HomeMy WebLinkAbout20081006 - VI-10MEMO - -
TO': Honorable Mayor and City Council Members
FROM: Charlene A. Stark, Finance Director ('~wt.~,vK
RE: Resolutions and Recommendations for-$3,095,000 GO
{mprovement Bonds, 2008A and $360,000 Equipment Certificates,
2008B,
DATE: September 30, 2008.
Attached for Council approval are the Recommendations providing fok the sale of these
bonds, as prepared,by the City's financial advisors, Brenda Krueger of Springsted Inc.
and Resolutions for the set sale date by tho City's bond council,` Mary Dryseth of Briggs
and Morgan.
A change was made after the recommendations were provided to me for council and
don't include that the Vermillion 61 wall project will be bonded through` the debt provision
in the city charter rather then a Chapter 429'bond issue as is usually tlone with the city's
street improvements. This change will not affect cost to the city only procedural
changes.
The improvement bonds will finance the 2008 road construction projects and;the
equipment bonds will finance the` equipment that was authorized in the 2008 budget.
I have included the debt management ratios that were adopted by city council and have
included how #hese two debt issues will affect the city's debt ratios.
If you should .have any questions, please feel free to contact me
Recommended Council Action'
Approve the attached three Resolutions providing for the sale of $3,105,Q00 GO
Improvement Bonds,'Series 2008A, $360,000 Certificate of Equipment Bonds 20086
and invoking the charter provision for debf issuance. Set the sale date of the bonds to be
November 6th.
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Recommendations
For
City of Hastings, Minnesota
$3,105,000*
General Obligation Improvement Bonds, Series 2008A
$360,000
General Obligation Equipment Certificates of Indebtedness, Series 20086
Preliminary,• subject to change
Presented to:
Honorable Paul Hicks, Mayor
Members, City Council
Mr. David Osberg, City Administrator
Ms. Charlene Stark, Finance Director
City of Hastings
101 Fourth Street East
Hastings, MN 55033-7082
Study No.: 0412100103
SPRINGSTED Incorporated
September 30, 2008
Q Springsted
RECOMMENDATIONS
Re: Recommendations for the Issuance of:
$3,105,000* General Obligation Improvement Bonds, Series 2008A (the "Improvement Bonds")
$360,000 General Obligation Equipment Certificates of Indebtedness, Series 20086 (the "Certificates")
(Collectively referred to as the "Issues" or the "Obligations")
We respectfully request your consideration of our recommendations for the above-named Issues. Proceeds of the
Improvement Bonds will be used to finance the North Vermillion Area reconstruction project, the Downtown Street &
Utility improvements and the Highway 61 wall repair. The proceeds of the Equipment Certificates will be used to
finance the acquisition of five different units of equipment (i) a civil defense siren; (ii) police squad cars; (iii) a dump
truck; (iv) a pickup truck; and (v) a 4-wheel truck with plow.
We recommend the following for the Obligations:
Action Requested To establish the date and time of receiving bids and
establish the terms and conditions of the offerings.
Sale Date and Time Thursday, November 6, 2008 at 10:00 A.M. with
consideration for award by the City Council at
7:00 P.M. that same evening.
3. Method ofSa/e The Bonds will be sold through a competitive bidding
process. In the interest of obtaining as many bids as
possible, we have included a provision in the attached
Terms of Proposal for underwriters to submit their bid
electronically through the electronic bidding platform of
PARITY. In addition, physical bids (by phone or fax)
will be accepted at the offices of Springsted.
To provide further flexibility to bidders, we also
recommend including three means of providing the
good faith deposits. Certified/cashier's check or a
financial surety bond have been permitted in the past;
however, the sole provider of financial surety bonds for
this purpose has imposed additional restrictions on its
participants. In response, we suggest that the City
allow good faith deposits to be submitted by wire
transfer and ask that the City name Springsted as your
agent for the purpose of receiving good faith deposits
submitted by wire transfer.
4. Authorityforthe /ssues The Obligations are being issued pursuant to
Minnesota Statutes, Chapter475.
Preliminary, subject to change
City of Hastings, Minnesota
September 30, 2008
5.
Principal Amount of the Offerings
Repayment Term
The Improvement Bonds - $3,105,000*
6.
Security, Sources of Payment and Payment Cyc%s
(a) Security
(b) Sources of Payment and Payment Cyc%s
8.
9.
In addition, the Improvement Bonds are being issued
pursuant to Minnesota Statutes, Chapter 429 and the
Certificates are being issued pursuant to Minnesota
Statutes, Section 412.301.
The Certificates - $360,000
*Included in the Terms of Proposal for the
Improvement Bonds is a provision that permits the City
to increase or reduce the principal amount of the
Improvement Bonds in any of the maturities. This
allows for any necessary adjustments required based
on final interest rates, capitalized interest
requirements, and issuance costs.
The Improvement Bonds will mature annually
February 1, 2011 through 2020. Interest will be
payable semi-annually each February 1 and August 1,
commencing August 1, 2009.
The Certificates will mature annually February 1, 2010
through 2014. Interest will be payable semi-annually
each February 1 and August 1, commencing
August 1, 2009.
The Obligations will be general obligations of the City,
secured by its full faith and credit and taxing power.
Sources of payment and payment cycle details can be
found in the Discussion section.
Prepayment Provisions The City may elect on February 1, 2018, and on any
date thereafter, to prepay the Improvement Bonds due
on or after February 1, 2019, at a price of par plus
accrued interest.
Due to their short duration, the Certificates will not be
subject to prepayment prior to their stated maturity
dates.
