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07-726� Council File # 7 (o Green Sheet � OF SAINT Presented by 1 RESOLUTION RELATING TO SUBORDINATE SALES TAX REVENUE BONDS (SERIES 2007 2 A AND B), ADOPTING 2007 BUDGET AMENDMENT AND RELATED GUIDELINES 3 4 WHEREAS: 5 A. This same date the Council of the City of Saint Paul has considered a resolution authorizing 6 the issuance of Subordinate Sales Tax Revenue Bonds, Series 2007; and 7 B. After considering review and comment of the Neighborhood STAR Board, the Mayor and 8 City Council supports use and amounts of $25,000,000 to be used for three initiatives as outlined below: 9 Invest St. Paul, Supportive Housing and Community Public Infrastructwe Initiative which are more fully 10 described in the attached Exhibit A— Sources and Uses and Exhibit B- 2007 STAlt Bonds Guidelines. ll C. City Council request HRA to prepare HRA Budget to accept funds for the Invest Saint Paul 12 and Supportive Aousing portion of the funds which is further deseribed below. 13 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Saint Paul, as follows: 14 1. Proiect Guidelines. The proceeds of the Series 2007 Bonds shall be expended on specific 15 projects approved by the City Council which constitute (1) capital projects to further residential, cultural, 16 commercial, and economic development in both downtown St. Paul and St. Paul neighborhoods, or (2) 17 capital and operating expense of cultural organizations in the City. Attached hereto as Exhibit B and 18 hereby made a part hereof is guidelines for the selection of specific pro}ects on which to spend the 19 proceeds of the Series 2007 Bonds. 20 21 2 Bud¢et Amendment. Upon recommendation of the Mayor, The City's capital budget for 22 2007 is available and the 2007 budget is heretofore adopted and amended by the City Council as follows: v�-�� 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 Cih• Sales Tax Fund 930 F'vmncma Plan Cmrern Buda t Changes 10,750,000.00 288,265A5 4Q584.90 16,615,000.00 50,39018 Amended Budget P7-930-90320-6201-00000 Bond Proceeds P7-930-90320-6603-00000 Premiiun on Bond Issue P7-930-90320-6601-00000 Accrued urterest 2007A - Tax F�empt P7-930-90321-6201-00000 Bond Proceeds P7-930-90321-6601-00000 Accrued urterest 2007B - Ta�able Total Financmg Pian SAendme Plan P7-930-90320-0601-00000 CostofIssuance P7-930-90320-0560-00000 Transferto DebtService(F961) P7-930-90320-0548-78500 CotmrnmdyPublicI�frastrvct�se Partners}vp-Contmgency P7-930-90320-0565-00000 Transferto HRA Capilal Projects (F118) 2007A - TaY Exerrq�t P7-930-90321-0601-00000 CostofIssuance P7-930-90321-0560-00000 Transferto Debt Service (F961) P7-930-90321-0565-00000 Traosfer to HRA Capital Projects (F118) 2007B - Ta�able Tota] Spendmg Plan City Revenue Bonds aud Other Long-Tenm Debt �nd 961 FinancmQ Plan 2QQ7 Sales Tas Debt Secvice Ser�s A- Ta�c Exempt GL 961-89570-7306 Transfer from CapIIal Pro�ect Furid (F930) GL 961-89570-7306 TransferofSalesTaxfromNeighborhhood Star (Nov. Debt Pymt) Debt Service Reserve - 2007 Series A- TaY Exempt GL 961-89572-7306 Transfer from Caprta] Project F�md (F930) GL 961-89572-9831 Confibution to Fimd Balance 10,750,000.00 288,265.05 40,584.90 16,615,000.00 80,390.18 27,774,24013 27,774,240.13 163,521.07 163,521.07 915,328.88 915,328.88 S,OOQ000.00 8,OOQ000.00 2,OOQ000.00 2,OOQ000.00 263,011.98 263,011_98 1,432,37820 1,432,37820 15,000,000.00 15,000,000.00 - 27,774,240.13 27,774,240.13 40,584.90 40,584.90 125,953.13 125,953.13 166,538.03 166,538.03 874,743.98 874,743.98 (874,743.98) (874,743.98) C�7-7�6 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 2007 Sales Tax Debt Service Series B- Tacable GL 961-89571-7306 Tiansfer from Capnal Project Fw�d (F930) GL 961-8957i-7306 Transfer ofSales Tae (Nov. Debt Pymt) Debt Service Reserve - 2007 Series B- Taxabk GL 961-89573-7306 Transfer from Capital Project Fimd (F930) GL 961-89573-9831 Corrtnbutionto Ftmd Balance Total Fvtancmg Plan SpendmQ Plan 2007 Sales Tax Debt Service Series A- TaY Fxempt GL 961-89570-0611 Interest on Bonds 2007 Sales Ta�c Debt Service Series B- TaYable GL 961-89571-0611 Itrteres[onBonds Total Spendmg Plan - 80,390.18 - 249,486]5 329,876.93 1,351,988.02 (1,351,988.02) 80,390. ] 8 249486J5 329,876.93 1,3� 1,988.02 (1,35 t,988.02) 496,414.96 496,414.96 I 66,53 8.Q3 166,538.03 329,876.93 329,876.93 496,414.96 496,414.96 U�-]�6 :� �,� Benanav Bosffom Thune Adopted by Council: Date �� S�, Adoption Certified by Council Secretary BY� // //� d �' SD.� Approved Ma . Date � i$ p BY� . ,6�CSC� t InG � Form Appro d by Ciry Attomey By: ��—� - C � $-/�O7 Form ove by ay r26ub ��on to Council By: Approved by th ' anci ervices By: � Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet � b?-�.�6 FS FIDancial semces Contact Person 8 Pfione: Bob Geurs 266-8837 Must Be on Council Agenda by (Date): 08-AUG-07 Doc.Type: RESOI.UTION W/$ TRAtSSAC E-Document Required: N DocumeM CoMact: ConWct Phone: o,.A��-0� � I Green Sheet NO: 3Q42471 � ueaarimem aew ... 0 ' ancial Services Assign 1 ' sncialS�viees De entD"ueetor Number y �ancialServices fficeEtinaacisiServices For Routing 3 " Attome Order q a or's Office Ms ar/ASSistant 5 onnN ' CoanN 6 i Clerk GS Cierk Total # of Signature Pages _{Clip All Locations for Signaturej - Sign Resolution adopting 2007 budget amendment and related guidelines for the 2007 STAR Sonds (25,OOQ000 net). wauons: ApPcOVe (A) or K� Planning Gommission CIB Committee Civii Service Commission 7. Has this personlfirm ever worked under a contract for this department? Yes No 2. Has this personlS�rm ever been a city employee? Yes No 3. Does this person/firtn possess a skill not'rortnalty possessed by any current city employee? Yes No Explain ail yes answers on separate sheet and attach to green sheet Initiating Problem, Issues, OpportuniSy (Who, What, When, Where, Why): This sazne date the City Council has considered a resolution authorizing the issuance of sales tas bonds. If bonds issuance is authorized the budget amendment is necessary to appropriate new funds. Advantages If Approved: Budget will be amended. New iniriatives will be fmanced. Disadvantages If Approved: 23one DisadvanWges IfNot Approved: Budget wili not be asnended and new initiatives will not be financed. Trensaction: Funding Source: Financiat tnformation: (Explain) •,:.+:.....«« STAR Bonds F930 CostlRevenue Sudgeted: Activity Number: August 1, 2007 1:27 PM Page 1 Exhibit A 2007 STAR Sonds $25,000,000 I �, St Paul Mortgages tegic Acquisfions unercial Corridors Projects iness Loans ISP portion of STAR Bonds Supportive HSG Subtotal Public Infrastructure Partriership Boads-Series B011dS 1,500,000 3,000,000 4,000,000 1,500,000 3,000,000 2,000,000 15,000,000 2.000,000 17,000,000 8,000,000 v�aoo� V �'� J "' Substitute — Eghibit S CF 07-726 2007 STAR BOl�'D Principles, Guidelines and Reporting STAR Bonds of $25,000,000 are expected to be spent in the following ttiree areas: Invest St. Paul, Supportive Housing, and Community Public Infrastructure Partnership. A. Invest St. Paul Rehabilitation: This concentrated rehabilitation assistance will provide hope far families without resources to address energy efficiency, curb appeal items (exterior nnprovements), health-related items, etc. It will also provide for initial contact to identify other needs that the fanuly may have which could include refinancing bad mortgages, counseling and other needs. Rehabilitation will range from minor repairs to major undertaking of improvements. Assistance will need to consider a variety of factors including income, curb appeal, energy efficiency, and cost feasibility, etc. Mortgage Financing: Initially, it is proposed that approximately 23 CDC properties be assisted by providing mortgage refinancing tools to reduce the number of completed, yet still vacant, CDC-owned properties for sale that were developed with city finances. Foreclosures will be reduced by working with lenders and encouraging the provision of affordable mortgage financing to families that have predatory or sub-prime loans that could result in the loss of their home. Interest write-down assistance, affordability fmancing gap, and entry cost assistance (i.e. closing costs, down payment assistance) funds are also necessary to keep mortgages affordable for families. Strategic Acquisition Strategic Acquisition will be a significant tool to stabilize deteriorating blocks. Vacant properties will be acquired that will have a visible and quality of life effect on these blocks. These properties will either (1) be secured and held for rehabilitation until the market changes; (2) be demolished and held for future development; and/or (3) be held and deconverted back to single family use. These activities will occur where a number of them aze strategically clustered. The first action under this category is to acquire from Dayton's Bluff Neighborhood Housing Services (DBNHS) five vacant properties previously purchased to prevent investor purchases which may lead to fiuther destabilization of the neighborhood. These properties are strategically clustered in the tazgeted area and plans for their future will be developed with the neighborhood. Neighborhood Commercial Corridors Vacant commercial buildings will be evaluated for functional and economic obsolescence. We will work to grow new and stabilize and/or expand existing businesses. Page 1 of 3 V I J I (/ "' ISP Projects Major redevelopment activities will be undertaken for commercial gateways; major commercial and/or residential sites/nodes; and other miYed use developments. T`hese will be Council and Mayor priority projects. Business Loans The intent of the program is to provide retention and expansion support for small businesses. Ttus program would leverage bank financing by providing a matching loan, with favorable terms, to existing or new businesses making unprovements or purchasing equipment. B) Supportive Housing An important priority for the City/HRA is producing housing to end homelessness. Saint Paul and Ramsey County have adopted a joint Plan to End Homelessness, and the state of Minnesota has a Business Plan to End L,ong-Term Chronic Homelessness. Efforts will be made to identify appropriate sites within the city along with szrvice providers to produce supportive housing to accomplish the goals expressed in the homeless plans. C) Community Public Infrastructure Partnership This is a draft of a proposed new section 11 to the Neighborhood STAR Guidelines. 772is section relates to funds which may be made available for large public improvement activities (Please see the budget section, page #9 of the Mayor's Invest Saint Paul Initiative.) The Community Public Infrastructure Partnership offers access to Neighbarhood STAR Program Bond funds for public improvement initiatives in Invest Saint Paul targeted areas throughout the City of Saint Paul. Aside from the CPIP specific guidelines listed below, all rules and regulations governing the Neighborhood STAR Program apply: In order to facilitate public/private partnerships, City Departments are eligible to apply for ISP Program funds when in partnership with another city department and/or a neighborhood non- profit organization; Proposals should maximize the use of STAR Bond funds, with a goal of matching STAR dollars on at least a dollaz for dollar basis with additional, non-STAR resources; The Neighborhood STAR Board will establish a process similar to the Large Loan and Grant process, including a timetable and schedule to review, recommend, and rank and transmit STAR CPIP applications to the Mayor and City Council; Proposals will be submitted to the I3eighborhood STAR staff on a STAR CP7P Program application form; Page 2 of 3 a�-� �-c� Ali Community Public Infrastructure Pro�am applicants will be invited to present their proposal to the Neighborhood STAR Board prior to their review and ranl�ng. Annual Reporting PED will submit to the Mayor, Neighborhood STAR Board, City Council and HRA Board, a �88� STAR Bond Annual Re ort r_le*=_':�^ ^�«;.,:,;e,. ...,a „„e.,a�..,_„ a p -- ---.---- _-_ _ = �., ..�._.. which includes: 1. Details of revenues and exnenditures to-date for activiries 2. Proiected revenues and expenditures for activities. 3. Actual and proiected revenues and expenditures for debt service This report will be provided within 90 days following the end of the calendar year. Annual reports will be provided until *�. °:::::� W��,^�^,^�^ :;,;; all project expenditures have been made. �� Guidelines for City and HRA AccountinE A. Invest S� Paul HRA Board will approve individual capital project funding for ISP Projects as well as all expenditures for Strategic Acquisitions. Other ISP programs (Rehab, Mortgage Financing, Neighborhood Commercial Corridors and Business Loans will be handled administratively. All activities will be consistent with information in Section A. B. Supportive Housing fIltA Board will approve all Supportive Housing projects. C. Community Public Infrastructure Partnership $8,000,000 is placed in City Contingency. Future City Budget resolutions are required to remove and expend funds from the City Contingency. Fina1 August 7, 2007 (2:10) Egan suggested revisions 8/8/07 Page 3 of 3 ��-��-� Interdepartmental Memorandum CITY OF SAIN'I' PAUL DATE: August 7, 2007 TO: Council President Kathy Lantry Councilmember Jay Benanav Councilmember Dan Bostrom Councilmember Patrick Harris Councilmember Lee Helgen Councilmember Debbie Montgomery Councilmember Dave Thune FROM: Bob Geurs, City Debt Manager RE: 2007 STAR Bond Approval Process for Wednesday August 8, 2007 Please fmd: 1) Approval Process for City STAR Bonds on Wednesday August 8 2) Exhibit B-2007 STAR BOND Principles, Guidelines and Reporting (2 copies) a} C?ty Council Packet - Add at the end of City Conncil Item #2b CF 07-726 b) I3RA Packet — Item #5 - Add to the end of E�ibit C- City Council Resolufion relating to 2007 City Sales Tax Bonds Budget 3) Draft Preliminary Offering Statement on the 2007 Sales Ta�c Bonds I will stop by tomorrow in advance to see if there aze any technical questions, on the City and HRA resolutions to approve the 2007 Sales Tas Bonds, that you need answered in advance of the your consideration Wednesday PM. Cc Ann Mulholland Cecile Bedar Matt Smith Stacey Millet U��'W 2007 STAR BOND Principles, Guidelines and Reporting • STAR Bonds of $25,000,000 aze expected to be spent in the following three azeas: Invest St. Pau1, Supporsve Ho.isir.g, aad Ccm u,:nity Public ;�:a;truc«ire Partr�ers'nip. A. Invest St. Paul Rehabilitation: Tfris concentrated rehabilitation assistance will provide hope for fasnilies without resources to address energy efficiency, curb appeal items (eaterior improvements), health-related items, etc. It wil� also �rovide for ini�ial coatact io identi#�y ot�3er needs fi�iat the fami�y may have which could include refinancing bad mortgages, counseling and other needs. Rehabilitation will range from minor repairs to major undertaking of improvements. Assistance will need to consider a variety of factors including income, curb appeal, energy efficiency, and cost feasibility, etc. Mortgage Financing: Initially, it is proposed that approximately 23 CDC properties be assisted by providing mortgage refinancing tools to reduce the number of completed, yet still vacant, CDGowned properties for sale that were developed with city finances. Foreclosures will be reduced by working with lenders and encouraging the provision of affordable mortgage financing to families that have predatory or sub-prime loans that could result in the loss of their home. Interest write-down assistance, affordability financing gap, and enhy cost assistance (i.e. closing costs, down payment assistance) funds are also necessary to keep mortgages affordable for fanulies. • Strategic Acquisition Strategic Acquisition will be a significant tool to stabilize deteriorating blocks. Vacant properties will be acquired that will have a visible and quality of life effect on these blocks. These properties will either (1) be secured and held far rehabilitation until the market changes; (2) be demolished and held for future development; andlor (3) be held and deconverted back to single family use. These activifies will occur where a number of them are strategically clustered. The first action under this category is to acquire from Dayton's Bluff Neighborhood Housing Services (DBNHS) five vacant properties previously purchased to prevent investor purchases which may lead to fiii destabilization of the neighborhood. These properties aze strategically clustered in the targeted area and plans for their future will be developed with the neighborhood. Nefighborhood Commercial Corridors Vacant commercial buildings will be evaluated for functional and economic obsolescence. We ��11 work to �ow new and sia'oiiize and/or expanri existing businesses. • Page 1 of 3 o�-�a� Isr rro;eets • Major redevelopment activities will be undertaken for commercial gateways; major commercial and/or residential sites/nodes; and other miYed use developments. These will be Council and Mayor priority projects. Business Loans The intent of the program is to provide retention and expansion support for small businesses. This program would leverage bank financing by providing a matching loan, with favorable terms, to existing or new businesses making unprovements or purchasing equipment. B) Supportive Housing An important priority for the Ciry/HRA is producing housing to end homelessness. Saint Paul and Ramsey County have adopted a joint Plan to End Homelessness, and the state of Minnesota has a Business Plan to End Long-Term Chronic Homelessness. Efforts will be made to identify appropriate sites within the city along with service providers to produce supportive housing to accomplish the goals expressed in the homeless plans. C) Community Public Infrastructure Partnership This is a draft of a proposed new section 11 to the Neighborhood STAR Guidelines. This section relates to funds which may be made available for large public • irytprove�nent activities (Please see the budget seetion, page #9 of the Mayor's Invest Saint Paul Initiative.) The Community Public Infrastructure Partnership offers access to Neighborhood STAR Program Bond funds for public improvement initiatives in Invest Saint Paul targeted areas throughout the City of Saint Paul. Aside from the CPIP specific guidelines listed below, all rules and regulations governing the Neighborhood STAR Program apply: In order to facilitate publiclprivate partnerships, City Departments aze eligible to appiy for ISP Program funds when in partnership with another city department and/or a neighborhood non- profit organization; Proposals should maximize the use of STAR Bond funds, with a goal of matching STAR dollars on at least a dollar for dollaz basis with additional, non-STAR resources; The Neiehborhood STAR Board will establish a process similar to the Large Loan and Grant process, including a tunetable and schedule to review, recommend, and rank and transmit 5TAR CPIP applications to the Mayor and City Council; Proposals will be submitted to the Neighborhood STAR staff on a STAR CPIP Program appiicafion form; • Page 2 of 3 V�� ( V "r A11 Community Public Infrastructure Program applicants will be invited to present their proposal � to the Neighborhood STAR $oard prior to their review and ranking. Annual Renorting PED will submit to the Mayor, Neighborhood STAR Board, City Council and HRA Board, a 2007 STAR Bond Annual Report, detailing activities and expenditures to date. This report will be provided within 90 days following the end of the calendar yeaz. Annual reports will be provided until the entire $25,000,000 has been expended. Guidelines for Citv and HRA Accounting A. Invest St. Paui I3RA Board will approve individual capital project fuuding for TSP Projects as well as all expenditures for Strategic Acquisifions. Other ISP programs (Rehab, Mortgage Financing, Neighborhood Commercial Conidors and Business Loans wi11 be handled administratively. All activities will be consistent with information in Secrion A. B. Supportive Housing HRA Boazd will approve all Supportive Housing projects. C. Community Pubiic Infrastructure Partnership • $8,000,000 is placed in City Contingency. Future City Budget resolutions aze required to remove and expend funds from the City Contingency. Fina1 August 7, 2007 (2:10) • Page 3 of 3 a7-��-c� 2007 STAR BOND Principles, Guidelines and Reporting • STAR Bonds of $25,000,000 aze expected to be spent in the following three areas: Invest St. Paul, Supporti �e He.�sing, aad Ccu.;�.�:r.;�� °u�uc I:�asuacttire P� A. Invest St. Paul Rehabilitarion: This concentrated rehabilitation assistance will provide hope for families without resources to address energy efficiency, curb appeal items (exterior improvements), health-related items, etc. It wi�� aiso p�ouide for i�it�al coatac# to ident� ot�ier xieeds tiiat the famiiy may have which could include refinancing bad mortgages, counseiing and other needs. Rehabilitation wili range from minor repairs to major undertaking of unprovements. Assistance wili need to consider a variety of factors including income, curb appeal, energy efficiency, and cost feasibility, etc. Mortgage Financing: Initiaily, it is proposed that approximately 23 CDC properties be assisted by providing mortgage refinancing tools to reduce the number of completed, yet still vacant, CDC-owned properties for sale that were developed with city finances. Foreclosures will be reduced by working with lenders and encouraging the provision of affordable mortgage financing to families that have predatory or sub-prime loans that couid result in the loss of #heir home. Interest write-down assistance, affordability fmancing gap, and entry cost assistance (i.e. closing costs, down payment assistance) funds aze also necessazy to keep mortgages affordable for families. . Strategic Acqu9sitfon Strategic Acquisition will be a significant tool to stabilize deteriorating blocks. Vacant properties will be acquired that will have a visible and quality of life effect on these blocks. These properties will either (1) be secured and held for rehabilitation until the market changes; (2) be demolished and held for future development; and/or (3) be held and deconverted back to single family use. These activities will occur where a number of them are strategically clustered. The first action under this category is to acquire from Dayton's Biuff Neighborhood Housing Services (DBNHS) five vacant properties previously purchased to prevent investor purchases which may lead to fi.irther destabilization of the neighborhood. These properties are strategically clustered in the targeted area and plans for their future will be developed with the neighborhood. Neighborhood Commercial Corridors Vacant commercial buildings will be evaluated for functional and econoxn�c obsolescence. We w�1: work to grow new an�i siabilize andlor expand e�sting businesses. • Page I of 3 � 07'72'Co ISP Projects � Major redevelopment activities will be undertaken for commerciai gateways; major commercial and/or residential sites/nodes; and other mixed use developments. These wi11 be Council and Mayor priar,ty projects. Business Loans The intent of the prograzn is to provide retention and expansion support for small businesses. This program would leverage bank financing by providing a matching loan, with favorable terms, to existing or new businesses making improvements or purchasing equipment. B) Supportive Housing An important priority for the City/HIZA is producing housing to end homelessness. Saint Paul and Ramsey County have adopted a joint Plan to End Homelessness, and the state of Minnesota has a Business Plan to End Long-Term Chronic Homelessness. Efforts will be made to identify appropriate sites witkrin the city along with service providers to produce supportive housing to accomplish the goals expressed in the homeless plans. C) Cor.imunity Public Infrastructure Partnership This is a draft of a proposed new section 11 to the Neighborhood STAR Guidelines. This section relates to funds which may be made available for large public improvement activities (Please see the budget section, page #9 of the Mayor's • Invest Saint Paul Initiative.) The Community Public Infrastructure Partnership offers access to Neighborhood STAR Progxam Bond funds for public unpmvement initiatives in Invest Saint Paul targeted azeas throughout the City of Saint Paul. Aside from the CPIP specific guidelines listed below, all rules and regulations governing the Neighborhood STAR Program apply: In order to facilitate public/private partnerships, City Departments are eligible to apply for ISP Program funds when in partnership with another city department ancUor a neighborhood non- profit organization; Proposals should ma�cimize the use of STAR Bond funds, with a goal of matching STAR dollars on at least a dollar for dollaz basis with addirional, non-STAR resources; The Neighborhood STAR Boazd will establish a process similar to the Large Loan and Grant process, including a timetable and schedule to review, recommend, and rank and transmit STAR CPIP applications to the Mayor and City Council; Proposals will be submitted to the Neighborhood STAR staff on a STAR CPIP Program application form; . Page 2 of 3 � k �� ( O Y V All Coxnmunity Public Infrastructure Program applicants will be invited to present their proposal • to the Neighborhood STAR Boazd prior to their review and rankuig. Annual Reportin� PED will submit to the Mayor, Neighborhood STAR Board, City Council and I�RA Board, a 2007 STAR Bond Annual Report, detailing activities and expenditures to date. This report will be provided within 90 days following the end of the calendaz yeaz. Annual reports will be provided until the entire $25,000,000 has been expended. Guidelines for Citv and I3RA Accounting A. Invest St. Paul HRA Board will approve individual capital project funding for ISP Projects as well as all expenditures for Strategic Acquisitions. Other ISP programs (Rehab, Mortgage Financing, Neighborhood Commercial Corridors and Business Loans will be handled administratively. All activities will be consistent with information in Section A. B. Supportive Housing HRA Board will approve all Supportive Housing projects. C. Community Public Infrastructure Partnership • $8,000,000 is placed in City Contingency. Future CiTy Budget resolutions are required to remove and expend funds from the City Confingency. Fina1 August 7, 2007 (2:10) • Page 3 of 3 D']-��-� � City of Saint Paul Minnesota Sales Tas Revenue Bonds Series2007 Preliminary Official Statement ��i 'oc g ^"_.y y� : s'� Draft: 8/02/07 PRELLI4IN 4RY OEFTCIAL STATEMEnT DATED AUGUST � 2007 New Issue Book-Euay Only Standard & Paor's Ratiag: "AAA" See "RATINGS" hereia. In u�' e opwon ofBnggs andMorgan, R'ofessiorial A.ssodation, Bord Co�nad. basrd an p�eoe(federal m�dM�esom Imvs. regulatiorzs, �Kgs a�d dericions, af the time of the'v issum�re a'd delivery by the ongind pwchase. +Neest orz rhe Seiet 2007A Bards is utluded fiom gross incomefo�pur�w.