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09-1012Substitute 9/16/09 Council File # 09-1012 Green Sheet # 3079056 AWARDING THE SALE OF GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2009G, AND TAXABLE GENERAL OBLIGAITON TAX INCREMENT REFUNDING BONDS, SERIES 2009H; FIXING THE FORM AND TERMS OF THE BONDS AND DIRECTING THEIR EXECUTION AND DELIVERY; AND PLEDGING TAX INCREMENTS AND CERTAIN PARKING REVENUES FOR THE PAYMENT THEREOF 1 WHEREAS, the City Council of the City of Saint Paui, Minnesota (the "City") has heretofore 2 deternuned that it was necessary and expedient to provide money to establish a redevelopment project in 3 the City (the "ProjecP') located within the area of the City bounded by Wabasha and 5t. Peter Streets and 4 Fifth and Sixth 5treets (`Block 39"); and 5 WHEREAS, the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the 6 "HRA") established the Block 39 Renewal and Renovation Tas Increment Financing District, being a tax 7 increment financing district established as a renewal and renovation district under Minnesota Statutes, 8 Section 469.174 to 469.179, as amended (the "Tax Increment AcY') pursuant to the Tax Increment Act 9 and a resolution adopted by the HRA on May 28, 1997, and approved by the City on May 28, 1997; and 1� WHEREAS, the HRA converted the Block 39 Renewal and Renovation Tax Increment Financing 11 District to the Block 39/Arena Redevelopment Tax Increment Financing District (the `Block 39 Tas 12 Increment DistricY' or the "DistricP') being a redevelopment district as defined in Section 469.174, 13 subdivision 10, of the Tax Increment Act, and a resdution adopted by the HRA on September 24, 1997, 14 and approved by the City on September 24, 1997, ta7c increment revenues from which (the "Tas 15 Increments") were pledged to the payment of the Prior Bonds (as defined herein) and aze pledged to the 16 Bonds (as defined herein); and 17 WHEREAS, the HRA established its Seventh Place Redevelopment Project as from time to time 18 amended, and has by HRA resolution adopted September 24, 1997, expanded the boundaries of the 19 Project which expansion was approved by the City on September 24, 1997, afrer consideration by the 20 Saint Paul Planning Commission as required by law; and 21 WHEREAS, on Januazy 22, 1998, the City issued its General Obligation Tvc Increment Bonds 22 (Block 39 Project), Series 1998A (the "Series 1998A Bonds), and Taxable General Obligation Tax 23 Increment Bonds (Block 39 Project), Series 1998B (the "Series 1998B Bonds" and, together with the 24 Series 1998A Bonds, the "Prior Bonds"); and 25 WI�REAS, the proceeds from the Prior Bonds were provided to the HRA to be applied to 26 finance: (i) the acquisition by the HRA of Block 39 located within the District; (ii) the demolition of the RESOLUTION CITY OF SAINT PAUL, MINNESOTA �� 09-1012 27 existing structures on Block 39; (iii} site prepazation on Block 39; (iv) the construction of a 1,075-space 28 pazking facility on the eastern two-thuds of Block 39 (the "Parldng Facility"); and (v) the constmction of 29 approximately 12,000 square feet of retail space in the Parking Facility on Wabasha Street (the "Retail 30 Facility"); and 31 WHEREAS, the City wishes to refund and prepay the Prior Bonds by issuing its General 32 Obligation Taac Increment Refunding Bonds, Series 2009G (the "Series 2009G Bonds or "Tas Exempt 33 Bonds"), and its Tarable General Obligation Tax Increment Refunding Bonds, Series 2009H (the 34 "Series 2009H Bonds" or "I'asable Bonds" and, together with the Tax Exempt Bonds, the `Bonds"); and 35 WHEREAS, the HRA enteted into a Piedge Agreement, dated as of January 1, 1998, pledging the 36 Tas Increments and the revenues derived from the Pazking Facility to the Prior Bonds; and 37 WHEREAS, the HRA has approved the execution and delivery of an Amended and Restated 38 Pledge Agreement, to be dated on or after October 1, 2009 (the "Pledge AgreemenP'), between the HRA 39 and the City, pledging the Tax Increments and the parking revenues derived from the Parking Facility net 40 of the expenses of operation and maintenance of the Pazking Facility including deposits to a repair and 41 replacement fund (the "Net Parking Revenues") to the Bonds; 42 NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Saint Paul, Minnesota, as 43 follows: 44 1. Sale of Bonds. The City is proposing to issue and sell, pursuant to the provisions of the 45 Tax Increment Act and Minnesota Statutes, Chapter 475, as amended (the "Municipal Debt AcP'), the 46 Series 2009G Bonds in the original aggregate principal amount of $20,695,000, and the Series 2009H 47 Bonds in the original aggregate principal amount of $8,655,000. The proceeds derived from the sale of 48 the Bonds are to be applied to the redemption and prepayment of the Prior Bonds. The City has retained 49 Springsted Incorporated, Saint Paul, Minnesota, as its financial advisor in connection with issuance of the 50 Bonds. Pursuant to Minnesota Statutes, Section 475.60, subdivision 2(9), the Issuer has deternuned, with 51 the concunence of its financial advisor, to sell such bonds by limited public sale. 52 53 54 55 56 57 58 59 2. Awazd of the Tas Exempt Bonds. The proposal of BMO Capital Markets (the "Ta�c Exempt Bonds Purchaser") to purchase the Series 2009G Bonds described in the Terms of Proposal incorporated into the Officiat Statement, dated August 24, 2009 (the "Official StatemenY'), is hereby found and detemdned to be the most favorable offer received and a reasonable offer and is hereby accepted, the proposal being to purchase the Tax Exempt Bonds at a price of $21,347,021.75 (the principal amount of the Bonds of $20,695,000, plus an original issue premium in the amount of $786,604.25, less the Tas Exempt Bonds Purchaser's discount of $134,582.50), for Tax Exempt Bonds bearing interest as follows: Maturity Date (February 1) 2015 2016 2017 2018 2019 2020 Interest Rate 4.000% 4.000 4.000 4.000 3.000 3.125 Maturity Date (Februazy 1) 2021 2022 2023 2024 2025 Interest Rate 3.125°k 3.500 3.500 3.500 3.500 09-1012 60 The amount of Tax Exempt Bonds authorized to be issued is the purchase price referenced above, ali of 61 wtrich will be applied to the refunding of the Series 1998A Bonds and the payment of the costs of issuing 62 the Tax Exempt Bonds. Interest on the Series 2009G Bonds will be payable semiannually on February 1 63 and August 1 in each yeaz, commencing Febrnary 1, 2�10, calculatecl on the basis of a 360-day yeaz of 64 twelve 30day months. The interest on the Series 2009G Bonds is payabie to the registered owners of 65 record thereof as of the close of business on the fifteenth (15th) day of the immediately preceding month, 66 whether or not such day is a business day. 67 3. Award of the Taxable Bonds. The proposal of Northland Securities, Ina (the "Tasable 68 Bonds Purchaser") to purchase the Series 2009H Bonds descabed in the Terms of Proposal incorporated 69 into the Official Statement is hereby found and determined to be the most favorable offer received and a 70 reasonable offer and is hereby accepted,the proposal being to purchase the Taxable Bonds at a price of 71 $8,794,562.95 (the principal amount of the Bonds of $8,655,000, plus an original issue premium in the 72 amount of $157,651.90, less the Taxable Bonds Purchaser's discount of $18,088.95), for Tasable Bonds 73 bearing interest as follows: Maturity Date (February 1) 2010 2011 2012 Interest Rate 3.10% 3.10 3.10 Maturity Date (February i) 2013 2014 2015 Interest Rate 3.10% 3.10 3.10 74 The amount of Tasable Bonds authorized to be issued is the purchase price referenced above, all of which 75 will be applied to the refunding of the Series 1998B Bonds and the payment of the costs of issuing the 76 Taxable Bonds. Interest on the Sedes 2�09H Bonds will be payable semiannually on February 1 and 77 August 1 in each yeaz, commencing Februazy 1, 201Q calculated on the basis of a 360-day yeaz of twelve 78 30-day months. The interest on the Series 2009H Bonds is payable to the registered owners of record 79 thereof as of the close of business on the fifteenth (15th) day of the immediately preceding month, 80 whether or not such day is a business day. 81 4. Oriainal Issue Date: Denominations; Maturities. The Tax Exempt Bonds and the Taxable 82 Bonds shall be issued on a parity of lien, shall be dated October 19, 2009, as the date of original issue, 83 and shall be issued forthwith on or afrer such date as fully registered bonds. Each series of Bonds shall be 84 numbered from R-1 upwazd and shall be in the denomination of $5,000 each or in any integral multiple 85 thereof. The Taac Exempt Bonds shall mature on Febmary 1 in the years and amounts as follows: Mariu Date (Febrnary 1) 2015 2016 2017 2018 2019 2020 Principal Amount $ 820,000 $1,725,000 $1,80Q000 $1,850,000 $1,855,000 $1,920,000 Maturity Date (February 1) 2021 2022 2023 2024 2025 Principal Amount $1,985,000 $2,055,000 $2,125,000 $2,225,000 $2,335,000 09-1012 86 The Taxable Bonds shall mature on February 1 in the years and amounts as follows: Maturity Date (Februazy 1) 2010 2011 2012 87 88 89 90 91 92 93 94 95 96 Principal Amount $ 1,295,000 $ 1,575,000 $ 1,605,000 Mahuity Date (February 1) 2013 2014 2015 Principal Amount $ 1,640,000 $ 1,710,000 $ 830,000 5. Re¢istraz. 'I`he City Treasurer is hereby appointed as the initial bond registrar and paying agent (the "Registraz" and the "Paying AgenY') for the Bonds. The City Treasurer shall serve as Registrar unless and until a successor Registraz is duly appointed. A successor Registraz shall be an officer of the City or a bank or trust company eligible for designation as Registraz pursuant to the Municipal Debt Act and may be appointed pursuant to any contract the City and such successor Registraz shall execute which is consistent herewith. The Registraz shall also serve as Paying Agent unless and until a successor Paying Agent is duly appointed. Principal and interest on the Bonds shall be paid to the registered holder or holders of the Bonds (the "Holder" or "Holders") in the manner set forth in the forms of the Bonds. The effect of registration and the rights and duties of the City and the Registrar with respect thereto aze as foilows: 97 (a) Register. The Registrar shall keep a bond register in which the Registraz provides for the 98 registration of ownership of the Bonds and the registration of transfers and exchanges of the Bonds 99 entitled to be registered, transferred, or exchanged. 