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2006-12-141 1 MOUND HOUSING AND REDEVELOPMENT AUTHORITY DECEMBER 14, 2006 The Housing and Redevelopment Authority in and for the City of Mound, Minnesota, met in special session on Thursday, December 14, 2006, at 5:00 p.m. in the council chambers of city hall. Members Present: Chair Pat Meisel; Commissioners David Osmek, Mike Specht, and John Beise. Members Absent: Commissioner Bob Brown Others Present: City Attorney John Dean, Executive Director Kandis Hanson, Sid Inman. 1. Open meeting Chair Meisel called the meeting to order at 5:05 pm. 2. Consideration/Action on Resolution Awarding the Sale of, and Providing the Form, Terms, Covenants, and Directions for the Issuance of the $2,965,000 Limited Tax Pledge Bonds (Mound Transit Center) Series 2006 Sid Inman, Senior Financial Advisor of Ehlers & Associates, reviewed the bond sale, stating that the sale was privately negotiated with Piper Jaffray at net interest of 4.7454%. Bond proceeds from the sale are $2,965,000.00 with net proceeds for project costs is $2,848,138.89. MOTION by Specht, seconded by Beise to adopt the following resolution. All voted in favor. Motion carried. RESOLUTION NO. 06-17H: RESOLUTION AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS, AND DIRECTIONS FOR THE ISSUANCE OF THE $2,965,000 LIMITED TAX PLEDGE BONDS (MOUND TRANSIT CENTER) SERIES 2006. 3. Adiourn MOTION by Osmek, seconded by Beise to adjourn at 5:06 p.m. All voted in favor. Motion carried. Attest: Bonnie Ritter, City Clerk L~ Chair Pat Meisel HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MOUND, MINNESOTA RESOLUTION N0.06-17H RESOLUTION AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF, THE $2,965,000 LIMITED TAX PLEDGE BONDS (MOUND TRANSIT CENTER), SERIES 2006 BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Mound, Minnesota (the "Issuer"), as follows: Section 1. Authorization and Sale. 1.01. Authorization. (a) The Issuer is authorized by Minnesota Statutes, Sections 469.001 to 469.047 (the "HRA Act"), and specifically Sections 469.034 and 469.035 thereof, to issue revenue bonds for any of its corporate purposes, and to pledge thereto income and revenues of the Issuer. (b) The Issuer duly created and administers a redevelopment project under the HRA Act designated as Development District No. 1 (the "Project"), and proposes to acquire and construct a parking facility and improvements related thereto within and serving the Project, designated as the Mound Transit Center (the "Facilities"), pursuant to Section 469.012, subdivision 12 of the HRA Act. To provide financing for a portion of the Facilities, the Authority proposes to issue its $2,965,000 Limited Tax Pledge Bonds (Mound Transit Center), Series 2006 (the "Bonds"), under the terms provided herein. 1.02. Sale. The Issuer hereby approves the sale of the Bonds to Piper Jaffray & Co. (the "Underwriter") at a price of $2,901,999.05. The Chair and Secretary or Executive Director of the Authority, or in the event any of them are unavailable for any reason, any other member of the Board of Commissioners or any officer of the Issuer (the "Authorized Officers") are hereby authorized and directed to execute a Bond Purchase Contract in substantially the form on file with the Issuer on the date hereof (the "Bond Purchase Contract") on behalf of the Issuer for the sale of the Bonds. Section 2. Bond Terms: Registration: Execution and Deliver 2.01. Issuance of Bonds. All acts, conditions and things which are required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed precedent to and in the valid issuance of the Bonds having been done, now existing, having happened and having been performed, it is now necessary for the Board of Commissioners to establish the form and terms of the Bonds, to provide security therefor and to issue the Bonds forthwith. 2.02. Maturities. Interest Rates: Denominations: and Payment. The Bonds shall be designated as the Housing and Redevelopment Authority in and for the City of Mound, Minnesota Limited Tax Pledge Parking Ramp Bonds, Series 2006, shall be originally dated as of delivery thereof, shall be in minimum denominations of $5,000 or any integral multiple of $1,000 in excess thereof, not exceeding a single maturity, shall mature on the dates and in the years and amounts stated below, and shall bear interest from date of issue until paid or duly called for redemption at the annual rates set forth opposite such years and amounts, as follows: Maturity Date Amount Interest Rate February 1, 2013 $ 235,000 4.000% February 1, 2017 225,000 4.100 February 1, 2024 580,000 4.500 February 1, 2031 905,000 4.600 August 1, 2036 1,020,000 4.650 The Bonds shall be issuable only in fully registered form. The interest thereon and, upon surrender of each Bond at the principal office of the Registrar described herein, the principal amount thereof, shall be payable by check or draft issued by the Registrar described herein. 