�¢ ofUnued Swu'v'come ms and is evlvdad, m tfiesane �m4from both gross inwme and+amble rzet irsromefo�purposes of SYare of MLmn'ota intome r¢c (a�v Sim� M'umeota franchise mxex mvasrved by inrnme a� 'vnposed on corpa�u arid fu�anaal +rzsdmPdK). Sve "Taz-E�nptian" haan and APPENDIXD Aa�ao. Litext on the Seies 2007B Bords u'vn�ded w oe indvdn6(e in gross v�mme for purpose ojFedval inmme f¢+anon md "u in(mded ta be indudable in tmable rzet irsrnme of "vldividvals, esratu, and busts fo> Purpasa ofSrereofM'weaom income tawiian SeeAPPENDZXD fieeta. $1��0�" CITY OF SALNT PAUL, i�'IINNESOTA SUBORDINATE SALES TAX REVENUE BONDS, SERIES 200�A � $15,000,000* CITY OF SAINT PAUL, A'IINNESOTA TAXABLE SUBORDINATE SALES TAX RE'VENUE SONDS, SERIES 2007B '�3c �Mc '°° ."-,? 'C C: �'r �eu ��r �,�s c�� N + "il3 � T �'� � TE� �E$ � Eaa =v� L�v �� =c � Dated: August 1, 2007 Due: Asshownbelow The Suboxdinate Sales Tax Revenue Bonds, Series 2007A (the "Series 2007A Bonds"), and the Tarzable Subordinate Sales Tax Revenue Bonds, Srsies 2007B (the "Seaes 2007B Bonds" and, [ogether with [he Series 2007A Bonds, the "Series 2007 Bonds"), ofFered hereby aze issued by the City of Saint Paul, Minaesofa (the "Cit}�'), to finance capita7 projects to further residential, cultural, commerc�al, and economic development in fhe City's downtown and iu neighborhoods and capital and operating eayeuses of cukural organizations in ihe City, pursuant to an Indenture of Tmst dated as of August 1, 2007 (the "Indenmre"), between ihe City and Wells Fazgo Bank, National Associahon, as Trustee. THE SERIES 2007 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY OF SAINT PAUL PAYABLE SOLELY FROM CERTAIN SALES TAX PROCEEDS, SUBJECT AND SUBORDINATE TO CERTAIN SENIOR OBLIGATIONS AS DESCRIBED HE12EIN, AND ARE NOT GENERAL OR MORAL OBLIGATIONS OF THE CITY OF SAINT PAUL, THE STATE OF MINNESOTA, OR ANY OTHER POLTTICAL SUBDIVISION. The Series 20Q7 Bonds will be issued as fully registered bonds registaed in the name of Cede & Co., as nominee of The Deposi[ory Tmst Company, to wl�ich payments of principal of and interest on [he Series 200'7 Bonds will be made. Individual purchases will be made in book-enhy foxm only, in denominatioas of $5,000 or any integral multiple tLereof of a single series and maturity. Ownas of the Series 2007 Bonds will not receive physical delivery of bond certificates except as an option upon the hansfer of an entire maturity, but each beneficial owna will receive a credit balaace on the books of its nominee. The Sesies 2007 Bonds mature and beaz interest as set forth on the inside front cover. Iaterest on the Series 2007 Bonds is payable semiannually un May 1 and Novembet L of each yeaz, commencing Novemba 1, 2007. The Series 2007 Bonds are subject to opflonal redemption and mandatory sinldng fund redempfion as descnbed herein. See `�HE SERIES 2007 BONDS — Redemption" in this Official Statement Scheduled payments of principai of and intaest on the Series 2007 Bonds when due will be guaranteed under an insurance policy to be issued by XL CapiTal Assurance Inc. �w� CAPVTAL ASSURANCE The Series 200'7 Bonds aze offaed, subject to prior sale, when, as and if accepted by the Undawriter named below and subject to an opinion as m validiTy by Briggs and Morgan, Professional Association, Saint Paul, Ahinnesota, Bond Counsel, and certain otha condiROns. Cestain tegal matte[s will 6e passed upon for The Underwriters by Faegre & Benson LLP, Minneapolis, Minnesota. It is expected tbat delivery of the Series 2007 Bonds will be made on or about August � 2007. Q�'7 y C/� C� D"l��a(v � �� {November 11 2007 2008 2009 2010 Manuiry fNovemberll 2007 2008 2009 2010 . Amo�mt Amount SERTES 2007A BONDS M4TURITYSCHEDULE Snterut Mannity te Yield (November Il Amo�mt 2011 2012 2013 2014 $ %TamBondsdueNovembal,_at $ % Term Bonds due November 1, _ at $ % Term Bonds due November 1, 2030 at _ SERTES 200'1B BONDS MA'CURITY SCHEDULE Interest Maauity Rate Yield (NovemheL �ount 2011 2012 2013 2014 $_ _%T eim Bonds due November 1, _ at $ _% Term Bonds due November 1, , at $ % Term Bonds due November l, 2030 at _ Interest Rate Interut Ra[e Yield Yield � No person has been authorized by the City or the Underwriters to give any information regarding the Series 2007 Bonds, the offering contaiaed herein and related matYers or to znake any representations . other than those contained in dus O�cial Stazement and, if given or made, such other infomiation or representations must not be relied upon as I�aving been authorized by any of the foregoing. � The Underwriters have provided the following sentence for inclusion in this Official Statement. T'he Underwrifers have reviewed tfie information in this Official Statement in accordance with, and as part o� its responsibilities to investors under the federal securities laws as applied to the Fads and circumstances of this transaction, but the Undenvriters do not guazantee the accuracy or completeness of such information. This Official Statement does not cons6tute an offer To sell or the soficitatioa of aa offer to buy in any State in which it is unlawful for any person to make such offer or solicitation. The information set forth herein has been provided by or on behalf of the Ciry. The Undeiwcitezs make no guazantee as to accucacy or wmpleteness of such informarion, and its inclusion herein is not to be construed as a represeutation by the Undeiw:itas. The information and expressions of opmion herein aze subject to change without notice and neither the delivery of this O�cial Statement at any time nor any sale made hereunder creates any implication that the infomiarion herein is correct as o£ any time subsequent to its date. O'IZIER THAN WITH RESPECT TO INFORMATION CONCERNING XI. CAPITAL ASSURANCE INC. (THE `BOND INSURER'� CONTAINED UNDER Tf� CAPTIONS "BOND INSURANCE POLICY" AND "$OND INSURER" AND IN "APpLfiTDJX E— SPECIMEN MUDIICIPAL BOND INSLIRANCE POLICY" HEREIN, NONE OF TF2E INFORMATION IN THLS OFFICIAL STATEMENT HAS BEEN SUPPLIED OR VERIFIED BY THE BOND INSUREIt AND THE BOND INSURER MAKES NO REPRESENTATION OR WAt2RANTY, EXPRESS OR IMPLIED, AS TO Tf� ACCURACY OR COMPLETE+NESS OF SUCH INFORMATION, OR Tf� VALIDITY OF THE SERIES 2007 BONDS. • Tf�SE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCEIANGE COMMISSION BY REASON OF THE PROVISIONS OF SECTION 3(a)(2) OF TF� SECURi'I'IES ACT OF 1933, AS AMENDED. Tf� REGISTRATION OR QUALIFICATTON OF THESE SECUI2ITIES LJNDER Tf� SECCiRI1'IES OR BLT3E SKY LAWS OF TE� STATES IN WHICH TfIEY HAVE BEEN REGISTERED OR QUALIFIEb, AND THE EXEMPTION FROM REGISTRATION OR QUALIFTCATION IN OTHER STATES SHALL NOT BE REGARDED AS A RECOMMENDATION 'THF,REOF. NEITHER THESE STATES NOR ANY OF THEII2 AGENCIES HAVE PASSED UPON Tf� MERITS OF TF�SE SECURIT7ES OR THE ACCURACY OR COMPLETENESS OF THIS- OFFICIAL STATEMENT. ANY REpRESENTATION TO THE CONTRARY MAY BE A CRIAqNAL OFFENSE. L � TABLE OF CONTENTS Il\`TRODUCTION .....................................................................................................................1 • General ..:...............................................................................................................................1 Use of Proceeds of the Series 2007 Bonds .............................................................................1 TheCitv .................................................................................................................................1 Prior Salu Tag FYnancine .....................................................................................................1 Sources of Pavment and Securiri for the Series 2097 $onds ...............................................3 TaxConsiderations ...............................................................................................................3 Other Informafion .................................................................................................................3 THE SERIES 2007 BONDS ......................................................................................................4 Redemntion...........................................................................................................................4 Investmenfs ............................................................................................................................7 Additionai ...................................................................................................................7 SOtiRCES OF PAXMENT A1V�D SECURITY FOR THE SERIES 2007 BONDS .................8 General ..................................................................................................................................8 Sales Proceeds ................................................................................................................8 Reserve .......................................................................................................................12 Restrictions on Certain Additional Sen'sor ObliEations .....................................................13 Tf� SEVIOR OBLTGATIONS .............................................................................................13 Series Bonds ................................................................................................................13 Series Bonds ................................................................................................................14 Additional Senior Oblieations ............................................................................................15 BO1V 'DHOLDERS' RISKS ......................................................................................................15 Reduction Ratines ...........................................................................................................15 Sales Proceeds ..............................................................................................................15 Nonmonetarv Defaults under Prior tndentures .................................................................16 � Passive Investment Income of S Caraorations ...................................................................20 Financial Institutions ..........................................................................................................20 Social Securitv and Railroad Retirement Benefits .............................................................20 Ezclasion :Vot Constitutionaltv Reauired ...........................................................................20 State Exemnrion ...........................................................................................................20 U�'DER�'VRI'CIr G ..................................................................................................................21 FrVANCIAI. ADVLSOR .........................................................................................................22 BOtV� ......................................................................................................................................22 CONTflVULNG DISCLOSL"RE ..............................................................................................24 LVIISCELLANEOUS ................................................................................................................25 ��-�� T.4X EXEMPTIOIC ................................................................................................................18 OTT3ER TAX CONSIDERATIONS FOR SERIES 2007 BONDS ........................................19 Federal Alternative blinimnm Tax .....................................................................................19 Pronerh aud Casualtv Insurance Comnanies ...................................................................19 F oreien Insurance Comoanies ............................................................................................19 Toc173814111 Disconiinuance Book-EnYrv Svstem .................................................................................2 CitvGovernance ..........................••••.........................................................................................1 APPENDIX A— CERTAIN DEFINITIONS AND SL7MMARIES OF BOND DOCUMENTS...........A-1 . APPENDIXB—BOOK-ENTRYSYSTEM ..........................................................................................B-1 ' APPEND7X C— GENERAL INFORMATION CONCERNING THE CITY ................-.....................C-1 APPENDIX D PROPOSED FORMS OF OPINIONS OF BOND COUNSEL ..................................D-1 APPENDIX E— SPECIMEN MIINICIPAL BOND INSL7RANCE POLICY ..................................... &I � C� Ftipu�� r•f:i•L�7ailii :� • • The following is a�+*�*��ry of certain infornialion contained in this O�cial Srateme¢t This �+.�++*��ry is not comprehensive or complete and is qualified 'm its entirety by reference to the complete Official Statement Undefined capitalized t�ms used below aze de5ned in "APPENDIX A— CERTAIN DEFINI110N5 AND SUMiYfARIES OF BASIC DOC[TME�`TS" or e7sewhece in this Official Shtement . TLe Series 2007 Bonds �10,000,000� Subordinate Sales Tax Revenue Bonds, Series 2007A, and 315,000,000' Tacable Subordinate Sales Tax Reveaue Bonds, Series 2007B, to be issued by ihe City of Saint Paul, Minnesota (the "City'�, in global book enhy form in denominations of the entire amount of a single manuity of a single series. Individual purchases may be made in �5,000 amounts or whole mulriples thereof of a single series and maiurity. See "TfiE SERIES 2067 BONDS" hezein. Use of Proceeds The proceeds of the Series 2007 Bonds will be used to finance capital projects to fiuther residential, cultural, commercial, and econoanc development in the City's downtown and its neighborhoods and capital and operating expenses of cultural organizations in the City, and to the following: (i) to pay the initial premium for the Bond Insurance Policy issued by the Bond Insurer to secure paymern of the principal of and interest on the Senes 2007 Bonds; (ii) to fund a reserve for the Series 2007 Bonds; and (iii) to pay the costs of issuing the Series 2007 Bonds. 5ee "SOURCES AND USES OF Fi7NDS" herein. Payment Interest will accrue on the Series 2007 Bonds at the rates set forth inside the cover page hereof and is payable on May 1 and November 1 of each yeaz (commencing November 1, 2007) pursuant to procedutes of The Depository Trust Company so long as the Series 2007 Bonds ue in book- entry form See "APPENDIX B— BOOK-ENTRY SYSTEM". Redemptionor Prepayment As more fully described herein, Series 2007 Bonds aze subject to redemption or prepayment prior to matutity as follows: Pceliminary, sub}ect tq change. (a) Opiional redemption. The Series 2007 Bonds tnaturing on or after November 1, _ aze subject to oprional redemption on or aftex May 1, � at the election of the City, in whole o2 in part, on any date for which rimely notice of redemption may be given, at redemption prices as follows: (b) Mandatory sinking fund redemption. The Series 2007 Bonds having stated maturities in the yeazs _, _ and 2030 aze subject to mandatory redemption at due to sinldng fund redemptions. (c) Acceleration. The Series 2007 Bonds aze subject to acceleration under certain circumstances descnbed herein. See "I'HE SERIES 2007 BONDS—Redemption" and "APPENDTX A— ��—��c� r�� u CERTAIlV DEFINITIONS AND SUNIMARIES OF BOND DOCUMENTS" herein. Additional Bonds The Indenture authorizes the issuance of Additional Bonds on a parity • with the Series 2007 Bonds (and subordinate to the Senior Obligations) under certain condirions, any such Additional Bonds and outstanding Series 2007 Bonds being referred to herein as the "Bonds". See "IT� SERIES 2007 BONDS – AdditionaI Bonds" herein Security for the Bonds As secuxity for the payment of the principal of premium, if any, and interest on fhe Bonds, the City fias pledged the foIIowing. (i) subject and subordinate to its pledge to the Senior Obligations described herein, all proceeds received by the City from a Ciry sates tae of one-half of one percent on sales transactions in the City thaz aze taacable under Minnesota sales tas law (the "Sales Tax Proceeds'� and (ii) all amounts on hand at any time in the Punds � and Accounts es[ablished under the Indenture (except the subaccounts established in Accounts of the Sales Tax Trust Funcn. In the event the revenues pledged to payment of the principal of and interest on the Sedes 2007 Bonds aze not sufficient to pay the scheduled principai of or interest on the Series 2007 Bonds when due on any Interest Payment Date, the owners of the Series 2007 Bonds will be eatifled to payment of such principat or interest from XI, Capitai Assurance Ina (the `Bond lnsurer") imder the tem�s of the Municipal Bond Insurance Policy (the `Bond Insutance Polic}�') issued by the Bond Insurer to guarantee scheduled payment of the principal of and interest on the Senes 2007 Bonds when due. See "SOiJRCES OF PAYMENT AND SECL7RITY FOR Tf� BONDS," `BOND INSURANCE pOLICY," "THE BOND INSURER," `BONDHOLDERS' RLSKS," and "APPENDIX E— SPECIMEN MUNICIPAL BOND INSURANCE POLICY" fierein. Senior Obligarions The pledge of Sales Tax Proceeds to the payment of the Bonds is subject � and subordinate to (i) the lien of the 1996 Indenture and the Series 1996 Bonds described herein and any additional pazity obligations thereunder and any bond insarer or credit provider with respeet thereto, (ii) the lien of the 1999 Tndenture and the Series 1999 Bonds described herein and any addilional parity obligztions thereunder and any bond insm or credit provider with respect thereto, and (iii) any bonds issued under the 1996 Indenture or 1999 Indenture or insisance, credit faciliry or swap which refunds or replaces such bonds, bond insurance or credit facility, all as further described undec "THE SETIIOR OBLIGA7'IONS" herein. Additional Senior The HIL9 and Ciry may issue additional bonds under the 1996 Indenture Obligations and 1999 Indenture on a pazity with the Series 1996 Bonds and Series I999 Bonds provided ttiat annual Saies TaY Pioceeds aze at Ieast (a) 150°/a of maximum principal and interest on the additional bonds, �d other outstanding Senior Obligations, and (b) 125% of maximum principal and interest on the additional 6onds, outstanding Seaior Obligations and outstanding Bonds. See "Tf� SEIVIOR OBLIGATIONS--Addirional Senior Obligations" herein. � ContinuingDisclosure Under the terms of a Continuing Disclosure Agreement, the City will covenant for the benefit of the ovraers of the Series 2007 Bonds to provide • certain financial and opecaiing data and norices of certain occuirences to informarion repositories as specified in and required by SEC Rule 15c2- 12. See "CONTINUING DISCLOSURE" herein. Trustee and Paying Agenf Wells Fazgo Bank, National fvssociation Rating The Series 2007 Bonds aze rated "AAA". This rating assumes the issuance and delivery of the Bond Insurance Policy by the Bond Insurer. The Series 2007 Bonds have also received a rating from Standard & � Pooz's Ratings Setvices that is independent of the issuance and delivery of the Bond Insurance Policy. The underlyina rating from Standazd & Poor's Ratings Services is "_" See "RATINGS" herein. Counsel The Series 2007 Bonds aze offered, subject to an opinion as to validity by Briggs and Morgan, Professional Associarion, Saint Paul, Minnesota, Bond Counsel. Certain legal matters will be passed upon for the Undeiwriters by Faegre & Benson LLP, Minneapolis, Minnesota. Certain legal matters will be passed upon for the City, by the O�ce of the City Attomey and by Bond Counsel. Investme¢t Risks An investment in the Series 2007 Bonds involves risks, including, but not limited to, those discussed under `BONDHOLDERS' ffiSKS" herein. �� iii �� i OFFiCIAL STATEMENT relatingtothe $10,000,000* CITY OF SAINT PAUL, MIlVNESOTA SUBORDINATE SALES TAX REVENUE BONDS, SERIES 2007A $15,000,000" CTTY OF SAlNT PAUL, NIINNESOTA TAXABLE SUBORDINATE SALES TAX REVENUE BONDS, s�s zao� INTRODUCTION Generat This Official Statement, including the cover page of and the appendices to tbis Official Statement, provides infoanation with respect to the above-refereaced obligations (the "Series 2007 Bonds") of the City of Saint Pavl, Mianesota (the "Cit}��. This In�oducrion is a guide to certain infoimation contained in this Official Statement and appendices to this Official Statement and the documents described, set forth, or summarized herein. The Series 2007 Bonds aze offered to potential investors by means of Hus entae Official Statement, including the cwer page and tfie appendices to this Official Statement. Purck�asers of the Series 2007 Bonds should review the entire Official Statement prior to purchasing any of the Series 2007 Bonds and aze encouraged to consult with their utveshnent advisors with respect to the puichase, ownership, and transfer of Series 2007 Bonds. Use of Proceeds of the Series 2007 Bonds r� LJ The Series 2007 Bonds aze beiag issued by the City to Snance capital pmjects ro further residential, cultural, commercial, and economic development in the City's downtown and its � neighborhoods and capital and operating expenses of cuitural organizations in the City. See "SOURCES AND USES OF FUNDS" herein. The CiTy The City is the capital of the State of Minnesota It is the second Iazgest city ia the State (measured by population esfimated to be 287,385) and is located wholly in Ramsey County. Additional informatian regazding the City is set forth in "APpENDIX C— GENERAL IlVFORMATION CONCERNING THE CITY". Prior Sales Tax �Ynancing . In 1993, pissuant to authorizarion by the Minnesota Legislature, ffie City imposed by resoIution of its Ctity Council a sales tar of one-half of one perceat on ta.eable sales transactions that occis in the PreliminaTy, subjectto change. i o�-7�c� City (the "Sales Tax'�. Since 2000 the Sales TaY has also included a use tas. To Snance improvements to the C1ty's RiveiCenh�e Complex, then Imovm as the Civic Center, the Housing and Redevelopment • Authority of the City of Saiat Pau], Minnesota (the "HRA'�, issued its Sales Tac Revenue Bonds (Civic Center Project), Series 1993, payable from Sales Ta�c Proceeds. In 1996, the HRA issued its Sales Tas Revenue Refunding Bonds (Civic Center Project), Series 1996 (the "Series 1996 Bonds"), in the original aggregaie principal amount of $55,865,000 (and in the outstanding principal amount of $43,585,000) to refund the Series 1993 Bonds. The revenues derived from the Sales TaY aze pledged to payment of the Series 1996 Bonds under the 1996 Indenture. See "I'f� SEDIIOR OBLIGATIONS — Series 1996 Bonds" herein. In 1999 the City issued its Taxable Sales Tac Revenue Bonds (RiverCentre Arena Project), Series 1999A (the "Series 1999 Bonds"), in the original aggregate principal amount of �72,570,000 (and in the outstanding principal amount of $66,280,000) to pay pazt of the costs of constructing a sports and entertainment azena which has been leased to Minnesota Hockey Ventures Group LP, a Minnesota limited parinership which owns the Mianesota Wild National