100 101 102 103 104 105 106 (b) Transfer of Bonds. Upon surrender for transfer of a Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, dnly executed by the registered owner thereof or by an attomey duly authorized by the registered owner in writing, the Registraz shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registraz may, however, close the books for registration of any transfer after the Fifteenth day of the month preceding each interest payment date and until that interest payment date. 107 (c) Exchange of Bonds. When Bonds are sunendered by the registered owner for exchange, 108 the Registraz shall authenticate and deliver one or more new Bonds of a like aggregate principal amount 109 and mahuity as requested by the registered owner or the owner's attorney in writing. 110 (d) Cancellation. Bonds surrendered upon transfer or exchange shall be prompdy cancelled 111 by the Registraz and thereafter disposed of as directed by the City. 112 (e) Improper or Unauthorized Transfer. When a Bond is presented to the Registraz for 113 transfer, the Registraz may refizse to uansfer the Bond mmtil the Registraz is satisfied that the endorsement 114 on the Bond or separate instrument of transfer is valid and genuine and that the requested transfer is I15 legally authorized. The Registrar shall incur no liability for the refusal, in good faith, to make transfers 116 which it, in its judgment, deems improper or unauthorized. 117 (� Persons Deemed Owners. The City and the Registrar may treat the person in whose 118 name a Bond is registered in the bond register as the absolute owner of the Bond, whether the Bond is 119 overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on 120 the Bond and for all other purposes, and payments so made to a registered owner or upon the owner's 121 order shall be valid and effectual to satisfy and dischazge the liability upon the Bond to the extent of the 122 sum or sums so paid. 09-1012 123 (g) Taxes, Fees, and Charges. The Registrar may impose a charge upon the owner thereof 124 for a transfer or exchange of Bonds sufficient to reimburse the Registrar for any tax, fee, or other 125 govemmental chazge required to be paid with respect to the transfer or exchange. 126 (h) Mutilated, I.ost, Stolen or Destroyed Bond. If a Bond becomes mutilated or is destroyed, 127 stolen, or lost, the Registraz shall deliver a new Bond of like amount, number, maturity date, and tenor in 128 exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution 129 for any Bond destroyed, stolen, or lost, upon the payment of the reasonable expenses and charges of the 130 Registraz in connection therewith; and, in the case of a Bond destroyed, stolen, or lost, upon filing with 131 the Regisuaz of evidence satisfactory to it that the Bond was destroyed, stolen, or lost, and of the 132 ownership thereof, and upon fumishing to the Registrar an appropriate bond or indemnity in Form, 133 substance, and amount satisfactory to it and as provided by law, in which both the City and the Regisuar 134 must be named as obligees. Bonds so surrendered to the Registraz shall be cancelled by the Registrar and 135 evidence of such cancellation shall be given to the City. If the mutiiated, destroyed, stolen, or lost Bond 136 has already matured or been called for redemption in accordance with its terms, it is not necessary to issue 137 a new Bond prior to payment. 138 6. Registration and Pa�ment. The Bonds will be issued only in fully registered form. The 139 interest thereon and, upon surrender of each Bond, the principal amount thereof, is payable by check or 140 draft issued by the Regisuar described herein. Each Bond shall be dated as of the last interest payment 141 date preceding the date of authentication to which interest on the Bonds has been paid or made available 142 for payment, unless: (i) the date of authentication is an interest payment date to which interest has been 143 paid or made available for payment, in which case the Bonds will be dated as of the date of 144 authentication; or (ii) the date of authentication is prior to the first interest payment date, in which case 145 the Bonds will be dated as of the date of original issue. The Tax Exempt Bonds shall bear interest at the 146 rates per annum as set forth in pazagraph 2 hereof and the Tasable Bonds shall beaz interest at the rates 147 per annum as set forth in pazagraph 3 hereof. 148 7. Redemntion. 149 (a) Optional Rederreption. The City may elect on February 1, 2018, and on any day 150 thereafter, to prepay Tax Exempt Bonds due on or afrer February 1, 2019. Optional redemptions may be 151 in whole or in part and if in part at the option of the City and in such manner as the City shall deternune. 152 If less than all Tax Exempt Bonds of a maturity aze called for redemption, the City will notify DTC (as 153 defined herein) of the particular amount of such maturity to be prepaid. DTC will deternune by lot the 154 amount of each participanYs interest in such maturity to be redeemed and each participant will then select 155 by lot the beneficial ownership interests in such maturity to be redeemed. All optional redemptions of the 156 Tas Exempt Bonds shall be at a price of par plus accrued interest to the redemption date. The Taxable 157 Bonds aze not subject to optional redemption prior to their respective stated maturity dates. 158 (b) Maadatory Redemption. Any maturity of the Tax Exempt Bonds may be subject to 159 mandatory redemption at a redemption price equal to one hundred percent (100%) of the principal amount 160 of Tas Exempt Bonds so redeemed plus accrued interest to the date of redemption, on February 1 in the 161 years and in the principal amounts as set forth below: 162 Any maturity of the Taxable Bonds may be subject to mandatory redemption at a redemption 163 price equal to one hundred percent (100%) of the principal amount of Taxable Bonds so redeemed plus 164 accrued interest to the date of redemption, on Febmary 1 in the yeazs and in the principal amounts as set 165 forth below: 09-1012 166 167 ]68 169 170 171 ]72 173 (c) Selecrion of Bonds to be Redeemed: Kedemprion Procedure. In the event any of the Bonds aze called for redemption, notice thereof identifying the Bonds to be redeemed shall be given by the Registraz by mailing a copy of the redemption notice by first class mail (postage prepaid) to the registered owner of each Bonds to be redeemed at the address shown on the registration books kept by the Regisuaz and by publishing the notice if required by law. Failure to give notice by publication or by mail to any registered owner, or any defect therein, shaIl not affect the validity of the proceedings for the redemption of Bonds. Bonds so called for redemption shall cease To bear interest afrer the specified redemption date, provided that the funds for the redempuon aze on deposit with the Registraz at that time. 174 (d) Notice of Redemption. The Registrar shall call Tax Exempt Bonds for optional 175 redemption and prepayment as herein provided upon receipt by the Registrar at least forty-five (45) days 176 prior to the redemption date of a request of the City, in written form if the Registrar is other than a City 177 officer. Such request shall specify the series and principal amount of Tas Exempt Bonds to be called for 178 redemption and the redemption date. 179 180 181 182 183 184 185 186 ] 87 188 189 190 191 Mailed notice of optional redemption shall be given to the Paying Agent (if otk�er than a City officer) and to each affected Holder. If and when the City shall call any of the Tas Exempt Bonds for redemption and prepayment prior to the stated maturity thereof, the Registraz shall give written notice in the name of the City of its intention to redeem and pay such Tax Exempt Bonds at the office of the Regisuar. Notice of redemption shall be given by First class mail, postage prepaid, mailed not less than thirty (30) days prior to the redemption date, to each Holder of Bonds to be redeemed, at the address appearing in the Bond Register. All notices of optional cedemption shall state: (i) the redemprion daYe; (ii) the redemption price; (izi) if less than all outstanding Tax Exempt Bonds are to be redeemed, the identification (and, in the case of partial redemption, the respecrive principal amounts) of the Tax Exempt Bonds to be redeemed; (iv) that on the optional redemption date, the redemption price will become due and payable upon each such Tax Exempt Bond, and that interest thereon shall cease to accrue from and after said date; and (v) the place where such Tax Exempt Bonds a� to be surrendered for payment of the redemption price (which shall be the office of the Registraz). 192 Notices to DTC or its nominee shall concain the CUSIP numbers of the Bonds. If there are any 193 Holders of the Bonds other than DTC or its nominee, the Regstrar shall use its best efforts to deliver any 194 such notice to DTC on the business day next preceding the date of mailing of such notice to all other 195 Holders. 196 197 198 199 200 201 202 203 204 205 206 207 8. Forms of Bands. All of the provisions of the Bonds, when executed as authorized herein, shall be deemed to be a part of this Resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Tax Exempt Bonds shall be substantially in the form attached to this Resolution as EXHIBIT A(Tax Exempt Bonds) and the Tasable Bonds shall be substantially in the form attached to this Resolurion as EXHIBIT B(Taxable Bonds), which forms are hereby approved, with such necessazy and appropriate variauons, omissions, and insertions (including changes to the aggregate principal amount of each series of the Bonds, the stated maturities of the Bonds, the interest rates on the Bonds, the terms of redemption of the Bonds, and variation from City policies regazding methods of offering general obligation bonds) as the City Treasurer and Director, Office of Financial Services, or their respective deputies, itt their discretion, shall determine and delivery of the Bonds by the C�ty shall be conclusive evidence of such determinations. 