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121806 EDA AgP CITY OF SHOREWOOD 5755 COUNTRY CLUB ROAD ECONOMIC DEVELOPMENT AUTHORITY MEETING COUNCIL CHAMBERS MONDAY, DECEMBER 18, 2006 6:00 P.M. AGENDA 1. CONVENE ECONOMIC DEVELOPMENT AUTHORITY MEETING A. Ro II Call President Love Lizee Turgeon _ Callies Wellens B. Review Agenda 2. APPROVAL OF MINUTES A. EDA Minutes of November 27, 2006 (Att.- Minutes) 3. NEW BUSINESS A. Resolutions Awarding Sale of Refunding Bonds for Public Safety Facilities (Att.- Executive Director's memorandum, 3 Resolutions) 1. Resolution Awarding Sale of Series 2007 A 2. Resolution Awarding Sale of Series 2007B 3. Resolution Awarding Sale of Series 2007C 4. ADJOURN CITY OF SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY MEETING MONDAY, NOVEMBER 27, 2006 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS Immediately Following Regular Council Meeting MINUTES 1. CONVENE ECONOMIC DEVELOPMENT AUTHORITY MEETING President Love called the meeting to order at 8: 14 P.M. A. Roll Call Present: President Love; Boardmembers Callies, Lizee, Turgeon, and Wellens; Executive Director Dawson; Assistant Executive Director Nielsen; Attorney Keane Absent: None B. Review Agenda Without objection from the Board, President Love proceeded with the Agenda for the meeting. 2. APPROVAL OF MINUTES A. EDA Minutes of September 11, 2006 Wellens moved, Lizee seconded, Approving the EDA Meeting Minutes of September 11,2006, as presented. Motion passed 5/0. 3. NEW BUSINESS A. Refinancing Bonds for Public Safety Facilities Director Dawson provided an overview of the possible advanced refunding of the bonds for the Public Safety facilities; the call dates for the bonds were 2009 and 20 10. He stated the market was at a 40-year low with regard to the interest rates for those types of bonds. When the bonds were originally sold the interest rates were 5% - 5.5%, which at that time were reasonable interest rfltp" Tho \...-.... ., hIe, which meant that anyone with a bond beyond that call date had been notified 1 ider the possible refunding ofthe bonds. Dawson explained a bond refun~ing was to do it at the call dat~, and an ad . Ci. Ll{f\d i'-- vas recommended. Advance refundmg allowed the current borrowmg rate to t..-t.-Z.-- () Lire refinancing. The new refinancing rates would actually begin at the call date of ..._ ~.~ ,,,"w;;::;. 1 ne savings would occur after the call date, because that was when the old issues were technically being replaced with the new issues. The proceeds of the new issue would be placed in an escrow account until the old issues call date, and the proceeds would be invested at the yield being paid on the old issues (therefore it was a break even). Northland Securities, the financial advisor, recommended using the negotiated sale method for the bond refunding (the same method that was used for the 2002 and 2003 issues). Dawson agreed with that recommendation. Using that method better allowed the terms of financing to be structured to achieve the net savings objective. ~?n It CITY OF SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY MEETING MINUTES November 27, 2006 Page 2 of2 Dawson stated the projected net savings from refunding only the 2002 issues would be approximately $512,873, while the net savings from refunding the 2002 and 2003 issues would be approximately $571,245. The EFD Board, SLMPD Board, the Deephaven City Council, and the Shorewood City Council had approved resolutions giving preliminary authorization to the Shorewood EDA to refinance either the 2002 issues or both the 2002 and 2003 issues, provided the minimum savings would be the previously stated amounts. Dawson explained refinancing the 2002 issues would be approximately $8.2 million, while refinancing both the 2002 and 2003 issues would be $10 million. The key threshold (known as the bank-qualification threshold) for bond issues for the City and the EDA was $10 million. Any bonds issued in excess of $10 million amount would no longer be bank-qualified and therefore they could incur a higher interest rate. Bonds not exceeding the $10 million threshold would be non-taxable; there would be more competitors for those bonds. He noted if the bonds were 15-year bonds today there would not be any difference in the bank-qualified versus non-bank-qualified bonds, but for 20-year bonds the difference would be a 20 basis points (.2%) premium. Dawson then explained if the EDA refinanced the entire $10 million, then any additional bonds issued by the City would not be bank-qualified. Because the City had no plans to issue any bonds in 2007, it appeared that it would be prudent to authorize the entire $10 million. The City would benefit from approximately 48% of the annual net savings. He noted the savings would not begin to be realized until 2009 and 2010. He stated all the affected patiies would benefit from the refunding. He clarified the bond ending terms would remain the same, and no fees would be incurred unless the refunding transaction had been completed. Boardmember Turgeon stated although there could be a slight risk with refunding the entire $10 million, she would support refunding the entire amount. President Love stated the risk would be managed risk, and the savings would outweigh the risk. Wellens moved, Lizee seconded, Adopting RESOLUTION NO. 06-01, "A Resolution Giving Preliminary Approval to Issuance of Refunding Bonds Issued in 2002 and 2003 Related to Certain Public Safety Facilities using the Negotiated Sale Method." Motion passed 5/0. 