Hockey League franchise (the "TenanY'), undei a long-teim lease (the "Arena Lease"). The debt service on the Series 1999 Bonds is payable from several revenue sources wlrich aze specifically pledged to their payment: (i) the Sales Tas Proceeds, subject to a parity pledge of such Sales Ta�c Pxoceeds to the payment of debt service on the Series 1996 Bonds issued by the HRA, and sub}ect to certain lunitahons set forth in the 1999 Indenture and the 1999 Intercreditor Agreement and the 7oint Pledge Agreement refened to below; (ii) certain payments under the Arena Lease (the "Arena Net Revenues"); (iii) certain tac increment revenues received by the HRA in the yeazs 2016 and thereafter ("Pledged Tax Increments'�; (iv) certain investment eamings on all Funds and Accounts established undei the 1999 Indentuze; and (v) certain othez ievenues from rime to rime received by the Tcustee and held in the Funds and Accounts. The Series 1999 Bonds aze also secured by the funds in the reserve fund established by the 1999 Indenture and in the Supplemental Reserve Fund established by the 1999 Indenture (the "Supplemental Reseroe Fund") and by certain other revenues. See "THE SENIOR OBLIGATIONS — Series 1999 Bonds" herein. • The pledge of Sales Tax Proceeds, the Arena Net Revenues and other revenues to the payment of the principal of, premium, if any, and interest on the Series 1999 Bonds was made under the terms of the Joint Pledge Agreement ([he "Pledge AgeemenY� among the City, the HRA, the Civic Center Authority, an agency of the City (the "Civic Center Authoriry'�, whose successor is the RiverCentre Convenrion & Visitors Authority, and the 1999 Trustee and the 1999 Indenture. The ailocation of Sales Tax Proceeds to the payment of the debt service on the Series 1999 Bonds and the Series 1996 Bonds is govemed by the terms of an intercreditor agreement (the "1999 Intercreditor AgreemenY� among the City, the FII2A, the 1999 Trustee and the 1996 Tmstee. The Ciry has the ability to issue additional obligarions under the 1996 Indenture and 1999 Indenture and certain related obligations on a parity with the Series 1996 Bonds and Series 1999 Bonds. See "THE SENIOR OBLIGATIONS — Additional Senior Obligarions" herein. As used in this Official Statement the term "Senior Obligarions" refers to all obligations to which the Sales Tax Proceeds have been or may be pledged on a basis prior to the Bonds, including the Series 1996 Bonds, the Series 1999 Bonds, and any addirional obligations issued undez the 1996 Indenture or 1999 Indenture. � L_J Sources of Payment and Secnrity for the Series 2007 Bonds The Series 2007 Bonds azz not generai obligazions of the City and aze not secured by the fvll faith � and credit of the City. The Series 2007 Bonds aze being issued under an Indenture of Trust (the "Tndenture'� between the City and Wells Fago Bank, National Association, as trustee (ihe "Trustee"). The Series 2007 Bottds aze special, limited obligations of the City payable solely from the revenues expressly pledged to payment o£ the Series 2007 Bonds that aze deposited in the fimds and accounts created and maintamed by the Trusfee pursuanf fo fhe feims of tfie Indeniuie. The principal of, premium, if any, and interest on the Series 2007 Bonds and any Additional Bonds issued under the Indenture (together, the "Bonds'� aze seciued by the following revenues, which aze specificaIly pledged to payment of the debt seraice obtigations on the Bonds: (i) snbject and subordinate to the pledge to the payment of the Senior Obligations, all proceeds received by the City from the Sales Ta�c imposed on taxable sales �ansactions in the City (the "Sales Tas Proceeds'�; and (ii) all ammmts held by the Trustee in the Fimds and Accounts established under the Indenture (except the subaccounts established in Accounts of the Sales Tax Trust Fupd), including the Reserve Fund, or otherwise pledged under the Indenture. In the event the revenues pledged to payment of the principal of and interest on the Series 2007 Bonds aze not sufficieut to pay the scheduled principal of or interest on the Series 2007 Bonds when due on any Interest Payment Date, the owaers of the Series 2007 Bonds will be entitled to seek payment of such principal or interest from XI. Capital Assurance Inc. (the `Bond Insurer") under the teims of the Mmmicipal Bond Insurance Policy (the "Bond Ins��rance Polic}�� issued by the Bond Tnsurer to guarantee scheduled payment of the principal of and interest on the Series 2007 Bonds when due. Additional infozmation about the security for the Series 2007 Bonds is set forth herein under the captions "SOURCES OF PAYMENT AND SECURITY FOR Tf� SERIES 2007 BONDS,° "THE BOND INSURER," "BONDHOLDERS' RISKS," and "APPENDIX E�— SPECIl�N MUNICIPAL BOND INSURANCE POLICY". Historical infoimation and certain projecrions regazding the Sales Tax Proceeds and the relarioaship of such Sales Taz Proceeds to the debt service obligations on the Series 2007 Bonds and the Senior Obligations aze set forth herein under the captions "SOURCES OF PAYMENT AND SECLiRITY FOR TT3E SERIES 2007 BONDS — Sales Tax Proceeds" and `BONDHOLDERS' RISKS — Sales Tax � Proceeds". Tax Considerations In the opinion of Briggs and Morgan, professional Association, Bond Counsel, based on present federal and Minnesota laws, reguiations, rulings and decisions, at the time of their issuance and delivery by the original purchaser, interest on the Series 2007A Bonds is excluded from gross income for pucposes of United States income tax and is excluded, to the same extent, from 6oth gross income and taxable net income for pucposes of State of Minnesota income ta�c (other than Minnesota franchise tases measured by income and imposed on corporations and financial institurions). See "TAX EXEMPTiON," "OTHER TAX CONSII3ERATTONS" and APPENDIX D. Interest on the Series 2007B Bonds is includable in gross ittcome for purposes of Fedeial income taYation and is includable in taacable net income o£ individuals, estates, and trusts for pmposes of State of Minnesota income ta�carion. Other 7nformation This Official Statement speaks as of its date. The infoimation contained herein is subject to change without norice and no implicarion is intended from the offer or sale of the Series 2007 Bonds that [here haz been no change in such information. Tlvs Official Statemea[ does nof coastitufe an offer to sell or the solicitarion of an offer to buy, nor shall there be any sale of the Series 2007 Bonds by any person in i ��-��-� any jurisdiction in wluch it is unlawfui for such peison to mzke such an offer, solicita[ion or sale. The infocmarion set forth herein I�as been obtained from sources which aze believed to be reliable, but it is not � guaranteed as to accuracy or completeness and is not to be cons�ued as a representation by the Underwrite�. Neither delivery of this Official Statement nor any sale made hereunder shall, under any cucumstances, create any implicatioa that there has been no chatige in the affairs of any parly descnbed herein subsequent to the date as of wluch such information is presented. THE SERIES 2007 BOi�IDS Generat The Series 2007 Bonds will be issued and delivered in fully-registered global book en�y form in denominarions of the entire amount of a series maturing oa a given daYe. Individual pwchases of the Series 2007 Bonds may be made in $5,000 denominarions and in any integral multiple of $5,000. 'I'he Series 2007 Bonds will be inirially dated as of and will mature on the dates and in the respecrive amounts shown on the cover page of this Official Statement, subject to eazlier redemprion or acceleration. The Series 2007 Bonds will beaz interest at the rates for each of the respective maturity dates as shown inside the cover page of this Official Statement. Interest on the Series 2007 Bonds is payable on May 1 and November 1 of each yeaz unril maturity, commencing November 1, 2007. If any Interest Payment Date is not a Business Day, interest will be payable on the next Business Day. Interest on the Series 2007 Bonds will be calculated on the basis of a year of 360 days and rivelve months of thirty days each. Book-Entry System The Series 2007 Bonds will be issued as fully registered bonds registered in the name of the Cede & Co., as nominee of The Depository Trust Company, to which payments of principal of and interest on the Series 2007 Bonds will be made. Individual pu2chases will be made in book-en�y form only, in denominations of $5,000 or any integral multiple thereof of a single series and maturity. Owners of the Senes 2007 Bonds will not receive physical delivery of bond certificates, except as an option upon the transfer of the entire maturity of a series, but each beneficial owner will receive a credit balance on [he books of its nominee. • Payment of the princlpal of and interest on such Series 2007 Bonds will be made directly to DTC. Disbursal of such payments to the DTC Participants is the responsibility of DTC; disbuxsal of such payment to the beneficial owners is the responsibiliry of the DTC Participants. See "APPENDIX B— BOOK-ENTRY SYSTEM". Redemption The Series 2007 Bonds are subject to redemphon and payment prior to maturity only under the conditions and subject to the terms as summazized below. Optional Redemption. The Series 20o7A Bonds maturing on or aftec November 1, � aze subject to redemption, at the option of the City, in whole or in part, by the City on May 1, � and on any date thereafter for which timely notice of zedemprion can be given, at the following Redemption Prices: . The Series 2007B Bonds mahu on or after November 1, � aze subject to redemption, at the option of the City, in whole or in part, by the City on November 1, � and on any date thereafter for which timely notice of redempfion can be given, at the following Redemprion Prices: • Mandatory Sinking Fund Redemprio�Series 2007A Bonds. The Series 2007A Bonds ruatuting on November 1, are subject to mandatory sinldng fund redemption at a Redemption Price equal to the principat amount of the Series 2007A Bonds to be redeemed, plus interest acccued to the redemption daze, without premium or penalty; on November 1 in the years ("Sintdng Fund Payment Dates'� and principal aznounts ("Principal Installments'� staTed below: Year PrincipalAmount Year PrincipalAmount *Scheduled maturity date. The Series 2007A Bonds mariuing on November 1, _� aze subject to mandazory sinldng fund redemptioa at a Redemption Price equal fo the principat amount of the Series 2007A Bonds to be redeemed, plus interest accrued to the redemption daTe, without premium or penalty, on November 1 in the yeazs ("Sinldng Fund Payment Dates") and principat amounts ("Principal Installments") staTed below: Year *Scheduled maturity date. PrincipalAmount Year PrincipalAmouttt The Series 2007A Bonds maturing on November 1, 2030, are subject to maadafory sinldng fuad redemption at a Redemption Price equal to the principat amount of the Series 2007A Bonds to be redeemed, plus intaest accrued to the redemption date, without prenuum or penalty, on November 1 in the years ("Sinldng Fund Payment Dates") and principal amounts ("Principal Installments") stated below: Year *Scheduled maturity date. Principal Amount Yeaz Principal Amonnt To the extent that the Series 2007A Bonds maturing on November 1, _� November 1, _, and on November 1, 2030 (the "Series 2007A Term Bonds") aze called for optional redempROn, the principal installments for the Series 2007A Teim Bonds so redeemed will be reduced, at the option of the CiEy, in such amounts and for such Sialdng Fund Payment Dates as aze selected by the City. SubjecE to malang satisfactory azrangements wiTh DTC or other Depository with respect to Global Certificates, the amount of Series 2007A Teim Bonds to be redeemed on any Sinldng Fund Payment Date will be reduced by the principal amount of Series 2007A Term Bonds which (i) aze purchased by the Tmstee at least one Business Day prior to the date on wlvch the Series 200'7A Bonds aze to be selected for redemprioa an8 (n) are not alieady credited against Pnncipal Installmenis of Series 2007A Tean Bonds otherwise payable on a prior Sinldng Fund Payment Date. Mandatory Sinking Fund Redemption—Series 20078 Bondr. The Series 2007B Bonds mafi,ri� on November I, aze subject to mandatory sinking fimd redempfion at a Redemption Price equal to the principal amount of the Series 2007B Bonds to be redeemed, plus inferest accrued to the rede�rion date, without premium or penalty, on November 1 in the yeazs ("Sinking Fund Payment Dates'� and principal amoimts ("Principal Installments'� stated below: � • . Year PrincipalAmount Xear PrincipalAmount ��/�� . *Scheduled maturity date. The Series 2007B Bonds matiuing on November 1, _� aze subject to mandatory sinldng fimd redemption at a Redemption Price equal to the principal amount of the Series 2007B Bonds to be redeemed, plus interest accrued to the redemption date, without premium or penalty, on November 1 in the yeazs ("Sinlang Fund Payment Dates") and principal amounts ("Principal Installments") stafed below: Year Principal Amount "Scheduled maturity date. Year Principal Amonnt The Series 2007B Bonds matiuing on November 1, 2030, aze subject to mandatory sinking fund redemption at a Redemprion Price equal to the principal amount of the Series 2007B Bonds to be redeemed, plus interest accrued to the redemp[ion date, without premium or penalty, on November 1 m the years ("Sinldng Fund Payment Dates") and principal amounts ("Principal Installments") stated below: Year i *Scheduled maturiry date. Principal Amount Year Principal AmounC To the extent that the Series 2007B Bonds maturing on November 1, ____, November 1, � and on November 1, 2030 (the "Series 2007B Tean Bonds") aze called for optional or calaznity redemption, the principal installments for the Series 2007B Tenn Bonds so redeemed wiil be reduced, at the opfion of the Citg in such amounts and for such Sinking Fund Payment Dates as aze selected by the City. Subject to making satisfactory arrangements with DTC or other Depository with respect to Global Certificates, the amount of Series 2007B Term Bonds to be redeemed on any Sinking Fund Payment Date will be reduced by the principal amount of Series 2007B Term Bonds which (i) aze purchased by the Trustee at least one Business Day prior to the date on which the Series 2007B Bonds aze to be selected for redemptlon and (ii) aze not already credited agaznst Principal Installments of 5eries 2007B Term Bonds othenuise payable on a prior Sinking Fund Payment Date. Panial Redemption. If less than all Series 2007A Bonds or Series 2007B Bonds aze to be called for optiona! redemption, the City will select The series and maturiries of the Series 2007A Bonds or Series 2007B Bonds to be redeemed and the principal amount to be redeemed from each maturity. Notice of Redemption. Notice of redemption will be given to each registered owner of Series 2007 Bonds to be redeemed and to the Bond Insurer by first-class mail, postage prepaid, by the Tnvstee not less than thirty days nor more than forty-five days prior to the Redemption Date. Neither failure to give notice by mail to any Holder, nor any defect in any notice so mailed, vnll affect the validity of the proceedings for redemption of the Bonds held by any Holder to which proper notice by mail has been given. All norices of redemption must state: (i) the Redemption Date; (ri) the Redemption Price; (iii) the principal amount of Senes 2007 Bonds to be redeemed, the identificarion (and, in the case of partial redemprion, the respec6ve principal amounts) of the Series 2007 Bonds to be redeemed, specifying the CUSIP numbers of the Series 2007 Bonds to be redeemed and their registrarion numbers and Stated Maturities; (iv) that on the Redemption Date, the Redemption Piice will become due and payable upon each such Series 2007 Bond, and that interest thereon shall cease to accrue from and after such date, provided that if redemprion is condi6oned on funds being deposited in the Bond Fund in an amount . sufficient to effect such redemption, this condirion shall be stated in The notice and if sufficient funds aze not so deposited in the Bond Fund, the Series 2007 Bonds to be redeemed will not be due and payable on the Redemption Date and interest will continue to accrue thereon; and (v) the place or places where such • Series 2007 Bonds aze to be surrendered for payment of the Redemption Price. Provided sufficient money is on deposit with the Tmstee to pay the principal amounf of tfie Series 2007 Bonds catIed for redemption on the redempfion date, the Series 2007 Bonds or the principal portions called for redemprion will not bear interest after the redemption date and will not be considered to be outstanding imder the Indenture or to have any other rights under the Indenture other than the right to receive payment. Lnvestments The money in the Funds and Accounts aeated and maintained under the Indenture will be invested and reinvested by the Tmstee in peimitted Ittveshnents at the direction of the D'uector, Office of Financial Services, at the City, or his or her designee, or The Ciry Treasurer, as the authorized representarive of the City. The type, amount, and maturity of such investments will be in the discretion of the City, but must be consistent with the putpose and operation of the Fimd or Account from which the investment is made. The Indenture imposes cerrain restricrions ott the temz of the invesRnents for any money that may be deposited in the Reserve Fimd. The Trustee will sell and reduce to cash fimds a sufficient porfion of investments whenever the cash balance is iasufficient for its curreat requirements. Except as otherwise expressly providad othenvise in the Indenture, eamings on inveshnents wi11 be credited to, and losses will be charged to, the particulaz fund or account from which such invesiment was made. Inves�ents for the credit of the Bond Fund and Sales Tax Trust Fund will be valued on a quarterly basis by the Trustee in accordance with the valuation criteria provided in the Indenhue. Investrnents held for the credit of the Reserve Fu� will be valued no later than 8fteen days prior to each Interest Payment Date in accordance wiTh the valuarion criteria provided in the Indenture. The Tmstee may purchase or sell to itself or any related company, as principal or agent, securities authorized in the Indenture. Additional Bonds The Ciry may, from time to time, for any purpose and to the extent petmitted by law, upon the conditions stated in the Indenture, issue Addirional Bonds secured by the Indent�e and on a parity of liea • with all Outstanding Bonds (but subject and subordinate to the Senior Obligations). Every series of Additionai Bonds must be authocized by a supplement to the Indenmre establishing the tem�s thereof and providing for additional Revenues sufficient to pay the interest when due and to pay and redeem all such Additional Bonds at or before their Scheduled Debt Seivice Dates as provided in such supplemental indent�ue, provided that each Scheduled Debt Service Date for the Addirioaal Bonds must, prior to the final Stated Maturity of all Outstanding Bonds, be May 1 and November f for the payment of interest and November I for the payment of principal; provided further that the final Stated Mazurity of any Additional Bonds must not be later than November I, 2030. Each series of Additional Bonds is required to be equally and rntably payable with the Series 2007 Bonds (and any Outstanding series of Additional Bonds) from the Revenues pledged and appropriated under the Indenture. In addition, the following conditions must be met prior to oz simu]taneously with the issuaace of aay Additioaat Boads: (i) no Event of Default can be then existing or uncured under the Indenture; (ii) the Reserve Fund, after giving effect to the Additional Bonds, is fiilly funded at the ReseTVe Requirement; and (iii) the ratio oF Sales Tax Proceeds received by the City in a consecutive• twelve�month period ending not moie than fhree months prior to the issuance of the Additional Bonds to the mazimum prmcipai and interest scheduled to become due in any Bond Year on ihe Addirional Bonds, ail Outshanding Bonds and the outstanding Senior Obligarions is az least 1.25:1. • b� �? 2� For plu�poses of establishing the scheduled interest for pinposes of tlus test, the interest rate on any outstanding Bonds, Additional Bonds to be issued oz outstanding Senior Obligarions which aze . variable rate bonds is deemed to be the average rate applicable to such bonds over the previous 12 months or, if such bonds aze to be issued or have been outstanding fewei than 12 months, the interest rate is deemed to be the least of (a) the current rate, (b) the twelve-month SIFMA Index (formerly lmown as the Bond Mazket Association rate), or (c) the twelve-month Revenue Bond Index rate. SOZ3RCES OF YAYMEiV'T A1��D SECiTRPPY FOR THE SERIES 2067 BONDS General TFIE SERIES 2007 BOI�'DS ARE NOT GENERAL OBLIGATIONS OF Tf� CITY OF SAINT PAUL AND ARE NOT SECURED BY THE FULL FAITH AND CREDIT OF THE CITY OF SAINT PAUL. 'I'ETE SERIES 2007 BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE CITY OF SAINT PAUL PAYABLE SOLELY FROM THE REVENUES EXPRESSLY PLEDGED TO PAYMENT OF THE SERIES 2007 BONDS AND THAT ARE DEPOSITED IN 1T� FUNDS AND ACCOUNTS CREATED AND MAINTAINED BY THE TRUSTEE PURSUANI' TO Tf� TERMS OF THE INDENTURE. The principal of, premium, if any, and interest on the Bonds aze secured by the following revenues, whicb aze specifically pledged to payment of the debt service obligarions on the Bonds: (i) all proceeds received by the City from the Sales Tae imposed on taYable sales transacrions in the City, subject to the prior pledge of such Sales Tas Proceeds to the payment of Senior Obligations and subject to certain lunitations set forth in the Indenture, (ii) all aznounts on hand at any time in all Funds and Accommts established under the Indenriue (except the subaccounts established in Accounts of the Sales Tax Tmst Fund), including inveshnent eamings and the proceeds thereof, and (iii) all other property of evexy ldnd which is now or hereafter subjected to the lien of the Indenture or pledged or assigned to the Trustee pursuant to the Indenture including without lnvitarion all cash and securities now or hereafter held in the Funds and Accounts (except the subaccounts established in Accounts of the Sales Tae Tmst Fund). The Series 2007 Bonds aze also secured by the funds in the Reserve Fund described below. In the event the revenues pledged to payment of the principal of and interest on the Series 2007 Bonds aze not • sufficient to pay the scheduled principal of or interest on the Series 2007 Bonds when due on any Interest Payment Date, the owners of the Series 2007 Bonds will be enfifled to seek payment of such principal or interest from XL Capital Assurance Inc. (the "Bond Insurer") under the teims of the Municipal Bond Insurance Policy (the "Bond Insurance Policy") issued by the Bond Insurer to guazantee scheduled payment of the principal of and interest on the Series 2007 Bonds when due. See "THE BOND INSURER" and "APPENDIX D— SPECIMEN MiJNICII'AL BOND INSURANCE POLICY". Sales Tax Proceeds Under a special law enacted in 1993 (the "Original Special Act"), the Mianesota Legislature authorized the City to impose by resolution of its City Council an additional sales taY of up to one-half of one percent on taxable sales transacrions that occur within the City. The City Council adopted a resolufion approving the Original Special Act and declaring its intent to exercise the authority granted under the Original Special Act and also adopted resolutions unposing ihe Sales Tax. Under authozity granted under the Original Special Act and other applicable law, the F3ILA issued the Series 1996 Bonds to refund its Sales Tax Revenue Bonds (Civic Center Project), Series 1993, which were issued to finance improvements to the RiverCentre Complex (then lmown as the Civic Cenier). In 1998, the Minnesota Legislature adopted another special law (the "1998 Special I.aw") which amended the Original Special Act to authorize the City to issue special revenue bonds of the City secured � by the Sales Tax to 5nance ihe demolirion of the existing arena constituting a part of the RiveiCenh�e Complex and the construction and equipping of the Arena The matimum principal amount of the bonds • authorized to be issued under the 1998 Special Law is, together with the outstanding principal amount of the Series 1996 Bonds, the sum of $13Q000,000. The City Council adopted a resolution approving the 1998 Special Law and issued the Sedes 1999 Bonds. Under the teims of tLe 1998 I.aw, the authority to impose a sales tax expires on December 31, 2030. As a result of general StaTe legislation, effective for collections in 2000 and subsequent years, the Sales Ta�c and other local sales ta�ces were expanded to include a use tax. In 2005, the Minnesota Legislature adopted another special law (the "2005 Special Iav�� wluch amended