Credit Rating Comments Applications will be made to Moody's Investors Service
for ratings on the Obligations. The City's general
obligation debt is currently rated "A1" by Moody's.
Page 2
City of Hastings, Minnesota
September 30, 2008
10. Term Bonds
We have included a provision for the Obligations that
permits the underwriters to combine multiple maturity
years into a term bond, subject to mandatory
redemption on the same maturity schedule provided in
the Terms of Proposals. The advantage to the
underwriter is that it provides large blocks of bonds,
which are more attractive to bond funds, and certain
pension funds, which deal only with large blocks of
bonds. This in turn is a benefit to the City since selling
larger blocks of bonds reduces the risk to the
underwriter, allowing them to lower their costs and the
interest coupons. Since the Obligations are being
offered on a competitive bid basis and awarded on the
lowest true interest cost, the City will award the
Obligations to the best bid regardless of whether term
bonds are chosen or not.
11. Federal Treasury Regulations Concerning Tax-
Exempt Obligations
(a) Bank Qua/ification Under Federal Tax Law, financial institutions cannot
deduct from income for federal income tax purposes,
expense that is allocable to carrying and acquiring tax-
exempt bonds. There is an exemption to this for "bank
qualified" bonds, which can be so designated if the
issuer does not issue more than $10 million of tax-
exempt bonds in a calendar year. Issues that are
bank qualified generally receive slightly lower interest
rates than issues that are not bank qualified. Since
the City does not expect to issue more than $10 million
of tax-exempt obligations in 2008, these Issues are
designated as bank qualified.
(b) Arbitrage Comp/ince All tax-exempt issues are subject to the federal
arbitrage and rebate requirements, which require all
excess earnings created by the financing to be rebated
to the U.S. Treasury: The requirements generally
cover two categories: bond proceeds and debt service
funds. There are exemptions from rebate that may
apply in both of these categories.
Page 3
City of Hastings, Minnesota
September 30, 2008
(i) Rebate There is a "small issuer" exemption from rebate for a
municipality that issues $5 million or less in a calendar
year. Since the City does not expect to issue more
than $5 million intax-exempt obligations in 2008, these
Issues will be exempt from rebate; however, the yield
restriction provision will apply (see next section).
(ii) Yield Restriction The City must maintain bona fide debt service funds
for the Obligations or be subject to yield restriction.
Yield restriction requires restricting the investment
return in the debt service funds to the yields on the
Obligations. A bona fide debt service fund is a fund for
which there is an equal matching of revenue to debt
service expense, with the fund spent down each year
to a carry over permitted equal to the greater of the
investment earnings in the fund during the prior year or
1/12 the debt service of the prior year.
With issues using special assessments as a source of
repayment, such as the Improvement Bonds,
additional diligence should be exercised in monitoring
the debt service fund due to the potential accumulation
of assessment prepayments, which could cause the
fund to become non-bona fide.
Additionally, all original proceeds of the Obligations
and interest earnings on those proceeds must be
expended within three years, or the remaining
proceeds will be subject to yield restriction.
The City should monitor both the project funds and the
debt service funds to make sure yield restriction
provisions of the federal arbitrage rules are met.
Springsted currently provides arbitrage compliance
services for the City under a separate contract.
Amendments to that contract adding these Issues
have been provided to City staff.
Page 4
City of Hastings, Minnesota
September 30, 2008
(c) Economic Life The average life of the Obligations cannot exceed
120% of the economic life of the projects to be
financed. The economic life of the projects to be
financed with the Improvement Bonds is at least
20 years. The average life of the Improvement Bonds
is 6.891 years. The economic life of the equipment
being financed is at least 3 years. The average life of
the Certificates is 3.308 years. Therefore, the
Obligations are within the economic life requirements.
(d) Federa/Reimbursement Regu/ations Federal reimbursement regulations require the City to
make a declaration, within 60 days of the actual
payment, of its intent to reimburse itself from expenses
paid prior to the receipt of issue proceeds. It is our
understanding the City has taken whatever actions are
necessary to comply with the federal reimbursement
regulations in regards to the Obligations.
12. Continuing Disclosure The Obligations are subject to continuing disclosure
requirements set forth by the Securities and Exchange
Commission ("SEC"). The SEC rules require the City
to undertake an annual update of its Official Statement
information and report any material events to the
national repositories. The purchaser therefore
requires the City to commit to providing such
information under a continuing disclosure agreement
or "undertaking". If the City does not enter into such
an agreement prior to the offering of the debt,
underwriters will not offer a bid to purchase the
Obligations.
Springsted currently provides continuing disclosure
services to the City under a separate contract.
Amendments to that contract adding these Issues
have been provided to City staff.
13. Attachments The Improvement Bonds
Sources and Uses Schedule
• Assessment Income Schedule
• Debt Service Schedule
The Certificates
• Sources and Uses Schedule
Debt Service Schedule
Terms of Proposals
Page 5
City of Hastings, Minnesota
September 30, 2008
DISCUSSION
The Improvement Bonds
The proceeds of the Improvement Bonds along with cash contributions of $1,630,169.20 from other sources of City
funds will be used to finance the North Vermillion Area reconstruction project, the Downtown Street & Utility
improvements and the Highway 61 wall repair. Sources and uses of funds, including the costs of issuance,
capitalized interest and underwriter's discount, are shown on page 8.
The Improvement Bonds are general obligations of the City, secured by its full faith and credit and taxing power.
