF WRIGHT
CITY OF OTSEGO
$17,273,277 GENERAL OBLIGATION SEWER REVENUE NOTE OF 2020
The City of Otsego, Wright County, Minnesota (the "City"), certifies that it is indebted
and for value received promises to pay to the Minnesota Public Facilities Authority or the
registered assign, the principal sum of SEVENTEEN MILLION TWO HUNDRED SEVENTY-
THREE THOUSAND TWO HUNDRED SEVENTY-SEVEN DOLLARS, or so much thereof as
may have been disbursed, on August 20 of the years and in the installments as follows:
Year
Amount
Year
Amount
2021
$130,277
2031
$900,000
2022
812,000
2032
911,000
2023
821,000
2033
921,000
2024
831,000
2034
932,000
2025
840,000
2035
943,000
2026
850,000
2036
954,000
2027
860,000
2037
965,000
2028
870,000
2038
976,000
2029
880,000
2039
988,000
2030
890,000
2040
999,000
and to pay interest on so much of the principal amount of the debt as may be disbursed and
remains unpaid until the principal amount hereof is paid or has been provided for, at the rate of
1.161% per annum (calculated on the basis of a 360-day year of twelve 30-day months). Interest
on the Note is payable semi-annually on February 20 and August 20, commencing February 20,
2021. Interest starts accruing as of the date of the initial disbursement.
Principal and Interest Payments. Interest shall accrue only on the aggregate amount of
this Note which has been disbursed under the Minnesota Public Facilities Authority Bond
Purchase and Project Loan Agreement dated as of April 27, 2020, by and between the City and
the Minnesota Public Facilities Authority (the 'Bond Purchase and Project Loan Agreement").
The principal installments shall be paid in the amounts scheduled above even if at the time of
payment the full principal amount of this Note has not been disbursed; provided that if the full
principal amount of this Note is never disbursed, the amount of the principal not disbursed shall
be applied to reduce each unpaid principal installment in the proportion that such installment
bears to the total of all unpaid principal installments (i.e., the remaining principal payment
schedule shall be reamortized to provide similarly level annual installments of total debt service
payments). Interest on this Note includes amounts treated by the Minnesota Public Facilities
Authority as service fees. Principal, interest and any premium due under this Note will be paid
on each payment date by wire payment, or by check or draft mailed at least five business days
prior to the payment date to the person in whose name this Note is registered, in any coin or
currency of the United States of America which at the time of payment is legal tender for public
and private debts.
Redemption. This Note shall be subject to redemption and prepayment in whole or in
part at the option of the City, subject to the written consent of the Minnesota Public Facilities
Authority, or mandatorily as provided in the Bond Purchase and Project Loan Agreement.
Purpose; General Obligation. This Note has been issued pursuant to and in full
conformity with the Constitution and laws of the State of Minnesota for the purpose of providing
money for rehabilitating the east wastewater treatment facility and expanding biosolids
processingas detailed in the Minnesota Pollution Control Agency's certification dated, April 21,
2020 (the "Project") and is payable out of the PFA Debt Service Account of the Sewer Fund of
the City, to which account have been pledged net revenues of the Sewer System. This Note
constitutes a general obligation of the City, and to provide moneys for the prompt and full
payment of said principal installments and interest when the same become due, the full faith,
credit and taxing powers of the City have been and are hereby irrevocably pledged.
Registration, Transfer. This Note shall be registered in the name of the payee on the
books of the City by presenting this Note for registration to the Administrator -Finance Director,
who will endorse his or her name and note the date of registration opposite the name of the payee
in the certificate of registration attached hereto. Thereafter this Note may be transferred to a
bona fide purchaser only by delivery with an assignment duly executed by the registered owner
or the registered owner's legal representative, and the City may treat the registered owner as the
person exclusively entitled to exercise all the rights and powers of an owner until this Note is
presented with such assignment for registration of transfer, accompanied by assurance of the
nature provided by law that the assignment is genuine and effective, and until such transfer is
registered on said books and noted hereon by the Administrator -Finance Director.
Fees Upon Transfer or Loss. The Administrator -Finance Director may require payment
of a sum sufficient to cover any tax or other governmental charge payable in connection with the
transfer of this Note and any legal or unusual costs regarding transfers and lost notes.