2.03. Dates and Interest Payment Dates. Each Bond shall be dated by the Registrar on the date of its authentication and delivery. The date inserted on each bond shall be the last interest payment date to which interest has been paid, or if no interest has been paid, the date of delivery thereof. The interest on the Bonds shall be payable on February 1 and August 1 in each year, commencing February 1, 2007, to the owner of record thereof as of the close of business on the fifteenth day of the immediately preceding month, whether or not such day is a business day. 2.04. Redemption. (a) Optional Redemption. Bonds maturing on or after February 1, 2016 are subject to redemption and prior payment at the option of the Issuer in whole or in part on February 1, 2015 and on any day thereafter at a redemption price of par plus accrued interest to the redemption date. (b) Scheduled Mandatory Redemption. The Bonds (also referred to as the "Term Bonds") are subject to mandatory redemption in part prior to maturity on the following dates, at their principal amount (or such portion thereof as is redeemed), without any premium, plus accrued interest thereon to such redemption date on the dates and in the amounts as set forth below, subject to pro rata reduction (as further described below): Sinking Fund Installment Date February 1, 2008 February 1, 2009 February 1, 2010 Term Bonds due February 1, 2013 Principal Amount Sinking Fund Installment Date Principal Amount $32,000 February 1, 2011 $41,000 34,000 February 1, 2012 44,000 37,000 February 1, 2013* 47,000 Term Bonds due February 1, 2017 Sinking Fund Installment Date February 1, 2014 February 1, 2015 Principal Amount Sinking Fund Installment Date Principal Amomit $51,000 February 1, 2016 $58,000 54,000 February 1, 2017* 62,000 Term Bonds due February 1, 2024 Sinking Fund Installment Date Principal Amount Sinking Fund Installment Date Principal Amount February 1, 2018 $67,000 February 1, 2022 $ 88,000 February 1, 2019 72,000 February 1, 2023 94,000 February 1, 2020 77,000 February 1, 2024* 100,000 February 1, 2021 82,000 Term Bonds due February 1, 2031 Sinking Fund Installment Date Principal Amount Sinking Fund Installment Date Principal Amount February 1, 2025 $107,000 February 1, 2029 $136,000 February 1, 2026 114,000 February 1, 2030 145,000 February 1, 2027 121,000 February 1, 2031* 153,000 February 1, 2028 129,000 Term Bonds due August 1, 2036 Sinking Fund Installment Date Principal Amount Sinking Fund Installment Date Principal Amomit February 1, 2032 $162,000 February 1, 2035 $192,000 February 1, 2033 172,000 February 1, 2036 204,000 February 1, 2034 182,000 August 1, 2036* 108,000 * Final Maturity. Upon any redemption in part of any of the Term Bonds funds other than pursuant to this Section 2.04(b), the principal amount of such Term Bonds redeemed shall be credited against 3 remaining Mandatory Redemption Payments for such Term Bond in multiples of $1,000 principal amount as directed by the Issuer, or if the Issuer fails to give direction, pro-rata as nearly as possible against each remaining Mandatory Redemption Payment. (d) Notice of Redemption. Upon a determination by the Issuer to redeem Bonds as provided in paragraph (a) above, the Issuer shall notify the Registrar. Upon receipt of such notice of redemption pursuant to paragraph (a) and in connection with the redemption of Bonds pursuant to paragraph (b) above, the Registrar shall give notice, in the name of the Issuer, of the redemption of such Bonds, which notice shall specify (i) the maturities of the Bonds to be redeemed, (ii) the redemption date, (iii) the place or places where amounts due upon such redemption will be payable, (iv) if less than all of the Bonds are to be redeemed, the letters and number or other distinguishing marks of such Bonds so to be redeemed, (v) the CUSIP number (if any), (vi) the date of such notice, (vii) the issuance date for the Bonds, (viii) the interest rate of the Bonds to be redeemed, (ix) the Redemption Price, (x) the Registrar's name and address with contact person and phone number, (xi) the complete official name of the Bonds, including series, and (xii) in the case of the Bonds to be redeemed in part such notice shall also specify the respective portions of the principal amount thereof to be redeemed. Such notice shall further state that on such date there shall become due and payable upon each Bond to be redeemed the redemption price thereof (or the redemption price of the specified portions of the principal thereof in the case of the Bonds to be redeemed in part only), together with interest accrued to the redemption date, and that from and after such date interest thereon shall cease to accrue and be payable. The Registrar