4. ADJOURN Wellens moved, Callies, seconded, Adjourning the Shorewood Economic Development Authority Meeting of November 27, 2006, at 8:26 P.M. Motion passed 5/0. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder Woody Love, President ATTEST: Craig W. Dawson, Executive Director SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY 5755 Country Club Road Shorewood, Minnesota 55331-8926 952.474.3236 FAX: 952.474.0128 MEMORANDUM TO: FROM: DATE: SUBJECT: EDA Board Craig W. Dawson, Executive Director December 14, 2006 Resolutions Awarding Sale of Refunding Bonds for Public Safety Facilities The recommendation of the award of the sale of the refunding bonds for the public safety facilities will be made at the EDA meeting on December 18. Northland Securities planned to begin the negotiations for pricing on December 14, and they would be finalized during the day of December 18. Final pricing must meet the minima for net savings set in the resolutions of the EDA, City of Shorewood, SLMPD, EFD, and the City of Deephaven that gave authorization to pursue the refunding bonds. The EDA Board will need to adopt three resolutions to award the sale of the bonds: . Series 2007A (to refund the Series 2002A and 2003A for the West Fire Station) . Series 2007B (to refund the Series 2002B and 2003B for the SLMPD Station) . Series 2007C (to refund the Series 2002C for the East Fire Station) A listing of all of local government entities party to this transaction and the resolutions they must adopt is attached. With their resolutions giving preliminary authorization of the refunding bonds, the cities of Shorewood and Deephaven, and the EFD and SLMPD, committed to approving all agreements related to them, provided that the net savings minima were achieved. The effect of the agreements will be to change the payment schedules to align with the new bonds, and thus to achieve the savings in interest costs. RECOMMENDATION: It is recommended that the Council adopt 1) the Resolution Awarding Sale of the Series 2007A bonds, 2) the Resolution Awarding Sale of the Series 2007B bonds, and 3) the Resolution Awarding Sale of the Series 2007C bonds as recommended by staff and consultants. The name of the awardee and the dollar figures will be placed in the final versions of the resolutions. Closing on the bonds is expected to occur in mid- January, 2007. A ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF SHOREWOOD, MINNESOTA $4,135,000 Public Safety Fire Facility Lease Revenue Crossover Refunding Bonds Series 2007 A (City of Shorewood, Minnesota Lease Obligation) $4,285,000 Public Safety Police Facility Lease Revenue Crossover Refunding Bonds Series 2007B (City of Shorewood, Minnesota Lease Obligation) $1,580,000 Public Safety Fire Facility Lease Revenue Crossover Refunding Bonds Series 2007C (City of Deephaven, Minnesota Lease Obligation) SUM~RYOFACnONSBYBOARDANDCOUNcns December 18, 2006 (Date of pricing; all principal and interest rates will be available by time of evening meetings) Shorewood EDA: Resolution Awarding Sale of Series 2007 A Resolution Awarding Sale of Series 2007B Resolution Awarding Sale of Series 2007C City of Shorewood Resolution approving all agreements related to Series 2007 A and Series 2007B City of Deephaven Resolution approving all agreements related to Series 2007C December 20, 2006 Fire District Resolution approving all agreements related to Series 2007 A Resolution approving all agreements related to Series 2007C Police Department Resolution approving all agreements related to Series 2007B RESOLUTION NO. A RESOLUTION A WARDING THE SALE OF PUBLIC SAFETY FIRE FACILITY LEASE REVENUE CROSSOVER REFUNDING BONDS, SERIES 2007 A (CITY OF SHOREWOOD, MINNESOTA LEASE OBLIGATION) BE IT RESOLVED By the board of commissioners of the Shorewood Economic Development Authority (the "Authority"), as follows: Section 1. Recitals. 1.01. The City of Shorewood, Minnesota (the "City") is authorized by Minnesota Statutes, Section 465.71, as amended, to acquire real and personal property under lease-purchase agreements. 1.02. The Authority has agreed with the Excelsior Fire District ("District") and the South Lake Minnetonka Police Department (the "Department") that pursuant to the Ground Lease (West Side) dated as of September 1, 2002 (the "Ground Lease"), as amended by a First Amendment to Ground Lease dated as of April 15, 2003 (the "First Amendment to Ground Lease") and a Second Amendment to Ground Lease dated as of January 1, 2007 (the "Second Amendment to Ground Lease"), the Authority will acquire certain property from the District and the Department, and the Authority will lease such property, together with the buildings, structures or improvements now or hereafter located thereon, to the City pursuant to a Lease Purchase Agreement (West Side Fire Facilities) dated as of September 1, 2002 (the "Lease"), as amended by a First Amendment to Lease-Purchase Agreement dated as of April 15,2003 (the "First Amendment to Lease"), as further amended by a Second Amendment to Lease-Purchase Agreement dated as of January 1, 2007 (the "Second Amendment to Lease"). Hereafter the term "Lease" includes the Amendment to Lease and the Second Amendment to Lease, unless the context requires otherwise. 1.03. With the Authority's consent, the City has entered into a Sublease Agreement (West Side Fire Facilities) with the District dated as of September 1, 2002 (the "Sublease Agreement"), under which the District undertakes the City's obligations under the Lease. 