Annual principal and interest payments on the Improvement Bonds will be made from a combination of ad valorem
property taxes and special assessments filed against benefited properties. Assessments will be filed on or about
November 1, 2009 for collection beginning in 2010. The principal amount of the assessments is approximately
$760,266. Capitalized interest has also been included in the principal amount of the assessments. Assessments
have been structured with equal payments of principal over a term of 10 years. The interest charged on the unpaid
balance of the assessments will be a rate of 1.5% over the true interest cost of the Improvement Bonds. For
structuring purposes, we have assumed a rate of 5.60%. At the time of sale, the projected principal amount of the
assessments may change based on the final amount of capitalized interest. The total projected assessment income
total is shown on page 9.
The City will be required to levy taxes to pay a portion of the debt service on the Improvement Bonds. The City will
make its first levy in 2009 for collection in 2010. Since neither assessments nor taxes will be available until August 1,
2010 to pay debt service on the Improvement Bonds, capitalized interest has been included in the par amount of the
Improvement Bonds in an amount sufficient to pay the August 1, 2009 and February 1, 2010 interest payments.
Thereafter, each year's collection of taxes and assessments will be used to pay the August 1 interest payment due in
the collection year and the February 1 principal and interest payment due in the following year. The estimated annual
levy is projected to be $299,976.
Per discussion with City staff, the Improvement Bonds have been structured around the projected assessment
income over a term of 10 years providing for substantially level annual levy requirements over the life of the
Improvement Bonds. The projected debt service schedule for the Improvement Bonds is shown on page 10 and
includes the following information:
• Columns 1 through 4 show the annual principal payments, estimated interest rates and projected total
principal and interest payments, given the current market environment.
• Column 5 shows the projected amount of capitalized interest included in the par amount of the Improvement
Bonds to pay the August 1, 2009 and February 1, 2010 interest payments.
• Column 6 shows the new net debt service.
• Column 7 shows the 105% overievy which is required by State statute and serves as a protection to
bondholders and the City in the event of delinquencies in the collection of assessments and/or taxes.
• Column 8 shows the projected assessment income developed on page 9.
• Column 9 shows the difference between columns 7 and 8, and represents the annual levy requirement for
the Improvement Bonds.
Page 6
City of Hastings, Minnesota
September 30, 2008
Premium Pricing
Based on current market conditions the Improvement Bonds may receive premium pricing from underwriters who are
submitting bids on the day of sale. An allowance for discount bidding is still allowed in the Terms of Proposal.
Interest rates that exceed the actual yield to an investor will cause the Improvement Bonds to be sold to the investor
at a premium over their face amount, thus generating the money from which the underwriter will be paid for their
services.
If a premium were received, the City would have the following options: (i) deposit the premium into the project fund to
pay for additional project costs in excess of those currently anticipated; (ii) deposit the premium into the debt service
fund or (iii) use the premium to reduce the principal amount of the Improvement Bonds. It is our understanding that if
a substantial premium is received (over $50,000) the City will use the premium to reduce the principal amount of the
Improvement Bonds. Otherwise, any excess premium received will be used to fund additional project costs.
The Certificates
Proceeds of the Certificates will be used to finance the acquisition of five different units of equipment (i) a civil
defense siren; (ii) police squad cars; (iii) a dump truck; (iv) a pickup truck; and (v) a 4-wheel truck with plow. Bond
Counsel has reviewed the items to be purchased and found them to be in compliance with regulations. Sources and
uses of funds, including the costs of issuance and underwriter's discount, are shown on page 11.
Minnesota Statutes, Section 412.301, specifies that the City may issue certificates of indebtedness without being
subject to a petition requirement calling for a referendum if the total amount of the issue does not exceed'/4 of 1 % of
the taxable market value of the City. Based on the City's 2007/2008 taxable market value of $1,854,388,200 this
represents a maximum issue size of $4,463,970. This issuance of $360,000 is within that limitation and is not subject
to taxpayer petition for a referendum.
The Certificates are general obligations of the City and will be repaid with general ad valorem tax levies. The City will
make its first levy for the Certificates in 2008 for collection in 2009. Each year's first-half collection of taxes will be
used to pay the interest payment due August 1 in the year of collection. Second-half collections plus surplus first half
collections will be used to pay the February 1 principal and interest payment due in the following year.
Per discussion with City staff, the Certificates have been structured to provide a level annual levy requirement over a
term of 5 years. The projected debt service schedule for the Certificates is shown on page 12.
Springsted is pleased to be of service again to the City of Hastings.