shall mail a copy of such notice by certified mail, with return receipt requested, postage prepaid, or by overnight delivery, not fewer than thirty (30) days nor more than sixty (60) days before the redemption date, to the Owners of any Bonds or portions of Bonds which are to be redeemed at their last addresses appearing upon the registry books. A defect in, or failure to give, notice shall not invalidate the redemption of any other Bonds. The Registrar also shall mail a copy of such notice by registered or certified mail, overnight delivery service, or electronic transmission, for receipt not less than thirty (30) days before such redemption date to The Depository Trust Company, 55 Water Street, 50th Floor, New York, New York, 10041-0099; provided, however, that such mailing or transmission shall not be a condition precedent to such redemption and failure so to mail any such notice shall not affect the validity of any proceedings for the redemption of Bonds. 2.05. Appointment of Initial Re istrar. The Issuer hereby appoints Bond Trust Services Corporation, Roseville, Minnesota, as the initial bond registrar, transfer agent and paying agent (the "Registrar") for the Bonds. The Authorized Officers are authorized to execute and deliver, on behalf of the Issuer, a contract with the Registrar. Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized by law to conduct such business, such corporation shall be authorized to act as successor Registrar. The Issuer agrees to pay the reasonable and customary charges of the Registrar for the services performed. The Issuer reserves the right to remove the Registrar upon thirty days' notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar shall deliver all cash and Bonds in its possession to the successor Registrar and shall deliver the bond register to the successor Registrar. 4 2.06. Registration. The effect of registration and the rights and duties of the Issuer and the Registrar with respect thereto shall be as follows: (a) Re ig ster. The Registrar shall keep at its principal corporate trust office a bond register in which the Registrar shall provide for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. (b) Transfer of Bonds. Upon surrender for transfer of any Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until such interest payment date. (c) Exchange of Bonds. Whenever any Bonds are surrendered by the registered owner for exchange, the Registrar shall authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity, as requested by the registered owner or the owner's attorney in writing. (d) Cancellation. All Bonds surrendered upon any transfer or exchange shall be promptly canceled by the Registrar and thereafter disposed of as directed by the Issuer. (e) Improper or Unauthorized Transfer. When any Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar shall incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (f) Persons Deemed Owners. The Issuer and the Registrar may treat the person in whose name any Bond is at any time registered in the bond register as the absolute owner of the Bond, whether the Bond shall be overdue or not, for the purpose of receiving payment of or on account of, the principal of and interest on the Bond and for all other purposes; and all payments made to any registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or sums so paid. (g) Taxes, Fees and Charges. For every transfer or exchange of Bonds the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. (h) Mutilated, Lost, Stolen or Destroyed Bonds. In case any Bond shall become mutilated or be destroyed, stolen or lost, the Registrar shall deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any Bond destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance and amount satisfactory to it, in which both the Issuer and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be canceled by it and evidence of such cancellation shall be given to the Issuer. If the mutilated, destroyed, stolen or lost Bond has already matured or been called for redemption in accordance with its terms it shall not be necessary to issue a new Bond prior to payment. (i) Authenticating Agent. The Registrar is hereby designated authenticating agent for the Bonds. 2.07. Execution. Authentication and Delivery. The Bonds shall be prepared under the direction of the Executive Director and shall be executed on behalf of the Issuer by the signatures of the Authorized Officers, provided that the signatures may be printed, engraved or lithographed facsimiles of the originals. In case any officer whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of any Bond, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if he had remained in office until delivery. Notwithstanding such execution, no Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on each Bond shall be conclusive evidence that it has been authenticated and delivered under this Resolution. When the Bonds have been prepared, executed and authenticated, the Executive Director shall deliver them to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore executed, and the Purchaser shall not be obligated to see to the application of the purchase price. 