208 The City Treasurer is authorized and directed to obtain a copy of the proposed approving legal 209 opinion of Kennedy & Graven, Chartere.d, Saint Paul, Minnesota, which ahall be complete excepY as to 210 daeing thereof and cause the opinion to accompany each Bond. 09-1012 211 9. Execution. The Bonds shall be executed on behalf of the City by the signature of its 212 Mayor, Clerk, and Director, Office of Financial Services, each with the effect noted on the forms of the 213 Bonds, and be sealed with the seal of the City; provided, however, that the seal of the City may be a 214 printed or photocopied facsunile; and provided further that any of such sia atures may be printed or 215 photocopied facsimiles and the corporate seal may be omitted on the Bonds as permitted by law. In the 216 event of disability or resignation or other absence of any such officer, the Bonds may be signed by the 217 manual or facsimile signature of that officer who may act on behalf of such absent or disabled officer. In 218 case any such officer whose signature or facsimile of whose signature shall appear on the Bonds shall 219 cease to be such officer before the delivery of the Bonds, such signature or facsimile shall nevertheless be 220 valid and sufficient for all purposes, the same as if he or she had remained in office until delivery. 221 10. Authentication; Date of Reeistration. No Bond shall be valid or obligatory for any 222 purpose or be entitled to any security or benefit under this resolution unless a Certificate of 223 Authentication on such Bond, substantially in the form set forth in EXHIBTT A and in EXHIBTT B, shall 224 have been duly executed by an authorized representative of the Registraz. Certificates of Authentication 225 on different Bonds need not be signed by the same person. The Registraz shall authenticate the signahxres 226 of of£icers of the City on each Bond by execution of the Certificate of Authentication on the Bond and by 227 inserting as the date of registration in the space provided the date on which the Bond is authenticated. For 228 purposes of delivering the original Tas Exempt Bonds to the Tas Exempt Bonds Purchaser, the Registraz 229 shall insert as the date of registration the date of original issue. For purposes of delivering the original 230 Taxable Bonds to the Tasable Bonds Purchaser, the Registrar shall insert as the date of registration the 231 date of original issue. The Certificate of Authentication so executed on each Bond shall be conclusive 232 evidence that it has been authenticated and delivered under this resolution. 233 234 235 236 237 238 239 240 1 L Holders; Treatment of Re¢istered Owner; Consent of Holders. (a) Benefzciad Owners. For the putposes of all actions, consents, and other matters affecting Holders of the Bonds, other than payments, redemptions, and purchases, the City may (but shall not be obligated to) treat as the Holder of a Bond the beneficial owner of the Bond instead of the person in whose name the Bond is registered. For that purpose, the City may ascertain the idenrity of the beneficial owner of the Bond by such means as the Registraz, in its sole discretion, deems appropriate, including but not limited to a certificate from the person in whose name the Bond is registeced identifying such beneficial owner. 241 (b) Registered Owners. The City and Registrar may treat the person in whose name any 242 Bond is registered as the owner of such Bond for the purpose of receiving payment of principal of and 243 premium, if any, and interest on such Bond and for all other purposes whatsoever whether or not such 244 Bond shall be overdue, and neither the City nor the Registrar shall be affected by notice to the contrary. 245 246 247 248 249 250 251 252 253 254 255 (c) Actions of Holders. Any consent, request, direction, approval, objection, or other instmment to be signed and executed by the Holders may be in any number of concurrent writings of similar tenor and must be signed or executed by such Holders in person or by agent appointed in writing. Proof of the execution of any such consent, request, direction, approval, objection, or other instrument, or of the wripng appointing any such agent and of the ownership of Bonds, if made in the following manner, sha11 be sufficient for any of the purposes of this xesolution, and shatl be conclusive in favor of the City with regard to any action taken by it under such request or other instrument, namely: (i) the fact and date of the execution by any person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such writing acknowledged before him the execution thereof, or by an af£idavit of any witness to such execution; and (ii) subject to the provisions of subparagraph (a) above, the fact of the ownership by o9-ioia 256 any person of Bonds and the amounts and numbers of such Bonds, and the date of the holding of the 257 same, may be proved by reference to the bond register. 258 12. Book-Entrv Svstem. 259 (a) The Depository Trust Company. The Bonds will be initially issued in the form of a 260 sepazate single typewritten or printed fully registered Bond for each of the maturities of the Series 2009G 261 Bonds and for each of the maturities of the Series 2009H Bonds. Upon initial issuance, the ownership of 262 each Bond wi11 be registered in the regsuation books kept by the Registraz in the name of Cede & Co., as 263 nominee for The Depository Trust Company, New York, New York, and its successors and assigns 264 ("DTC"). Except as provided in this Section 12, all of the outstanding Bonds will be registered in the 265 registration books kept by the Registraz in the name of Cede & Co., as nominee oF DTC. 266 (b) Participants. With respect to Bonds registered in the registration books kept by the 267 Registraz in the name of Cede & Co., as nominee of DTC, the City, the Registrar, and the Paying Agent 268 will have no responsibility or obligation to any broker dealers, banks, and other financial institutions from 269 time to time for which DTC holds Bonds as securities depository ("Participants") or to any other person 270 on behalf of which a Participant holds an interest in the Bonds, including but not limited to any 271 responsibility or obligation with respect to: (i) the accuracy of the records of Cede & Co., DTC, or any 272 Participant with respect to any ownership interest in the Bonds; (ii) the delivery to any Participant or any 273 other person (other than a registered owner of Bonds, as shown by the registration books kept by the 274 Registrar), of any notice with respect to the Bonds, including any notice of redemption; or (iii) the 275 payment to any Participant or any other person, other than a registered owner of Bonds, of any amount 276 with respect to principal of, premium, if any, or interest on the Bonds. The City, the Registrar, and the 277 Paying Agent may treat and consider the person in whose name each Bond is registered in the registration 278 books kept by the Registrar as the holder and absolute owner of such Bond for the purpose of payment of 279 principal, premium, and interest with respect to such Bond, for the purpose of registering transfers with 280 respect to such Bonds, and For all other purposes. The Paying Agent shall pay all principal of, premium, 281 if any, and interest on the Bonds only to or on the order of the respective registered owners, as shown in 282 the registration books kept by the Registrar, and all such payments will be valid and effectual to fully 283 satisfy and dischazge the City's obligations with respect to payment of principal of, premium, iF any, or 284 interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner of 285 a Bond, as shown in the registration books kept by the Registraz, will receive a certificated Bond 286 evidencing the obligation of this Resolution. Upon delivery by DTC to the City Clerk of a written notice 287 to the effect that DTC has deternvned to substitute a new nominee in place of Cede & Co., the words 2S8 "Cede & Co." shall refer to such new nominee of DTC; and upou receipt of such a notice, the City Clerk 289 shall promptly deliver a copy of the same to the Registraz and Paying Agent. 290 (c) Representation Letter. The City has heretofore executed and delivered to DTC a Blanket 291 Issuer Letter of Representations (the "Representation L.etter") which shall govern payment of principal of, 292 premium, if any, and interest on the Bonds and notices with respect to the Bonds. Any Paying Agent or 293 Registraz subsequently appointed by the City with respect to the Bonds shall agree to take all actions 294 necessary for all representations of the City in the Representation Letter with respect to the Registrar and 295 Paying Agent, respectively, to be complied with at all times. 296 (d) Transfers Outside Book-Entry System. In the event the City, by resolution of the City 297 Council, deternunes that it is in the best interests of the persons having beneficial interests in the Bonds 298 that they be able to obtain Bond certificates, the City will notify DTC, whereupon DTC will notify the 299 Participants, of the availability through DTC of Bond certificates. In such event the City will issue, 300 transfer, and exchange Bond certificates as requested by DTC and any other registered owners in 301 accordance with the provisions of this Resolution. DTC may deternune to discontinue providing its 09-1012 302 services with respect to the Bonds at any time by giving notice to the City and discharging its 303 responsibilities with respect thereto under applicable law. In such event, if no successor securities 304 depository is appointed, the City shall issue and the Registraz shall authenticate Bond certificates in 305 accordance with this Resolution and the provisions hereof shall apply to the transfer, exchange, and 306 method of payment thereof. 