Respectfully submitted,
„__,
SPRINGSTED Incorporated
SAS
smc
Provided to Staff: Continuing Disclosure and Arbitrage Compliance Amendments
Page 7
$3,105,000
City of Hastings, Minnesota
General Obligation Improvement Bonds, Series 2008A
Issue Summary
Total Issue Sources And Uses
Dated 11/15/2008 ~ Delivered 11/15/2008
2008-1 North 2008-2
Vermillion Downtown Hwy 61 Wall Issue
Area Improvements Repair Summary
Sources Of Funds
ParAmount of Bonds ................................................. $1,800,000.00 $1,040,000.00 $265,000.00 $3,105,000.00
Cash Contribution ....................................................... 1,065,120.23 565,048.97 - 1,630,169.20
Total Sources ............................................................ $2,865,120.23 $1,605,048.97 $265,000.00 $4,735,169.20
Uses Of Funds
Deposit to Project Construction Fund ......................... 2,746,566.42 1,534,786.35 247,976.37 4,529,329.14
Deposit to Capitalized Interest (CIF) Fund ................. 82,440.33 47,878.25 12,229.19 142,547.77
Total Underwriter's Discount (1.000%) ...................... 18,000.00 10,400.00 2,650.00 31,050.00
Costs of Issuance ....................................................... 16,875.38 9,750.20 2,484.42 29,110.00
Rounding Amount ....................................................... 1,238.10 2,234.17 (339.98) 3,132.29
Total Uses ................................................................., $2,865,120.23 $1,605,048.97 $265,000.00 $4,735,169.20
,Series 200A~I / Issue,SLnunury / .'7/?;1/2008 / .Z'?4 PM
Page 8
$760,266
City of Hastings, Minnesota
General Obligation Improvement Bonds, Series 2008A
Issue Summary
ASSESSMENT INCOME
Date Principal Coupon Interest Total P+I
12/31/2009 - _ _
12/31/2010 76,026.59 5.600% 49,670.69 125,697.28
12/31/2011 76,026.59 5.600% 38,317.38 114,343.97
12/31/2012 76,026.59 5.600% 34,059.92 110,086.51
12/31/2013 76,026.57 5.600% 29,802.42 105,828.99
12/31/2014 76,026.57 5.600% 25,544.92 101,571.49
12/31/2015 76,026.57 5.600% 21,287.44 97,314.01
12/31/2016 76,026.57 5.600% 17,029.96 93,056.53
12/31/2017 76,026.57 5.600% 12,772.46 88,799.03
12/31/2018 76,026.57 5.600% 8,514.96 84,541.53
12/31/2019 76,026.57 5.600% 4,257.50 80,284.07
Total $760,265.76 - $241,257.65 $1,001,523.41
SIGNIFICANT DATES
Filing Date ............................................................................................................................................................................... 11/01/2009
First Payment Date ................................................................................................................................................................. 12/31/2010
Serie.,•2008A Aearamente / /xrue.tummary /.9/'19/'1008 / 3.'l.>PM
Page 9
$3,105,000
City of Hastings, Minnesota
General Obligation Improvement Bonds, Series 2008A
Issue Summary
NET DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I Cap. Interest Net New D/S 105% of Total Assessment Levy Required
02/01/2009 - - - - - _ _ _
02/01/2010 - - 142,547.77 142,547.77 (142,547.77) - - - _
02!01/2011 285,000.00 3.000% 117,700.00 402,700.00 - 402,700.00 422,835.00 125,697.28 297,137.72
02/01!2012 290,000.00 3.250% 109,150.00 399,150.00 - 399,150.00 419,107.50 114,343.97 304,763.53
02/01/2013 290,000.00 3.400% 99,725.00 389,725.00 - 389,725.00 409,211.25 110,086.51 299,124.74
02/01/2014 300,000.00 3.600% 89,865.00 389,865.00 - 389,865.00 409,358.25 105,828.99 303,529.26
02/01/2015 300,000.00 3.800% 79,065.00 379,065.00 - 379,065.00 398,018.25 101,571.49 296,446.76
02/01/2016 310,000.00 3.900% 67,665.00 377,665.00 - 377,665.00 396,548.25 97,314.01 299,234.24
02/01/2017 325,000.00 4.000% 55,575.00 380,575.00 - 380,575.00 399,603.75 93,056.53 306,547.22
02/01/2018 325,000.00 4.100% 42,575.00 367,575.00 - 367,575.00 385,953.75 88,799.03 297,154.72
02/01/2019 335,000.00 4.200% 29,250.00 364,250.00 - 364,250.00 382,462.50 84,541.53 297,920.97
02/01/2020 345,000.00 4.400% 15,180.00 360,180.00 - 360,180.00 378,189.00 80,284.07 297,904.93
Total $3,105,000.00 - $848,297.77 $3,953,297.77 (142,547.77) $3,810,750.00 $4,001,287.50 $1,001,523.41 $2,999,764.09
Dated ....................................
Delivery Date .........................
First Coupon Date .................
Yield Statistics
Bond Year Dollars ..............................
Average Life .......................................
Average Coupon ................................
Net Interest Cost (NIC) .......................
True Interest Cost (TIC) .....................
Bond Yield for Arbitrage Purposes.....
All Inclusive Cost (AIC) ......................
IRS Form 8038
Net Interest Cost .........................................................................................................
Weighted Average Maturity .........................................................................................