2.08. Book-Entr~ystem: Limited Obligation of Issuer. (a) The Depository Trust Company The Bonds will be initially issued in the form of a separate single typewritten or printed fully registered Bond for each of the maturities set forth in Section 2.02 hereof. Upon initial issuance, the ownership of each such Bond will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York, and its successors and assigns (the "Depository"). Except as provided in this section, all of the outstanding Bonds will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of the Depository. (b) Participants. With respect to Bonds registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of the Depository, the Issuer, the Registrar and the Paying Agent will have no responsibility or obligation to any broker dealers, banks and other financial institutions from time to time for which the Depository holds Bonds as securities depository (the "Participants") or to any other person on behalf of which a Participant holds an 6 interest in the Bonds (the "Beneficial Owners"), including but not limited to any responsibility or obligation with respect to (i) the accuracy of the records of the Depository, Cede & Co., or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person other than a registered owner of Bonds, as shown by the registration books kept by the Registrar, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any Participant or any Beneficial Owner, other than a registered owner of Bonds, or any amount with respect to principal of, premium, if any, or interest on the Bonds. The Issuer, the Registrar and the Paying Agent may treat and consider the person in whose name each Bond is registered in the registration books kept by the Registrar as the holder and absolute owner of such Bond for the purpose of payment of principal, premium and interest with respect to such Bond, for the purpose of registering transfers with respect to such Bonds, and for all other purposes. The Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to or on the order of the respective registered owners, as shown in the registration books kept by the Bond Registrar, and all such payments will be valid and effectual to fully satisfy and discharge the Issuer's obligations with respect to payment of principal of, premium, if any, or interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner of Bonds, as shown in the registration books kept by the Registrar, will receive a certificated Bond evidencing the obligation of this resolution. Upon delivery by the Depository to the Administrator of a written notice to the effect that the Depository has determined to substitute a new nominee in place of Cede & Co., the words "Cede & Co.," will refer to such new nominee of the Depository; and upon receipt of such a notice, the Administrator will promptly deliver a copy of the same to the Bond Registrar and Paying Agent, if the Registrar or Paying Agent is other than the Administrator. (c) Representation Letter. The form of representation letter proposed to be submitted to the Depository which is on file with the Authority and presented to this meeting (the "Representation Letter"), is hereby approved, and the Authorized Officers, or any one of them, is authorized to execute and deliver the Representation Letter in substantially the form on file, with such changes therein not inconsistent with law as the Executive Director and the Bond Counsel may approve, which approval will be conclusively evidenced by the execution thereof. Any Paying Agent or Registrar subsequently appointed by the Issuer with respect to the Bonds will agree to take all action necessary for all representations of the Issuer in the Representation Letter with respect to the Registrar and Paying Agent, respectively, to at all times to complied with. (d) Termination of Book-Entry On1~System. Discontinuance of a particular Depository's services and termination of the book-entry only system may be effected as follows: (i) The Depository may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the Issuer and discharging its responsibilities with respect thereto under applicable law. The Issuer may terminate the services of the Depository with respect to the Bonds if it determines that the Depository is no longer able to carry out its functions as securities depository or the continuation of the system of book-entry transfers through the Depository is not in the best interests of the Issuer or the Beneficial Owners. -1 (ii) Upon termination