1.04. Pursuant to the Trust Indenture dated as of September 1, 2002 (the "Indenture") between the Authority and U.S. Bank National Association, as trustee (the "Trustee"), as modified by a First Supplemental Trust Indenture dated as of April 15, 2003 (the "First Supplemental Indenture"), as further modified by a Second Supplemental Trust Indenture dated as of January 1,2007 (the "Second Supplemental Indenture"), between the Authority and the Trustee, the Authority will issue its Public Safety Fire Facility Lease Crossover Refunding Revenue Bonds, Series 2007 A (City of Shorewood, Minnesota Lease Obligation) (the "Bonds") in an aggregate principal amount of $4,135,000. Hereafter the term "Indenture" includes the Supplemental Indenture and the Second Supplemental Indenture unless the context requires otherwise. 1.05 (a) Pursuant to the original Indenture, the Authority has previously issued its $3,865,000 Public Safety Police Facility Lease Revenue Bonds, Series 2002A (City of Shorewood, Minnesota Lease Obligation) (the "Series 2002A Bonds") in order to pay a portion of the cost of acquisition, construction and equipping of the Facilities described in the Lease. (b) Pursuant to the First Supplemental Indenture, the Authority has previously issued its $1,195,000 Public Safety Police Facility Lease Revenue Bonds, Series 2003A (City of Shorewood, Minnesota Lease Obligation) (the "Series 2003A Bonds") in order to pay a portion of the cost of acquisition, construction and equipping of the Facilities described in the Lease. 1.06. The Bonds are being issued under the Indenture as Additional Bonds for the purpose of refunding in advance of maturity the outstanding Series 2002A Bonds and Series 2003A Bonds. The Series 2002A Bonds and the Series 2003A Bonds are collectively referred to herein as the "Refunded Bonds." 1.07. Pursuant to an Assignment and Security Agreement dated as of September 1,2002 (the "Assignment) as modified by a First Supplemental Assignment and Security Agreement dated as of April 15, 2003 (the "First Supplemental Assignment") and a Second Supplemental Assignment and Security Agreement dated as of January 1, 2007 (the "Second Supplemental Assignment"), the Authority assigned to the Trustee all of the Authority's right, title and interest in and to the Ground Lease, the Lease, and the Lease Payments to be made by the City thereunder (other than certain rights to indemnification and payment of expenses) as security for the Series 2007 A Bonds. 1.08. Proceeds of the Series 2007 A Bonds will be used to pay costs of issuance of the Bonds and to fund the escrow account established to effectuate refunding of the Refunded Bonds, all pursuant to the Escrow Agreement (Series 2007 A) between the Authority and the Trustee, as escrow agent, dated January 1, 2007 (the "Series 2007 A Escrow Agreement"). 1.09. Forms of the Second Amendment to Ground Lease, the Second Amendment to Lease, the Second Supplemental Indenture, Second Supplemental Assignment, the Series 2007 A Escrow Agreement and the Official Statement for the Bonds have been prepared and submitted to the Authority and are on file with the Authority. Section 2. Sale of Bonds. 2.01. The proposal of Northland Securities, Inc. (the "Purchaser") to purchase the Bonds is hereby found and determined to be a reasonable offer and is hereby accepted, the proposal being to purchase the Bonds at a price of $ plus accrued interest to date of delivery, for Bonds bearing interest as follows: SJB-302304v.! SH230-39 2 Year of Maturity Interest Rate Year of Maturity Interest Rate Term Bonds due February 1,20_ at _%. Term Bonds due February 1,20_ at _%. 2.02. The Authority will forthwith issue and sell the Bonds in the total principal amount of $ originally dated January 1,2007, in the denomination of $5,000 each or any integral multiple thereof, numbered No. R-I, upward, bearing interest as above set forth, and which mature serially on February 1, in the years and amounts as follows (subject to redemption and prior payment as set forth in the Indenture): Year Amount Year Amount Term Bonds due February 1,20_ at_%. Term Bonds due February 1,20_ at _%. Term Bonds due February 1, 20_ and 20_ are subject to Mandatory Sinking Fund Redemption on February 1 in the years and amounts described in the Second Supplemental Trust Indenture. 2.03. Execution, Authentication and Delivery. The Bonds, substantially in the form provided in the Indenture, will be prepared under the direction of the Authority staff and executed on behalf of the Authority by the signatures of the President and one other officer of the Authority, provided that all signatures may be printed, engraved or lithographed facsimiles of the originals. Notwithstanding such execution, a Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution or the Indenture unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Trustee. When the Bonds have been so prepared, executed and authenticated, the Authority will deliver the same to The Depository Trust Company, New SJB-302304v.l SH230-39 3 York, New York, on behalf of the Purchaser, upon payment of the purchase price, and the Purchaser is not obligated to see to the application of the purchase price. Section 3. Approval and Execution of Documents. The Second Amendment to Ground Lease, the Second Amendment to Lease, the Second Supplemental Indenture, the Second Supplemental Assignment, and the Series 2007 A Escrow Agreement described in Section 1 are hereby approved. The President and one other officer of the Authority are authorized