,cenev g008A / Lxrur summary / 9/.YO/2006 / lOSGiIM
, ;:~,al~~~~~d:
............................................................... 11 /15/2008
................................................................... 11 /15/2008
...................................................................... 8/01 /2009
.................. $21,395.50
.............. 6.891 Years
.................. 3.9648420%
...................................................................... 4.1099660%
...................................................................... 4.1169761%
.............................................................................. 3.9459488%
..................................................................... 4.2794294
.................................................................. 3.9648420%
.......................................................................... 6.891 Years
Page 10
$360,000
City of Hastings, Minnesota
General Obligation Equipment Certificates of Indebtedness, Series 2008B
Sources & Uses
Dated 11/15/2008 ~ Delivered 11/15/2008
Sources Of Funds
Par Amount of Bonds ................................................................................................................................................................ $360,000.00
Total Sources ........................................................................................................................................................................... $360,000.00
Uses Of Funds
Deposit to Project Construction Fund ....................................................................................................................................... 336,500.00
Costs of Issuance ...................................................................................................................................................................... 13,890.00
Total Underwriter's Discount (1.650%) ..................................................................................................................................... 5,940.00
Rounding Amount ..................................................................................................................................................................... 3,670.00
Total Uses ................................................................................................................................................................................ $360,000.00
SYne,.•200tIF / SINC:LEPf/.P/OSE / 9/26/200F /J.•34AM
r~~~~~e3
Page 11
$360,000
City of Hastings, Minnesota
General Obligation Equipment Certificates of Indebtedness, Series 2008B
DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I 105% Levy
02/01 /2009 - - - _
02/01/2010 65,000.00 3.000% 14,951.17 79,951.17 83,948.73
02/01/2011 70,000.00 3.250% 10,395.00 80,395.00 84,414.75
02/01/2012 70,000.00 3.400% 8,120.00 78,120.00 82,026.00
02/01/2013 75,000.00 3.600% 5,740.00 80,740.00 84,777.00
02/01/2014 80,000.00 3.800% 3,040.00 83,040.00 87,192.00
Total $360,000.00 - $42,246.17 $402,246.17 $422,358.48
SIGNIFICANT DATES
Dated ........................................................................................................................ ................................................................ 11 /15/2008
Delivery Date ............................................................................................................ ................................................................ 11/15/2008
First Coupon Date ..................................................................................................... ................................................................ 8/01/2009
Yield Statistics
Bond Year Dollars ..................................................................................................... ................................................................ $1,191.00
Average Life .............................................................................................................. ................................................................ 3.308 Years
Average Coupon ....................................................................................................... ................................................................ 3.5471175%
Net Interest Cost (NIC) .............................................................................................. ............................................................... 4.0458581
True Interest Cost (TIC) ............................................................................................ ................................................................ 4.0822420%
Bond Yield for Arbitrage Purposes ............................................................................ ............................................................... 3.5390050%
All Inclusive Cost (AIC) .............................................................................................. ............................................................... 5.4029462%
IRS Form 8038
Net Interest Cost ....................................................................................................... ................................................................ 3.5471175%
Weighted Average Maturity ....................................................................................... ............................................................... 3.308 Years
Interest rates are estimates. Changes in rates may
cause significant alterations to this schedule.
The actual underwriter's discount bid may also vary.
.5eriev?OOBR / S%NGLEPpFpO.tG / 9/l6/2008 / .9:.34AM
a I' C"~ '. S ns. ~,d
Page 12
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE
ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
TERMS OF PROPOSAL
$3,105,000*
CITY OF HASTINGS, MINNESOTA
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2008A
(BOOK ENTRY ONLY)
Proposals for the Bonds and the Good Faith Deposit ("Deposit") will be received on Thursday,
November 6, 2008, until 10:00 A.M., Central Time, at the offices of Springsted Incorporated,
380 Jackson Street, Suite 300, Saint Paul, Minnesota, after which time proposals will be opened
and tabulated. Consideration for award of the Bonds will be by the City Council at 7:00 P.M.,
Central Time, of the same day.
SUBMISSION OF PROPOSALS
Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the
time of sale specified above. All bidders are advised that each Proposal shall be deemed to
constitute a contract between the bidder and the City to purchase the Bonds regardless of the
manner in which the Proposal is submitted.
(a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax
(651) 223-3046 to Springsted. Signed Proposals, without final price or coupons, may be
submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting
to Springsted the final Proposal price and coupons, by telephone (651) 223-3000 or fax
(651) 223-3046 for inclusion in the submitted Proposal.
OR
(b) Electronic Biddin .Notice is hereby given that electronic proposals will be received via
PARIT ". For purposes of the electronic bidding process, the time as maintained by PARITY°
shall constitute the official time with respect to all Bids submitted to PARITY°. Each bidder shall
be solely responsible for making necessary arrangements to access PARITY° for purposes of
submitting its electronic Bid in a timely manner and in com liance with the requirements of the
Terms of Proposal. Neither the City, its agents nor PARITY shall have any duty or obligation to
undertake registration to bid for any prospective bidder or to provide or ensure electronic access
to any qualified prospective bidder, and neither the City, its agents nor PARITY° shall be
responsible for a bidder's failure to register to bid or for any failure in the proper operation of, or
have an liability for any delays or interruptions of or any damages caused by the services of
PARITY. The City is using the services of PARITY® solely as a communication mechanism to
conduct the electronic bidding for the Bonds, and PARITY° is not an agent of the City.
If any provisions of this Terms of Proposal conflict with information provided by PARITY°, this
Terms of Proposal shall control. Further information about PARITY°, including any fee charged,
may be obtained from:
PARITY°, 1359 Broadway, 2"d Floor, New York, New York 10018
Customer Support: (212) 849-5000
DETAILS OF THE BONDS
* Preliminary; subject to change.
Page 13
The Bonds will be dated November 15, 2008, as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing August 1, 2009. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Bonds will mature February 1 in the years and amounts* as follows:
2011 $285,000 2013 $290,000 2015 $300,000 2017 $325,000 2019 $335,000
2012 $290,000 2014 $300,000 2016 $310,000 2018 $325,000 2020 $345,000
The City reserves the right, after proposals are opened and prior to award, to increase or reduce the
principal amount of the Bonds offered for sale. Any such increase or reduction will be made in
multiples of $5,000 in any of the maturities. In the event the principal amount of the Bonds is
increased or reduced, any premium offered or any discount taken by the successful bidder will be
increased or reduced by a percentage equal to the percentage by which the principal amount of the
Bonds is increased or reduced.
Proposals for the Bonds may contain a maturity schedule providing for a combination of serial
bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at
a price of par plus accrued interest to the date of redemption and must conform to the maturity
schedule set forth above. In order to designate term bonds, the proposal must specify "Years of
Term Maturities" in the spaces provided on the Proposal Form.
BOOK ENTRY SYSTEM
The Bonds will be issued by means of a book entry system with no physical distribution of
Bonds made to the public. The Bonds will be issued in fully registered form and one Bond,
representing the aggregate principal amount of the Bonds maturing in each year, will be
registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"),
New York, New York, which will act as securities depository of the Bonds. Individual purchases
of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single
maturity through book entries made on the books and records of DTC and its participants.