Bond Purchase and Project Loan Agreement. The terms and conditions of the Bond
Purchase and Project Loan Agreement are incorporated herein by reference and made a part
hereof. The Bond Purchase and Project Loan Agreement may be attached to this Note, and shall
be attached to this Note if the holder of this Note is any person other than the Minnesota Public
Facilities Authority.
Tax -Exempt Obli ag tion. The City intends that the interest on this Note will be excluded
from gross income for United States income tax purposes or from both gross income and taxable
net income for State of Minnesota income tax purposes.
Not Qualified Tax -Exempt Obligation. This Note has not been designated by the Issuer
as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue
Code of 1986, as amended.
3
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things
required by the Constitution and laws of the State of Minnesota to be done, to happen and to be
performed, precedent to and in the issuance of this Note, have been done, have happened and
have been performed, in regular and due form, time and manner as required by law; that the City
has covenanted and agreed with the holder of this Note that it will impose and collect charges for
the service, use and availability of and connection to the Sewer System at the times and in
amounts necessary to produce net revenues adequate to pay all principal and interest when due
on this Note; that the City will levy a direct, annual, irrepealable ad valorem tax upon all of the
taxable property in the City, without limitation as to rate or amount, for the years and in amounts
sufficient to pay the installments of principal and interest on this Note as they respectively
become due, if the net revenues from the Sewer System and any other revenues irrevocably
appropriated to said PFA Debt Service Account are insufficient therefor; and that this Note,
together with all other debts of the City outstanding on the date hereof, being the date of its
actual issuance and delivery, does not exceed any constitutional or statutory limitation of
indebtedness.
IN WITNESS WHEREOF, the City of Otsego, Wright County, Minnesota, by its City
Council has caused this Note to be executed on its behalf by the signatures of its Mayor and of
its Administrator -Finance Director, and the corporate seal of the City having been intentionally
omitted as permitted by law, all as of (do not date)_, 2020.
CITY OF OTSEGO, WRIGHT COUNTY,
MINNESOTA
(do not sigh)
Mayor
(do not sign)
Administrator -Finance Director
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CERTIFICATE OF REGISTRATION
The transfer of ownership of the principal amount of the attached Note may be made only
by the registered owner or his, her or its legal representative last noted below.
DATE OF
REGISTRATION
do not date
REGISTERED OWNER
SIGNATURE OF
ADMINISTRATOR -
FINANCE DIRECTOR
Minnesota Public Facilities Authority
Saint Paul, Minnesota
Federal Employer Identification
No. 41-6007162 (do not sign)
7. Execution. The Note shall be executed on behalf of the City by the signatures of
its Mayor and Administrator -Finance Director; the seal of the City has been intentionally omitted
as permitted by law. In the event of disability or resignation or other absence of either such
officer, the Note may be signed by the manual signature of that officer who may act on behalf of
such absent or disabled officer. In case either such officer whose signature shall appear on the
Note shall cease to be such officer before the delivery of the Note, such signature shall
nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in
office until delivery.
8. Delivery, Application of Proceeds. The Note when so prepared and executed
shall be delivered by the Administrator -Finance Director to the purchaser thereof prior to
disbursements pursuant to the Bond Purchase and Project Loan Agreement, and the purchaser
shall not be obliged to see to the proper application thereof.
9. Fund and Accounts. There has heretofore been created a separate fund in the City
treasury designated the Sewer Fund (the "Fund"). The Administrator -Finance Director and all
municipal officials and employees concerned therewith shall maintain financial records of the
receipts and disbursements of the Sewer System in accordance with the resolutions establishing
the Fund. The Operation and Maintenance Account heretofore established by the City for the
Sewer System shall continue to be maintained in the manner heretofore provided by the City.
