RES 20-30EXTRACT 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: Stockamp, Darkenwald, Tanner, Goede
and the following were absent: Warehime
Member Tanner 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 PFA 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
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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; Pant. 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
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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
126033790
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:
El
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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
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currency of the United States of America which at the time of payment is legal tender for public
and private debts.
Redem tp ion. 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 Obli ag tion. 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.
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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 May 26, 2020.
CITY OF OTSEGO, WRIGHT COUNTY,
MINNESOTA
G"W4
'0
yor
Administrator -Finance Director
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12603379v1
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
126033790
REGISTERED OWNER
Minnesota Public Facilities Authority
Saint Paul, Minnesota
Federal Employer Identification
No. 41-6007162
SIGNATURE OF
ADMINISTRATOR -
FINANCE DIRECTOR
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
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126033790
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
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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
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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 Pro'ee . 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
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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
Goede and, after full discussion thereof and upon a vote being taken thereon, the following voted
in favor thereof. Stockamp, Darkenwald, Tanner, Goede
and the following voted against the same: None
Whereupon the resolution was declared duly passed and adopted.
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126033790
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.
t
126033790
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