the priginal Speciai Act, as amended, to authorize the City to issue special revenue bonds of the City secured by the Sales Ta7c for uses other than the RiverCentre Complex or the Arena. The Sales TaY is imposed on taYable sates in the City in addirion to the general sales tas imposed by the State of Minnesota (the "State'�. The State sales tax is cisrendy imposed at the rate of 6.5 percent on atI saies 4ansactions taxable pursuant to Minnesota Statutes, Chapta 297A, as amended ("Chapter 297A"). The Sales TaY is imposed on sales subject to the State sales tax under Chapter 297A. The Minnesota Departinent of Revenue (the `Revenue DepartmenP') adunuisters and collects the Sales Tax reveaues. Under the Origin.at Special Act, the Sales Tax is subject to the same penatties, interest, and enforcemen[ provisions imposed under Chapter 297A and related laws applicable to the State sales tax The revenues derived from fhe imposition of the Sales TaY aze collected by the Revenue Depaztment under fhe terms of an"Agceement beriveea the Department of Revenue, State of Minnesota, and the City of St. Paul, Minnesota for the Collection of a St. Paul City Sales Tac," dated as of September 1, 1993. The Revenue Department collects a fee from the Sales Tas revenues for its administration and collection oftheSalesTac. � . The State sales tax was originally enacted in 196'7 (at a rate of 3,0 percent) and is imposed on the sales price of tangible personat properiy and taeable services sold or used in Minnesota. The curtent general rate is 6.5 percent, although there are special iates applicable to certain specific types of properiy (e.g., 9.0 percent on liquor and beer, both on-sale and off-sale, 2.5 percent for fazm machinery and logging equipment, and 2.0 percent for replaceraeat capitat equipment). The Sates Tax mmposed by the • Ciry is imposed on the same sales of tangible personal property and ta�cable services thaz aze subject to the State sales tax. Since 2000 the Sales Tax also includes a use tax. The major exemptions from imposition of the State sates tax and, therefore, upon i�ositioa of the Sales Tax aze The following: (i) sales for resale in the regular course of business; (ii) food for consumpfion off premises; (iii) clothing, (iv) prescnbed drugs and medications and tton-prescribed aaalgesics ;(v) gaso]ine and other fuels taced imder the motor fuels excise taY and motor vehicles subject to the motor vehicle sales tax; (vi) publicarions issued at intervals of three months or less (except overthe-counter magazine sales) and textbooks; (vii) materials used or consumed in agricultural or industrial production; (viii) residential heating fuels and water services; and (ix) certain capital equipment. As indicazed above, the exemptions from imposifion of the State sales tas aze also applicable to the Sales Tax imposed by the City. � � Historical collecrions of the Sales Tax for each of the calendaz years 1999 to 2006 were �� "' asfollows: . Year Amount 1999 $11,151,817 2000 (1) 13,007,632 2001 13,432,179 2002 13,344,192 2003 2004 2005 2006 Sales Tax Proceeds 1999 to 2006 Percentage Chanee Year +14.27% +3.16 -.66 Amonnt $13,312,004 13,762,357 14,271,686 14,'726,439 Percentage Chan2e -24 +338 +3.70 +3.19 (1) 2000 and subsequent yeazs include collections of a use taY. Use tax collecrions in 2000 were $1,fi58,438. In the absence of use taY collecrions the percentage increase in 2000 collections from 1999 would have been 1.77%. (2) Overall, receipts of Sales Tax Proceeds increased at an average annual rate of 1.89% for the five yeazs ended in 2006. Sales Taz Proceeds for each of the 3-month periods ended Mazch 31 in the years 2003 to 2007 were as follows: year Amount 2003 $3,211,538 2004 3,549,590 2005 3,704,771 2006 3,620,880 2007 3,840,463 follows: CJ Percenta e Chan e +10.52 +4.37 -2.26 +6.06 For the State of Minnesota as a whole, sales tax collections for fiscal years 1999 to 2006 were as Year 1999 2000 2001 2002 2003 2004 2005 2006 State of Minnesota Sales Tas Collections Amount $3,15QOOQ000 4,006,000,000 3,993,000,000 4,027,000,000 4,116,000,000 4,330,000,000 4,270,000,000 4,440,000,000 10 Percenta e Chan e +639% -033 +0.86 +2.15 +4.94 -1.39 +3.98 u In the City of Minneapolis, Mianesoh's other major uiban center, sales tax collections for the yeazs 1999 to 2006 were as follows: Year 1999 2000 2001 2002 2003 2004 2005 2006 Minneapolis Sales Tas Collections Collections PercenTa e Chan e $25,608,000 27,39I,000 +6.51 29,379,000 -.04 25,283,000 -8.29 25,562,000 +1.09 26,366,000 +3.05 27,404,000 +3.79 27,867,000 +1.66 The table on the following page shows the projected collections of the Ciry's 0.50 percent Sales Tas for the years 2007 through 2030. The Ciry has been authorized by statute to impose the Sales Tax through 2030. The table on the following page compazes the projected Sales Tas revenues to the estunated combined payment obligarions on the Senior Obligations and the Series 2007 Bonds. Beginning in the yeaz 2007, the projected Sales Tax collecrions include: (i) the budgeted collections of the Sales Tax for 2007; and (ii) a projected growth rate of approximately 2.00 percent in Sales Tat coIlections. No third parry review of these p�ojected colleciions of Sales Ticc revenues, or the assumptions on which such projecrions are based, has been obtained by the City. Projected Sales Taa Collecrions, Senior Obligations Aebt Service and Debt Service on the Series 2007 Bonds Collection Year 2007 2008 2009 2010 2011 20I2 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Projected Sales Tax Collections � Total Projected Debt Service on Senior Oblieations (2) $10,664,326 10,665,866 10,663,292 10,665,671 10,665,899 10,668,780 10,667,909 10,667,253 10,670,423 10,666,767 10,668,549 10,668,663 10,665,350 10,671,859 10,669,899 10,667,466 10,662,075 10,671,243 10,671,519 11 Debt Service on Series 2007 Bonds 3 Covera2e(41 • . � L_J V �/ l �� . Collection Yeaz 2026 2027 2028 2029 2030 Projected Sales Tax Collections � Total Projected Debt Service on Senior Obliearions (2) 0 0 0 0 0 Debt Service on Series 20D7 Bonds 3 Covera¢e (4� (1) Sudgeted Sales Ta� wllutioas for 2007, in¢easing cumula4vely in 2008 and eac6 subseqvent year at a rate of 2.00 percent aonually. Does not include Arena Net Revenues or otk�er revenues wltich may be available to pay the Series 1996 Bonds or Seciu 1999 Bonds. See °TEIE SEf1IOR OBLIGATTONS" haein (2) The sum of the debt service on the Seriu 1996 Bonds and the Series 1999 Bonds. Does reflec[ the impact of anypotential te£unding hansacrions. (3) &t'unated (4) The prqected Sales Taz Roceeds divided by the totat debt service on the Series 1996 Bonds, the Series 1999 Bonds and tt�e Seriu 2aa'! Bonds. The total revenues derived from the unposirion of the Sales Tas in any yeaz aze entirely dependent on the volume of retail sales occumng in the City during such yeaz and use tax collections from City residents maldng purchases elsewhere. The volume of such retazl sales is subject to numerous influences including general economic condirions in the City, the State, and the Narion, and the qualiry and quantity of retail sales businesses located and operating in the City. Although the volume of Sales T�r Proceeds has increased in most years since collections of SaZes Tax revenues first occurred in November of 1993, no assurance can be given that Sales Taz Proceeds will continue to increase irz subseguent years and no assurance can be given that Sales Tax Proceeds will noE decline in future years. • If the Tenant continues to make scheduled payments under the Arena Lease, at least $3.75 million would be available annually to pay debt service on the Series 1999 Bonds, freeing up a like amount to pay debt service on the Series 2007 Bonds and the Senlor Obligarions. However, the Arena Lease may be temunated by the City and the City is not required to apply Arena Net Revenues to the payment of any obligations which refvnd the Series 1999 Bonds. For those reasons, Arena Net Revenues aze not included in the City's projections. Reserve Fund The Indenture establishes a Reserve Fund and a minimum Reserve Jtequirement for the Reserve Fund in an amount equal to ten percent of the original aggregate principal amount of Series 2007 Bonds and any Addirional Bonds issued under the Indenture. The Reserve Requu'ement foi the Series 2007 Bonds ($_�, which is to be [funded with proceeds of the Series 2007 Bonds] [provided by a surety bond meeting the requirements of a Credit Facility described below.]. On any Intecest Payment Date, amounts in the Resecve Fund will be credited to the Debt Service Account of the Bond Fund and applied to the payment of principal nf and interest on the Series 2007 Bonds then due and unpazd if and to the extent the avazlable amounts in the Debt Service Account and m the Revenue Fund and Prepayment and Purchase Account aze insufficient for such purpose. 12 � The City may provide a Czedit Facility from a Credit Provider to satisfy all or a portion of the Reserve Requirement The Credit Facility and the Credit provider mus[ be sppmved by the Bond Insurer and must meet the following requirements: (i) the Credit Provider's long-term unsecured debt obligations • or, if the Creditor Provider is an insurance company, its claims-paying ability, must be rated "A" or better by each Rating Agency then maiataining a rating on the Series 2007 Bonds; (ii) the proceeds of the Credit Facility must be available to the Trustee for the pinposes for wlrich funds may be wittidrnwn from the Reserve Fund; (iii) counsel to the Credit Provider must deliver to the Trustee and the Bond Insurer an opinion, in foim and substance acceptable to the Trustee and the Bond Insurer, to the effect that ihe Credit Facility is a valid and binding obligaTion of the Credit Provider, enforceable in accordance with its terms, subject only to customary excepfions; (iv) on the date of issuance of the Credit Facility, the sum of the stated amoimt of the CYedit Facility and the cash and inveshnents held in the Reserve Fund must be equal to the Reserve RequiremenT, (v) the agreement between the City and the Credit Provider (the "Credit Facility AgeemenY� may provide that withdrawals from the Reserve Fund must first be made from cash and investments credited to the Reserve Fund; (vi) the obligation of the City to reimburse the Credit Provider under the teims of the CYedit Facility Agreement must be Subordinate to the payment of the � principal of mmd interest on the Series 2007 Eonds; and (vii) the CYedit Facility and the GYedit Facility Agreemeat must authorize a draw on the Credit Facilily on the fifth Business Day prececling expiration of the GYedit Facility unless the Ciry has deposited money in the Reserve Fund in an equivalent amount or the City has provided a replacement Credit Facility to the Trustee which meets the requirements of the Indenture. At least one-half of the cash credited in the Reserve Fund at any time must be invested in Pemritted 7nveshnents with mahuities of less than six montt�s. The remainder may be invested in Permitted Investrnents wiyh maturifies of noY more thaa five years, unless oYheiwise approved in writing by rhe Bond Insurer. Ail eamings on amounts held in the Reserve Fund will be �ansfeaed monthly to the Debt Service Account. Any balance in the Reserve Fimd in excess of the Reserve Ra�uirement shall be credited monthly to fhe Debt Service Account. Restrictions on Certain Additiona] Senior Obligations Under the Indenhue, the City has ageed not to issue any bonds wluch constitute "Additional Bonds° unda the 1996 Indenture or 1999 Indenture which have a lien on Sales Tax Proceeds superior to • [he lien of t}�e Series 2007 Bonds unless (i) such bonds aze a refunding of the Series 1996 Bonds or Series 1999 Bonds or boads wluch refimded the Series 1996 Bonds or Series 1999 Bonds or (ri) both (A) the minimum 1.25:1.00 coverage ratio wo¢id be meY if such bonds were Addi[ionai Bonds unda tfie Indenture and (B) a minimum 1.50:1.00 coverage ratio would be met if Outstanding Bonds were excluded. The City is not required to include fees for credit enhancement, liquidity remarketing services or certain other potential costs in the coverage computations described above. The City also covenants that it will not make any optional payments or deposits of Sales TaY Proceeds for the redemption, prepayment or purchase of the Series 1996 Bonds, the Series 1999 Bonds or bonds refimding the Series 1996 Bonds or Series 1999 Boads if such optional use of Sales Tas Proceeds would create an iasafficiency for the payment of the Series 2007 Bonds. THE SEIVIOR OBLIGATIONS Series 1996 Bonds The Series 1996 Bonds aze payable solely from Sa1es Ta�c Proceeds on a parity witfi the Series 1999 Bonds and beaz tax exempt interest at the rate of 7.10°/a per annum. They aze subject to optional I3 . redemption initially oa November 1, 2015 at a premium of 3.00%. The redemprion price deciines to paz D� �� by November 1, 2018. Scheduled annval debt service on the Senes 1996 Bonds is as follows: . Year 2007 2008 2009 201� 2011 2012 2013 2014 2015 Series 1999 Bonds The Series 1999 Bonds beaz intezest at rates ranging from 626°/a in 2007 to 7.09% in 2025. The Series 1999 bonds aze subject to oprional redemprion on May 1, 2009 at a redemprion premium of 3.00% which declines to par by 2012. Scheduled annual debf service on the Series 1999 Bonds is as follows: Amount �4,494,535 4,495,135 4,493,635 4,494,680 4,492,560 4,496,920 4,496,695 4,496,530 4,495,715 Year 2016 2017 2018 2�14 2020 2021 2022 2023 Amount $4,493,540 4,494,295 4,496,915 4,495,335 4,498,845 4,496,025 4,496,165 4,492,845 Year Amount Year Amount 2007 $6,169,790 2017 $6,174,253 2008 6,170,730 2018 6,171,747 2009 6,169,656 2019 6,170,014 2010 6,170,990 2020 6,173,013 2011 6,173,338 2021 6,173,874 2012 6,171,859 2022 6,171,300 2013 6,171,214 2023 6,169,229 2014 6,170,�23 202A 10,671,243 2015 6,174,707 2025 10,671,518 2016 6,173,226 • The debt service on the Series 1999 Bonds is payable from several revenue sources which aze specifically pledged to their payment: (i) the Sales TaY Proceeds, subject to a pazity pledge of such Sales Ta�c Proceeds to the payment of debt service on the Series 1996 Bonds, and subject to certain limitafions set forth in the 1999 Indenture and the 1999 Intercceditor Agreement and the Joint Piedge Agreement; (ii) Arena Net Revenues; (iii) Pledged Tax Increments; (iv) certain inveshnent eamings on all Funds and Accounts established under the 1999 Indenture and (v) certain other revenues from fime to time received by the Trustee and held in the Funds and Accounts. The pledge of Sales Taac Proceeds, the Arena Net Revenues and other revenues to the payment of the principal of, premium, if any, and interest on the Series 1999 Bonds was made under the terms of the Pledge Agreement and the 1999 Indenture. The allocarion of Sales Tax Proceeds to the payment of the debt service on the Senes 1999 Bonds and the Series 1996 Bonds is governed by the temis of the 1999 Intercreditor Agreement. The 1999 Indenture contains several covenants which are unrelated to the coSlecrion of Sales Tax Proceeds. These include covenants obligating the City to enforce the respecrive obligations of the HRA and Civic Center Authority (whose successor is the RiverCenfre Convenrion & Visitors Authority) under the Pledge Agreement to make payments to the 1999 Trustee of certain ta�c increments and Arena Net Revenues and to perform its obligations under the Pledge Agreement and 1999 Intercreditor Agreement. 14 • Unda the 1999 Indenture, the bond trustee is requ'ved to retain d��ri�A the continuance of an "Event of DefaulY' �mder the 1999 Indentuze alt Sales Tax Proceeds not required for debt seivice on the Series 1996 Bonds and Series 1999 Bonds. Because failure to perfortn its obligations under the 1999 _ • Indentute may give rise to an event of default thereunder, any such failure would prevent a transfer of available Sales Tas Proceeds to the Tmstee for payment of the Series 2007 Bonds. Additional Senior Obligations The City may issue additional obligations imder [he 1996 Indenture or 1999 Indenture. The City may piedge Sales Tac Proceeds to any such addifionai bonds, reIated swap agreements or any related bond issuance or credit facility, subject to certain restrictions based on covexage. See "SOURCES OF PAI'MENT AND SECURITY FOR THE SERIES 2007 BONDS — Restrictions on Certain Addirional Senior Obligations" herein. Any addirional bonds under the 1996 Indenture or 1999 Indenture may be issued on eiTher a£ixed or variable rate basis on a parity with the Series 1996 Boads and Series 1999 Bonds. f7�:� Set forth below aze risk factois related to the purchase and owneiship of the Series 2007 Bonds. Each prospecfive investor should cazefully consider the following factors as well as other information included in this Official Statement (including the appendices to this OScial Statement) before maldng a decision to purchase any Series 2007 Bonds. This following factors aze not intended to be a complete list of all potenfial risks relaEed to the Series 2007 Bonds. Reduction i¢ Ratings As descri6ed heiein under "RATINGS," it is expeded that, prior to the daze of issuance of The Series 2007 Bonds, Standard & Poor's Ratings Services will assign its municipal bond rating of "AAA" to ihe Series 2007 Bonds, based on the Policy issued by the Bond Insurer guazaateeing the payment of the principal of and interest on the Series 2007 Bonds. However, in the event that the claims-paying ability of the Bond Insurer is heLeafter downgraded the value of the Series 2007 Bonds may decline. No representations or wazranries aze made by the Ciry, the Under�iteis, or the Bond Insurer as . to the claims-paymg rating or rafings of the Bond Tnsurer by any agency ratin.g the Series 2007 Bonds after the dafe of issuance of the Series 2007 Bonds. Sales Tas Proceeds Sales Tac proceeds aze pledged to the payment of the Bonds, subject and subordinate to the pledge of such Sales Tac pmceeds to ffie Senior Obligarions. The amount of Sales Tax Proceeds is or may be limited by factors over wlrich the City has no control. Under state law the Sales Tax is limited to one-half of one percent of the value of transactions occumng in the City which aze taYable under the Staze sates tas law and transactions covexed by a related use tax. The State sales tax law could be amended W exctude transactions now taxable. The C�ty cannot increase the rate of the Sales Taz under cunent law or extend its imposirion beyond 2030. The amount and tinvng of Sales Tas Proceeds derived by the City from the Sales Tax depead upon various economic factors and conditions over wluch The City has no control. These economic factors include all of those elements which detemvne whether the United STates economy and ihe Minnesota and Minneapolis-St Paul Metropofitan Area economies aze expanding, are stable or aze in a recession. They also include those factors wluch affect the purct�asing pattems of City residents and LF7 � visitors. As exemplified by the City neighboring cenhal City of Mianeapolis, events which impact D[��`-� pazticulaz sectors of the local economy may cause sales tas receipts to decline despite inflation and • economic growth Thus, the amount of Sales Tax Proceeds available for payment of the principal of and interest on the Bonds is uncertain and not predictable with a high degree of accuracy. 7Txe projections of future colleciions of Sales Tax Praceeds, and the assumprions on which such projections are based, provided under the caption "SOI7RCES OF P1tY1vIENT AIJD SECURITY FOR THE SERIES 2007 BONDS — Sales Tas Proceeds" in this Officiai St�emenf have nos been reviewed by any thtrd party. Although the volume of Sades Tos Proceeds has increased in most years sznce collecrions oj Sales T¢z revenues frst occurred in November of 1993, no assurance can be given that SaZes Tax Proceedr wil! increase in subsequent years and no assurance can be given that Sales Tax Proceeds wi11 rzot declirze in future years. The City Council has duly enacted rhe Sales Tax in accoidance with the provisions of the Odginal Special Act. The effective date of the Sales TaY was September 1, 1993. The authorized uses of Sales Tax revenue were broadened by the 2005 Special Law. State law provides that the 2005 Special Law, the 1998 Special Law and the Original Special Act may be cancelled or xepealed by amendment to the Charter of the City and provides a psocedure for aznending city ctiarters by a voter petition for referendum on the proposed change. On September 27, 1993, a perition for an elecrion on an amendment to the City Charter that would have prohibited the City from levying or collecting the Sales Tax was offered to the City, but was determined on October 7, 1993 to be insufficient on several grounds and no elecrion was held. No further peritions challenging the Sales Tax have been filed vrtth the City, and counsel to the Ciry opined in connection with the issuance of the Series 1993 Bonds that any aznendment to the City Charter such as that proposed in 1993 would constitute an unconstiturional impairment of the City's obligations. Nonmonetary Defaults under Prior Indentures Regazdless of the adequacy of Sales Tax Proceeds to pay the Senior Obligations and the Series 2007 Bonds, the 1999 Indenture provides that if there is an event of default thereunder (which can mclude defaults in the performance of any wvenants whether or not related to the Sales Tax Proceeds) any Sales � Tax Pzoceeds available after payment of debt service on the Series 1996 Bonds and the 1999 Bonds aze cetained under such indentures until the event of default is cured. Accordingly, no Sales Tax Proceeds will be available to pay debt seivice on the Series 2007 Bonds during the continuance of an event of default under the 1999 Indenture. For a summary of certain of the covenants set forth in the 1999 Indenture, the breach of which could lead to that result, see "fFIE SENIOR OBLIGATIONS — Series 1999 Bonds" herein. Variable Rate Senior Obligations Subject to certain limitarions, the City is perniltted to refund the Series 1996 Bonds and Sedes 1999 Bonds with variable rate bonds issued on a pazity with other Senior Obligations or otherwise issue additional vaziable rate bonds as Senior Obligations. The City is not required to maintain a swap ageement (in the case of a refunding of the Series 1999 Bonds) or other arrangement to provide protection against rising interest rates or variable rate debt. If prevailing interest rates increase after the issuance of the vaziable rate bonds, the debt service payable on the 5enioi Obligations may be substanrially greater than the amount estimated at the time the variable rate obligarions were issued. Tn that event, substantially less Sales Tae Proceeds would be available to pay the Series 2007 Bonds. Although the coverage requirements may limit the issuance of additional variable rate Senior Obligarions, the coverage tests aze based only on recent interest rate levels of short term debt and do not require the cost of aedit enhancement, liquidity or remukering services to be included in the calculafion. R� r � �J Fornazd Looldng Stakements This Officiat Statement contains forward-looking statements with [esped to the future collecROns of Sales Tac Proceeds and the debf service requirements of the Senior Obligations. 'I7iese foiwazd- looking staTements aze based on uncertain asswnptions and, therefore, such results xnay not be realized. T'he actual results of these espectations may differ materially from those ciurenfly anticipated as a resuk of various factors, including those set forth hereiu under the caption `BOlVDHOLDERS' RLSKS" and eLsewhere in this Official Statement. No person should consider the purchase of any Bonds without first cazefully reviewing the all the iafozmation in this O$icial Stateiaent. The future collections of Sales Tax Proceeds will be subject to contingencies which cannot be determined with assurance. Some of the statements contained herein regazding such fumre collections and such activities and operarions are fnrward-tooking statements and aze subject, therefore, to substanrial risks aad uncertainries, many of wluch aze beyond the control of the City. Certain of these risks and uncertainties include the risks and uncertainries described herein including, without ]ixnitation: (i) economic conditions that may have a substantial impact on collections of Sales TaY revenues; (ri) licensing requirements and other govemmental regularions; and (iii) future regional and national economic, polirical, and other condirions. See also "SOiTRCES OF PAYN4,NT AND SECLiRITY FOR THE SERIES 2007 BONDS" fierein. SOURCES AND USES OF FUNDS The principal purpose for the issuance of the Series 2007 Bonds is to provide money in the City, including the acquisition of real estate for development. The proceeds derived from the sale of the Series 2007 Bonds, and tEie eamings derived from the investment of such proceeds (and the investment of such eamings), will also be applied to the payment of the costs of issuance of the Series 2007 Bonds and to fund The Reserve Fimd. The soiuces of funds to accomplish tlus and related activities and the specific uses of such fimds aze estimated below. Sources of Fands Proceeds of the Series 2007 Bonds Total Uses of I�nds Deposit W Construc�on Fimd� Boad Insurance Policy Premium Underwriters' Discount Costs of Tssuance and Miscellaneous Expenses�' Total � Fmmds held d"sectly by the CiTy. $ 25,000,000 � $ $ 2 Costs ofissuance include the fees of Bond Counsel, connsel to the Bond Insuca, and counsel to the Underwritecs, the fees of tLe Trustee, the fees of ihe RaIIng Agencies, the costs of prmting the Official SEatemen[, and similar fees and costs. 