Principal and interest are payable by the registrar to DTC or its nominee as registered owner of
the Bonds. Transfer of principal and interest payments to participants of DTC will be the
responsibility of DTC; transfer of principal and interest payments to beneficial owners by
participants will be the responsibility of such participants and other nominees of beneficial
owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the
Bonds with DTC.
REGISTRAR
The City will name the registrar, which shall be subject to applicable SEC regulations. The City
will pay for the services of the registrar.
OPTIONAL REDEMPTION
The City may elect on February 1, 2018, and on any day thereafter, to prepay Bonds due on or
after February 1, 2019. Redemption may be in whole or in part and if in part at the option of the
City and in such manner as the City shall determine. If less than all Bonds of a maturity are
called for redemption, the City will notify DTC of the particular amount of such maturity to be
prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to
be redeemed and each participant will then select by lot the beneficial ownership interests in
such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest.
Page 14
SECURITY AND PURPOSE
The Bonds will be general obligations of the City for which the City will pledge its full faith and
credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special
assessments against benefited properties. The proceeds will be used to finance various
improvement projects within the City.
BIDDING PARAMETERS
Proposals shall be for not less than $3,073,950 and accrued interest on the total principal
amount of the Bonds.
No proposal can be withdrawn or amended after the time set for receiving proposals unless the
meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to
another date without award of the Bonds having been made. Rates shall be in integral multiples
of 5/100 or 1/8 of 1%. Rates are not required to be in level or ascending order; however, the
rate for any maturity cannot be more than 1 % lower than the highest rate of any of the
preceding maturities. Bonds of the same maturity shall bear a single rate from the date of the
Bonds to the date of maturity. No conditional proposals will be accepted.
GOOD FAITH DEPOSIT
Proposals, regardless of method of submission, shall be accompanied by a Deposit in the
amount of $31,050, in the form of a certified or cashier's check, a wire transfer, or Financial
Surety Bond and delivered to Springsted Incorporated prior to the time prior to the time
proposals will be opened.
Any Deposit made by certified or cashier's check should be made payable to the City and
delivered to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota
55101.
Any Deposit sent via wire transfer should be sent to Springsted Incorporated as the City's
agent according to the following instructions:
Wells Fargo Bank, N.A., San Francisco, CA 94104
ABA #121000248
For credit to Springsted Incorporated, Account #635-5007954
Contemporaneously with such wire transfer, the bidder shall send an a-mail to
bond_services@springsted.com, including the following information; (i) indication that a wire
transfer has been made, (ii) the amount of the wire transfer, (iii) the issue to which it applies,
and (iv) the return wire instructions if such bidder is not awarded the Bonds.
Any Deposit made by the successful bidder by check or wire transfer will be delivered to the City
following the award of the Bond. Any Deposit made by check or wire transfer by an
unsuccessful bidder will be returned to such bidder following City action relative to an award of
the Bonds.
If a Financial Surety Bond is used, it must be from an insurance company licensed to issue
such a bond in the State of Minnesota and pre-approved by the City. Such bond must be
submitted to Springsted Incorporated prior to the opening of the proposals. The Financial
Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial
Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then
that underwriter is required to submit its Deposit to the City in the form of a certified or cashier's
check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central
Time on the next business day following the award. If such Deposit is not received by that time,
the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement.
Page 15
The Deposit received from the purchaser, the amount of which will be deducted at settlement,
will be deposited by the City and no interest will accrue to the purchaser. In the event the
purchaser fails to comply with the accepted proposal, said amount will be retained by the City.
AWARD
The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true
interest cost (TIC) basis. The City's computation of the interest rate of each proposal, in
accordance with customary practice, will be controlling.
The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of
matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals
without cause, and (iii) reject any proposal that the City determines to have failed to comply with
the terms herein.
BOND INSURANCE AT PURCHASER'S OPTION
If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment
therefor at the option of the underwriter, the purchase of any such insurance policy or the
issuance of any such commitment shall be at the sole option and expense of the purchaser of
the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of
insurance shall be paid by the purchaser, except that, if the City has requested and received a
rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating
agency fees shall be the responsibility of the purchaser.
Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the
purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on
the Bonds.
CUSIP NUMBERS
If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the
Bonds, but neither the failure to print such numbers on any Bond nor any error with respect
thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the
Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers
shall be paid by the purchaser.
SETTLEMENT
Within 40 days following the date of their award, the Bonds will be delivered without cost to the
purchaser through DTC in New York, New York. Delivery will be subject to receipt by the
purchaser of an approving legal opinion of Briggs and Morgan, Professional Association, of
Saint Paul and Minneapolis, Minnesota, and of customary closing papers, including a no-
litigation certificate. On the date of settlement, payment for the Bonds shall be made in federal,
or equivalent, funds that shall be received at the offices of the City or its designee not later than
12:00 Noon, Central Time. Unless compliance with the terms of payment for the Bonds has
been made impossible by action of the City, or its agents, the purchaser shall be liable to the
City for any loss suffered by the City by reason of the purchaser's non-compliance with said
terms for payment.
CONTINUING DISCLOSURE
On the date of actual issuance and delivery of the Bonds, the City will execute and deliver a
Continuing Disclosure Undertaking (the "Undertaking") whereunder the City will covenant for the
benefit of the owners of the Bonds to provide certain financial and other information about the
City and notices of certain occurrences to information repositories as specified in and required
by SEC Rule 15c2-12(b)(5).