and directed to execute and deliver the Second Amendment to Ground Lease, the Second Amendment to Lease, the Second Supplemental Indenture the Second Supplemental Assignment and the Series 2007 A Escrow Agreement on behalf of the Authority, substantially in the forms on file, but with all such changes therein as shall be approved by the officers executing the same, which approval shall be conclusively evidenced by the execution thereof. Copies of all of the transaction documents shall be delivered, filed and recorded as provided therein. The President and other officers of the Authority are also authorized and directed to execute such other instruments as may be required to give effect to the transactions herein contemplated. Section 4. Payment: Security: Pledges and Covenants. The Bonds are payable prior to the respective redemption dates for the Refunded Bonds solely from the funds on deposit under the Series 2007 A Escrow Agreement, and from and after such redemption dates solely from the Lease Payments to be made by the City under the Lease and by the District under the Sublease Agreement and from other moneys realized by the Trustee after default or termination of the Lease by the City as provided therein. No property or funds of the Authority, other than the property pledged pursuant to the Indenture and assigned to the Trustee pursuant to the Assignment, is pledged to the payment of the Bonds. Section 5. Refunding: Findings: Redemption of Refunded Bonds. 5.01. Reduction of Debt Service Cost. It is hereby found and determined that based upon information presently available from the Authority's financial advisers, the issuance of the Bonds is necessary and desirable for the reduction of debt service cost to the Authority, City and District. 5.03. Redemption of Refunded Bonds. The Series 2002A Bonds maturing on February 1, 2011 and thereafter will be redeemed and prepaid on February 1,2009. The Series 2003A Bonds maturing on February 1, 2011 and thereafter will be redeemed and prepaid on February 1,2010. The Refunded Bonds will be redeemed and prepaid in accordance with their terms and in accordance with the terms and conditions set forth in the Series 2007 A Escrow Agreement. The Trustee for each of the Refunded Bonds is authorized and directed to send a copy of the Notice of Redemption to each registered holder of each of the Refunded Bonds. Section 6. Authentication of Transcript: Issuance Costs. 6.01. The officers ofthe Authority are authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records of the Authority relating to the Bonds and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books SJB-302304v.l SH230-39 4 and records in their custody and under their control, relating to the validity and marketability of the Bonds and such instruments, including any heretofore furnished, may be deemed representations of the Authority as to the facts stated therein. 6.02. The preparation and distribution of the Official Statement prepared and circulated in connection with the issuance and sale of the Bonds is hereby approved. Section 7. Tax Covenants. 7.01. The Authority covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. 7.02. In order to qualify the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, the Authority makes the following factual statements and representations: (a) the Bonds are not "private activity bonds" as defined in Section 141 of the Code; (b) the Authority hereby designates the Bonds as "qualified tax -exempt obligations" for purposes of Section 265(b)(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than any private activity bonds that are not qualified 501(c)(3) bonds) which will be issued by the Authority (and all subordinate entities of the City) during calendar year 2007 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the Authority during calendar year 2007 have been designated for purposes of Section 265(b)(3) of the Code. 7.03. The Authority will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. (The remainder of this page is intentionally left blank.) SJB-302304v.l SH230-39 5 Approved by the Board of Commissioners of the Shorewood Economic Development Authority this 18th day of December, 2006. President ATTEST: Executive Director SJB-302304v.l SH230-39 6 RESOLUTION NO. A RESOLUTION A WARDING THE SALE OF PUBLIC SAFETY FIRE FACILITY LEASE REVENUE CROSSOVER REFUNDING BONDS, SERIES 2007B (CITY OF SHOREWOOD, MINNESOTA LEASE OBLIGATION) BE IT RESOLVED By the board of commissioners of the Shorewood Economic Development Authority (the "Authority"), as follows: Section 1. Recitals. 1.01. The City of Shorewood, Minnesota (the "City") is authorized by Minnesota Statutes, Section 465.71, as amended, to acquire real and personal property under lease-purchase agreements. 1.02. The Authority has agreed with the Excelsior Fire District ("District") and the South Lake Minnetonka Police Department (the "Department") that pursuant to the Ground Lease (West Side) dated as of September 1, 2002 (the "Ground Lease"), as amended by a First Amendment to Ground Lease dated as of April 15, 2003 (the "First Amendment to Ground Lease") and a Second Amendment to Ground Lease dated as of January 1, 2007 (the "Second Amendment to Ground Lease"), the Authority will acquire certain property from the District and the Department, and the Authority will lease such property, together with the buildings, structures or improvements now or hereafter located thereon, to the City pursuant to a Lease Purchase Agreement (West Side Police Facilities) dated as of September I, 2002 (the "Lease"), as amended by a First Amendment to Lease-Purchase Agreement dated as of April 15, 2003 (the "First Amendment to Lease"), as further amended by a Second Amendment to Lease-Purchase Agreement dated as of January 1,2007 (the "Second Amendment to Lease"). Hereafter the term "Lease" includes the Amendment to Lease and the Second Amendment to Lease, unless the context requires otherwise. 