17 • LJ i LEGAL MATTERS � On the data of original issuance and delivery of the Series 2007 Bonds, Briggs and Moigan, Professional Associarion, as Bond Counsel, will deliver its opinion that the Series 2007 Bonds and the Indenture aze valid and legally bind'mg obligations of the City, enforceable in accordance with their respecrive teims. In rendermg its opinion, Briggs and Morgan will rely on the opinion of t$e City Attomey of the City with respect to certain matters contained in the City Attomey's opinion. Faegre & Benson LLP is acting as counsel to the Underwriters with respect to the issuance of the Series 2007 Bonds. All of the legal opinions as to enforceability of obligarions will be qualified to the extent that enforceability may be subject to bankmptcy, insolvency, reorganization, moratorium, and other sisulaz laws affecting aeditors' rights generally and to the exercise of judicial discretion in accordance with general principles of equity. In addition, the prnctical realization of any security upon the occurrence of a default under any of the above-referenced documents may depend on the exercise of various remedies specified in such documents. Such resnedies aze dependent in many respects on judicial action and other delays. Accordingly, the remedies specified by the foregoing documents may not be readily available or may be limited. TAX EXEMPTION At closing, Briggs and Morgan, Professional Associarion, Bond Counsel, will render an opinion based upon present federal and State of Minnesota laws (which excludes any pending legislaflon which may have a retroactive effect), regularions, rulings and decisions, to the following effect: Gross Income: at the time of the issuance of the Series 2007A Bonds, the interest on the Series 2007A Bonds is excluded from gross income for United States income tax puiposes and is excluded, to the same extent, from both �oss income and tasable net income for State of Mianesota income tas purposes (other than Minnesota &anchise taYes measured by income and imposed on corporarions and fmancial insritutions); � Alternative Minimum Tox: the interest on the Series 2007A Bonds is not an item of taY preference far putposes of the federal altemative minimum tas imposed on individuals and coipotations or for putposes of the Minnesota altemafive minimum taz applicable to individuals, tmsts or estates, but for the purpose of compuring the federal altemarive minimum tax on corporations it is taken into account in detemvning adjusted current eamings; and Compliance: the above opinions aze subject to the condition that the City comply with all applicable federal taY requirements that must be satisfied subsequent to the issuance of the Series 2007A Bonds; failure to so comply may cause inclusion of interest on the Sedes 2007A Bonds in gross income and taYable net income retroactive to their date of issuance. No opinion will be expressed by Bond Counsel iegazding other federal or state tax consequences caused by the receipt or accmal of interest on the Series 2007A Bonds or arising with respect to ownership of the Bonds. Though excluded from gross income, interest on the Series 2007A Bonds is subject to federal income taxation for certain types of taapayers and certain inwme taaces, including without implied lunitation taYation to the extent it is included as part of (a) the adjusted cuaent eaznings of a corporarion for purposes of the altemative minimum taac, (b) effectively connected eamings and profits of a foreign m 0�?�'1� � corpontion for piuposes of the branch profits tac on dividend equivalent amounts, (c) e�ccess net passive income of an S Corporetion which has Subchapter C eazuings and pro5ts, or (d) mininzum effectively � connected net inveshnent income of a foreign insurance company. Interest on the Bonds is also taken into , account in other ways for federal income taY piuposes, iacluding without miplied limitation (a) reducing loss reserve deductions of property and casualty insivance companies, (b) reducing interest eayense deductions of 5nancial institutions, and (c) cansing certain taYpayers to include in gross income a portion of sociat secisity benefits and raikoad retirement benefits. The City wlll covenant to comply with requirements necessary under the Intemal Revenue Code to establish and maintain the intaest on the Series 2007A Bonds as excluded from gross income under Section 103 thereof, inciuding without limitarion requirements relaring to temporary periods for investments, limitarions on amounts invested at a yield �eater than the yield on the Series 2007A Bonds, and, if necessary, the rebate of excess invesenent eainings to the United States. As is typical for obligarions such as the Series 2007A Bonds, no provision has been tnade for redeetning The Series 2007A Bonds or increasing the interest rate on the Series 2007A Bonds in the event that interest on the Series 2007A Bonds becomes includable in gross income or tazable net income. OTHER TAX CONSIDERATIONS FOR SERIES 2007 BONDS Federal Akemative Minimum Tas Interest on the Series 2007A Bonds is not subject to the federal individual atternative minimum taC because interest on the Series 2007A Bonds is not a preference item; the intaesf is, however, included in adjusted current earnings of a corporation for putposes of caicularing the fedezaI altemative *�;n;*rn tax. Federal altemative min;,m,..� �able income is calculated by adding preference items and maldng other adjus�ents to income subject to the regulaz income tax. After all other adjushnents and additions aze made, a final adjustment will increase the altemarive zninimum taxable income otheiwise caiculated For taeable years beginning a$er December 31, 1989, as the final step 75% of ihe excess of a cotporation's adjusted cuaent eamings over its altemative minimum tacable income as calculated prior to tlris final step will be added to such altemative minknum tasable income. Property a¢d CasnalTy Tnsurance Companies Property and casuaity insurance companies aze required by federal taY law for taxable years be nnin a8er December 31, 1986, to reduce ihe amount of their loss reserve deducfion by 15% of the amount of taY-exempt interest received or accrued during the tasable yeaz on certain obligations acquired after August 7, 1986, including interest on the Series 2007A Bonds. Foreign Insurance Companies Foreign comp�ies canying on an insivance busmess in the United States aze subject to a federal ta�c on income which is effectively connected with their conduct of any hade or business in the United States. Such income includes tax-exempt interest. 19 � � Branch Profits Tax � ��7 �� t Foreiga coiporarions aze subject to a federal "branch profiu tax" equat to 30% of the "dividend equivaleat amounP' for the taxable yeaz. The "dividend equivalent amoimY' is the foreign coiporntion's "effectively connected eaznings and profifs,° including taY-exempt municipal bond interest Passive Investment Income of S Corporations Passive inveshnent income, including interest on the Series 2007A Bonds, may be subject to federal income taxation under Secrion 1375 of the Intemal Revenue Code of 1986, as amended, for S cpiporarions that have Subchapter C eaznings and profits at the close of the t�able yeaz if more than 25% of the goss receipts of such S coiporations is passive investment income. b7nancial Institurions For federal income taY purposes, financial insriturions aze unable to deduct any portion of the intetest expense allocable to the ownership of certain taY-exempt oUligations acquired after August 7, 1986, including the Series 2007A Bonds. Social Security and Railroad Retirement Benefits Certain recipients of social securiry benefits and railroad retirement benefits aze required to inciude a portion of such benefits within gross income by reason of receipt of interest on tax-exempt obligations, including the 2007A Bonds. Exclusion Not Constitutioaaliy Required The United States Supieme Court ruled in 1988 that the exclusion from �oss income of interest on state and local taz-exempt bonds is not required by the United States Consritution. The Constitution of the State of Minnesota likewise does not require the exclusion from gross income or taacable net income of interest on tax-exempt bonds of Minnesota issuers. Hence, future federal and/or sTate laws could cause � ihe inclusion of interest on tac-exempt bonds, including the Series 2007A Bonds, in g'oss income or taYable net income, or could othecwise cause such interest to be tased or to be included in the calculation of other income which is tased ' State Tax Exemption The 1995 Minnesota Legislature enacted a law that included interest on obligarions of Minnesota govemmentzl units and Indian tribes in net income of individuals, estates and husts foi Minnesota income taY ptuposes if a court detecmines that Minnesota's exemption of such interest unlawfully discrnninates against interstate commerce because interest on obligations of govemmental issuers located in other states is not excluded. This law applies to taxable years that begin during ur after the calendar yeaz m which any such court decision becomes final, itrespecrive of the date on which the obligafions were issued. The Court of Appeals of Kentucky recently held that Kentucky's exemption of interest on its own bonds, but not of intetest on the bonds of other states, unlawfully discriminates against interstate commerce. A peririon for review of this decision has been accepted by the United States Supreme Court. If a Minnesota Court were to render a similaz final decision, or a federal court with jurisdicrion over Minnesota were to affirm this decision or render a similaz final decision, interest on the Series 2007A Bonds would become subject to Minnesota income tax for calendaz yeazs during and after the date the decision became final. 20 • General The above is not a comprehensive list of all federal or state tac consequences which may axise � from the receipt or accrual of interest on the Series 2007A Bonds. The receipt or accmal of interest on the Series 2007A Boads may oYherwise affect the federal or state income tac &ability of the recipienf based on the pazticulaz ta7ces to which the recipient is subject and the particulaz tax �tatus of other items of income or deductions. Bond Counsel expresses no opinion regazding any such consequences. All prospective purchasers of the Series 2007A Bonds aze advised to consuk their own taz advisors as to the taY consequrnces of, or tas considerntions for, purchasing or holding the Series 2007A Bonds. NOT QUALIEIED TAX-EXEMP'P OBLIGATIONS The Series 2007A Bonds do not qualify as "qualified tax-exempt obligarions" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, relazing to the abiliry of financial institurions to deduct from income for federal income tax pucposes, interest expense that is allocable to carrying and acquiring taY-exempt obligations. TAXABII,I'i'y OF SERIES 2007B BONDS Interest on the Series 2007B Bonds is intended to be includable in goss income for puiposes of Federal income taxation and is intended to be includable in taxable net income of individvals, estates, and trusts for purposes of State of Minnesota income taxarion. RATINGS Standard & Poor's Ratings Services will assign its municipal bond rating of "AAA,"to the Series 2007 Bonds. This rating is assigied with the undastanding that, upon issuance and delivery of the Series 2007 Bonds, the Bond Tnsurance Policy insuring the scheduled payment of ihe principal of and intaest on the Series 2007 Bonds vnll be issued by the Bond Insurer and deliveced to the City. Standazd & Poor's Ratings Services has also assigned a rdting of "_" to the Series 2007 Bonds. This rating ktas been assigned to the Series 2007 Bonds without regazd to the issuance and delivery of the Bond Insurance � Policy. Such rating reflects only the views of such rating agency, and an explanarion of the significance of such ratings may be obtained only from the rating agency. Genecally, reting agencies base their razings on the infocmation and materiais fiunished to them and on investigation, s[udies, and assumptions by the rating agencies. A securities rating is not a recommendation to buy, sell, or hold secisiries. The ratings of the Series 2007 Bonds represent judgments as to the likelihood of timely payment of the Series 2007 Bonds according to their tem�s, but do not address the likelihood o£ redemption or acceleration prior to maturiry. 'There is no assurance that such ratings will remaia in effect for any given period of time or that they may not be lowaed, suspended, or withdrawn entirely if; in the judgment of the rating agencies, circumstances so wazrant. Any such downward change in or suspension or withdrawal of such ratings may have an adverse effect on the mazket price and marketability of Series 2007 Bonds. The address of Standard & Poor's Ratiags Services is 25 Broadway, New York, New York 10004, and the telephone number of the rating agency is (212) 208-1723. � Subject to certain condirions set forth in the Bond Piuchase Agieement, the Undeiwriters have agreed to purchase the Series 2007 Bonds on the date of original issuaace of the Series 2007 Bonds at a purchase price equal to $_ (the principal of the Series 2007 Bonds in the amoimt of $ reduced by the Undenviiters' discount of $� [plus accrued interest]. The Underwri[ers aze obligated to purchase all of the Series 2007 Bonds if any of the Series 2007 Bonds aze purchased, The 21 • Series 2007 Bonds may be offered and sold by ihe Underwriter to certain dealers, banks, and others V 1� 1�'` (including underwriters and other dealers depositing such Series 2007 Bonds into investment trusts) az . prices lower than the initial offering prices, and such initial offering prices may be changed from time to time by the Underwriters. Under the temis of the Bond Purchase Agreement, the City has agreed to indemnify the Undenvriters against certam, clauns and losses, including claims and losses under Federal and State secwities laws. FINANCIAI, ADVLSOR The City has retained Springsted Incorporated, Public Finance Advisors, of Saint Paul, Minnesota, as 5nancial advisor (the "Financial Adviso�") in connection with the issuance of the Bonds. The Financial Advisor is not a public accounting firm and has not been engaged by the City to compile, review, e�nnne, or audit any informarion in the Official Statement in accordance with accounting standards. The Financial Advisor is an independent advisory firm and is not engaged in the business of undeiwrihng, �ading, or distributing municipal securities or other public securifies and, therefore, will not participate in ihe undenmit{ng of the Bonds. BOND INSURER The following information has been supplied by The Insurer for inclusion in this Official Statement No representation is made by the City or the Undenvriter as to the accuracy or completeness of the infor[nation. The Insurer accepts no responsibitity for the accuracy or completeness of this Of&cial Statement or any other information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regazding the Insurer and its affiliates set forth under this heading. In addition, the Insurer makes no representation regazding the Bonds or the advisabiliry of investing in the Bonds. General � XL Capital Assurance Ina (the "Bond Insurer" or "XLCA") is a monoline financial guaranty insurance company incoiporated under the laws of the State of New Yotk. The Bond Insurer is cwxently licensed to do insurance business in, and is subject to the insurance regulation and supervision by, all 50 states, the Distdct of Columbia, Puerto Rico, the U.S. Virgin Lslands and Singapore. The Bond Insurer is an ind'uect wholly owned subsidiary of Security Capital Assurance Ltd ("SCA"), a company organized under the laws of Bemmda Through its subsidiaries, SCA provides credit enhancement and protection �products to the public finance and shuctured 5nance mazkets throughout the United States and internationally. XL Capital Ltd beneficially owas approximately 63% of SCA's outstanding shazes. The common shazes of SCA are publicly traded in the United States and listed on the New York 5tock Exchange {NYSE: SCA). SCA is not obligated to pay the debts of or claims agaiust the Insurer. FSnancial Strength aud Financial Enhancement Rafings of XLCA The Bond Insureis insurance financial shength is rated "Aaa" by Moody's and "AAA" by Standard & Poor's and Fitch, Inc. ("Fitch"). In addirion, the Insurer has obtained a financial entiancement rating of "AAA" from Standazd & Poor's. These ratings reflect Moody's, Standazd & Poor's and Fitch's current assessmrnt of the Bond Insurers creditworthiness and claims-paying abihty as well as the reinsurance azrangement with XL Financial Assuxance Lfd. ("XLFA") described undec "Reinsurance" below. 22 . The above ratings aze not recommendations to buy, sell or hold secisities, including the Bonds and aze subject to revision or withdiawal at any time by Moody's, Standard & Poor's or Fitch. Any � dowuwazd revision or withdrawai of these ratings may have an adverse effect on the mazket price of the Bonds. The Bond Insurer does not guaranty the market price of the Bonds nor does it guaranty fl�at the ratings on the Bonds will not be revised or withdrawn. Reinsurance The Bond Insurer has entered iato a facultative quota share reinsurance agreement with XLFA, an insutance company organized under The laws of Bermuda, and an afftliate of the Bond Insurer. pursuant to this ieinsurance agreemenT, the Bond Insurer expeds to cede up to 75% of its business to XLFA. The Insurer may also cede reinsurance to third parties on a transaction-specific basis, wlnch cessions may be any or a combination of quota shaze, 5rst loss or excess of loss. Such reinsurnnce is used by ihe Bond Insurer as a risk management device and to comply with statutory and rating agency requirements and does not alter or limit the Insurets obligarions under any Snancial guaianty insurance policy. With respect to any transac@oa insured by XLCA, the percentage of risk ceded ro XI,FA may be less than 75% depending on certain factors including, without 1'unitarion, whether XI.CA has obtained third party reinsurance covering the risk. As a result, there can be no assurance as to the percentage reinsured by XI,FA of any �ven financial guaranTy insurance policy issued by XLCA, including the Policy. Based on the audited financial statements of XI.FA, as of December 31, 2006, XI,FA had total assets, liabilities, redeemable preferred shazes and shazeholders' equiry of $2,007,395,000, $874,028,000, $54,016,000 and $1,079,351,OOQ respechvely, deteimined in accordance with generally accepted accounting principles in the United States ("US GAAP'�. XLFA's insurance Snancial. strength is razed "Aaa" by Moody's and "AAA" by S&P and Fitch Inc, In addifion, XI,FA has obtained a financial enhancemeat ra�ing of "AAA" from S&P. The ratings of XLFA or aay other member of the SCA goup of companies aze not recommendahons to buy, sell or hold securiries, including the Bonds and aze subject to revision or withdrawat at any time by Moody's, Standazd & Poor's or Fitch. Notwithstanding the capital support provided to the Bond Insurer described in this section, The � Bondholders will have direct tecourse against the Insurer only, and XLFA will not be directly liable to the Bondholders. Capitalization of the Insurer � Based on the audited financial statemen[s of XLCA, as of December 31, 2006, XI,CA had total assets, liabilifles, and shazeholder's equity of $1,224,735,000, $974,23QOOQ and $25Q505,000, respecrively, detemilned in accordance with U.S. GAAP. Based on the uaaudited statutory financial statements for XLCA as of December 31, 2006 filed with the State of New York Tnsurance Depazhnent, XLCA has total admitted assets of $429,073,000, total liabilities of $222,060,000, total capital and siuplus of $207,013,000 and total contingency reserves of $20,876,000 determined in accordance with statutory accounting pracrices prescribed or pemutted by insurance reguiatory authorilies ("SAP'�. Based on the audited statutory finattcial statements for XLCA as of December 31, 2005 51ed with The State of New York Insurance Department, XLCA has total admitted assets of $328,231,000, total liabiliries of $139,392,000, totat capital and surplus of $188,839,000 and total contingency reserves of $13,031,000 detezxnined in accordance with SAP. 23 • Incorporation by Reference of FSnancials . For fisther information conceming XLCA and XL,FA, see the financial statements of XL.CA and XI,FA, and the notes theretq incozporated by reference in this O�cial Statement. The financial statements of XLCA and XLFA aze included as exLibits to the periodic reports 51ed with the Securiries and Exchange Commission (the "Commission") by SCA and may be reviewed at the EDGAR website ma;ntai � by the Commission. All 5nancial statements of XLCA and XI.FA included in, or as exhibits to, documents filed by SCA or XL Capital Ltd pursuant to Section 13(a), 13(c), 14 or IS(d) of the Securities Exchange Act of 1934 on or prior to the date of this O�cial Statement, or after the date of this Official Statement but pnor to teiminarion of the offering of the Bonds, shall be deemed incoipozated by reference in tlus Official Statement Except for the financial statements of XLCA and XI.FA, no other infotmarion contained in the reports filed with the Commission by SCA or XI, Capital Ltd is incoiporated by reference. Copies of the statutory quarterly and annual statements filed with the State of New York Insurance Department by XLCA aze available upon request to the State of New York Insurance Department. Regulation of the Insurer The Bond Insucec is iegulated by the Superinteadent of Insucance of the State of New Yoik. In addition, the Bond Insurer is subject to regulation by the insurance laws and regulations of the other jurisdictions in which it is licensed. As a financial guazanty insurance company licensed in the State of New York, the Bond Insurer is subject to Article 69 of the New York Insurance Law, which, among other things, limits the business of each insurer to financial guazanty msurance and related lines, prescribes minimum standazds of solvency, inclucling minimum capital requirements, establishes conringency, loss and uneazned premium reserve requirements, requires the maintenance of minimum surplus to policyholders and 1'vnits the aggregate amount of insurance which may be written and the maximum size of any single risk exposure which may be assumed. The Bond Insurer is also required to file detailed annual financial statements with the New York Insurance Deparhnent and sunilaz supervisory agencies in each of the other jurisdictions in which it is licensed. The extent of state insurance regulation and supervision varies by jurisdiction, butNew York and most otherjurisdictions have laws and regulafions prescribing permitted investments and govemiag the � paymeat of dividends, transactions with affiliates, mergers, consolidations, acquisifions or sales of assets and incunence of liabilities for boirowings. THE FINANCIAL GUARANTY INSURANCE POLICIES ISSUED BY THE BOND INSURER, INCLUDING THE INSURANCE POLICY, ARE NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURTTY FUND SPECIFTED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. The principal executive offices of the Bond Insurer aze located at 1221 Avenue of the Americas, New York, New York 10020 and its telephone number at this address is (212) 478-3400. CONTINUING DISCLOSiJRE The City wilt enter into a Continuing Disclosure Agreement to provide for continuing disclosure of certain infozmation zelating to the Series 2007 Bonds, in accotdance with the piovisions of Rule 15c2- 12(b)(5) (the "Rule") promulgated by the Securities and Exchange Commission. Under such agreement, there will be provided to each nationally recognized municipal securities informafion repository ("1VRMSIR") and to the appropriate state informarion depository, if any ("SID") for the State of Minnesota, certain annual financial informarion and operating data with respect to the City and the 24 P7�� • Revenues and notices of certain material events wiTh respect to the Series 2007 Bonds as required by the Rule. The annuat Snancial information and operating data is expected to be available widvn twelve � months after the end of each fiscal yeaz of the Clty, commencing with the fiscal year ended December 31, 2006. The infonnation is to include the annual audited fittancial statements of the City prepared in accordance with generally accepted govemmental accounting principles. Under the Continuing Disclosure Agreement the City will also agree to provide or cause to be provided in a tirttely manner to (i) each NRMSIIt and (ii) the SID, norice of the occuzrence of any of the following events with respect to the Series 2007 Bonds, if such event is material. (i) principal and interest payment deliaquencies; (ri) non-payment related defaults; (iii) mmscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled chaws on credit enhancements reflecting financial difficulries, (v) subsritution of credit or liquidity providers, or their failure to perfoim; (vi) adverse tac opiaions or events affecting the tas-exempt status of the security, (vii) modifications to rights of security holders; (viii) bond calls, other than as a result of scheduled mandatory sinidng fund redemptions; (ix) defeasances; (x) release, substitution, or sale of any property secuting repayment of the securiries; and (xi) raring changes. The Trustee agrees to provide or cause ro be provided, in a timely manner, to each NRMSIR and i the SID norice of a failure by ihe City to provide the information described above. In the event of a failure of the City to provide [he required infoxmation, the Trustee or any bondholder or beneficial owner may take such actions as may be necessary and appropriate, including seeldng specific perfoimance by court order, to cause the City to comply. A default under the Contiuuing Disclosw�e Agreement is not an Event of Default mmder the Indenture, and the sole remedy under the Continuing Disclosure Agreement is an acEion to compel perfom�ance. MISCELLANEOUS The informarion sef fortfi in tfiis O$"iciai Statement is subject to change without notice and no implication should be made $om the delivery of this Officiai Statement after its date that no change has occutred in the affairs oFthe City since the date of Uds Official Statement No person has been authorized to give any infoimztion or to make any representations other than those contained in this Official Statement in connection with the offering made hereby, and if given or made, such information or representations must not be re&ed upoa as haviag been authorize3 by the City or the Undervrsiters. Tl�is Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale o£the Series 2007 Bonds by any person, in any jurisdiction in wluch it is unlawfiil for such person ro mzke such offer, solicitation, or sale. The information set forth in tt�is Official Statement has FI.'