of the services of the Depository as provided in the preceding paragraph, and if no substitute securities depository is willing to undertake the functions of the Depository hereunder can be found which, in the opinion of the Issuer, is willing and able to assume such functions upon reasonable or customary terms, or if the Issuer determines that it is in the best interests of the Issuer or the Beneficial Owners of the Bonds that the Beneficial Owners be able to obtain certificates for the Bonds, the Bonds shall no longer be registered in the bond register in the name of the Nominee, but may be registered in whatever name or names the Holder of the Bonds shall designate at that time, in accordance with Section 2.06. To the extent that the Beneficial Owners are designated as the transferee by the Holders, in accordance with Section 2.06 hereof, the Bonds will be delivered to the Beneficial Owners. (iii) Nothing in this subparagraph (d) shall limit or restrict the provisions of Section 2.06. 2.09. Form of Bonds. The Bonds shall be prepared in substantially the following form: R- HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MOUND, MINNESOTA LIMITED TAX PLEDGE BONDS (MOUND TRANSIT CENTER) SERIES 2006 Maturity Interest Dated Date Rate Date CUSIP REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: DOLLARS The Housing and Redevelopment Authority in and for the City of Mound (the "Issuer"), a duly organized and existing public body corporate and politic and political subdivision of the State of Minnesota, acknowledges itself to be indebted and for value received hereby promises to pay to the registered owner specified above, or registered assigns, the principal sum specified above on the maturity date specified above, and to pay interest thereon from the date hereof at the annual rate specified above, payable on February 1 and August 1 in each year, commencing February 1, 2007, to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a business day) of the immediately preceding month. The interest hereon and, upon presentation and surrender hereof, the principal hereof are payable in lawful money of the United States of America by check or draft by Bond Trust Services Corporation, in Roseville, Minnesota, as Bond Registrar and Paying Agent (the "Registrar"), or its designated successor under the Resolution described herein. This Bond is one of a series in the aggregate principal amount of $2,965,000 all of like date and tenor, except as to maturity date, interest rate and denomination, issued pursuant to a resolution adopted by the Board of Commissioners of the Issuer on December 14, 2006 (the "Resolution"), to finance certain costs of a redevelopment project (the "Project") undertaken by the Issuer, and is issued pursuant to and in full conformity with the Constitution and laws of the State of Minnesota thereunto enabling, including Minnesota Statutes, Chapter 469. The Bonds of this series are issuable only as fully registered bonds, in minimum denominations of $5,000 or any integral multiple of $1,000 in excess thereof. The Bonds are secured by the Issuer's covenant to levy its special benefits tax for collection in each year during the term of the Bonds in an amount at least equal to 105 percent of the amount necessary to pay principal of and interest on the Bonds as the same become due and payable, and a pledge of such special benefits tax to the payment of debt service on the Bonds. The Bonds are special limited obligations of the Issuer, payable solely from amounts pledged to the payment thereof pursuant to the Resolution. The Bonds shall not be a debt of the City of Mound, the State of Minnesota or any political subdivision thereof, and neither the City 9 of Mound nor the State or any political subdivision thereof shall be liable on the Bonds, nor shall the Bonds be payable out of any funds or properties other than those of the Issuer pledged thereto. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the Issuer at the principal office of the Registrar, by the registered owner hereof in person or by the owner's attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner or the owner's attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange the Issuer will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. Bonds maturing on or after February 1, 2016, are subject to redemption and prior payment at the option of the Issuer in whole or in part on February 1, 2015, and on any day thereafter at a redemption price of par plus accrued interest to the redemption date. The Bonds (also referred to as the "Term Bonds") are subject to mandatory redemption in part prior to maturity at their principal amount (or such portion thereof as is redeemed), without any premium, plus accrued interest thereon to such redemption date, on the dates and in the amounts as set forth in