1.03. With the Authority's consent, the City has entered into a Sublease Agreement (West Side Police Facilities) with the Department dated as of September 1, 2002 (the "Sublease Agreement"), under which the Department undertakes the City's obligations under the Lease. 1.04. Pursuant to the Trust Indenture dated as of September 1, 2002 (the "Indenture") between the Authority and U.S. Bank National Association, as trustee (the "Trustee"), as modified by a First Supplemental Trust Indenture dated as of April 15, 2003 (the "First Supplemental Indenture"), as further modified by a Second Supplemental Trust Indenture dated as of January 1,2007 (the "Second Supplemental Indenture"), between the Authority and the Trustee, the Authority will issue its Public Safety Fire Facility Lease Crossover Refunding Revenue Bonds, Series 2007B (City of Shorewood, Minnesota Lease Obligation) (the "Bonds") in an aggregate principal amount of $ . Hereafter the term "Indenture" includes the Supplemental Indenture and the Second Supplemental Indenture unless the context requires otherwise. 1.05 (a) Pursuant to the original Indenture, the Authority has previously issued its $4,025,000 Public Safety Police Facility Lease Revenue Bonds, Series 2002B (City of Shorewood, Minnesota Lease Obligation) (the "Series 2002B Bonds") in order to pay a portion of the cost of acquisition, construction and equipping of the Facilities described in the Lease. (b) Pursuant to the First Supplemental Indenture, the Authority has previously issued its $1,220,000 Public Safety Police Facility Lease Revenue Bonds, Series 2003B (City of Shorewood, Minnesota Lease Obligation) (the "Series 2003B Bonds") in order to pay a portion of the cost of acquisition, construction and equipping of the Facilities described in the Lease. 1.06. The Bonds are being issued under the Indenture as Additional Bonds for the purpose of refunding in advance of maturity the outstanding Series 2002B Bonds and Series 2003B Bonds. The Series 2002B Bonds and the Series 2003B Bonds are collectively referred to herein as the "Refunded Bonds." 1.07. Pursuant to an Assignment and Security Agreement dated as of September 1,2002 (the "Assignment) as modified by a First Supplemental Assignment and Security Agreement dated as of April 15, 2003 (the "First Supplemental Assignment") and a Second Supplemental Assignment and Security Agreement dated as of January 1, 2007 (the "Second Supplemental Assignment"), the Authority assigned to the Trustee all of the Authority's right, title and interest in and to the Ground Lease, the Lease, and the Lease Payments to be made by the City thereunder (other than certain rights to indemnification and payment of expenses) as security for the Series 2007B Bonds. 1.08. Proceeds of the Series 2007B Bonds will be used to pay costs of issuance of the Bonds and to fund the escrow account established to effectuate refunding of the Refunded Bonds, all pursuant to the Escrow Agreement (Series 2007B) between the Authority and the Trustee, as escrow agent, dated January 1, 2007 (the "Series 2007B Escrow Agreement"). 1.09. Forms of the Second Amendment to Ground Lease, the Second Amendment to Lease, the Second Supplemental Indenture, Second Supplemental Assignment, the Series 2007B Escrow Agreement and the Official Statement for the Bonds have been prepared and submitted to the Authority and are on file with the Authority. Section 2. Sale of Bonds. 2.01. The proposal of Northland Securities, Inc. (the "Purchaser") to purchase the Bonds is hereby found and determined to be a reasonable offer and is hereby accepted, the proposal being to purchase the Bonds at a price of $ plus accrued interest to date of delivery, for Bonds bearing interest as follows: SJB-302954v.l SH230-39 2 Year of Maturity Interest Rate Year of Maturity Interest Rate Term Bonds due February 1,20 at %. -- Term Bonds due February 1,20 at %. -- 2.02. The Authority will forthwith issue and sell the Bonds in the total principal amount of $ originally dated January 1,2007, in the denomination of $5,000 each or any integral multiple thereof, numbered No. R-l, upward, bearing interest as above set forth, and which mature serially on February 1, in the years and amounts as follows (subject to redemption and prior payment as set forth in the Indenture): Year Amount Year Amount Term Bonds due February 1,20_ at _%. Term Bonds due February 1,20_ at _%. Term Bonds due February 1, 20 and 20 are subject to Mandatory Sinking Fund - - Redemption on February 1 in the years and amounts described in the Second Supplemental Trust Indenture. 