. • been obtained from the City, the Bond Insurer, and other sources that aze believed to be reliable, but is not O�j ��i ��j guazanteed as to accisacy or wmpleteness and is not to be construed as a representation by the ( � � Undeiwriters. The disixiburion of this Official Statement has been authonzed by the City. CITY OF SAINT PAUL, MIlViV�ESOTA � Its i � � APPENDIX A CERTAIN DEFINTl'IONS In this Officiat Statement the following teims have the following respective meanings unless the � conte�ct hereof clearly requires othenvise. Act: The Special Act and the Cf�arter of the Ciry, as amended, and other applicable law. Additional Bonds: Bonds issued under the Indenture on a parity with the Series 2007 Bonds. Administrarive Aereement: the Agreement Beriveen the Depaztment of Revenue State of Minnesota, and Ciry of Saint Paul, Minnesota for Collecrion of a St. Paul City Sales TaY, dated as of September 1, 1993. Administiztive Earoenses: al1 expenses of enforcement and collection of the Sales TaY incuned by or on behalf of the Ciry, including but not limited to eapenses contemplazed by the Administrative Agreement. Arena: the azena constructed pursuant to the Arena Lease and located adjacent to the then- existing Civic Center Complex. Authori : the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota, a public body coiporate and politic organized and exis[ing under the laws of the State of Mianesota Bond Closine: the date of issuance of and payment for the Bonds. Bond Counsel: any attomey or fiim of attomeys desig�ated by the City and narionally- recognized in the field of municipal finance and acceptable to the Tmstee; any opinion of Bond Counsel shal( be a wiitten opinion of such Bond Counsel. Bond Fund: the Bond Fimd created and established as a kust fund under the Indenture. Bond Insurance Policv: the municipa( bond ins�sance policy issued by the Bond Insurer, � insuring the payment, when due (except by reason of accelerarion) of the priacipal of and interest on the Series 2007 Bonds as provided therein. Bond Insurer: XL Capital Assw�ance, a New York domiciled insisance company or any successorthereto. Bond Purchase Aereement: the Bond Purchase Agreement beriveen the City and the Original Purchaser providing for the purchase of the Series 2007 Bonds. Bond Regishar: the Trustee, who shall act as bond regist�ar, transfer agent and paying agent, or any successor trustee or other Fiduciary acting as bond regishar, transfer agent or paying agenT for the Series 2007 Bonds. Bond Yeaz: as to any series of Bonds, the period from the date of Bond Closing to aad including the next succeeding November 1, and thereafter each twelve month caIendar yeaz period beanning on each November 2 and ending on November 1 of the following yeaz. Bondholder or Holder. the person in whose name a Series 2007 Bond is xegistered in the Bond Regster. A-1 \ J Bonds: the Series 2007 Bonds and any Additional Bonds issued under the Indenture; Business Dav. aay day other than a Sahuday, Sunday, legal holiday or a day on which banlang � institutions in the City of New York, New York, or the city where the principal corporate mist office of The Tmstee is located aze authorized by law or execurive order to close. � the City of Saint Paul, Minnesota, its successors and assigns. Ciri Council: the goveming body of the City. Civic Center: the Saint Paul Civic Center comples., within the meaning of the Special Act (also cotnmonly refesed to as the RivetCentre Complex). Civic Center Account: the account by that name in the Sales Ta-c Trust Fund. � Civic Center Authoritv: the Saint Paul RiverCentre Convenfion and Visitors Authority, a nonprofit coiporation, as successor to the Saint Paul Civic Center Authority, which had been an agency of rhe Ciry vested with operarional conKol of the CSvic Centex, oz any successor to its functions. Code: the federal Intemal Revenue Code of 1986, as amended, and with respect to a specific secrion thereof such reference shall be deemed to include (a) the Treasury Regularions promulgated under such section, (b) any successor provision of similaz hereafter enacted, (c) any cosesponding provision of any subsequent Intemal Revenue Code, and (d) the regularions promulgated under the provisions descdbed in (b) and (c). Consmicrion Fund: the Construcrion Account heid by the City Treasurer and into which the proceeds of the Series 2007 Bonds will be deposited, which is not a part of the Trust Estate. Counsel: any attomey desigtated by the City or Trustee, as appropriate, duly admitted to practice law before the highest cow[ of any state, who may (except as othervise provided herein) be counsel to the Ciry or Trustee; and any opinion of Counsel sha11 be a written opinion signed by such Counsel. Credit Facilitv: a]etter of credit, suzety bond, insurance policy or other instminent provided to the Tmstee by the City for the putposes of funding the Reserve Requirement. Credit Provider: the bank insurance company, financial institurion or other enfity, which issues a Credit Facility. GY�ltural Account: the account by that na.me in the Sales Ta�c Trust Fund. Debt Service Account: the trust account in the Bond Fmmd created under [he Indenture from wiuch the Series 2007 Bonds aze payable. Debt Service Account Requirement: as of the date of calculation, an amount equal to the sum of (i) the amount of interest due on the Bonds on the next succeeding Interest Payment Date, plus (ii) if the next Interest Payment Date is not a Principat Payment Dates one-half (1/2) of the amount of principal due on the Bonds, if any, on the second succeeding Interest Payment Date, plus (iii) if the next Interest Payment Date is atso a Principal Payment Date, the amount of principal due on the Bonds on the next Principal Payment Date, in any case less the amount actually on deposit in the Debt Service Account on the applicable calculation date. A-2 D��d� � Deoositorv: a hvst company or other fiduciary acting as a depository pursu�t to a Depostory Letter Agreement with respect to Global Certificates. Denositorv Letter Aareement: with respect to the Series 2007 Bonds, the Letter of � Representations dated on or about the date of issue of the Series 2007 Bonds by and among the City, Bond Registraz and Depository Trust Company. Event of Default: any of the events described as such under the Indenture. Excess Revenues. Sales TaY Proceeds transfeired to the Sales Tax Tnut Fund, pursuant to the Indenture; Excess Revenues remitted to the City from the Sales Tas Tiust Fimd pursuant to the Indenture or credited to subaccounts of the Accounts of the Sales Tax Trust Fund pursuant to the Indenmre aze not subjec[ to the liea of the Indent�se. Fiduciarv: any bank or other organizarion acting in a fiduciary capacity with respect to The Bonds, whether as a paying agent, Bond Registraz, tender agent, or escrow agent, or in a similaz function; provided That a Depository st�ali not be considered a Fiduciary hereunder. Funds and Accounts: the F�mds and Accounts created and described in the Indenture, but specifically excluding the Construction Fund. Global Certificate: Bonds in the foRn of one certificate per maturity, each representing the entire aznount of Bonds of a single series due on a pazticulaz maturity date, w]vch siagle cerrificate per mahuiry may be transfezred on the City's boad register as required by ihe Uniform Commercial Code, but which may not be exchanged for smaller denoarinations unless the Ciry determines to issue Replacement Bonds as provided in the Indenture. Govemment Obli arions: govemment bonds, notes, bills and other secwiries, wluch aze dfrect general obligations of the United States of America Holder: the person or entity in whose name any Bond is registered on the books of the City, or, in the case of Global Certificates, registered in the name of the Depository or its nominee. � Indenture: the Indenture of Tmst dated as of August 1, 2007, between the Ciry and the Trustee pursuant to wMch the Series 2007 Bonds aze issued, together with any supplement or amendment entered into pursuant to the applicable provisions thereof. Interest Pavment Date: May 1 and November 1 of each yeaz, commencing November 1, 2007. M� when used with respect to any Bond, ihe date on wlrich the principal of such Bond becomes due and payable as therein or in the Indenture provided, whether at the Stated Maturity or by scheduled redemption or declazation of acceleration or call for redemption or othecvrise. Natio¢ai Svstem the computerized national securiries cleazance and settlement system to register transfer of ownerslup interests in debt seciuities by making book entdes on the books of a Depository, and through wlilch payments aze dish to Parcicipants as shown on the books of the Depository as the owners of such interests. Neiehborhoods Account: the account by that name in the Sales TaY Tmst Fimd A-3 � i 1996 Indenture: the Indenture of Trust, dated as of April 1, 1996, betweea the Authority and the 1996 Tiustee pursuant to wluch the Series 1996 Bonds were issued. 1996 Tmstee: Wells Fazgo Bazik, Nationai Association, in Minneapolis, Minnesota, in its capacity as Trustee under the 1996 Indenture. 1999 Indeniure: the Indenture of Trust, dated as of Febmary 1, 1999, between the City and the 1999 Trustee pursuant to wluch the Series 1999 Bonds were issued. 1999 Intercreditor Agreement: ttte Intercreditor Agreement and First Amendment to Indenture of Tmst dated as of February 1, 1999, by and beriveen the 1999 Trustee, the 1996 Tmstee, the City and the Authority. 1999 Tmstee: Wells Fazgo Bank, Narional Association, in Minneapolis, Minnesota, in its capacity as Tiustee under the 1999 Indenture. Non-Globai Bonds: Replacement Bonds, which aze not issued in the form of Global Certificates. Orieinal Purchaser: RBC Dain Rauscher Inc., doing business under the name RBC Capital Mazkets. Outstandin¢: when used with reference to Bonds, shal] mean, as of the date of detemunation, all Bonds theretofore authenticated and delivered under the Iadennue except: (i) Bonds thecetofore canceled by the Trustee ot delivered to the Tmstee for cancellahon (or purchased and held by the Tiustee uncancelled under the Indenture); (ii) Bonds and po�tions of Bonds for whose payment or redemption moneys or Govemment Obligations (as provided in Article Seven of the Indenhue) shail have been theretofore inevocably deposited with the Tmstee or any other paying agent for such Bonds in � trust for the Holders of such Bonds, provided, however, that if such Bonds are to be redeemed, norice of such redemprion shall have been duly given pursuant to the indenture or inevocable instrucrions to call such Bonds fot iedemption at a stated Redemption Date shall have been given to the Trustee; and (iii) Bonds in exchange for or in lieu of which other Bonds shall have been authenticated and delivered pursuant to the Indentures; ptovided, however, that in deteimining whether the Holders of the requisite principal amount of Outstanding Bonds have given any request, demand, authorization, d'uection, norice, consent or waiver hereunder, Bonds owned by the City or purchased by the Tmstee as provided therein shall be disregazded and deemed not to be outstanding, except that in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direcrion, norice, wnsent, or waiver, only Bonds which the Trustee actually lmows to be so owned shall be disregazded. Partici�ants: the financial institutions or securiries dealers for whom the Depository effects book-enh h�ansfers and pledges of securiries deposited and immobilized with the Depository. A-4 D�-'? 2�-� . Pavine Aeeat: any paying agent or agents for Bonds appointed by or pursuant to Secrion 9-10 of the Indenture, and its or their successor or successors, and any other corporation or association u�nich may � at any time be substituted in iis place pursuant to the Indenture. - Pavment Date: any date on which Bonds become due, whether by scheduled mahuity, mandatory or extraordinary optional redemprion or otherorise. Permitted Inveshnents: any of the following, wlrich at the time of inves�ent aze legal investments under the laws of the State for the moneys proposed to be invested therein, in addifion to any invesanents pecmitted by the Bond Insurer: (a) Obligations of, or guarantied as to principal and interest by the United States of America, or by any agency or insfrumentaliry thereof hereinafter designated when such obligations are lacked by the fu11 faith and credit o£ the United States of America The obligations included under flus pazagraph (a) aze specifically limited to: U.S. Treas�uyob7igatioas; ii) Fazmers Home Administration certificates of beneficial ownership; iii) General Services Adm%nistrarion participaTion certificates; iv) U.S Mazitime Administration Guaranried Tifled XI Snancing; v) Small Business Administrarion guazantied participation certificates or guazantied pool certificates; vi) Goverament National Mortgage Association guazanried mortgaged backed securities or guazanried participation certificates; vii) U.S. Depamnent of Housing & Urban Development local authority bonds; and viii) Washingto¢ Metropolitan Area Transit Authority a�a transit bonds. � (b) Obligarions of ins[rumentalities or agencies of the United States of America The obligations included under this paragraph (b) are specifically limited to: i) Federal Home Loan Mortgage Coiporation pazticipation certificates or debt obligations; ii) Fedeml Home I,oan Banks consolidated debt obligation or Letter of Credit (LOC� backed issues: ni) Federal National Mortgage Association debt obligations or mortgage backed securiries (excluding stripped mortgage sec�uiries which aze valued geater than paz on the portion of impaid principal). (c) Federal Housing Adminisharion debentures; (d) Commercial paper, payable in the United States of America, haviag original maturilies of not more thzn ninety-two days and which aze rated in the highest rating category by Standazd & Poor's Ratings Serv+:ces and Moody's Tnvestors Service; A-5 � (e) Interest bearing demand or time deposits issued by state bank or trust companies, savings O��'�a.�1 and loan associations, federal savings banks or any narional banldng associations, ihe deposits of which � aze insured by the Bank Insurance Fund (BTF) or the Savings Association Insuzance Fund of the Federal Deposit Insurance wiporarion (SAIF') or mmy successors thereto. These deposits: (i) must be continuously and fully insured by B1F or SAIF or (ii) must have maturiries of less than 366 days and be deposited with banks the short term obligations of which are rnted A-1+ by Standazd and Poor's Corporarion and P-1 by Moody's Investocs Service; (� Money mazket mutual funds or portfolios investing in short-temi US Treasury securities rated AAr1ni or AAAm-G Standazd & Poor's Ratings Services. Tms[ee shall provide Bond Insurer annual certificalion that the money market portfolio Into which funds aze invested is then rated AAAm or AAAm-G by Standazd & Poor's; and (g) Such other investments as aze approved in writing by the Bond Insurer. Book entry securiries listed in (a) and (6) above must be held in a hust account with the Federal Reserve Bank or with a clearing coiporation or chain of clearing coxporarions which has an account with the Pedeial Reseive Bank. ` Pledee Aereement: the Ioint Pledge Ageement relating to the Bonds, dated as of Febmary 1, 1999, entered into among the Authority, City, Civic Center Authority and Tmstee. Prep�ent and Purchase Account: The account by that name in the Bond Fund created and established by Article Five of the Indentuze. Princinai Pavment Date the date on which an installment of Principal is due. Proiects: capital projects to fiuther residential, cultural, commercial, and economic development in the City's downtown and its neighborhoods and capital and operating expenses of cultural organizations in the City. � Ratine Aeencv: Standazd & Poor's Ratings Services, for so long as such entity mainYains a rating foz any series of Outstanding Bonds, or any other national rating agency that maintains a rating on the Outstanding Bonds at the time. Rebate Amount: the aznount, if any, of eamings required to be paid to the United States by the City as the rebate of azbitrage profits. RebaTe Fund the Rebate Fund created and established under the Indenture. Record Date: With respect to any Interest Payment Date on the Series 2007 Bonds, (a) the fifteenth day of the month (whether or not a Business Day) next preceding such Interest Payment Daze or (b) if there is a default in payment of interest due on such Interest Payment Date, a special Record Date for the payment of such defaulted interest established by the Trustee in accordance with Secrion 2-4 of the Indrnture. Redemgflon Date: with respect to any Bond to be redeemed, the date on which it is to be redeemed. Rede�tion Price: with respect to any Bond to be redeemed, the price at which it is to be redeemed. A-6 � Reserve Fund: the fund by that name, established as provided in the Indentise. Reserve Requirem.ent: an amount equal to ten perceat (10%) of the original principal amount of � the Bonds. Revenue Fund: the fund by that name created in the Indenture. Revenues: Sales Tax Proceeds, eamings on all Funds and Accounts created by the Indenhue (except subaccounts created within the Accounts of the Sales Ta�c Trust Fund), and all other revenues or monies from time to time ptedged under the Indenture. Sales T�: a Ci[y sales tas of one-half of one percent on sales Ransactions taYable pi¢suant to Minnesota Statutes, Chapter 297A, that occur within the City, imposed by The CiTy Council pursuant to the Special Act and Resolurions 93-783 and 93-1045, adopted 7une 29, 1993, and July 22, 1993, respectively. Sales TaY Proceeds: all proceeds received by the City from khe Sales Tax pursuant to the Administrative Agreement or oiheiwise, less any Administrarive Expenses. Sales Tae Tmst Fund: the fund by that name created and established in the Indenhae. Scheduled Debt Service Dates: the dates on wlrich principat or interest are scheduled to become due on the Bonds whether at their Stated Matw or on a Sinking Fund Payment Date, or on an Iaterest Paymenf Date or Principal payment Date. Series 1996 Bonds: the Sales Tae Revenue Refunding Bonds (Civic Center Project), Series t 996, dated April 29, 1996, issued by the Authority pursuant to the Series 1996 Indenture. Series 1999 Bonds: the Taxable Sales Tax Revenue Bonds (RiveiCentre Arena Project), Series 1999, issued by the City ptasuant to the 1999 Indenture. � Series 2007 Boads: the Series 20Q7A Bonds and Series 2007B Bonds fogether, issued on � a parity of lien under the Indentuze. Series 2007A Term Bonds: the Series 2007A Bonds whose Stated Mariuiries aze November I, _ November 1, _ aad November 1, 2030. Series 2007A Bonds: the $ Subordinate Sales Tazc Revenue Bonds, Series 2007A, issued by the Issuer pursaant to the Indenture. Series 200'7B Term Bonds: the Series 2007B Bonds whose Stazed Maturiries are November 1, _ November 1, _ and November I, 2030. Series 2007B Bonds: the $ Tazcable Subordinate Sales Tax Revenue Bonds, Series 2007B, issued by the Issuer pursuant to the Indenture. Sinldne Fund Payment Date: one of the dates set forth in Section 3-I (2) of the Indenture for the maldng of mandatory scheduled principal paymeats for the Series 2007 Bonds, including the Stated Mahuity of the Term Bonds. A-7 � Special Act: Laws of Minnesota for 1993, Chapter 375, Article 9, Secrion 46, as amended from time to time. �� State: the State ofMinnesota Stazed Maturiri: with respect to aay Bond, the date specified in such Sond and ihe Indenture or the applicable Supplemental Indenturing as the fised date on which the principal of such Bond is due. Subsritute De�ositorv: a trust company or other fiduciary which replaces a Depository. Sunnlemental Indenture: a supplemental indenture entered into between the City and Trustee which, supplements or amends the Indenture. Transfer Dav: the fifth Business Day prior to the end of each month and the fifth Business Day preceding each Redemprion Date. " Tax Levv Resolu6on: each resolurion adopted by the City Council with respect to the unposition of the Sales Tax, including any amendments thereto. Tezm Bonds the Series 2007A Texm Bonds and the Series 2007B Tesm Bonds. Treasurv Reeulations: regularions promulgated by the United States Department of the Treasury under the Code. Trust Estate: all properiy, rights, interests, privileges, rentals, revenues and income ganted to the Tiustee in the Granring Clauses of the Indenture. Tmstee: Wells Fazgo Bank, National Associarion, a national banking association, and any successor or co-trustee appointed, qualified and acting as such under the provisions of the Indenture. � A-8 � SL7NItii IARIES OF BOND DOCUMENTS THE INDENTURE � The following is a summary of certain provisions of the Indenture. Other provisions of the Tndenture aze summarized elsewhere in This Official Statement, This sianmary does not purport to be comprehensive ox definitive and is qualified in its entirety by the reference to the complete Indentise. Pledge by City . On a basis subordinate to the lien of the 1996 Indenture and 1999 Indenture and certain other listed obligations, the City will pledge and assign to the Tmstee in trust atl of the righfs and interests of the City in Sales Tax Proceeds, amounts deposited in the trust accounts creazed pursuant to the Indenture (except monies on deposit in the subaccounTS of the Accounts in the Sales Tae Tiust Fund and eaznings ihereon), the eazttings derived from the inveshnent of the foregoing sums, and any other property wlrich may become subject to the lien of the Indenture. kLnds and Accounts The follovring Fmmds and Accounts aze es[ablished under the Indenture: (1) ARevenueFund; (2) A Bond Fund; � (3) A Reserve Fund; and (4) A Sates Tas Tiust Fund with the following accoimts: (a) a Civic Center Account, (b) a Neigfiborhoods Accoimt, and (c) a G7iltisal Account. RevenueFund The City has agreed to remit to the Trustee the Sales Tas Proceeds received by the City which � constitute "Escess Revenues° derived from Sa(es Tax Proceeds uader the t996 Iadenhue and 1999 Tndennse. In accordance with