the Resolution, subject to pro rata reduction (as further described in the Resolution). Upon any redemption in part of any of the Term Bonds funds other than pursuant to Section 2.04(b) of the Resolution, the principal amount of such Term Bonds redeemed shall be credited against remaining Mandatory Redemption Payments for such Term Bond in multiples of $1,000 principal amount as directed by the Issuer, or if the Issuer fails to give direction, pro-rata as nearly as possible against each remaining Mandatory Redemption Payment. Upon a determination by the Issuer to redeem Bonds as provided above, the Issuer shall notify the Registrar and the Registrar shall give notice, in the name of the Issuer, of the redemption of such Bonds, which notice shall specify (i) the maturities of the Bonds to be redeemed, (ii) the redemption date, (iii) the place or places where amounts due upon such redemption will be payable, (iv) if less than all of the Bonds are to be redeemed, the letters and number or other distinguishing marks of such Bonds so to be redeemed, (v) the CUSIP number (if any), (vi) the date of such notice, (vii) the issuance date for the Bonds, (viii) the interest rate of the Bonds to be redeemed, (ix) the Redemption Price, (x) the Registrar's name and address with contact person and phone number, (xi) the complete official name of the Bonds, including series, and (xii) in the case of the Bonds to be redeemed in part such notice shall also specify the respective portions of the principal amount thereof to be redeemed. Such notice shall further state that on such date there shall become due and payable upon each Bond to be redeemed the redemption price thereof (or the redemption price of the specified portions of the principal thereof in the case of the Bonds to be redeemed in part only), together with interest accrued to the redemption date, and that from and after such date interest thereon shall cease to accrue and 10 be payable. The Registrar shall mail a copy of such notice by certified mail, with return receipt requested, postage prepaid, or by overnight delivery, not fewer than thirty (30) days nor more than sixty (60) days before the redemption date, to the Owners of any Bonds or portions of Bonds which are to be redeemed at their last addresses appearing upon the registry books. A defect in, or failure to give, notice shall not invalidate the redemption of any other Bonds. The Registrar also shall mail a copy of such notice by registered or certified mail or overnight delivery service for receipt not less than thirty (30) days before such redemption date to The Depository Trust Company, 55 Water Street, 50~' Floor, New York, New York 10041- 0099; provided, however, that such mailing shall not be a condition precedent to such redemption and failure so to mail any such notice shall not affect the validity of any proceedings for the redemption of Bonds. The Issuer and the Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the Issuer nor the Registrar shall be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order to make it a valid special limited bond of the Issuer in accordance with its terms, have been done, do exist, have happened and have been performed as so required; that, prior to the issuance hereof the Board of Commissioners of the Issuer has by the Resolution covenanted and agreed to levy a special benefits tax in each year during the term of the Bonds in order to provide moneys to pay principal of and interest on the Bonds. The Bonds have been issued in aid of the Project. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon shall have been executed by the Registrar by manual signature of one of its authorized representatives. 11 IN WITNESS WHEREOF, the Housing and Redevelopment Authority in and for the City of Mound, Minnesota, by its Board of Commissioners, has caused this Bond to be executed on its behalf by the printed facsimile signatures of its Chair and Secretary, and has caused this Bond to be dated as of the date set forth below. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MOUND, MINNESOTA facsimile) Chair Attest: (facsimile) Executive Director CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. BOND TRUST SERVICES CORPORATION as Registrar By Its Authorized Representative 12 The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common TEN ENT -- as tenants by the entireties JT TEN -- as joint tenants with right of survivorship and not as tenants in common UTMA -- as custodian for under (Gust) (Minor) the Uniform Transfers to Minors Act (State) Additional abbreviations may also be used though not in the above list. i 1 13 ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and does hereby irrevocably constitute and appoint attorney to transfer the said Bond on the books kept for registration of the within Bond, with full power of