307 (e) Payments to DTC. Notwithstanding any other provision of this Resolution to the 308 contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTG payments with 309 respect to principal of, premium, if any, and interest on the Bonds and all notices with respect to the 310 Bonds shall be made and given, respectively, in the maoner provided in DTC's Operational 311 Arrangements, as set forth in the Representation Letter. 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 13. Deliverv: Apalication of Proceeds. The TaY Exempt Bonds when so prepazed and executed shall be delivered by the Director, Office of Financial Services, to the Tax Exempt Bonds Purchaser upon receipt of the purchase price, and the Tax Exempt Bonds Purchaser shall not be obliged to see to the proper application thereof. The Taxable Bonds when so prepared and executed shall be delivered by the Director, Office of Financial Services, to the Taxable Bonds Purchaser upon receipt of the purchase price, and the Taxable Bonds Purchaser shall not be obliged to see to the proper application thereof. 14. Funds and Accounts. (a) Project Fund. There is created hereby a special fund of the City designated the "Block 39 Refunding Fund" (the "Refunding Fund"), to be held and administered by the City Treasurer or the Director, Office of Financial Services, sepuate and apart from all other funds of the City. For the convenience and proper administration of the Refunding Fund there is hereby created in the Project Fund a"Tax Exempt Proceeds Account" and a"Taxable Proceeds AccounP' to be separately administered and maintained as bookkeeping accounts in the Refunding Fund separate and apart from all other accounts maintained therein. All proceeds from the sale of the Bo�ds, excluding accmed interest, shall be deposited 'an the Refunding Fund and applied to: (i) payment of the costs of issuing the Bonds, and (ii) the costs oP refunding the Prior Bonds. The proceeds of the Series 2009G Bonds shall be deposited in the Tax Exempt Proceeds Account and, after payment of any costs of issuance to be paid from the proceeds of the Series 2009G Bonds, shall be applied solely to refund and prepay the Series 1998A Bonds. The proceeds of the Series 2009H Bonds shall be deposited in the Taxable Proceeds Account and, after payment of any costs of issuance to be paid from the proceeds of the Series 2009H Bonds, shall be applied solely to refund and prepay the Series 1998B Bonds. (b) Debt Service Fund. There is created hexeby a special fund of the City designated the `Block 39 Debt Service Fund" (the "Debt Service Fund") to be held and administered by the City Treasurer or the D'uector, Office of Financial Services, sepazate and apart from all other funds of the City. For the convenience and proper administration of the revenues to be applied to payment of the debt seroice on the Bonds, and to provide adequate and specific security to the Taac Exempt Bonds Purchaser, the Taxable Bonds Purchaser, and the Holders from time to time of the Bonds, there aze hereby created in the Debt Service Fund the "Tas Increment AccounP' and the "Parking Revenues Account," each to be administered and maintained as bookkeeping accounts in the Debt Service Fund separate and apart from all other accounts maintained therein. The Debt Service Fund shall be maintained in the manner herein specified until all of the Bonds and the interest thereon have been fully paid. (i) Tax Increment Account. To the Tax Increment Account there is hereby pledged and irrevocably appropriated and there shall be credited and used to pay debt service on the Bonds as further provided herein: (A) all Tas Increments derived from the District and pledged 09-1012 347 to the payment of the Bonds (subject to any senior pledges or exclusions of such Tarc Increments 348 provided for in the Pledge Agreement and provided that Revenues in excess of amounts necessary 349 to pay the principat of and interest on the Bonds shall be released from the pledge as provided 350 herein); plus (B) all "shortfall payments" required to be paid to the HRA pursuant to the terms of 351 the Developer Shortfall Agreement, dated as of August 8, 1997, as amended and supplemented; 352 plus (iii) all investment eamings thereon. 353 (n) Parking Revenues Account. To the Parking Revenues Accountthere is hereby 354 pledged and irrevocably appropriated and there shall be credited all Net Parking Revenues, as 355 deternuned in accordance with the terms of the Pledge Agreement, plus all investment earnings 356 on funds held in the Pazking Revenues Account. Funds held in the Pazking Revenues Account 357 shall be used to pay debt service on the Bonds as further provided herein. 358 (iii) Order of Use of Accounts. The money credited to the Tar Increment Account 359 shall be applied first to payment of the debt service on the Bonds and the money credited to the 360 Parldng Revenues Account shall be applied to pay debt service on the Bonds oaly to the extent 361 that money credited to the Tar Increment Account is not sufficient for the payment of debt 362 service on the Bonds. 363 (iv) Tcr�r Increment Account Ezcess. Any money held in the Tax Increment Account 364 as of February 2 of each yeaz shall be transferred from the Tax Increment Account to the HRA 365 and may thereafter be used for any lawful purpose for which Tas Increments derived from the 366 District may then be used. 367 (v) Parking Account Ezcess. Any money held in the Pazking Revenues Account as 368 of February 2 of each year shall be transferred from the Pazking Revenues Account to the HRA 369 and may thereafrer be used for any lawful putpose for which Net Pazking Revenues may then be 370 used. 371 (vi) Reservation for Rebate. Prior to making the transfers provided for in ciauses (iv) 372 and (v), the City Treasurer shall estimate or cause to be estimated the amount of accrued liabffity 373 for rebatable azbitrage on account of the Tax Exempt Bonds, and shall than segregate all or a 374 portion of the money subject to transfer from the Tax Increment Account and the Parking 375 Revenues Account in accordance with clauses (iv) and (v) to make provision for the payment (or 376 reserve for the payment ofl any rebate due or to become due to the United States of America 377 arising from the investment of funds held in the funds and acaounts created by this Resolution. 378 (vii) Bona Fide Debt Service Fund. The Debt Service Fund, and the accounts therein, 379 shall be held and administered at all times as a"bona fide debt service fund" within the meaning 380 of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"). Excess funds 381 shall be released or transferred from the Debt Service Fund at such times and in such amounts as 382 are required to comply wirh this clause (vii). 383 (c) Arbitrage Restrictions. The money in the funds shall be used solely as provided herein, 384 or to pay any rebate due to the United States. No poftion of the proceeds of the Tax Exempt Bonds shall 385 be used directly or indirectly to acquire higher yielding investments or to replace funds which were used 386 directly or indirectly to acquire higher yielding investments, except (i) for a reasonable temporary period 387 until such proceeds aze needed for the purpose for which the Tar Exempt Bonds were issued, and (ii) in 388 addition to the amounts referred to in clause (i) in an amount not greater than $100,000. To this effect, 389 any proceeds of the Tas Exempt Bonds and any sums from time to time held in the Debt Service Fund 390 allocated to the Tax Exempt Bonds (or any other City account which wi11 Ue used to pay principal or 10 09-1012 391 interest to become due on the Tas Exempt Bonds) in excess of amounts which, under then applicable 392 federal arbitrage regulations, may be invested without regazd as to yield shall not be invested at a yield in 393 excess of the applicable yield restrictions imposed by said arbitrage regulations on such investments after 394 taking into account any applicable "temporary periods" or "minor portion" made available under the 395 federal arbitrage regulations. In addition, the proceeds of the Tax Exempt Bonds and money allocated to 396 the Tas Exempt Bonds in the Debt Service Fund shall not be invested in obligations or deposits issued by, 397 guazanteed by, or insured by the United States of America, or any agency or instnunentality thereof, if 398 and to the extent that such investment would cause the TaY Exempt Bonds to be deemed to be "federally 399 guaranteed" within the meaning of Section 149(b) of the Code. 400 (d) Allocation of Investment Earnings. Investment earnings, net of rebatable arbitrage, shall 401 be credited to the fund or account from which the investment was made. 402 (e) Other Accounts and Subaccounts. The City Treasurer is hereby authorized to create such 403 accounts or subaccounts within the Refunding Fund and the Debt Service Fund (and accounts therein) to 404 properly administer such funds and accounts and to assure compliance with the preceding pazagraphs, and 405 Sections 20 and 21 hereof. Specifically, the City Treasurer may create separate accounts and subaccounts 406 to hold and apply the proceeds of the Taxable Bonds and the Tax Exempt Bonds, and revenues pledged to 407 payment thereof. 408 15. Pledee of Tax Increments; Covera¢e Test. All of the Tas Increments (subject to the 409 terms of the Pledge Agreement and this Resolution) and Net Parking Revenues (subject to the terms of 410 the Pledge Agreement and this Resolution) are hereby pledged to the payment of the Bonds and the 411 interest thereon, but only to the extent of an amount equal, with other pledged sources, to one hundred 412 five percent (105%) of the principal and interest requirements of the Bonds. Revermes (both Tax 413 Increments and Net Parking Revenues) shall be used to pay debt service on the Bonds in accordance with 414 the terms of Section 14 of this Resolurion. Revenues received in each year in excess of the amount 415 required to pay the debt service on the Bonds shall be released from the funds, free and clear of the pledge 416 stated in this Section 15, as provided in Section 14 of this ResoluUon. 