the Administrarive Agreement, the City will ceceive Sales Tax Proceeds &om the State on approximazely the fifth day of each month The Trustee is required to deposit in the Revenue Fund, upon receipt by the Trustee all Sales TaY Proceeds received from the 1996 Trustee and 1999 Trustee. Transfers of Fqnds from Revenue �nd On the fiffh Business Day prior to the end of each month and the 5fth Business Day next preceding each Redemprion Daze (collectively, the "Transfer Day"), the Tmstee is required to fransFer funds from the Revenue Fimd to the estent amounts therein aze sufficient, ia the following order of priority: (a) to the appropriate subaccount in the Debt Service Account, an aznount equal to the Debt Service Account Requ'vement, or so much thereof as has not been previously deposited; provided thai if such hansfer is made on the fifth Business Day preceding a Redemption Date, the transfer shail be in the amount of interest due on the Redemption Date on the Bonds to be A-9 � redeemed, plus the aznount of principal of the Bonds to be redeemed, less the amovnt then Il� �'l � available in the Debt Seivice Account or Prepayment and P�schase Account for that purpose; U � (b) after all amounts have been deposited as required by subpazagraph (a), above, to the Reserve Fund, an amount necessary to restore the Reserve Fund to the Reserve Requirement; provided, thai in the event a G7edit Facility has been deposited in the Reserve Fund, funds shall instead be transferred from the Revenue Fund to reimburse the Credit Provider for any amounts drawn under such Credit Facility, ail as more specifically provided in the reimbursement agreement entered into between the City and the Credit Provider; (c) after all amounts have been deposited as requued by subparagaphs (a) and (b) above, to the Tmstee and Paying Agent, an aznount equai to their fees and expenses then due and unpaid, in the amounts agreed upon between the Trustee, Paying Agent and City; and (d) except during the conrinuance of aa Event Default, to the Sales Tax Trust Fund or to the Rebate Fund. Bond Fund Money in the Debt Service Account of the Bond Fund shall be used and withdrawn by the Trustee solely (i) to pay the interest on the Bonds as it becomes due and payable, or (ii) to pay the pnncipal amount of the Bonds at the'u respecrive Principal Payment Dates. Money in the Debt Service Account shatl not be used to purchase or redeem Bonds (oiher than the mandatory sinking fund redemprion of Bonds) but znay be used to pay interest acciued thereon. Prepayment and Purchase Account Monies shall be deposited in the Prepaycnent and Purchase Account of the Bond Fund at such times and in such amounts as the City shall from time to time detemune, provided that such deposits shall not be made from Revenues (or other funds) required by the Indenture to be deposited in the Debt Service Account, Reserve Fund, ox Sales Tax Trust Fund. � Reserve Fund . The Indenture provides that the "Reserve RequiremenY' shall be an amount equal to ten percent (10%) of the original principal amount of the Bonds. The Reserve Requirement for the Series 2007 Bonds will be funded [from Bond proceeds on the date of Boad Closing.] [by means of a surery bond]. On any Interest Payment Date, sums in ttte Reserve Fund shall be credited to the Debt Service Account and applied towazds the payxnent of principal and interest on the Bonds then due and unpaid if and to the extent the sums in the Debt Service Account and available sums in the Revenue Fund and the Prepayment and Purchase Account aze insufficient for such pmpose. � Any balance in the Reserve Fund in excess of the Reserve Requirement shall be credited monthly to the Debt Service Account. Priority of Sources to Cure Deficiency in Debt Service Account If at any time sums ia the Debt Service Account aze insufficient to pay the principal of or interest on Bonds due and unpaid or payable within two days, such deficiency shall be cured from, in order of priority, available sums in the: A-10 � (A) RevenueFund; (B) Prepayment and Purchase Account, to the extent of available fimds; and (C� Reserve Fund; and (D) Sales Tax Trust Fund (other tt�an amotmts which aze held in subaccounts therein established piusuant to a certificate of the City delivered to the Trustee). Sales Tas Trust Fund Pursuant to the 1996 Indenture and 1999 Sndenture, there has previously been created aad established a Sales Tas Tmst Fund, with a Civic Center Account, a Neighborhoods Account and a C�ltural Account therein. The Sales Tax Trust Fund will be held by and administered by the Trustee after issuance of the Series 2007 Bonds. The Trustee is required to, at ihe written direction of the City, establish such subaccounts within the Accounts in the Sales TaY Tiust Fund as may be necessary or desirable to properly administer the Sales T� Trust Fund and AccounLS there'uy Money held from [ima ro time in such subaccounfs shall nof be available for withdrawal to cure a deficiency in any of the Trust Funds. On the fifth $usiness Day from the end of each month and the day next preceding each Redemption Date, the Trustee will transfer Excess Revenues to the Sales Tax Tnut Fund or to the City. Monies transferred to the Sales Tas Tmst Fund shall be allocated aznong the Civic Center Accoimt, the Neighborhoods Acwunt and the Culturat Account (the "Accounts'� pursuant to the formula set forth in Section 5-12 of the Indenture. The monies in the Sales Tax Tmst Fund may be disbursed to the City and applied as authorized by the City Council to pay for the capital expenses of coashuction, equipment and acquisition costs for the expansion and remodeling of the (,lvic Center, and to fund capital projects to fiuther residenrial, cultural, co�ercial and ecoaomic development both in dowutoum Saint Paul and ia Saint Paul neighborhoods, and to pay capital and operating expenses of culhsal organizations in the City. � Any monies disbursed to the City from the Sales T¢c Tncrt Fund, or any Account or subaccount � therein, or tr¢nsfened into a subaccount withEn an Account as descri6ed below, shall be free and clear of the tien ojthe Indeniure and neither the Trustee nar any Holder of any Series 1007 Bonds shall have any interest therein. In ihe event moneys on hand in the Revenue Fimd, Prepayment and Purchase AccounT and Reserve Fund (in thaz order) aze not, together with sums held in the Debt Service Account, sufficient on any date to pay the principal of or interest on the $onds then due, the Trustee shall withdraw from the Sales TaY Trnst Fund available moneys sufficient to cure such a deficiency; piovided that moneys wluch have been the subject of a certificaze delivered to the Tnutee by the City's Director, Office of Financial Services, duecting the Tiustee to disburse the money to the City or to creaze and deposit money in separate sabaccount for a proj ect or pucpose approved by the Ciry shall not be deemed "available" for the putposes of a deficiency draw. Additional Bonds Addirional Bonds secwed by the Indent�ae and on a pazity of lien with the Series 2007 Bonds may be issued as permitted by law and as provided in Section 2-22 of the Indenture, including compliance with certain debt service coverage ratios. See "TT-IE SERIES 2007 BONDS--Additional Bonds.° A-11 � Sales Tax Proceeds � �� With respect to the Sales TaC Proceeds the City has covenanted that it shall not act, directly or by �� / . omission, in any way that (i) would deprive it of its right fo collect and receive the Sales Tax, or its right to pledge the Sales Tas Proceeds or (ii) would deprive the Trustee of the right To apply Sales Tas Proceeds as provided in the Indenture. Investmenf of N�nds Any monies held as part of established Funds under the Indenture shatl be invested or reinvested by the Trustee upon the d'uecrion of the City Treasurer in Permitted Investrnents and any securities purchased and any eaznings or investments of the monies held in the funds established under the Indenture shall be held by the Tiustee in accordance with the Indenture. All such investments must be Perautted Inveshnents. Investments in ihe Bond Fund and Sales Tas Trust Fund shall be valued quarterly. Investments matiu�ing in one yeaz or less, or which may be liquidated upon demaad, shall be valued at paz. Invesisnents maturing in one yeaz or more shall be valued at fair mazket value. Investments held in the Reserve Fund shall be valued twice per year. Discharge of Lien of Indenture The lien of the Indenture will be terminated, and the Trustee and the City will execute and deliver such insiruments of satisfaction and release as necessary, whenever the City has deposited with the Trustee or Paying Agent in trust, cash and/or Govemment Obligations specified in the Indenture, which will provide sufficient cash, when added to all other cash on hand, to dischazge the enrire indebtedness, including interest, on Outstandmg Bonds to their Stated Maturity or any eazlier date upon which they may be redeemed in accordance with their terms, provided that notice of redemption shall have been duly given; and provided fiuthey that said dischazge, if effected with inveshnents, may only become effective upon the Ciry filing with the Trustee a certificate of a certified public accountant stating that the cash and/or Government Obligations deposited in escrow satisfy the dischazge requirements. Upon such discharge, the rights of the Holders of the Bonds shall be limited to the cash or cash and Govemment Obligations deposited with the Tiustee, and the Bonds shall no longer be deemed outstanding under the � Indenture. Events of Default Any of the following events is an"Event of Default" under the Indenture: (I) failure to pay when due any interest on any Bond, or the principal of any Bonds whether at the Stated Maturity date or a date fixed for redemption; or (2) default in the performance or observance of any other of the covenants, agreements or conditions on the part of the City contained in the Indenture if such default shall have continued for a period of thuty days after written norice thereof specifying such default shall have been given by the Trustee or Insurer to the City, or to the City and the Trustee by the Holders of not less than ten percent (10°/a) in aggregate principal aznount of the Bonds with respect to which an Event of Default has occurred at the rime Outstanding; provided, however, if such default cannot be cozrected within such thirty day period, it shall not constimte an Event of Default if conective action is instituted by the CYty within said rime and diligently pursued unril the default is coaected; or A-12 � (3) if the City shall become a debtor in a proceeding instituted by the City, as applicable, uader the United Stazes Banl¢uptcy Code (11 United States Code, Section 101 et seq.). . Remedies Acceleraiion. If an Event of Default occurs and is continuing, the Trustee may, with the prior written consent of the Bond Insurer, and shall upon the written direction of the Bond Insurer, but only if t[ie Bond Insurer has agreed to pay the principal and interest on the Bonds due and payable upon such acceleraTion, declaze the principal of all Bonds then Outstanding and the interest acciued thereon immediately due and payable, and such principal and interest accmed thereon immediately due utd payable, and such principal and interest shall thereupon become and be i�ediately due and payable. Other Remedies. Upon the occurreace of an Event of Defaul2, the Trustee may, with the prior written consent of the Bond Insurer, pursue, and shall ptusue ¢pon the written d'uection of the Bond Insurer, any available remedies by suit at law or in equity to enforce the payment of principal, inteiest and any premium on the Yhen Oatstanding Bonds. AI2 remedies confeaed upon or reserved by fhe Tmstee or the Bondholders aze cumulaflve and aze in addition to any other remedy now or heieafter eacisting aY law, in equity or by statute. If aay Event of Defauk shall have occurred, aad if it shall have been reqvested to do so by the Bond Ins�ser and shall have been indeamified as provided in the Indent�se, the Trustee shall be obliged to exercise such rights and poweis conferred by the Indenture as the Bond Ins�ner shall direct; provided, however, that the Tmstee shall have ihe right to decline to comply with any such request if the Tmstee shall be advised by Coimsel that the action so requested may not lawfully be taken. Every right and power accruing to the Trustee or Bondholdecs upon an Event of Default may be exercised as often as deemed expedient; no delay or omission in exercising any such rights or powers shall be consfrued as a waiver of or acquiescence in an Event of Default. Direction of Proceedings by Bond Insurer The Bond Insurer shall have the righy at any time during ihe continuance of an Event of Default, + by an instrmnent or inshvments in writing executed and delivered to tUe Trustee, to direct the time, method and place of conducting all proceedings to be taken in connection with the enforcement of the teans and conditions of the Indenture, or for ihe appointment of a receiver or any other proceedings hereimder; provided that: (i) such d'uection shall not be othervrise thazt in accordance wi[h the provisions of law and of the Indenture; (ii) the Tnvstee may take any otha action deemed proper by the Tiustee wIucfi is not inconsistent with such direc[ion; and (iii) the Trustee shall have been indemnified as provided in the Indenture. Application of Monies All monies received by the Trustee piasuant to any right givea or action taken under the provisions of the Indenture shall, after payment of the costs and eacpenses of the proceedings resulting in the collection of such monies and of the e�cpenses, liabilities and advances incuired or made by the Trustee, be deposited in the Fund or Funds czeated �mder the Indenture u the Trustee deems appropriate. Such moaies shall be used to pay principal and interest on the Bottds in accordance wiih the fucther provisions of ihe Indenture. A-13 � Rights and Remedies of Bondholders _ � No Aolder of any Bond shall have any right to institute any suit, action or proceeding in equity or D�� at law for the enforcement of the Indent�se or for $te execurion of any h'ust thereof or for the appoint[nent of a receiver or for any other remedy thereunder, unless a default shall have become an Evenf of Default and the Bond Insurer shall have made written request to the Trvstee and shall have offered it reasonable opportunity either to proceed to exercise the powers ganted in the Tndenture, or to institute such action, suit or proceeding in its own nazne, nor unless also they have offered to the Trustee indemniry as provided in the Indenhue, nor imless the Trustee shall theceafter fail or refuse to excise the remedies ganted in the Indenture, or to institute such action, suit or proceeding in iis own name. Nothing in the Indenture shall, however, affect or impair the right of any Bondholder to enforce the payment of the principal of and interest on any such Bond at and after the maturity thereof, or the obligation of the City to pay the principal of and interest on each of 1he Bonds issued undei the Indennue to the respecrive Holders thereof at the rime and place, from the source and in the manner provided in said Bonds. Waiver of Events of Default The Bond Insurer may in its discretion waive any Event of Default under the Indenture and its consequences and rescind any declazafion of maturity of principal; provided, however, that there tnay not be waived (a) any Event of Default in the payment of the principal of any outstanding Bonds at the dates of maturity specified therein or (b) any defauk in the payment when due of the interest on any such Bonds, unless prior to such waiver or rescission all aneazs of interest, with interest (to the extent pernutted by law) at the rate bome by the Bonds with respect to which such default shall have occurred in overdue installments of interest, or all azreazs of payments of principal when due, u the case may be, and all expenses of the Trustee and Payiag Agent, in connection with such default shall have been paid or provided for. No such waiver or rescission shall extend to any subsequent or other default, or impair any rightconsequentthereon. The Trustee ; The Trustee under the Indenture is Welis Fargo Bank, National Associarion. The Ittdenture provides that the Trustee shail, prior to the occurrence of any Event of Default under the Indenriue and after the curing of al] Events of Default which may have occisred, perForm only such duries as aze specifically set forth in the Indenture. During the existence of any Event of Default, the Tmstee shal] exercise such of the rigt�ts and powers vested in it under the Indentuxe, and use the same degree of caze and skill in their exercise, as a pmdent person would in the conduct of Yus own affairs. The Trustee may acquire and hold Bonds for its own account with the same rights as if it were not Trustee under the IndenNre. The Trustee shall be protected in acting upon any norice, order, requisition, request, consent, certificate, order, opinion (including an opinion of Counsel), affidavit, letter, telegram or other paper or documem in good faith believed by it to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Trustee pursuant to the Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authoriry or consent is the Holder of any Bond, shall be conclusive and binding upon all future Holders of the same Bond and any Bond issued in eacchange therefor or in place thereof. A-14 � In the Eveni of Default, the Indenture requires the Tmstee to give the Holders notice thereof; except for an Event of Default in the payment of principal and interest on tfie Bonds, the Tmstee may witk�hold notice on the good faith advice of a tiust committee of the Tmstee that such withholding of � norice is in the interest of the Holders. Snpplemental Indentures Except for certain specific piuposes set out in the Indenture, supplementat indentures modifying, azuending or rescinding tt�e tezms of the Indenture require the consent of tfie Holders of not less than a majority in the aggregate totai principal amount of the then Outstanding Bonds. However, the consent of Holdeis of 100 percent of the principal amount of Outstanding Bands is required for supplemental indentures extending the maturiry of the principal of or interest on any Bond, or reducin.g the amount of the principai of, premium or interest rate on any Bond, or giving any Bonds a privilege or priority over any other Bonds, or modifying the provisions of the Indenture relaring to Bondholder consettt to supplementai indentures. Supplemental indentures providing for (i) the issuance of Additional Bonds, (ii) cure any ambiguity or focmai defect on omission, (iii} gant to or confer upon the Trustee for the benefit of The Bondholders additional rights, remedies, powers, authority or security, (iv) evidence the appoinhnent of a separate Trustee or co-hvstee, (v) changes which do not materially prejudice the Aolders of The Outstanding Bonds, among other purposes, may be entered into without the consent of or norice to, the Holders of Bonds then Outstanding. Amendments, Changes and Modifications If the required number of Holdeis consent to any amenc�ent or modification of tfie Indenture, no Hotder shail ]�a.ve the right to objecf fo t6e ferms and provisions tfiereof or to enjoin or reshain the CiTy or Trustee from executing such amendment. Bond Insurer Consent So long as the Bond Insurance Policy is in full force and effect, and the Bond Insiser is not in • default thereunder, wherever the teim Bondholder or a teim of like meaning appeazs in the Indenture, the Bond Insurer shall be deemed to be a Bondholder of a sufficient percentage of the outstanding Series 2007 Bonds (a) to initiate any action or effect any demand which a Bondholder may initiate or effect, and (b) to approve or disapprove any ac�ion, forbeazance or aznendment wIuch is subjed to Bondholder approval or initiation, excluding approval of a Supplemental Tndenture which requires the consenf of 100 percent of the Holders of Outstanding Bonds. ('I'he remainder of this page is mtentionally left blank.) A-15 \J ... •► BOOK-ENTRYSYSTEM • Book-Entry Only System DTC wi11 act as seciuiries depository for the Series 2007 Bonds. The Senes 2007 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (the paztnership nominee of DTC). One fully-registered Series 2007 Bond certificate will be issued for each maturity of each series of the Senes 2007 Bonds in the principal amount of such maturity, and will be deposited with DTC. DTC is a lunited-putpose tmst company organized under the New York Banldng Law, a "banlang organi�ation" within the meaning of the New York Bavlong Law, a member of the Federal Reserve System, a"clearing coiporation" within the meaning of the New Yoik LSniform Commercial Code, and a"cleanag agenc}�' registaed pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC hoids securiries that its participants (`Participants'� deposit with DTC. ATC also facilities the settlement among Participants of securiries transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminafing the need for physical movement of securiries certificates. Direct Participants include securities brokers and deaters, banks, trust companies, cleazing coxporarions, and certain other organizations. DTC is owned by a number of its D'uect Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc, and the National Associarion of Securities Dealers, Inc. Access to the DTC system is also available to others such as securiries brokers and dealers, banks, and hvst companies that cleaz through or maintain a custodial relationship with a Direct Pazticipant, either dtrectly or indirectly ("Indirect Participants"). The Rules apphcable to DTC and its Participants aze on file with the Securities and Exchange Conunission. Purchases of Series 2007 Bonds undex the DTC system must be made by or through Direct Pazticipants, which will teceive a credit for the Series 2007 Bonds on DTC's records. The ovmership interest of each actual purchaser of each Series 2007 Bond (`Beneficial Owner'� is in turn to be recorded on the Duect and Indirect Participants' records. Beneficial Owners will not receive wdtten confuuaarion . from DTC of their purchase, but Beaeficial Owners aze expected to receive written confinnations providing details of the h�ansacfion, as well as periodic statements of their holdings, from the D'uect or Ind'uect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2007 Bonds aze to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certi5cates representing their ownecship interest in Series 2Q07 Bonds, except in the event that use of the book-enhy system for the Series 2007 Bonds is discontinued or as an option upon the transfer of an entire mat�uity. To facilitate subsequent tsansfers, all Series 2007 Bonds deposited by Participants with DTC aze registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Series 2007 Bonds with DTC and their regishation in the name of Cede & Co. effect no change in beneficial ownership. DTC has no lmowledge of the actwzl Beneficial Owners of the Series 2007 Bonds; DTC's records reflect only the idenrity of the Direct Participants to whose accounts such Series 2007 Bonds aze credited, which may or may not be the Beneficial Owners. The Participants wili rematn responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communicarions by DTC to Direct Participants, by Direct Participants to Ind'uecY Participants, and by Direct Pazticiganu and Indirect Participants to Beneficial Owners will be govemed by azrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. C�3.1 ��`�' • Redemption noaces shall be sent to Cede & Co. If less than all of the Series 2007 Bonds within an issue aze being redeemecl, DTC' s pcacrice is to detezmine by lot the aznount of the interest of each Airect Pazticipant in such issue to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to Series 2007 Bonds. Under its • usual procedures, DTC mails an p�ibus Proacy to the issuer of the Senes 2007 Bonds as soon as possible after the record date. The Omnibus Proay assigas Cede & Co.'s consentiag or votiag rights to those D'uect Participants to whose accounts the Series 2007 Bonds aze ctedited on the record date (identified in a listing aTtached to the Omnibus Proxy). Frincipal and interest payments on the Series 2007 Bonds wi11 be made to DTC. DTC's practice is to credit Direct Participants' accounts on the payable date m accordance with their respective holdings showa oa DTC's records unless DTC has reason co believe tfiat it wiil not receive payment on the payable date. Payments by Pazticipants to Beneficial Owners will be govemed by standing iastructions and customary practices, as is the case with securiries held'for the accounts of customers in beazer fozm or registered in "sh name,° and will be the responsibility of such Pazticipant and not of DTC, the Tmsfee