All moneys remaining after paying or providing for the items set forth in the resolution
establishing the Operation and Maintenance Account shall constitute and are referred to as "net
revenues" until the Note has have been paid. There shall be maintained in the Fund the
following accounts:
(a) A "PFA Construction Account", to which shall be credited all proceeds
received from the sale of the Note. The Note shall be the only source of moneys credited
to the PFA Construction Account. It is recognized that the sale proceeds of the Note are
received in reimbursement for costs expended on the Project or in direct payment of such
costs, and that accordingly the moneys need not be placed in the PFA Construction
Account upon receipt but may be applied immediately to reimburse the source from
which the expenditure was made. The moneys in the PFA Construction Account shall be
used solely for the purpose of paying for the cost of constructing the Project, including all
costs enumerated in Minnesota Statutes, Section 475.65, provided that such moneys shall
only be expended for costs and expenses which are permitted under the Bond Purchase
and Project Loan Agreement. The PFA prohibits the use of proceeds of the Note to
reimburse costs initially paid from proceeds of other obligations of the City unless
otherwise specifically approved. Upon completion of the Project and the payment of the
costs thereof, any surplus shall be transferred to the PFA Debt Service Account.
(b) A "PFA Debt Service Account", to which shall be irrevocably
appropriated, pledged and credited: (i) net revenues of the Sewer System in an amount
sufficient to pay the principal of, and interest on, the Note when due; (ii) any collection of
taxes which may hereafter be levied in the event the net revenues of the Sewer System
herein pledged for the payment of the Note are insufficient therefor; (iii) all investment
earnings on moneys held in the PFA Debt Service Account; (iv) any amounts transferred
from the PFA Construction Account; and (v) any other moneys which are properly
available and are appropriated by the City Council to the PFA Debt Service Account.
The moneys in the PFA Debt Service Account shall be used only to pay or prepay the
principal of, and interest on, the Note and any other general obligation bonds hereafter
issued and made payable from the PFA Debt Service Account, and to pay any rebate due
to the United States with respect to the PFA Bonds in connection with the Note.
No portion of the proceeds of the Note shall be used directly or indirectly to acquire
higher yielding investments or to replace funds which were used directly or indirectly to acquire
higher yielding investments, except (1) for a reasonable temporary period until such proceeds are
needed for the purpose for which the Note was issued, and (2) in addition to the above in an
amount not greater than the lesser of five percent of the proceeds of the Note or $100,000. To
this effect, any proceeds of the Note or any sums from time to time held in the PFA Construction
Account, Operation and Maintenance Account or PFA Debt Service Account (or any other City
account which will be used to pay principal or interest to become due on the Note) in excess of
amounts which under then applicable federal arbitrage regulations may be invested without
regard to yield shall not be invested at a yield in excess of the applicable yield restrictions
imposed by said arbitrage regulations on such investments after taking into account any
applicable "temporary periods" or "minor portion" made available under the federal arbitrage
regulations. In addition, moneys in the Fund shall not be invested in obligations or deposits
issued by, guaranteed by or insured by the United States or any agency or instrumentality thereof
if and to the extent that such investment would cause the Note to be "federally guaranteed"
within the meaning of Section 149(b) of the federal Internal Revenue Code of 1986, as amended
(the "Code").
The City shall observe the covenants of paragraphs 17, 18 and 19 of this resolution and of
Article 3 of the Bond Purchase and Project Loan Agreement with regard to the Fund.
10. Coverage Test; Pledge of Net Revenues; Excess Revenues. It is hereby found,
determined and declared that the net revenues of the Sewer System are sufficient in amount to
pay when due the principal of and interest on the Note and a sum at least five percent in excess
thereof. It is hereby found, determined and declared that the net revenues of the Sewer System
and the Water System are sufficient in amount to pay when due the principal of and interest the
Outstanding System Bonds and a sum at least five percent in excess thereof. The net revenues of
the Sewer System are hereby pledged on a parity lien with the Outstanding System Bonds to the
payment of the Note, but solely to the extent required to meet, together with other pledged sums,
the principal and interest requirements of the Note. Excess net revenues may be used for any
proper purpose. Nothing contained herein shall be deemed to preclude the City from making
further pledges and appropriations of the net revenues of the Sewer System for the payment of
other or additional obligations of the City, provided that it has first been determined by the City
Council that estimated net revenues of the Sewer System will be sufficient, in addition to all
other sources, for the payment of the Note and such additional obligations, and any such pledge
and appropriation of net revenues may be made superior or subordinate to, or on a parity with,
the pledge and appropriation herein. Net revenues in excess of those required for the foregoing
may be used for any proper purpose.