417 The Ta�c Increments aze such that if collected in full they, together with estimated collections of 418 Net Pazking Revenues, investment earnings, and other revenues herein pledged for the payment of the 419 Bonds, will produce at least five percent (5%o) in excess of the amount needed to meet when due the 420 principal and interest payments on the Bonds. The estimated amount of Tas Increments to be received 421 over the term of the Bonds, and the use of Tax Increments as provided herein, aze such that more than 422 twenty percent (20%) of the total amount to be paid as principal and interest on the Bonds over their term 423 sha11 be paid from Tax Increments, all within the meaning of Section 475.58 of the Municipal Debt Act. 424 Annually at the times taxes are required to be levied, the City shall estimate the sufficiency of the 425 Debt Service Fund. In the event that it is anUcipated that the aggregate amount in (or to be timely 426 received in) the Debt Service Fund will not be sufficient to pay principal of and interest on the Bonds to 427 become due in the next eighteen (18) months, the City shall levy an ad valorem tas in such amount as is 428 estimated, with other sources, to be necessazy to pay the princiQal of, and interest on, the Bonds to 429 become due during such period. 430 The Tax Exempt Bonds and Taxable Bonds shall be on a parity of lien. 431 16. Tas Increments; PledQe Aereement. The County Auditor has certified the original tax 432 capacity of real property within the Block 39 Tax Increment District, and has covenanted not to withdraw 433 or limit such request. Under the provisions of Section 469.177 of the Tax Increment Act, the County 434 Auditor will remit to the HRA as tax increment that portion of the taxes paid each yeaz on real property in 11 09-1012 435 the Block 39 Tac Increment District which represents the ta�ces on captured taz capacity (being tas 436 capacity of the property less said oria nal tax capacity) provided that the HRA shall request that the 437 County Auditor remit such funds d'uectly to the City Treasurer. Tax increments not required to pay the 438 principal of and interest on the Bonds may be used for any proper purpose. 439 Prior to issuance of the Bonds, the City and HRA shall enter into the Pledge Agreement under the 440 terms of which the TaY Increments and Net Pazking Revenues pledged to payment of the Bonds are 441 remitted to the City. Tas Increments and Net Pazking Revenues may be pledged to other purposes by the 442 HRA. The priority of such pledges may be superior, subordinate, or on a parity with the pledge made in 443 this Resolution, such priority to be determined at the ume thereof. A superior or parity pledge of Tas 444 Increments shall only be made with the consent of the City, but a subordinate pledge may be made 445 without the consent of the City. Notwithstanding any provision herein to the contrary, the City reserves 446 the right to terminate or reduce the Tas Increments and Net Parking Revenues herein pledged to the 447 payment of the Bonds and interest thereon to the extent and in the manner pernutted by law so long as 448 such action does not preclude the City from paying when due the debt service on the Bonds or otherwise 449 impair the City's full faith and credit pledge to the Bonds. 450 17. General Oblieation Pledee. For the prompt and full payment of the principal and interest 451 on the Bonds, as the same respectively become due, the full faith and credit and taxing powers of the City 452 shail be and are hereby irrevocably pledged. If the balance in the Debt Service Fund is ever insufficient 453 to pay all principal and interest then due on the Bonds payable therefrom, the deficiency shall be promptly 454 paid out of any other funds of the City which aze available for such pwpose, including the general fund of 455 the City, and such other funds may be reimbursed with or without interest from the Debt Service Fund 456 when a sufficient balance is available therein. 457 18. Certificate of Registration. The Director, Office of Financial Services, is hereby directed 458 to file a certified copy of this resolution with the County Anditor of Ramsey County, Minnesota, togethex 459 with such other information as the County Auditor shall require, and to obtain the County Auditor's 460 certificate that the Bonds have been entered in the County Auditor's Bond Register, and that the Pledge 461 Agreement has been filed with the County Auditor. 462 19. Records and Certificates. The officers of the City are hereby authorized and duected to 463 prepare and furnish to the Tax Exempt Bonds Purchaser and to the Tasable Bonds Purchaser, and to the 464 attorneys approving the legality of the issuance of the Bonds, cert�ed copies of all proceedings and 465 records of the City relaUng to the Bonds and to the fmancial condition and affairs of the City, and such 466 otk�er affidavits, cettificates, and information as are required to show the facts relating to the legaliry and 467 marketability of ihe Bonds as the same appeaz from the books and records under their custody and control 468 or as otherwise known to them, and all such certified copies, certificates, and affidavits, including any 469 heretofore furnished, shall be deemed representations of the City as to the facts recited therein. 470 20. Ne¢ative Covenants as to Use of Proceeds and Improvements. The City hereby 471 covenants not to use (or permit the HRA to use) the proceeds of the Taac Exempt Bonds or to use (or 472 pernut the IIRA to use) the facilities financed with the proceeds of the Tas Exempt Bonds, or to cause or 473 permit (or pemut the HRA to cause or permit) them or any of them to be used, or to enter into (or permit 474 the ARA to enter into) any deferred payment arrangements for the cost of such facilities, in such a manner 475 as to cause the TaY Exempt Bonds to be "private acavity bonds" within the meaning of Section 103 and 476 Sections 141 through 150 of the Code. The City hereby covenants not to use (or to permit the HRA to 477 use) the proceeds of the Tas Exempt Bonds in such a manner as to cause the Tax Exempt Bonds to be 478 "hedge bonds" within the meaning of Section 149(g) of the Code. 12 09-1012 .. .. 21. Tax Exempt Status of the Tax Exempt Bonds: Rebate: Elections. The City shall comply with all requirements necessary under the Code to establish and maintain the exclusion from goss income under Section 103 of the Code of the interest on the Tas Exempt Bonds including, without limitation, requirements relating to temporary periods for investments, limitations on amounts invested at a yield greater than the yield on the Ta�c Exempt Bonds, and the rebate of excess investment earnings to the United States. ff any elections aze now or hereafter available with respect to arbitrage or rebate matters relating to the Tas Exempt Bonds, the Mayor, Clerk, City Treasurer, and Director, OfFice of Pinancial Services, or any of them, aze hereby authorized and d'uected to make such elec6ons as they deem necessary, appropriate, or desirable in connection with the Tax Exempt Bonds, and all such elections shall be, and shall be deemed and treated as, elections oP the City. 489 22. No Designataon of Qualified Tas Exemot Obli a�ons. The Tax Exempt Bonds, together 490 with other obligations issued by the City in 2009, exceed in amount those which may be qualified as 491 "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, and hence aze 492 not designated for such purpose. 493 494 495 496 497 498 499 500 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 23. Other AQreements: Official Statement. There have been submitted to this City Council the Porm of the Pledge Agreement between the City and the HRA and the Official Statement. The Pledge Agreement is hereby approved, and sha11 be executed on behalf of the City by the Mayor, City Clerk, and Director, Office of Financial Services, in substantially the form approved, with such changes, modifications, additions, and deletions as shall be necessary and appropriate and approved by the City Attomey. So long as the Bonds remain outstanding, the City shall comply with the provisions of the Pledge Agreement as from time to time supplemented or amended. The use and distribution of the OfFicial Statement, and of an Addendum to the Official Statement, by the Tar Exempt Bonds Purchaser in connection with the offer and sale of the Tas Exempt Bonds and by the Tasable Bonds Purchaser in connection with the offering and sale of the Taxable Bonds is hereby approved. The Mayor, City Clerk, and Director, Office of Financial Services are authorized and directed to ceRify that they have examined the Official Statement, as supplemented by the Addendum to the Official Statement, and that to the best of their knowledge and belief the Official Statement is a complete and accurate representation of the facts and representations made therein as of the date of the Official Statement and that the Official Statement does not, at the date of closing, and did not, as of its date, contain any untrue statement of a material fact or omit to state any material fact necessazy in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. 24. Continuine Disclosure. In order to satisfy the continuing disclosure requirements of Rule 15cZ12(b)(5), 17 CFR §240.15c2-12, promulgated by the Securities Exchange Commission under the Securities Exchange Act of 1934, as amended, the appropriate officials of the City ue hereby authorized and directed to execute and deliver a continuing disclosure undertaking substantially in the form of the Continuing Disclosure Certificate set forth in Appendix II of the Official Statement (the "Continuing Disclosure Certificate"). The Continuing Disclosure Certificate is hereby approved with such changes, modifications, additions, and deletions as shall be necessazy and appropriate and approved by the City Attorney. 