2.03. Execution, Authentication and Delivery. The Bonds, substantially in the form provided in the Indenture, will be prepared under the direction of the Authority staff and executed on behalf of the Authority by the signatures of the President and one other officer of the Authority, provided that all signatures may be printed, engraved or lithographed facsimiles of the originals. Notwithstanding such execution, a Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution or the Indenture unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Trustee. When the Bonds have been so prepared, executed and authenticated, the Authority will deliver the same to The Depository Trust Company, New SJB-302954v.l SH230-39 3 York, New York, on behalf of the Purchaser, upon payment of the purchase price, and the Purchaser is not obligated to see to the application of the purchase price. Section 3. Approval and Execution of Documents. The Second Amendment to Ground Lease, the Second Amendment to Lease, the Second Supplemental Indenture, the Second Supplemental Assignment, and the Series 2007B Escrow Agreement described in Section 1 are hereby approved. The President and one other officer of the Authority are authorized and directed to execute and deliver the Second Amendment to Ground Lease, the Second Amendment to Lease, the Second Supplemental Indenture the Second Supplemental Assignment and the Series 2007B Escrow Agreement on behalf of the Authority, substantially in the forms on file, but with all such changes therein as shall be approved by the officers executing the same, which approval shall be conclusively evidenced by the execution thereof. Copies of all of the transaction documents shall be delivered, filed and recorded as provided therein. The President and other officers of the Authority are also authorized and directed to execute such other instruments as may be required to give effect to the transactions herein contemplated. Section 4. Payment; Security; Pledges and Covenants. The Bonds are payable prior to the respective redemption dates for the Refunded Bonds solely from the funds on deposit under the Series 2007B Escrow Agreement, and from and after such redemption dates solely from the Lease Payments to be made by the City under the Lease and by the Department under the Sublease Agreement and from other moneys realized by the Trustee after default or termination of the Lease by the City as provided therein. No propeliy or funds of the Authority, other than the property pledged pursuant to the Indenture and assigned to the Trustee pursuant to the Assignment, is pledged to the payment of the Bonds. Section 5. Refunding; Findings; Redemption of Refunded Bonds. 5.01. Reduction of Debt Service Cost. It is hereby found and determined that based upon information presently available from the Authority's financial advisers, the issuance of the Bonds is necessary and desirable for the reduction of debt service cost to the Authority, City and Department. 5.03. Redemption of Refunded Bonds. The Series 2002B Bonds maturing on February 1, 2011 and thereafter will be redeemed and prepaid on February 1, 2009. The Series 2003A Bonds maturing on February 1,2011 and thereafter will be redeemed and prepaid on February 1,2010. The Refunded Bonds will be redeemed and prepaid in accordance with their terms and in accordance with the terms and conditions set forth in the Series 2007B Escrow Agreement. The Trustee for each of the Refunded Bonds is authorized and directed to send a copy of the Notice of Redemption to each registered holder of each of the Refunded Bonds. Section 6. Authentication of Transcript; Issuance Costs. 6.01. The officers of the Authority are authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records of the Authority relating to the Bonds and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books SJB-302954v.l SH230-39 4 and records in their custody and under their control, relating to the validity and marketability of the Bonds and such instruments, including any heretofore furnished, may be deemed representations of the Authority as to the facts stated therein. 6.02. The preparation and distribution of the Official Statement prepared and circulated in connection with the issuance and sale of the Bonds is hereby approved. Section 7. Tax Covenants. 7.01. The Authority covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. 7.02. In order to qualify the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b )(3) of the Code, the Authority makes the following factual statements and representations: (a) the Bonds are not "private activity bonds" as defined in Section 141 of the Code; (b) the Authority hereby designates the Bonds as "qualified tax -exempt obligations" for purposes of Section 265(b)(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than any private activity bonds that are not qualified 501(c)(3) bonds) which will be issued by the Authority (and all subordinate entities of the City) during calendar year 2007 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the Authority during calendar year 2007 have been designated for purposes of Section 265(b )(3) of the Code. 7.03. The Authority will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. (The remainder ofthis page is intentionally left blank.) SJB-302954v.l SH230-39 5 Approved by the Board of Commissioners of the Shorewood Economic Development Authority this 18th day of December, 2006. President ATTEST: Executive Director SJB-302954v.l SH230-39 6 RESOLUTION NO. A RESOLUTION A WARDING THE SALE OF PUBLIC SAFETY FIRE FACILITY LEASE REVENUE CROSSOVER REFUNDING BONDS, SERIES 2007C (CITY OF DEEPHA VEN, MINNESOTA LEASE OBLIGATION) BE IT RESOLVED By the board of commissioners of the Shorewood Economic Development Authority (the "Authority"), as follows: Section 1. Recitals. 1.01. The City of Deephaven, Minnesota (the "City") is authorized by Minnesota Statutes, Section 465.71, as amended, to acquire real and personal property under lease-purchase agreements. 