substitution in the premises. Dated: Notice: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever. Signature Guaranteed: Signature(s) must be guaranteed by a commercial bank or trust company or by a brokerage firm having a membership in one of the major stock exchanges. PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: 14 Section 3. Funds and Accounts. (a) 3.01. Project Fund. There is hereby created a special fund designated as the Series 2006 Project Fund (the "Project Fund"), to be held and administered by the Issuer separate and apart from all other funds of the Issuer. The Issuer appropriates to the Project Fund the proceeds of the sale of the Bonds. (b) The funds in the Project Fund will be disbursed (i) to pay or reimburse costs of the Facilities; and (ii) to pay costs of issuance of the Bonds. (c) All income received from investment of amounts on deposit in the Project Fund shall be credited to the Project Fund. Any balance remaining in the Project Fund after completion of the Facilities shall be credited and paid to the Bond Fund established in Section 3.02. 3.02. Bond Fund. There is hereby established on the official books and records of the Issuer a Series 2006 Bond Fund (the "Bond Fund"). So long as any of the Bonds are outstanding and any principal of or interest thereon unpaid, the Issuer shall maintain the Bond Fund, and the principal of and interest on the Bonds shall be payable from the Bond Fund. The Issuer irrevocably appropriates to the Bond Fund (a) proceeds of the Issuer's special benefits tax levied pursuant to Section 469.033, Subdivision 6 of the HRA Act (the "Special Benefits Tax") and collected in each year during the term of the Bonds, in an amount that, together with any other funds on deposit in the Bond Fund, is equal to the principal of and interest on the Bonds (and any Parity Debt as defined in Section 4.02 that is secured by the Bond Fund) due during the immediately following Bond Year, and (b) proceeds of the Special Benefits Tax collected in 2006 in an amount equal to the interest due on the Bonds on February 1, 2007. The term "Bond Year" means a year commencing on August 1 and ending on July 31 of the following calendar year. All monies appropriated to the Bond Fund under this Section, together with any other amounts deposited therein by the Issuer, are pledged solely to pay principal of and interest on the Bonds. The Issuer shall not cause to be applied to the payment of the Bonds any amounts which would constitute "private payments" or "private security" for the Bonds, which might cause the Bonds to be considered "private activity bonds" or "private loan bonds" pursuant to Section 141 of the Internal Revenue Code of 1986, as amended (the "Code"). Section 4. Covenants. 4.01. Special Benefits Tax. The Issuer hereby covenants and agrees as follows: (a) The Issuer will levy for collection in each year in which principal of or interest on the Bonds is due and payable, its Special Benefits Tax in an amount that, together with any other funds on deposit in the Bond Fund as of the date of filing the final levy with the County auditor, is sufficient to pay not less than 105 percent of principal of and interest due on the Bonds (and any Parity Debt as defined in Section 4.02) in the following Bond Year; all subject to the limit on such Special Benefits Tax set forth in Section 469.033, Subdivision 6 of the HRA Act; and 15 (b) The Issuer will submit to the City in each year during which the Bonds are outstanding a budget in accordance with the requirements of Section 469.033, Subdivision 6 of the HRA Act, and to take other actions necessary to levy its Special Benefits Tax in accordance with (a) above. (c) Upon receipt of each of the first half and the second half of proceeds from its Special Benefits Tax in each year, the Issuer shall deposit in the Bond Fund an amount sufficient to pay debt service due and payable on the Bonds (and any Parity Debt that is secured by the Bond Fund) on the next interest payment date. On each February 1, the balance of any proceeds of the Special Benefits Tax collected by the Issuer as of that date in excess of the principal and interest payment due on that date are released from the pledge to the Bonds under this Resolution and may be retained by the Issuer and used for any purpose in accordance with law. 4.02. Parity Debt. The Issuer may pledge its Special Benefits Tax to other bonds or obligations on a parity with the pledge made hereunder ("Parity Debt"), provided however, that the Issuer shall not make any such pledge unless, at the time such pledge is initially made, (a) the maximum Special Benefits Tax that the Issuer is authorized to levy in the then-current calendar year is at least 105 percent of the total principal and interest payable on the Bonds and all Parity Debt (including the Parity Debt