518 25. Severabilitv. Tf any section, pazagraph, or provision of this resolution shall be held to be 519 invalid or unenforceable for any reason, the invalidity, or unenforceability of such section, pazagraph, or 520 provision shall not affect any of the xemaining provisions of this Resolution. 521 26. HeadinQS. Headings in this Resolution aze included for convenience of reference only 522 and aze not a part hereof, and shall not limit or define the meaning of any provision hereof. 13 09-1012 Requested by Department of: � B _�_ Approved by City By: /^-� � ta Council Adoption Cert�ed by C uncil Secretary B y' BY� ��"L1Di�/�.i� Approved by // Date Mayor: j � � n �� 14 Adopted by Date Cauncil: ��j �d� 09-1012 EXFIIBIT A FORM OF TAX EXEMP'f BOND UNITED STATES OF AMERICA STATE OF MINNESOTA RAMSEY COUNTY C1TY OF SAINT PAUL � INTEREST RATE REGISTERED OWNER: PRINCIPAL AMOUNT: GEI�ERAL OBLIGATION TAX INCREMENT REFUNDING BOND SERIES 2009G DATE OF MATURITY DATE ORIGINAL ISSUE $ CUSIP DOLLARS KNOW ALL PERSONS BY THESE PRESENfS that the City of Saint Paul, Ramsey County, Minnesota (the "Issuer" or "City"), certifies that it is indebted and for value received promises to pay to the registered owner specified above, or registered assigns, in the manner hereinafter set forth, the principai amount specif'ied above, on the maturity date specified above, unless called for eazlier xedemption, and to pay interest thexeon semiannually on February 1 and August 1 of each yeaz (each, an "Interest Payment Date"), commencing Februazy 1, 2010, at the rate per annum specified above (calculated on the basis of a 360-day year of twelve 30-day months) until the principal sum is paid or has been provided for. This Bond will beaz interest from the most recent Interest Payment Date to which interest has been paid or, if no inierest, has been paid, from the date oF original issue hereof. The principal of and premium, if any, on this Bond are payable by check or draft in next day funds or its equivalent (or by wire transfer in immediately available funds if payment in such form is necessary to meet the timing requirements below) upon presentation and surrender hereof at the principal office of the Saint Paul Treasurer, aaing as paying agent, or any successor paying agent duly appointed by the Issuer. The principal of and premium, if any, and interest on this Bond aze payabie in lawful money of the United States of America. Date of Pavment Not Business Day. If the date for payment of the principal of, premium, if any, or interest on this Bond shall be a Saturday, Sunday, legal holiday, or a day on which banking institutions in the City of New York, New York, or the city where the principal offfce of the Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the nexi succeeding day which is not a Saturday, Sunday, legal holiday, or a day on which such banking institutions aze authorized to close, and payment on such date shall have the same force and effect as if made on the nominal date of payment. Redemption. All Bonds of this issue (the "Bonds") maturing in the yeazs 20_ through 20_, both inclusive, aze subject to redemption and prepayment at the option of the Issuer on Februazy 1, 20_, and on any day thereafrer at a price of par plus accmed interest. Redemption may be in whole or in part of the Bonds subject to prepayment. ff redemption is in part, those Bonds remaining unpaid may be prepaid in such order of maturity and in such amount per maturity as the City shall determine; and if only A-1 09-1012 part of the Bonds having a common maturity date are called for prepayment, this Bond may be prepaid in $5,000 increments of principal. Bonds or portions thereof called for redemption shall be due and payable on the redemption date, and interest thereon shall cease to accrue from and afrer the redemption date. Notice of Redemption. Mailed notice of redemption shall be a ven to the paying agent (if other than a City officer) and to each affected Holder of the Bonds. In the event any of the Bonds aze called for redemption, written norice thereof will be given by fsst class mail mailed not less than thirty (30) days prior to the redemption date to each Holder of Bonds to be redeemed. In connection with any such notice, the "CUSIP" numbers assigned to the Bonds shall be used. Issuance: Pumose: General Obli ag tion. This Bond is one of an issue in the total principal amount of the Issuer's $ General Obligation TaY Increment Refunding Bonds, Series 2009G (the `Bonds"), all of like date of origiaal issue and tenor, except as to number, maturity, interest rate, denomination, and redemption privilege, which Bond has been issued pursuant to and in full conforarity with the Constitution and laws of the State of Minnesota, including partiwlazly Minnesota Statutes, Section 469178, and the Charter of the Issuer, and pursuant to a resolution adopted by the City Council of the Issuer on September 16, 2009 (the "Resolution"), for the purpose of providing funds for the refunding of existing indebtedness. This Bond is payable out of the Block 39 Debt Service Fund, to which have been pledged tax increments zeceived fzom the Block 39 Tax Increment Distzict in the City and certain net pazking revenues derived from a pazking facility located in the Block 39 Tas Increment District. This Bond constitutes a general obligation of the Issuer, and to provide money for the prompt and full payment of its principal, premium, if any, and interest when the same become due, the full faith and credit and taxing powers of the Issuer have been and are hereby inevocably pledged. Denominations: Resolution. The Bonds are issuable originally only as fully registered bonds in the denominations of $5,000 and integral multiples thereof of a single maturity. Reference is hereby made to the Resolution for a description of the rights and duties of the Registrar. A copy of the Resolution ise on file in the principal office of the Registraz. Transfer. This Bond shall be registered in the name of the payee on the books of the Issuer by presenting this Bond for registration to the Registraz, who will endorse its name and note the date of registration opposite the name of the payee in the certificate of registration attached hereto. Thereafrer this Bond may be transferred by delivery with an assignment duly executed by the Holder or its legal representatives, and the Issuer and Registrar may treat the Holder as the person exclusively entitled to exercise all the rights and powers of an owner until this Bond is presented with such assignment for registration of transfer, accompanied by assurance of the nature provided by law that the assignment is genuine and effective, and until such transfer is registered on said books and noted hereon by the Registrar, all subject to the terms and conditions provided in the Resolution and to reasonable regulations of the Issuer contained in any agreement with, or notice to, the Registraz. Transfer of this Bond may, at the direction and expense of the Issuer, be subject to certain other restrictions if required to qualify this Bond as being "in registered form" within the meaning of Section 149(a) of the Internal Revenue Code of 1986, as amended. Fees uaon Transfer or Loss. The Registraz may require payment of a sum sufficient to cover any tas or other governmental charge payable in connection with the transfer or exchange of this Bond and any legal or unusual costs regazding transfers and lost Bonds. Treatment of Registered Owner. The Issuer and Registrar may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payxnent as herein provided (except as otherwise provided with respect to the Record Date) and for all other purposes, whether or not A-2 09-1012 this Bond shall be overdue, and neither the Issuer nor the Registrar shall be affected by notice to the contrary. Authenticauon. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security unless the Cert�cate of Authentication hereon shall have been executed by the Registrar. Not Oualified Tax Exempt Oblieations. The Bonds have not been desi�ated by the Issuer as "qual�ed taY-exempt obligations" for purposes of Section 265(b)(3) of the federal Intemal Revenue Code of 1986, as amended. IT' IS HEREBY CERTINIIED AND RECITED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota and the Charter of the Issuer to be done, to happen and to be performed, precedent to and in the issua�ce of this Bond, have been done, have happened and have been performed, in regular and due form, time, and manner as required by law, and this Bond, together with all other debts of the Issuer outstanding on the date of original issue hereof and on the date of its issuance and delivery to the original purchaser, does not exceed any constitutional or statutory or Charter limitation of indebtedness. (The remainder of this page is intentiooally left blank.) A-3 o9-ioiz IN WITNESS WHEREOF, the City of Saint Paul, Ramsey County, Minnesota, by its City Council has caused this Bond to be sealed with its official seal and to be executed on its behalf by the facsimile signature of its Mayor, attested by the facsimile si�ature of its C1erk, and countersigned by the facsimile signature of its Duector, Office of Financial Services. CITY OF SAINT PAUL, RAMSEY COUNTY, MINNESOTA Mayor Attest: City Clerk Countersigned: Director, Office of Financial Services (SEAL) I_Q! 09-1012 CERTIETCAT`E OF AU1'HENTICATION This is one of the Bonds delivered pursuant to the Resolutions mentioned within. CITY OF SAINT PAUL, MINNESOTA � City Treasurer � 09-1012 ASSIGNMENT For value received, the undersia ed hereby sells, assigns and transfers unto the within Bond and all righu thereunder, and does hereby inevocably constitute and appoint attorney to transfer the said Bond on the