Page 16
OFFICIAL STATEMENT
The City has authorized the preparation of an Official Statement containing pertinent information
relative to the Bonds, and said Official Statement will serve as a nearly final Official Statement
within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of
the Official Statement or for any additional information prior to sale, any prospective purchaser
is referred to the Financial Advisor to the City, Springsted Incorporated, 380 Jackson Street,
Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223-3000.
The Official Statement, when further supplemented by an addendum or addenda specifying the
maturity dates, principal amounts and interest rates of the Bonds, together with any other
information required by law, shall constitute a "Final Official Statement" of the City with respect
to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any
underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no
more than seven business days after the date of such award, it shall provide without cost to the
senior managing underwriter of the syndicate to which the Bonds are awarded 125 copies of the
Official Statement and the addendum or addenda described above. The City designates the
senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for
purposes of distributing copies of the Final Official Statement to each Participating Underwriter.
Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its
proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a
contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring
the receipt by each such Participating Underwriter of the Final Official Statement.
Dated October 6, 2008
BY ORDER OF THE CITY COUNCIL
/s/ Melanie Mesko Lee
City Clerk
Page 17
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE
ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
TERMS OF PROPOSAL
$360,000
CITY OF HASTINGS, MINNESOTA
GENERAL OBLIGATION EQUIPMENT CERTIFICATES OF
INDEBTEDNESS, SERIES 20086
(BOOK ENTRY ONLY)
Proposals for the Certificates and the Good Faith Deposit ("Deposit") will be received on
Thursday, November 6, 2008, until 10:00 A.M., Central Time, at the offices of Springsted
Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota, after which time proposals
will be opened and tabulated. Consideration for award of the Certificates will be by the City
Council at 7:00 P.M., Central Time, of the same day.
SUBMISSION OF PROPOSALS
Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the
time of sale specified above. All bidders are advised that each Proposal shall be deemed to
constitute a contract between the bidder and the City to purchase the Certificates regardless of
the manner in which the Proposal is submitted.
(a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax
(651) 223-3046 to Springsted. Signed Proposals, without final price or coupons, may be
submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting
to Springsted the final Proposal price and coupons, by telephone (651) 223-3000 or fax
(651) 223-3046 for inclusion in the submitted Proposal.
OR
(b) Electronic Biddin .Notice is hereby given that electronic proposals will be received via
PARIT R. For purposes of the electronic bidding process, the time as maintained by PARITY°
shall constitute the official time with respect to all Bids submitted to PARITY°. Each bidder shall
be solely responsible for making necessary arrangements to access PARITY° for purposes of
submitting ifs electronic Bid in a timely manner and in com liance with the requirements of the
Terms of Proposal. Neither the City, its agents nor PARITY shall have any duty or obligation to
undertake registration to bid for any prospective bidder or to provide or ensure electronic access
to any qualified prospective bidder, and neither the City, its agents nor PARITY° shall be
responsible for a bidder's failure to register to bid or for any failure in the proper operation of, or
have an liability for any delays or interruptions of or any damages caused by the services of
PARITY. The City is using the services of PARITY® solely as a communication mechanism to
conduct the electronic bidding for the Certificates, and PARITY® is not an agent of the City.
If any provisions of this Terms of Proposal conflict with information provided by PARITY°, this
Terms of Proposal shall control. Further information about PARITY°, including any fee charged,
may be obtained from:
PARITY°, 1359 Broadway, 2"d Floor, New York, New York 10018
Customer Support: (212) 849-5000
Page 18
DETAILS OF THE CERTIFICATES
The Certificates will be dated November 15, 2008, as the date of original issue, and will bear
interest payable on February 1 and August 1 of each year, commencing August 1, 2009.
Interest will be computed on the basis of a 360-day year of twelve 30-day months.
The Certificates will mature February 1 in the years and amounts as follows:
2010 $65,000 2011 $70,000 2012 $70,000 2013 $75,000 2014 $80,000
Proposals for the Certificates may contain a maturity schedule providing for a combination of
serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund
redemption at a price of par plus accrued interest to the date of redemption and must conform to
the maturity schedule set forth above. In order to designate term bonds, the proposal must
specify "Years of Term Maturities" in the spaces provided on the Proposal Form.
BOOK ENTRY SYSTEM
The Certificates will be issued by means of a book entry system with no physical distribution of
Certificates made to the public. The Certificates will be issued in fully registered form and one
Certificate, representing the aggregate principal amount of the Certificates maturing in each
year, will be registered in the name of Cede & Co. as nominee of The Depository Trust
Company ("DTC"), New York, New York, which will act as securities depository of the
Certificates. Individual purchases of the Certificates may be made in the principal amount of
$5,000 or any multiple thereof of a single maturity through book entries made on the books and
records of DTC and its participants. Principal and interest are payable by the registrar to DTC
or its nominee as registered owner of the Certificates. Transfer of principal and interest
payments to participants of DTC will be the responsibility of DTC; transfer of principal and
interest payments to beneficial owners by participants will be the responsibility of such
participants and other nominees of beneficial owners. The purchaser, as a condition of delivery
of the Certificates, will be required to deposit the Certificates with DTC.
REGISTRAR
The City will name the registrar, which shall be subject to applicable SEC regulations. The City
will pay for the services of the registrar.
OPTIONAL REDEMPTION
The Certificates will not be subject to payment in advance of their respective stated maturity
dates.
SECURITY AND PURPOSE
The Certificates will be general obligations of the City for which the City will pledge its full faith
and credit and power to levy direct general ad valorem taxes. The proceeds will be used to
finance the acquisition of equipment for City purposes.