1.02. The Excelsior Fire District (the "District") leases certain property from the City pursuant to the Ground Lease (East Side) dated as of September 1, 2002, as amended by a First Amendment to Ground Lease (East Side) dated ,2005, as further amended by a Second Amendment to Ground Lease (East Side) dated January 1, 2007 (the "East Side Ground Lease"). The Authority has agreed with the District that pursuant to the Subground Lease (East Side) dated as of September 1,2002 (the "Subground Lease"), as amended by a First Amendment to Subground Lease dated as of , 2005 (the "First Amendment to Subground Lease") and a Second Amendment to Subground Lease dated as of January 1, 2007 (the "Second Amendment to Subground Lease"), the Authority will acquire certain property from the District, and the Authority will lease such property, together with the buildings, structures or improvements now or hereafter located thereon, to the City pursuant to a Lease Purchase Agreement (East Side) dated as of September 1, 2002 (the "Lease"), as amended by a First Amendment to Lease-Purchase Agreement (East Side) dated as of , 2005 (the "First Amendment to Lease"), as further amended by a Second Amendment to Lease-Purchase Agreement (East Side) dated as of January 1,2007 (the "Second Amendment to Lease"). Hereafter the term "Lease" includes the First Amendment to Lease and the Second Amendment to Lease, unless the context requires otherwise. 1.03. With the Authority's consent, the City has entered into a Sublease Agreement (East Side) with the District dated as of September 1, 2002, as amended by a First Amendment to Sublease Agreement (East Side) dated , 2005, as further amended by a Second Amendment to Sublease Agreement (East Side) dated January 1, 2007 (the "Sublease Agreement"), under which the District undertakes the City's obligations under the Lease. 1.04. Pursuant to the Trust Indenture dated as of September 1, 2002 (the "Indenture") between the Authority and U.S. Bank National Association, as trustee (the "Trustee"), as modified by a First Supplemental Trust Indenture dated as of January 1, 2007 (the "First Supplemental Indenture"), between the Authority and the Trustee, the Authority will issue its Public Safety Fire Facility Lease Crossover Refunding Revenue Bonds, Series 2007C (City of Deephaven, Minnesota Lease Obligation) (the "Bonds") in an aggregate principal amount of $ . Hereafter the term "Indenture" includes the First Supplemental Indenture unless the context requires otherwise. 1.05 Pursuant to the original Indenture, the Authority has previously issued its $2,060,000 Public Safety Police Facility Lease Revenue Bonds, Series 2002C (City of Deephaven, Minnesota Lease Obligation) (the "Series 2002C Bonds") in order to pay a portion of the cost of acquisition, construction and equipping of the Facilities described in the Lease. 1.06. The Bonds are being issued under the Indenture as Additional Bonds for the purpose of refunding in advance of maturity the outstanding Series 2002C Bonds. 1.07. Pursuant to an Assignment and Security Agreement dated as of September 1,2002 (the "Assignment), as modified by a First Amendment to Assignment and Security Agreement dated as of , 2005(the "First Amendment to Assignment"), as further modified by a Second Amendment to Assignment and Security Agreement dated as of January 1, 2007 (the "Second Amendment to Assignment"), the Authority assigned to the Trustee all of the Authority's right, title and interest in and to the Ground Lease, the Lease, and the Lease Payments to be made by the City thereunder (other than certain rights to indemnification and payment of expenses) as security for the Series 2007C Bonds. 1.08. Proceeds of the Series 2007C Bonds will be used to pay costs of issuance of the Bonds and to fund the escrow account established to effectuate refunding of the Series 2002C Bonds, all pursuant to the Escrow Agreement (Series 2007C) between the Authority and the Trustee, as escrow agent, dated January 1,2007 (the "Series 2007C Escrow Agreement"). 1.09. Forms of the Second Amendment to Ground Lease, the Second Amendment to Sub ground Lease, the Second Amendment to Lease, the First Supplemental Indenture, the Second Amendment to Assignment, the Series 2007C Escrow Agreement and the Official Statement for the Bonds have been prepared and submitted to the Authority and are on file with the Authority. Section 2. Sale of Bonds. 2.01. The proposal of Northland Securities, Inc. (the "Purchaser") to purchase the Bonds is hereby found and determined to be a reasonable offer and is hereby accepted, the proposal being to purchase the Bonds at a price of $ plus accrued interest to date of delivery, for Bonds bearing interest as follows: SJB-302953v.l SH230-39 2 Year of Maturity Interest Rate Year of Maturity Interest Rate Term Bonds due February 1,20 at %. -- Term Bonds due February 1,20_ at _%. 2.02. The Authority will forthwith issue and sell the Bonds in the total principal amount of $ originally dated January 1,2007, in the denomination of $5,000 each or any integral multiple thereof, numbered No. R-l, upward, bearing interest as above set forth, and which mature serially on February 1, in the years and amounts as follows (subject to redemption and prior payment as set forth in the Indenture): Year Amount Year Amount Term Bonds due February 1,20_ at _%. Term Bonds due February 1,20_ at _%. Term Bonds due February 1, 20_ and 20_ are subject to Mandatory Sinking Fund Redemption on February 1 in the years and amounts described in the Second Supplemental Trust Indenture. 