or the City, subject to any statutory or regulatoty requirements as may be in effecE from time to time. Payment of principal and interest to DTC is the responsibility of the City or the Tms[ee, disbursemenY of such payments to D'uect Participants shall be the responsibility of DTC, and disb�ssement of such payments to the Beneficial Owners shall be the respons�bility of Duect and Indirect participants. DTC may discontinue pmviding its services as securiries depository with respect to the Series 2007 Bonds at any time by giving reasonable notice to the City and the Tmstee. Under such oircumstances, in the event that a successor seeiuities depository is not obtained, Series 2007 Bond certificates are required to be printed and delivered. The preceding infoimation in tlris sectioa conceming DTC and DTC's book-entry system has been pmvided by DTC. No representation is made by the City or the Underwriters as to the accuracy or adequacy of such information provided by DTC or as to the absence of material adverse changes in such information subsequent to the date of this Officiat Statement The City may decide to discontinue use of the system of book-entry transfers through DTC (or a • successor securities depository). In that event, Series 2007 Bond certificates will be printed and delivered. The City and the Tmstee shall have no responsibility or obligarion to DTC Pazticipants, to Indirect Pazticipants, or to any Beneficial Ocvner with respect to (i) the accurncy of any records mainmined by DTC, any D'uect participant, or any Indirect participant; (ri) any notice that is peanitted or required to be given to owners under The Indenture; (iii) the selection by DTC or any Direct Pazticipant or Indirect Participant of any person to receive payment in the event of a partial redemprion of the Series 2007 Bonds; (iv) the payment by DTC or any Direct Pazticipant or Indirect Participant of any amount with respect to the principal o� Redeinption Price, if applicable, or interest due on the Series 2007 Bonds; or (v) any consent given or other action taken by DTC as owner of ihe Series 2007 Bonds. Discontinuance of Book-Enhy System DTC may discontinue providing its sexvices with respect to the Series 2007 Bonds at any time by giving notice to ihe Tmstee aad the City and dischazging its responsibilities with respect thereto under applicable law, or the Ciry may temtinate its participarion in the system of book-enhy transfeis through DTC or any other securities deposiYOry at any time, In the event that the book entry system is discontinued, the City will execute, and the Trustee will authenticate and make available for delivery, replacement Series 2007 Bonds in the form of regstered certi&cates. In addition, the following Y.cv:s;oas cvould appiy. t�4z principal of and redemp�on premium, if any, on the Series 2007 Bonds wIli � � U be payable at the principal coiporate h�ust office of the Tmstee, and interest on the Series 2007 Bonds will ��^�� be payable by check mailed on each Interest Payment Date to the registered owners thereof as shown on / the registration books of the Trustee as of the close of business on the Record Date with respect to the . applicable Interest Payment Date; provided, however, that registered owners of at least $1,000,000 aggregate principal amount of Series 2007 Bonds tnay, at least five days preceding the Record Date with respect to any Interest Payment Date give the Trustee written inshucrions for payment of such interest on each succeeding Interest Payment Date by wire transfer or by deposit to an accotmt in the United Stazes. The Series 2007 Bonds will be transferable and exchangeable on the teims and condivons provided in the Indenture. (The remainder of this page is intentionally left blank.) \_J f'.3c3 • APPENDIX C GENERAL INFORMATION CONCERNING THE CITY The City of Saint Paul (the "Cit}�') is the capital of the State of Minnesota and its second largest city. The geogaphic area of the City encompasses an azea of approximately fifty-six squaze miles and is situated wholly in Raznsey County. The City and reaon have a balanced and divezsified employment base with no single industry sector dominating. The populalion of the City in 2000, according to the United States Census of 1990, was 289,151. The Ciry's cunent population is estimated to be 287,385 (Minnesota State Demographic Center estunate). Trends in population and number of households aze showa betow. Population and Household Data— City of St Panl Yeaz Popularion Households 2006 286,620 113,574 2005 287,385 113,587 2000 287,151 112,109 1990 272,235 110,249 1980 270,230 106,223 Source: US Census 1980, 1990, 2000; Minnesota Siafe Demogr¢phic Center utimaie, 2005 City Governance The City of Saint Paul has been a municipal coiporation since 1854. The first City Charter was adopted i¢ 1900; the cunent Chazter was adopted in 1970. The City has a Ma}rorCouncil form of governmenf, with execurive power ves[ed in the Mayor and legislative power in the Council. The Mayor has veto power, which the Council may override with a vote of five of its seven members. Cotmcil members aze elected by Wazd to four-year conciurent teims of office. The Mayor's term is four yeazs. The City Council positions are part time. The Mayor was elected on November 8, 2005, and his cunent term e�cpires January 2, 2010. Terms o£the council members listed below expire January 2, 2008. Name Chris Coletnan Jay Benanav Daniel Sostrom PahickHams Lee Helgen Kathy I.anhy Deborah Montgomery Dave Thime Office Mayor Council member Council member Council member Council member Council member Council member Council member In Office Since: January 2006 January 1998 January 1996 January 2000 November 2003 7anuary 1998 Januazy 2004 7anuary 2004 The City has approacimately 2,982 authorized, budgeted full-time equivalent employees. G1 � � • In oider to deliver better Ciry 5nancial services the Mayor and the City Council have placed /„ respoasibility for managing the City of Saint Paul's 5nancial resources in the Office of Financial � 7�� U� • Services. The Financial Sernces Office manages all of ihe Ciry's 5nancial �ansactions from stzrt to finish. The Office ensvres that the budget process effectively meets budget users' needs, cieazly reports useful infoimation to elected officials and The citizens of Saint Paul regazding City 5nances, manages cash and investments, issues debt, and measises costs and perfoimance related to delivering City services. Mr. Matthew G. Smith was appointed to the position of D'uector of the Office of Financial Services in October 2002. Mr. Smitl� eamed a bachelor's degree in history and a master's degee in agricultural economics from the University of Minnesota Mr. Smith worked as a research associate for the University of Minnesota and an economist for the United States Depaztrnent of Agriculture from 1984 to 1988. In 1988 he joined the Mianesota State Department of Revenue as the depuanenYs agicultisal economist, and then served successively as ptoperty tac system managec, assistant to the commissioner, and aasistant wmmissioner for properiy tas. Mr. Smith was designated as acting commissioner of revenue in December 1994 through mid-1996, and then served as deputy comxnissioner through 1999. He served as commissioaer of the Minnesota Depazhnent of Revenue from Ianuazy 1999 to October 2002. Mr. Ron Kline is the interun manager of the Treasury Section. He has worked for the City of Saint Paul since September, 1973. He has been involved with Saint Paul's Snancial management for 34 yeazs. He is the City's chief budget analyst and is currenfly serving in an interim role of �easury manager for the City of Saint Paul's Office of Financial Services. He has also served as the 5nance director during interim periods in the past. The Office of Financial Services is the Mayor's adminisnative department responsible for overseeing the development, implementation and monitoring of the Ciry's financial resources, processes, policies, and planning for the operating, debt service and capital budgets. Ron's job responsibilities include fiscal analysis, forecasring, and strategy setting, and maldng and implemenring financial and operarional recommendations for the Mayor, Council and City departments. Ae serves as a liaison on the budget and financial matters for various City departments. As treasury manager, he ensures proper collection and disbursement of ail City and HRA funds, management of an investment portfolio in excess of $200,00O,OOQ and administration of City debt. Ron is a membex of the Govemmental Finance Oflicers Association of the United States and Canada (GFOA). Ron was bom and gew up in Saint Paul, and graduated from the University of Minnesota and Cretin Aigh School. • (The remainder of this page is intentionally left blank.) C-2 � Retail Sales - City of Saint Panl(a) Sales & Mazketina Manasement magazine (SNIM) reported the following estimazes of total retail • sales figures for the City in its annual "Survey of Buying Power" (2000-2005 edirions): (b) The following table reports SMM data on Total Retail Sales for St. Paul and Minneapolis for the yeazs 2000 [hrough 2005 and the percentage change from the prior year. (b) �a� The ertimates are based on [he Cerssus ofRetail Trade ("CRT ) and the Nonh tlmerican Indusdy . Clarsificafian System (`iVAICS ). The CRT includes county-Ieve1 data and is updated every five years. Using the CRT, arznual estimazes are derived for countiu and individuaZ municipaIities using a proprietary methodoZogy. (bJ Sales numbers are ezpressed in thousands of dollars. �� Not gerzerally subject to sales and use tazes. C-3 • • • Average Annnal Labor Force Data Total Labor Force City of Saint Paul Unemnlovment Rate City of Mefro State of United Saint Paul Area�°1 Ivlinnesota States 2006 146,616 2005 149,832 2004 149,599 2003 151,622 2002 152,333 4.1% 3.7% 4.0% 4.6% 4.4 3.8 4.0 5.1 53 43 4.6 5.6 5.5 4.7 4.8 6.0 5.1 4.4 4.5 5.8 �°� RepruentstheMinneapolis-SaintPaulMN-Y['Zl3-counryMetropolitanSiatislicalArea Source: MinnesafaDepartmentofEmplaymentandEconomicDevelopmenf, htip:/hvww.mnworkforcecente>. org. Employment Data: Covered Employment and Wages Avera Annua Covered Emplo}maent Averaee Annual Waee Yeaz Saint Paul Metro(aI Minnesota Saint Paul Metro�°) Minnesota 2005 179,413 1,594,418 2,639,492 $43,940 $46,644 $40,820 2004 177,225 1,561,241 2,577,178 43,628 46,1?A 40,404 2003 179,194 1,558,353 2,571,829 42,328 43,940 38,584 2002 193,993 1,565,351 2,584,731 44,356 42,640 37,440 2001 187,444 1,598,131 2,611,684 42,900 41,756 36,608 2000 188,134 1,60Q536 2,608,854 41,543 40,404 35,412 �a� Seven-countyMetr000litanCouncilarea_____________________'__________________'__________'_________________ `_____________' _ _ Note: Covered &mployment and Average Anrsual Wage data for 20D0 through 2005 are not direcSy comparab(e io prior years' figw�es, due ta the sh� in reporting from the Standard Irsdusirta[ Classification ("SIC') system to ike new North American Industry Ctassifcation Sysiem ("NAICS'). 2006 data are not yet availab[e. Source: Minnesoia Department of EmpZoyment and Economic Development; pre-2002 Saint Paul employment data adjusted by Saint Pau[ Departrneni of PI¢nning and Economic Development Eo eeclude Maplewood 3Mfacility. (Post-2002 staie data a[so excludes tke 3MMaplewood faciliry.) "Covered Employment and Wages" data refer to employers located in particular geographic azeas—in this case, Saint Paul, the seven-county'Itvin Cities Metropolitan Council azea and Minnesota. There is neazly a one-yeaz time lag in the processing and reporting of such data The most recent annual data aze $om 2005. Since 2000, the State of Minnesota has based its reporting of these data on NAICS ciassiFications. Major Employers in Ramsey Couaty The following lists provide major employers in the City of Saint Paul as well as several of the lazger employers throughout Ramsey County, ranked by the number of full-time employees in the County. C-4 o�—� �-� , -- eo IeYed:9 I • Private Employers ia Rafficey Coanty Emolover U.S. Bancoip 3M Company Tazget Corporation cPVGvidant Minnesota Mutual Life Insurance Ford Motor Company St, paul Traveler's Insurance Mazsden Ecolab Inc. St. Paul Pioneer Press Deluse Corporation Lawsoa Softwaze Product/Seivice Fiaancial Indushial and consumer products Retail Electromedical devices Insurance Truck assembly Tnsuraace 7anitorial and security services Chemical producfs and cleaning systems Newspaper typesetting Paper and electronic paytnent protection Computer consulting(soRwaze devetopmenf Approximate EmDlovment 51,000(a) 14,200 t t,sool�l 3,000(�) 2,400 2,070 2,000 1,800 1,275 1,000 986 936 Notes.� Employment is within Ramsey Counfy ¢nd not necessarily comparzywide. Ma�or employers no longer on the list include Cardiac Pacemakers, now part of CPI/Guidant, and Conseco Financial, now part of Greentree Pinancial. �a� Employment figure is nation-wide; company headguar[ers are in Saint Paul. �� Eniire Twin Cities metro area. �� Employment as af February 2003; CPUGuidarst no longer reZeasu this information. Source: Telephone survey of individual employers, February 2005. Non-Profft and Govemment Employers in Ramsey County Emolover State of Minnesota University of Minnesota Independent School District 625 HealthEast (three caze centers) Children's Hospital Regions Hospital United Hospital Ranvsey Coimty City of Saint Paul U.S. Postal Service Univeisity of St. Thomas Amherst H. Wilder Foimdarion ProducUService Staze govemment Post-secondary education Public education Health care Heakh caze Heatnc �aze Health care County govemment City govemment Postal service fiigher education Hvman services Approximate Emnlovment 35,751 27,000 7,700 7,500 5,500 3,800 3,700 3,500 3,000 2,200 1,400 800 Note: Emp[oyment is withirz Ramsey County and not necessarily company wide for all employers listed, except the State of Minnesota which refTects the sotal number ojemployees in the seven-county metropolit¢n area and the University of �nnesota, which reflects the Minnea,00lu m�d Sains ' Paul campuses. Source: TeZephone survey of individual empZoyers, February 2005. :�.7 • • • o�-��-� J Annual Buildiag Permits Issued by the City Total BuildinR Permits Yeaz 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 Nimiber 8,818 8,905 9,835 10,577 11,557 11,444 10,612 10,993 8,909 8,322 V alue $555,104,063 479,840,220 673,664,737 432,220,911 498,371,219 414,778,340 405,886,895 437,622,506 395,002,812 299,841,425 Source: City of Sairzt Paul O�ce ofLicense, Inspections and Environmental Protection. Annual Residenrial Building Permits Issued by the City New Residentiai Consh'uction • Yeaz 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 Siazle Familv__ No. of Peimits Value 119 $18,688,103 123 18,543,504 179 24,960,641 150 20,049,878 l29 17,194,190 112 14,466,067 130 13,490,527 115 12,538,956 90 13,960,814 58 6,128,523 Duplez and Multiple Unit No. of No. of Pertnits Value Units 30 $ 63,723,065 426 29 33,309,384 251 77 160,793,053 1,698 38 64,793,267 627 3Q 39,249,237 414 34 49,259,771 536 24 2A,691,921 221 17 5,617,956 46 14 2,427,628 N/A 5 3,648,330 N/A Total Residential No. of Pemilts Value 149 $ 82,411,168 152 51,852,888 256 185,753,694�'� 188 159 146 154 132 104 63 Source.� City of Saint Paul 0�ce ofLicense, Inspections and Environmental Protection. 84,843,145�"� 56,443,427�`� 63,725,838 38,182,448 18,156,912 16,388,442 9,77b,853 (a) An additiona[ I S permits were issued for footingffoundaiion in 2004; 1056 units, va[uation $10,410,840. (6) An additional 13 permits were issued jor footing/foundation in 2003; 322 units, valuation $2,438,500. (cf Footing/foundation permits were processed in 2002 for an additiona1207 units. C-6 • Public Education Independent School District 625 is coterminous with the City boundazies and approsimately 5,797 full-time equivalent personnel. Its educarion program encompasses I�dergarten through grade twelve and post-high school vocational courses. Enrollments as of October 1 aze shown below: Eady Kindergazten Kindergarten Grades I-6 Grades 7-12 Pr�School Han,dicapped Total Saurce: Estimated 2002/03 2003/04 2004/OS 2005/06 2006/07 589 561 953 915 946 3,I45 3,035 3,107 3,319 3,322 19,442 18,535 17,906 17,976 18,044 20,175 19,733 19,370 19,373 19,066 512 579 565 556 564 43,863 42,443 41,901 42,139 41,942 Colieges and Universities Located in the City College/[Tniversitv Universiry of Minnesota (metro campuses) University of St. Thomas(b) Metropolihan State University College of SG Catherine(b) Hamline University Saint Paul College Concordia University Macalester College William Mitchell College of Law Luther Seminary�� College of Visual Arts Fall 2006 Enrollment(a) ead Count 50,402 10,712 6,627 5,246 5,109 4,625 2,046 ],918 1,103 819 169 �°� Includes fu11- and pan-time students �� Ittdudes both Minneapolis and Saint Paul campuses. The main campuses for both the University of St. Thomas and ihe CoLlege aJ�St. Catherine are located irz Saint Paul. (c) FaZl, 2005 Source: http.�//www.mhesostate.mn.us. City Ftinancial Statements The City is audited annually by tfie Office of the State Auditor. The audited financial statemenis for the 5sca1 years ended December 31, 2002, 2003, 2004 and 2005 aze available on the City's website.�a� The audited financiat stazements for the fiscal year ended DecemUer 31, 2006 will be available from the City in July of 2007. (a) Available at: http://www.stpaui.gov/depts/ofs/cafr.fitml. C-7 � • \J CiTy Bndgefing Process � On or before August 15 of each yeaz, the Mayor presents his budgeY to the City Council for ihe foliowing calendar yeaz. The budget includes pioposed expenditures and the means of fin�eing them The City Council holds public heazings in November and Decetnber to obtain taxpayer comments. The budget is legally adopted fluough passage of a Council resolution after the 5nal public hearing. The budget is required by the City Charter to be balanced. Certification of the finai levy to the Cotmty is zeqused within five woilang days aftex DecembeL 20. City Debt Policy In 1977, the Ciry of Saint Paul, Ramsey County, Independent School Dis�ict 625 (Saint Paul Pubhc Schools) and the Saint Paul Port Authority joined toge+her and formed a Joint Debt Advisory Committee (JDAC� to control Saint PauPs genezal obligation debt in a responsible manner while providing for the future physical development of the City. In 1989, the City received two national awards in recognitlon of its overlapping debt management policy. The Govemment Finance Officeis Association of the United States and Canada awazded its 1989 "Awazd for Excellence" [o the City for debt management and also awazded the City its "Louisville Awazd for Innovation in Financial Management" In 1998, the wozk of the JDAC was incoipoiated into the work of the Soint Property Tax Advisory Committee (JPTAC). The JPTAC, created by Minnesota law, is made up of elected officials from the City, Ramsey County and Saint Paul School District. The JPTAC is charged with the obligarion to reduce ffie overall taY burden on the citizens of the City through tax reform and integration/consolidation of service delivery. Because the membership and ultunate goals of the JDAC and the JPTAC were consistent, the two efforts were merged under the aegis of the JPTAC. The goals of the JPTAC for the management of debt were completed and presented to the Committee in November 1998. The goals were adopted by resolutions of the City, County Schools and Port Authorlty in eazly 1999. The JPTAC will conrinue to biennially prepaze the report which serves as a planning tool that . benefits each unit of govemment individuaily and coilectively. It demonstxates an ongoing commitment to plan and work together to finance needed capital 'unprovements in a responsible way which considers the impact upon the tas base of the Ciry. Housing and Redevelopment Authority The Housing and Redevelopment Authority (fIRA) of the City of Saint Paul, Minnesota is a public body, cotporate and politiq created under the laws of Minnesota and established in 1947. The HRA was originally established to undertake urban renewal programs. It now admuusters a full range of housing, redevelopmeat and economic development acrivities, which aze designed to redevelop the residential, commercial and industriaS azeas of the City and to ptovide adequate jobs, a sound fiscal base, and a variety of affordable housing to City residents. The ARA is govemed by Ciry Council members serving as HRA Commissioners, and is staffed by City employees. � ��-� � • Saint Panl port Anthority The Port Authority of the GYTy of Saint Paul is a municipal corporarion and a redeveloptnent � agency under the laws of Minnesota The Port Authority is an industriai development agency, seeking out and encoisaging businesses to locate or e�cpand in the Ciry, and providing industrial redevelopment and financing to the manufacfuring seaor. The Port Authority is govemed by a seven-member Boazd of Comtnissioners, appointed by the Mayor, subject to Council approval. T�vo Commissioners must be CSty Counc� Members. The Port Authority functions as an independent govemmental enrity sepazate from the Ciry. Revenue bonds issued by the Port Authority do not cons[itute an indebtedness of the City. T6e Port Authority has issued certain bonds to which the City's futl faith and credit is pledged, and for wluch the debt service is paid from revenues of the Port Authority and from taYes levied by the Port Authority. Employee Pension Ylans Housing and Redevelopment Aufhority Pexsion Plan: The Hous�ng and Redevelopment Authority pension is a defined cnntnbution plan. Employees under this plan receive a pension based on the amount placed in the plan by the employee, the employer, and interest eamed. Therefore, the plan is futly fimded at all rimes. The 2006 (unaudited) employer conhiburions to this plan were $48,729. All fult-time and certain part-time employees of the Ciry of Saint Paul who aze not participants of the Housing and Redevelopment Authority Pension Plan are covered by retirement plans administered by the Public Employees Retirement Assoeiarion of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF� and the Public Employees Police and Fire Fund (PEPFF), which aze cost-shating, multiple-employer retQement plans. These pIans aze estabHsfied a¢d adininistered in accordance with Minnesota Statutes, Chapters 353 and 356. PERF members belong either to the Coordinated Plan or the Basic Plan. Coordinated Plan members aze covered by sociai security and Basic Ptan members aze not. All new members must pazlicipate in the Coordinated Plan. All police ofCicers, fire fighters and peace officers who qualify for membership by statute aze covered by the PEPFF. "Housing attd Redevelopment Authority Pension Plan" aeembers also are a part of fhe Sociai • Securiry system Since 1986, PEPFF new employees pay for a Medicaze tax. In addiflon to the employer contdbutions to those plans listed on the following pages, the Ciry (excluding its water utility) conhibuted $7,335,625 to FICA in 2006 (unaudite� on their behalf. The three de5ned benefit pension plans adminis[ered by the named associations were established by Staze law and require membecship by qualified City employees; employees and the City aze required to conhibute to the pension plans. The Housing and Redevelopment Authority defined conhibution plan covers 13 emrent employees of the City. The plan is an accommodarion to those employees who transfened to the City from the Housiag and Redevelopment Authority in 1978. Saint Pau[ Fire and Police pe:sonnel hired prior to June 15, 1980 belonged to the PoIice and Fixe Consolidation Fund (PFCF�. The City was responsible for any unfunded liability in these plans. On July 1, 1999 these plans were £olded into the Statewide PEPFF. The CYry is now only responsible for noimal pension costs for these employees plus a 10-year fixed annuai payment of $40,967. State Aid will equai the payment. AII aew fire and police personnel hired after June 15, 1980 have been placed directly in the PEPFF. C-9 • The City's conhiburion to the Public Employees Retirement Association (PERA) a statewide plan, includes aa aznount to retire prior yeazs' unfimded liabiliries. The PERA annual actuarial valuation • report for the fiscal year ended June 30, 1997 discloses "Tn addition to the level noimal cost, the actuazial calcutations iaclude the amommt of addirional annual contribution which would be required to retire the current imfunded accrued liabilityby June 30, 2020:' The 2004 employer contriburions were as follows: PEPFF - Public Employees Police and Fire Fund �7,460,167 PEI2F - Basic and Coordinated Fund (excluding City's water urility) 54,993,628 The funding rarios indicated in the most recent actuarial valuarions (3une 30, 2004) aze disclosed according to Statement No. 25 of the Govemmental Accounting Standazds Board (GASB) and aze as follows: PEPFF - Public Employees Police and Fire Fund PEKF - Basic and Coordinated Fund f6.us.1269419.08 • C-1� 97.15% 74.53% D7-� 2� � •