BIDDING PARAMETERS
Proposals shall be for not less than $354,060 and accrued interest on the total principal amount
of the Certificates.
No proposal can be withdrawn or amended after the time set for receiving proposals unless the
meeting of the City scheduled for award of the Certificates is adjourned, recessed, or continued
to another date without award of the Certificates having been made. Rates shall be in integral
Page 19
multiples of 5/100 or 1/8 of 1 %. Rates must be in level or ascending order. Certificates of the
same maturity shall bear a single rate from the date of the Certificates to the date of maturity.
No conditional proposals will be accepted.
GOOD FAITH DEPOSIT
Proposals, regardless of method of submission, shall be accompanied by a Deposit in the
amount of $3,600, in the form of a certified or cashier's check, a wire transfer, or Financial
Surety Bond and delivered to Springsted Incorporated prior to the time prior to the time
proposals will be opened.
Any Deposit made by certified or cashier's check should be made payable to the City and
delivered to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota
55101.
Any Deposit sent via wire transfer should be sent to Springsted Incorporated as the City's
agent according to the following instructions:
Wells Fargo Bank, N.A., San Francisco, CA 94104
ABA #121000248
For credit to Springsted Incorporated, Account #635-5007954
Contemporaneously with such wire transfer, the bidder shall send an a-mail to
bond_services@springsted.com, including the following information; (i) indication that a wire
transfer has been made, (ii) the amount of the wire transfer, (iii) the issue to which it applies,
and (iv) the return wire instructions if such bidder is not awarded the Bonds.
Any Deposit made by the successful bidder by check or wire transfer will be delivered to the City
following the award of the Certificate. Any Deposit made by check or wire transfer by an
unsuccessful bidder will be returned to such bidder following City action relative to an award of
the Certificates.
If a Financial Surety Bond is used, it must be from an insurance company licensed to issue
such a bond in the State of Minnesota and pre-approved by the City. Such bond must be
submitted to Springsted Incorporated prior to the opening of the proposals. The Financial
Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial
Surety Bond. If the Certificates are awarded to an underwriter using a Financial Surety Bond,
then that underwriter is required to submit its Deposit to the City in the form of a certified or
cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30
P.M., Central Time on the next business day following the award. If such Deposit is not
received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit
requirement.
The Deposit received from the purchaser, the amount of which will be deducted at settlement,
will be deposited by the City and no interest will accrue to the purchaser. In the event the
purchaser fails to comply with the accepted proposal, said amount will be retained by the City.
AWARD
The Certificates will be awarded on the basis of the lowest interest rate to be determined on a
true interest cost (TIC) basis. The City's computation of the interest rate of each proposal, in
accordance with customary practice, will be controlling.
The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of
matters relating to the receipt of proposals and award of the Certificates, (ii) reject all proposals
without cause, and (iii) reject any proposal that the City determines to have failed to comply with
the terms herein.
Page 20
CUSIP NUMBERS
If the Certificates qualify for assignment of CUSIP numbers such numbers will be printed on the
Certificates, but neither the failure to print such numbers on any Certificate nor any error with
respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of
the Certificates. The CUSIP Service Bureau charge for the assignment of CUSIP identification
numbers shall be paid by the purchaser.
SETTLEMENT
Within 40 days following the date of their award, the Certificates will be delivered without cost to
the purchaser through DTC in New York, New York. Delivery will be subject to receipt by the
purchaser of an approving legal opinion of Briggs and Morgan, Professional Association, of
Saint Paul and Minneapolis, Minnesota, and of customary closing papers, including a no-
litigation certificate. On the date of settlement, payment for the Certificates shall be made in
federal, or equivalent, funds that shall be received at the offices of the City or its designee not
later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the
Certificates has been made impossible by action of the City, or its agents, the purchaser shall
be liable to the City for any loss suffered by the City by reason of the purchaser's non-
compliance with said terms for payment.
CONTINUING DISCLOSURE
On the date of actual issuance and delivery of the Bonds, the City will execute and deliver a
Continuing Disclosure Undertaking (the "Undertaking") whereunder the City will covenant for the
benefit of the owners of the Bonds to provide certain financial and other information about the
City and notices of certain occurrences to information repositories as specified in and required
by SEC Rule 15c2-12(b)(5).
OFFICIAL STATEMENT
The City has authorized the preparation of an Official Statement containing pertinent information
relative to the Certificates, and said Official Statement will serve as a nearly final Official
Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission.
For copies of the Official Statement or for any additional information prior to sale, any
prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated,
380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223-3000.
The Official Statement, when further supplemented by an addendum or addenda specifying the
maturity dates, principal amounts and interest rates of the Certificates, together with any other
information required by law, shall constitute a "Final Official Statement" of the City with respect
to the Certificates, as that term is defined in Rule 15c2-12. By awarding the Certificates to any
underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no
more than seven business days after the date of such award, it shall provide without cost to the
senior managing underwriter of the syndicate to which the Certificates are awarded 25 copies of
the Official Statement and the addendum or addenda described above. The City designates the
senior managing underwriter of the syndicate to which the Certificates are awarded as its agent
for purposes of distributing copies of the Final Official Statement to each Participating
Underwriter. Any underwriter delivering a proposal with respect to the Certificates agrees
thereby that if its proposal is accepted by the City (i) it shall accept such designation and (ii) it
shall enter into a contractual relationship with all Participating Underwriters of the Certificates for
purposes of assuring the receipt by each such Participating Underwriter of the Final Official
Statement.
Dated October 6, 2008 BY ORDER OF THE CITY COUNCIL
/s/ Melanie Mesko Lee
City Clerk
Page 21