2.03. Execution, Authentication and Delivery. The Bonds, substantially in the form provided in the Indenture, will be prepared under the direction of the Authority staff and executed on behalf of the Authority by the signatures of the President and one other officer of the Authority, provided that all signatures may be printed, engraved or lithographed facsimiles of the originals. Notwithstanding such execution, a Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution or the Indenture unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Trustee. When the Bonds have been so prepared, executed and authenticated, the Authority will deliver the same to The Depository Trust Company, New SJB-302953v.l SH230-39 3 York, New York, on behalf of the Purchaser, upon payment of the purchase price, and the Purchaser is not obligated to see to the application of the purchase price. Section 3. Approval and Execution of Documents. The Second Amendment to Ground Lease, Second Amendment to Subground Lease, the Second Amendment to Lease, the First Supplemental Indenture, the Second Amendment to Assignment, and the Series 2007C Escrow Agreement described in Section 1 are hereby approved. The President and one other officer of the Authority are authorized and directed to execute and deliver the Second Amendment to Ground Lease, the Second Amendment to Sub ground Lease, the Second Amendment to Lease, the First Supplemental Indenture, the Second Amendment to Assignment and the Series 2007C Escrow Agreement on behalf of the Authority, substantially in the forms on file, but with all such changes therein as shall be approved by the officers executing the same, which approval shall be conclusively evidenced by the execution thereof. Copies of all of the transaction documents shall be delivered, filed and recorded as provided therein. The President and other officers of the Authority are also authorized and directed to execute such other instruments as may be required to give effect to the transactions herein contemplated. Section 4. Payment; Security; Pledges and Covenants. The Bonds are payable prior to the redemption date for the Series 2002C Bonds solely from the funds on deposit under the Series 2007C Escrow Agreement, and from and after such redemption date solely from the Lease Payments to be made by the City under the Lease and by the District under the Sublease Agreement and from other moneys realized by the Trustee after default or termination of the Lease by the City as provided therein. No property or funds of the Authority, other than the property pledged pursuant to the Indenture and assigned to the Trustee pursuant to the Assignment, is pledged to the payment of the Bonds. Section 5. Refunding; Findings; Redemption of Refunded Bonds. 5.01. Reduction of Debt Service Cost. It is hereby found and determined that based upon information presently available from the Authority's financial advisers, the issuance of the Bonds is necessary and desirable for the reduction of debt service cost to the Authority, City and District. 5.03. Redemption of Refunded Bonds. The Series 2002C Bonds maturing on February 1, 2011 and thereafter will be redeemed and prepaid on February 1, 2009. The Series 2002C Bonds will be redeemed and prepaid in accordance with their terms and in accordance with the terms and conditions set forth in the Series 2007C Escrow Agreement. The Trustee for the Series 2002C Bonds is authorized and directed to send a copy of the Notice of Redemption to each registered holder of the Series 2002C Bonds. Section 6. Authentication of Transcript; Issuance Costs. 6.01. The officers of the Authority are authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records of the Authority relating to the Bonds and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books SJB-302953v.l SH230-39 4 and records in their custody and under their control, relating to the validity and marketability of the Bonds and such instruments, including any heretofore furnished, may be deemed representations of the Authority as to the facts stated therein. 6.02. The preparation and distribution of the Official Statement prepared and circulated in connection with the issuance and sale of the Bonds is hereby approved. Section 7. Tax Covenants. 7.01. The Authority covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. 7.02. In order to qualify the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, the Authority makes the following factual statements and representations: (a) the Bonds are not "private activity bonds" as defined in Section 141 of the Code; (b) the Authority hereby designates the Bonds as "qualified tax -exempt obligations" for purposes of Section 265(b )(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than any private activity bonds that are not qualified 501(c)(3) bonds) which will be issued by the Authority (and all subordinate entities of the City) during calendar year 2007 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the Authority during calendar year 2007 have been designated for purposes of Section 265(b)(3) of the Code. 7.03. The Authority will use its best effOlis to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. (The remainder of this page is intentionally left blank.) SJB-302953v.l SH230-39 5 Approved by the Board of Commissioners of the Shorewood Economic Development Authority this 18th day of December, 2006. President ATTEST: Executive Director SJB-302953v.l SH230-39 6