books kept for registration of the within Bond, with full power of substitution in the premises. Dated: Notice: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or any cha�ge whatever. Signature Guaranteed: NOTICE: Sip ature(s) must be guazanteed by a financial institution that is a member of the Securities Ttansfer Agent Medallion Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP"), the New York Stock Exchange, Inc. Medallion Signatures Program ("MSP") or other such "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Excha�ge Act of 1934, as amended. The Registraz will not effect transfer of this Bond unless the information conceming the assignee requested below is provided. Name and Address: (Include information for all joint owners if this Series 2009C Bond is held by joint account.) Please insert social security or other identifying number of assignee (The remainder of this page is intentionally lefr blank.) � 09-1012 EXHBIT B FORM OF TAXABLE BOND UNITED STATES OF AMERICA STATE OF MINNESOTA RAMSEY COUNTY CITY OF SAINT PAUL � TAXABLfi GENERAL OBLIGATION TAX INCREMENT REFUNDING BOND, SBRIES 2009H INTEREST RATE DATE OF MA1`URITY DATE ORIGINAL ISSUE CUSIP REGISTERED OWNER: .. � �.. �� �.r DOLLARS KNOW ALL PERSONS BY TI�SE PRESENTS that the City of Saint Paul Ramsey County, Minnesota (the "Issuer" or "City"), certifies that it is indebted and for value received promises to pay to the registered owner specifted above, or registered assigns, in the manner hereinafter set forth, the principal amount specified above, on the maturity date specif"ied above, and to pay interest thereon semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date"), commencing February 1, 2010, at the rate per annum specified above {calculated on the basis of a 360day year of twelve 30-day months) until the principat sum is paid oz has been provided for. This Bond will beaz interest from the most recent Interest Payment Date to which interest has been paid or, if no interest, has been paid, from the date of original issue hereo£ The principal of and premium, if any, on this Bond aze Qayable by check or draft in next day funds or its equivalent (or by wire transfer in immediately available funds if payment in such focm is necesary to meet the timing cequirements below) upon presentation and sucrender hereof at the principal office of the Saint Paul Treasurer, aciing as paying agent, or any successor paying agent duly appointed by the Issuei. The principal of and premium, if any, and interest on this Bond aze payable in lawful money of the United States of America. Date of Pavment Not Business Day. If the date for payment of the .principal of, premium, if any, or interest on this Bond shall be a Saturday, Sunday, leaal holiday or a day on which banking institutions in the City of New York, New York, or the city where the principal office of the Registrar is located aze authorized by law or executive order to close, then the date for such payment shali be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking insritutions aze authorized to close, and payment on such date shall have the same force and effect as if made on the nominal date of payment. Issuance: Purpose: Generai Obligarion. This Bond is one of an issue in the total principal amount of the Issuer's $ Tasable General Obligauon Tas Increment Refunding Bonds, Series 2009H (the `Bonds"), all of like date of original issue and tenor, except as to number, maturity, interest rate, denomination, and redemption privilege, which Bond has been issued pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including particularly Minnesota Statutes, � o9-ioia Secrion 469.178, and the Charter of the Issuer, and pursuant to a resolution adopted by the City Council of the Issuer on September 16, 2009 (the "Resolutton"), for the purpose of providing funds for t�e refunding of existing indebtedness. This Bond is payable out of the Block 39 Debt Service Fund, to which have been pledged taY increments received from the Block 39 Ta�c Increment District in the City a�d certain net pazking revenues derived from a parking facility located in the Block 39 Tax Increment District. This Bond constitutes a general obligation of the Issuer, and to provide money for the prompt and full payment of its principal, premium, if any, and interest when the same become due, the full faith and credit and tarcing powers of the Issuer have been and are hereby urevocahly pledged. Denominations: Resolution. The Bonds are issuable originally only as fully registered bonds in the denominations of $5,000 and integral multiples thereof of a single maturity. Reference is hereby made to the ResoluGOn for a description of the rights and duties of the Registraz. Copies of the Resolution aze on file in the office of the Registraz, Transfer. This Bond shall be registered in the name of the payee on the books of the Issuer by presenting this $ond fot registration to the Regstrar, who wiil endorse its name and note the date of registration opposite the name of the payee in the cert�cate of registration attached hereto. Thereafter this Bond may be transferred by delivery with an assignment duly executed by the Holder or its legal representatives, and the Issuer and Registrar may treat the Holder as the person exclusively entitled to exercise all the rights and powers of an owner until this Bond is presented wiffi such assignment for registration of transfer, accompanied by assurance of the nature provided by law that the assignment is genuine and effective, and until such transfer is registered on said books and noted hereon by the Registraz, atl subject to the terms and conditions provided in the Resolution and to reasonable regulations of the Issuer contained in any agreement with, or notice to, the Registraz. Transfer of this Bond may, at Che direcrion and expense of the Issuer, be subject to certain other restricrions if required to qualify this Bond as being "in registered form" within the meaning of Section 149(a) of the federat Internal Revenue Code of 1986, as amended. Fees uoon Transfet or Loss. The Registraz may require payment of a sum sufficient to cover any tax or other governmental chazge payable in connection with the transfer or exchange of this Bond and any legal or unusual costs regarding transfers and lost Bonds. Treatment of Registered Owner. The Issuer and Registraz may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided {except as otherwise provided with respect to the Record Date) and for all other purposes, whether or not this Bond shali be overdue, and neither the Issuer nar the Registrar shall be affected by notice to the conuary. Authentication. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security unless the Certificate of Authentication hereon shail have been executed by the Registraz. IT I5 HEREBY CERTIFIED ANU RECITED that all acts, conditions and things required by the Consiitution and laws of the State of Minnesota and the Cbazter of the Issuer to be done, to happen and to be performed, precedent to and in the issuance of this Bond, have been done, have happened and have been perfornied, in regular and due form, time and manner as required by law, and this Bond, together with all other debts of the Issuer outstanding on the date of original issue hereof and on the date of its issuance and delivery ro the original purchaser, does not exceed any constitutional or statutory or Charter limitation of indebtedness. B-2 o9-io�z IN VJTTNESS WHEREOF, the City of Saint Paul, Ramsey County, Minnesota, by its City Council has caused this Bond to be sealed with its o�cial seal and to be executed on its behalf by the facsimile signature of its Mayor, attested by the facsimile signature of its Clerk, and countersigned by the facsimile si�mature of its Director, Office of Financial Services. CITY OF SAINT PAUL, RAMSEY COUNTY, MINNESOTA Mayor Attest: City Clerk Countersigned: Director, Office of Financial Services (SEAL) I•.�L? 09-1012 CERTIFTCATE OF AUTFIENTICATION This is one of the Bonds delivered pursuant to the Resolutions mentioned within. CITY OF SAINT PAUL, MINNESOTA I� City Treaswer � 09-1012 AS5IGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and ali rights thereunder, and does hereby irrevocably constitute and appoint attorney to transfer the said Bond on the books kept for registration of the within Bond, with full power of substitution in the premises. Dated: Notice: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the wiChin $ond in every particulaz, withQUt alteration or any change whatever. Signature Guazanteed: NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the Securities Transfer Agent Medallion Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP"), the New York Stock Exchange, Inc. Medallion Sia atures Program ("MSP") or other such "signature guazantee program" as may be detemuned by the Registrar in addition to, or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange Act of 1934, as amended. The Registrar will not effect transfer of this Bond unless the informauon concerning the assignee requested below is provided. Name and Address: (Include information for all joinC owners if this Series 2009C Bond is held by joint account.) Please insert social security or other identifying number of assigc�ee (The retnainder of this page is intentionally left biank.) sas8s-is �aw,� 346000v.2 � Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet ,..__......__.,,.�_,,._..--:•- ..-•-•_.,-.-_ aq����a- FS —F�nanciaf Services CoMaet Person 8 Pfione; Bob Geurs 266-8837 Must 6e on Council qqenda by (Date): 16-SEP-09 T� RESOLUTION W!