then being issued) in the following Bond Year and (taking into the account the provisions of clause (b) of this Section) in each subsequent Bond Year while the Bonds and Parity Debt are outstanding, and (b) for purposes of structuring any Parity Debt, the Issuer may project an annual increase in the Special Benefits Tax of no more than one percent. Section 5. Defeasance. When all of the Bonds have been discharged as provided in this section, all pledges, covenants and other rights granted by this Resolution to the holders of the Bonds shall cease. The Issuer may discharge its obligations with respect to any Bonds which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full; or, if any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued from the due date to the date of such deposit. The Issuer may also discharge its obligations with respect to any prepayable Bonds called for redemption on any date when they are prepayable according to their terms, by depositing with the Registrar on or before that date an amount equal to the principal, interest and redemption premium, if any, which are then due, provided that notice of such redemption has been duly given as provided herein. The Issuer may also at any time discharge its obligations with respect to any Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a bank qualified by law as an escrow agent for this purpose, cash or securities which are authorized by law to be so deposited, bearing interest payable at such time and at such rates and maturing or callable at the holder's option on such dates as shall be required to pay all principal, interest and redemption premiums to become due thereon to maturity or earlier designated redemption date. Section 6. Authentication of Transcript. The officers of the Issuer and the Executive Director are hereby authorized and directed to prepare and furnish to the Purchaser and to Kennedy & Graven, Chartered, Bond Counsel, certified copies of all proceedings and records relating to the Bonds and such other affidavits, certificates and information as may be required to 16 show the facts relating to the legality and marketability of the Bonds, as the same appear from the books and records in their custody and control or as otherwise known to them, and all such certified copies, affidavits and certificates, including any heretofore furnished, shall be deemed representations of the Issuer as to the correctness of all statements contained therein. Section 7. Tax Covenants; Arbitrage Certificate. (a) The Issuer covenants and agrees with the holders from time to time of the Bonds herein authorized, 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 payable on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the Code) and regulations issued thereunder, in effect at the time of such action, and that it will take, or will cause its officers, employees or agents to take, all affirmative actions within its powers which may be necessary to insure 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. (b) The Authorized Officers, being the officers of the Issuer charged with the responsibility for issuing the Bonds pursuant to this Resolution, are authorized and directed to execute and deliver to the Purchaser a certificate in accordance with the provisions of Section 148 of the Code, and Sections 1.148-0 through 1.148-11 of the Regulations, stating that on the basis of facts, estimates and circumstances in existence on the date of issue and delivery of the Bonds, it is reasonably expected that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be arbitrage bonds within the meaning of the Code and the applicable regulations. (c) In order to qualify the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, the Issuer makes the following factual statements and representations: Code; (1) the Bonds are not "private activity bonds" as defined in Section 141 of the (2) the Issuer designates the Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code; (3) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds that are not qualified 501(c)(3) bonds) which will be issued by the Issuer (and all subordinate entities of the Issuer) during calendar year 2006 will not exceed $10,000,000; and (4) not more than $10,000,000 of obligations issued by the Issuer during calendar year 2006 have been designated for purposes of Section 265(b)(3) of the Code. Section 8. Official Statement. The Preliminary Official Statement and an Official Statement relating to the Bonds, prepared and delivered, or to be on behalf of the Issuer, is 17 hereby approved, and the officers of the Issuer are hereby authorized and directed to execute such certificates as may be appropriate concerning the accuracy, completeness and sufficiency thereof. 18 1 C i Adopted this 14th day of December, 2006. ~~ Acting Chair Attest: Exec tive Director 19