11. Pledge to Produce Revenues. In accordance with Minnesota Statutes,
Section 444.075, the City hereby covenants and agrees with the holder of the Note that it will
iff
impose and collect charges for the service, use and availability of and connection to the Sewer
System at the times and in the amounts required to produce net revenues adequate to pay,
together with other pledged sums, all principal and interest when due on the Note. However,
nothing herein shall preclude the City from levying taxes for the payment of the Note as
permitted by Minnesota Statutes, Section 115.46.
12. General Obligation Pledge. The full faith, credit and taxing powers of the City
shall be, and are hereby, irrevocably pledged for the prompt and full payment of the principal
and interest on the Note as the same respectively become due. If the net revenues of the Sewer
System appropriated and pledged to the payment of principal and interest on the Note, together
with other funds irrevocably appropriated to the PFA Debt Service Account, shall at any time be
insufficient to pay such principal and interest when due, the City covenants and agrees to levy,
without limitation as to rate or amount, an ad valorem tax upon all taxable property in the City
sufficient to pay such principal and interest as they become due. If the balance in the PFA Debt
Service Account is ever insufficient to pay all principal and interest then due on the Note and any
other obligations payable therefrom, the deficiency shall be promptly paid out of any other funds
of the City which are available for such purpose, and such other funds may be reimbursed, with
or without interest, from the PFA Debt Service Account when a sufficient balance is available
therein.
13. Certificate of Registration. The Administrator -Finance Director is hereby
directed to file a certified copy of this resolution with the County Auditor of Wright County,
Minnesota, together with such other information as the County Auditor shall require, and to
obtain the County Auditor's certificate that the Note has been entered in the County Auditor's
Bond Register.
14. Bond Purchase and Project Loan Agreement. The Bond Purchase and Project
Loan Agreement is hereby approved in substantially the form heretofore presented to the City
Council, and in the form executed is hereby incorporated by reference and made a part of this
resolution. Each and all of the provisions of this resolution relating to the Note are intended to
be consistent with the provisions of the Bond Purchase and Project Loan Agreement, and to the
extent that any provision in the Bond Purchase and Project Loan Agreement is in conflict with
this resolution as it relates to the Note, that provision shall control and this resolution shall be
deemed accordingly modified except as provided in paragraph 15. The City's previous
execution and delivery of the Bond Purchase and Project Loan Agreement by the Mayor and the
Administrator is hereby approved, ratified and authorized. The execution of the Bond Purchase
and Project Loan Agreement by the appropriate officers shall be conclusive evidence of the
approval of the Bond Purchase and Project Loan Agreement in accordance with the terms hereof.
The Bond Purchase and Project Loan Agreement may be attached to the Note, and shall be
attached to the Note if the holder of the Note is any person other than the PFA.
15. Principal Forgiveness Grant. In addition to the Note, the City is obligated to
repay the Principal Forgiveness (as defined in the Bond Purchase and Project Loan Agreement)
in accordance with Section 9.2, Article 9 of the Bond Purchase and Project Loan Agreement.
Notwithstanding any provision to the contrary in the Bond Purchase and Project Loan
Agreement, the Principal Forgiveness is payable solely from legally available funds and is a
special, limited revenue obligation and not a general obligation of the City. Neither the full faith
11
and credit nor the taxing powers of the City are pledged to the payment of the Principal
Forgiveness.
16. Records and Certificates. The officers of the City are hereby authorized and
directed to prepare and furnish to the PFA, and to the attorneys approving the legality of the
issuance of the Note, certified copies of all proceedings and records of the City relating to the
Note and to the financial condition and affairs of the City, and such other affidavits, certificates
and information as are required to show the facts relating to the legality and marketability of the
Note 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.
17. Negative Covenants as to Use of Proceeds and Project. The City hereby
covenants not to use the proceeds of the Note or to use the Project, or to cause or permit them to
be used, or to enter into any deferred payment arrangements for the cost of the Project, in such a
manner as to cause the Note to be a "private activity bond" within the meaning of Sections 103
and 141 through 150 of the Code. The City reasonably expects that no actions will be taken over
the term of the Note that would cause it to be a private activity bond, and the average term of the
Note is not longer than reasonably necessary for the governmental purpose of the issue. The
City hereby covenants not to use the proceeds of the Note in such a manner as to cause the Note
to be a "hedge bond" within the meaning of Section 149(g) of the Code.
The City hereby covenants not to use the proceeds of the Note or to use the Project, or to
cause or permit them to be used, or to enter into any deferred payment arrangement for the cost
of the Project, in such a manner as to cause the PFA Bonds to be "private activity bonds" within
the meaning of Sections 103 and 141 through 150 of the Code. The City reasonably expects that
it will take no actions over the term of the Note that would cause the PFA Bonds to be private
activity bonds, and the average term of the Note is not longer than reasonably necessary for its
governmental purpose.
18. Tax -Exempt Status of the Note; Rebate. The City shall comply with requirements
necessary under the Code to establish and maintain the exclusion from gross income under
Section 103 of the Code of the interest on the Note, including without limitation (a) requirements
relating to temporary periods for investments, (b) limitations on amounts invested at a yield
greater than the yield on the Note, and (c) the rebate of excess investment earnings to the United
States. The City expects to satisfy the twenty-four month exemption for gross proceeds of the
Note as provided in Section 1.148-7(e)(1) of the Regulations. If any elections are available now
or hereafter with respect to arbitrage or rebate matters relating to the Note, the Mayor,
Administrator -Finance Director, or either of them, are hereby authorized and directed to make
such elections as they deem necessary, appropriate or desirable in connection with the Note, and
all such elections shall be, and shall be deemed and treated as, elections of the City.
19. Tax -Exempt Status of the PFA Bonds; Rebate. The City with respect to the Note
shall comply with requirements necessary under the Code to establish and maintain the exclusion
from gross income under Section 103 of the Code of the interest on the PFA Bonds, including
without limitation (a) requirements relating to temporary periods for investments, (b) limitations
on amounts invested at a yield greater than the yield on the PFA Bonds, and (c) the rebate of
12
excess investment earnings to the United States. The City covenants and agrees with the PFA
and holders of the Note that the investments of proceeds of the Note, including the investment of
any revenues pledged to the Note which are considered gross proceeds of the PFA Bonds under
the applicable regulations, and accumulated sinking funds, if any, shall be limited as to amount
and yield in such manner that the PFA Bonds shall not be arbitrage bonds within the meaning of
Section 148 of the Code and any regulations thereunder. On the basis of the existing facts,
estimates and circumstances, including the foregoing findings and covenants, the City hereby
certifies that it is not expected that the proceeds of the Note will be used in such manner as to
cause the PFA Bonds to be arbitrage bonds under Section 148 of the Code and any regulations
thereunder. The Mayor and Administrator -Finance Director shall furnish a certificate to the PFA
embracing or based on the foregoing certification at the time of delivery of the Note to the PFA.
The proceeds of the Note will likewise be used in such manner that the Note is not a private
activity bond under Section 103(b) of the Code.
20. Not Designated as Qualified Tax -Exempt Obligations. The City will not
designate the Note as "qualified tax exempt obligations" for purposes of Section 265(b)(3) of the
Code.
21. Severability. If any section, paragraph or provision of this resolution shall be held
to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section,
paragraph or provision shall not affect any of the remaining provisions of this resolution.
22. Headings. Headings in this resolution are included for convenience of reference
only and are not a part hereof, and shall not limit or define the meaning of any provision hereof.
The motion for the adoption of the foregoing resolution was duly seconded by member
and, after full discussion thereof and upon a vote being taken thereon, the following
voted in favor thereof:
and the following voted against the same:
Whereupon the resolution was declared duly passed and adopted.
13
11KAQ11' 0-I
STATE OF MINNESOTA
COUNTY OF WRIGHT
CITY OF OTSEGO
I, the undersigned, being the duly qualified and acting Clerk of the City of Otsego,
Minnesota do hereby certify that I have compared the attached and foregoing extract of minutes
with the original thereof on file in my office, and that the same is a full, true and complete
transcript of the minutes of a meeting of the City Council, duly called and held on the date
therein indicated, insofar as such minutes relate to the $17,273,277 General Obligation Sewer
Revenue Note of 2020.
WITNESS my hand and City's seal on May 26, 2020.
Clerk
(SEAL)
14
17rM170v1