$ l'RANSACTION E-Docume�rt Required: N OocumeM Co�act: �b Geurs CoMact Phone: 266-8837 O8 SEP 2009 N Assign Num6er For Routing Order SoYal # of Signature Pag _(Clip AII Loptions for Signature) Action Requested: Green Sheet NO: 3079056 0 I�Snavcial Services I I I 1 ipa¢cia1S¢rvices De arhnentDirector 2 waneial Services ce Finavcial Services 3 ' Atlnrn 4 m"s Office orlAss�stant 5 unN C' Conncil Approve awarding the sale of GO T�iZefunding Bonds, Series 2009 G and taxable GO T'I Refunding Bonds, series 2009 H, fixing the foim and terms of the bonds and directing the execution and delivery; and pledging fax increments and certain parking revenues for the payfsent thereof. Recommendafions: Approve (A) or Reject (R): Planning Commission Ci6 Committee Civil Service Commission Personal Service Contracts Must Answer the Following Questions: 1. Has this person/firm ever worked under a contract for this department? Yes No 2, Has this person/firtn ever been a city employee? Yes No 3. Does this person/firtn possess a ski➢ not nortnally possessed by any current city employee? Yes No Explain alf yes answers on sepatate sheet and attach W green sheet. fnitiating Problem, Issues, Opportunity (Who, What, When, Where, Wby): The City is proposing to refund GO TI Bonds (Block 39 project), Series 1998 A and taxable GO IT Eonds (Block 34 project), Series 1998 B and lower debt service. Advantages If Approved: � 1998 A and Y998 B GO TT Bonds will be refunded and debt service will be lowered. Disadvantages If Approved: None Known �.. �'� , �. .. i �� � ��+'� DisadvanWges If NotApproved: 1998 A adn 1998 B GO TI Bonds wi11 not be refunded Toul Amoum of $27 510,000.00 Tmnsaction: Fundine Source; Band proceeds Financial lnformation: ypd $8,845,000.00 (E�cplain) Activity Number: CosURevenue Budgeted: Sefltember 8. 2009 9:27 AM pa�p � 09-1412 EXHIBIT A Agenda #30 CF-09-1012; GS 3079056 COMPLETIONS AND CONFORMING DETAILS FOR GENERAL OSLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2009G TAXABLE GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2009H There is before this Council a draft resolution For the sale af the above bonds that requires certain completions and details that conform to terms of sale. The C1erk or bond counsel for the Bonds shall revise the draft resolution to read as it should with the campleuons and details provided here directly or by reference to other materials before this Council. Spots in the resolutiQn are noted in the second column. The third columu is optional but may contain the cornp]etion or note the specific sanrce of the other materials. SPOTS IN THE COMPLETION, DETAIL COMPLETIONS AND DETAILS RESOLUTION OR SOURCE (OPTIONAL) l. Winning Pxouoser — Serias 2009G Bonds. Section 2 BMO Capital Markets Other materials before this Council indicate the winning Tax Exempt Sonds Purchaser, whose name shal] be inserted in Section 2. 2. Wionine Proposer — Series 2009H Bonds. Section 3 NQrthland Securities, lnc. Other materials before this Council indicate the winning Taxable Bonds Purchaser, whose name shall be inserted in Section 3. 3. Princioal Amounts — Series 2009G Bonds. Sections ], 2 and Par amount changed to Other materials before this Council indicate 4 $20,695,��0 the principal amount af the Series 2009G Bonds and the principal amounts of each See attached schedule on maturity. Exhibit B 4. Principa] Amounts — Series 2009H Bonds. Sections l, 3 and Par amount ehanged to Other materials before this Council indicate 4 $8,655,�00 the principal amount of tha Series 2009H Bonds and the principal amounts of each See atcached schedule on mafirity. Hxhibit C 5. PurchasePrice—Series2009GBonds. Other Section2 $21,347,02].75 materials before this Council indicate the proposed purchase price of the Series 2009G Bonds. A-1 09-1012 6. Purchase Price — Series 2009H Bonds. Other Section 3 $&,194,562.95 materials before this Conncil indicate the proposed purchase price of the Series 2009H Bonds. 7. Tnterest Rates — Series 2009G Bonds. Other Section 2 See attached schedule on materials before this Council indicate the Exhibit B interest rates for the matnrity dates of the Bonds to be added to the schedule in Section 2 of the resolution 8. Interest Rates — Series 2009H Bonds. Other Section 3 See attached schedule on matarials before this Council indicate the Exhibit C interest rates for the maturity dates of the Bonds to be added to the schedule in Section 3 of the resolution 9. Redemotion Provisions — Series 2009G Section 7 Not Applicable Bonds. Other materials before this Council indicate the redemption provisions for d�e Series 3009G Bonds m be iocluded in Secrian 7 of the resolution. SA385-075 (3U) A-2 355464v.2 o9-ioia EXHIBIT B Saint Paul City, Minnesota General Obligation Tax Increment Refunding Bonds Series 2009G TERMS AND CONDITIONS True Interest Cost for the Series 2009G Bonds: 3.1434390�Ic The Series 3009G �ands shall mature on the dates and in the principa3 amounts set forth below: Maturity Year Principal Interest Bond (February 1) Amount Rate Pield 2015 2016 2077 2018 2019 2020 2027 2022 2023 202A 2025 * P�iced to the fzrst �ptiona( call ctate of Februar7� 7, 2018. B-1 $ 820,000 3,725,000 1,800,000 1,850,000 1,855,000 1,92QOD0 ],985,000 �,055,000 �,125,000 �,225,000 2,335,000 4.00% 4.00 4.00 4.00 3.00 3.]25 3.125 3.50 3.50 3.50 3.50 1.97% 2.20 2.45 2.68 2.84* 2.96" 3.08x 3.18r 3.28* 3.375 * 3.47x Price 7 ] 0.136% ] ] 0.506 110.278 ] 09.743 101.17]M 107.20]' ] 00.323' 102310� 10] .580* 100.893� ]00.21a* 09-1012 EXHIBIT C Saint Paul City, Minnesota Taxable General Obligation Tax Increment Refunding Bonds, Series 2009H TERMS AND CONDITIONS Tme Interest Cost for the Series 2009H $onds: 2_4672097�7� The Series 2Q09H Bonds shall mature on the dates and in the priucipal amounts set forth 6elow: Maturity Year Principal Interest Bond (February 1) Amount Rate Yield Price 2010 2011 2072 2013 2014 2015 $],245,000 1,575,000 ] ,605,000 1,640,000 1,7]q000 830,000 3.10% 3.10 3.10 3.10 3.10 3.10 Gl 0.50% l.]5 l .75 2.25 2.85 3.10 ] 00.734�0 102.475 7 03.007 ] 02.673 ] 00.998 100.000 Springsted September 16, 2D09 Ms. Margaret Keily, Director of Financiai Services Office of Financial Services 700 City Hall 15 West Kellogg Boulevard Saint Pauf, Minnesota 55102 RE: ,�9-ioia s y �:<� ��� ,��z� ie� ��.xs�- a; ,. s� � s: - _ . , _� , za�i -� .��,--aa-s� c :., .� -z_�-a :� Recommendations for Award ofi the City of Saint Paul's: $14,235,000* General Obligation Capital Notes, Series 2009F; $20,695,000* General Obligation Tax Increment Refunding Bonds, Series 2009G; and $8,655,O�U* Taxable General Obiigation Tax Increment Refunding Bonds, Series 2U09H, (coilectively, the "Issues" or "Bonds") Dear Ms. Kelly: This letter summarizes the results of the competitive bids opened this morning for the three Issues listed above. Purpose and Repayment Sources of Issues The purpose of the Notes is to finance the purchase and instailation of the City Operations Modemization antl Enterprise Transformation ("COMET") project. The Notes will be repaid by general property tax levies. The purpose of the two 71F Refunding Bonds is to refinance two TIF bond issues marketed in 1998 associated with the Block 39/Lawson Project. The goals of the Refunding are both to achieve interest cost savings and to adjust the debt repayment schedule to match revised TIF revenue estimates after the impact of state statutory changes. The two issues, taac-exempt and taxable, refiect the tax status of the 1998 issues. 7a�ble municipal bond issues reflect the conveyance of a benefit io a private party, in this case reflecting the original development arrangement. Municipai Market Rates The municipal tax-exempt market continues in a very low range for those issuers with good cretlit quality, such as the City of Saint Paul. The national index of these interest rates, the BBI, continues in a low range, at present the very low point of 4.33°l0. This fevel is approaching a 30-year low poini in the tae-exempt markeL We have attached a graph of the BBI covering the last several years which shows the recent reduction in interest rates. *Please see section on premium bidding. Pubhc Sector Ativisors 09-1012 City of Saint Pau{, Minnesota September 16, 2009 Page 2 Sale Results The City received six bids on the Note Issue. The senior managers of the bidding syndicates were as folfows: Rank Bidder TIC °fo BMO Capital ............................ 2.295 JP Morgan ..................... ......... 2.318 Robert Baird ........................ .. 2.339 Piper,laffray ............................ 2.340 Welis Fargo ............................ 2.378 BB&T Capital ........................... 2.420 The lowest (or best} bid was receivetl from BMO Capital Markets at a true interest rate of 2.295%. Our estimate of interest rates from eariy August for this Issue was 2.56°(0. The City received eight bids on the tax•exempt TIF Issue: Rank Bidder T{C(°!o) BMO Capital ......... .... ............. 3,141 JP Morgan ........... ................... 3.232 Ro6ert Baird ............................ 3.259 Cronin & Co . ........................... 3.329 Morgan Stanley ....................... 3.331 Hutchinson Shockey ................ 3.343 Piper Jaffray ............................ 3.364 BB&T Capital ...... .................... 3.431 The lowest (or best) bid was received from BMO Capital Markets at a true interest rate of 3.141 °fo. Our estimate of interest rates from early August for this issue was 3.54%. The City received nine bids on the taxable TIF Issue: Rank Bidder TIC % Northland Securities ................ 2.466 Piper Jaffray ............................ 2.509 BMO Capitai ............................ 2.540 Robert Baird ................... ........ 2.551 Cronin & Co ............................. 2.564 UBS Financial .......................... 2.588 Morgan Keegan ....................... 2.607 FTN Financial .......................... 2.629 Stifel Nicolaus .......................... 2.768 The lowest (or best) 6id was received ftom Northland Securities at a true interest rate of 2.466°!n. Our est+mate of interest rates from early August for this Issue was 2.86%. The difference in estimates behveen the tax-exempt and 09-1012 City of Saint Paul, Mi�nesota September 16, 2009 Page 3 taxable issues reflects the much shorter repayment period of the taxable issue as compared to the tax-exempt issue, in addition to the norma! difference between the two interest rate markets. We require bidders to submit their bids on a"True Interest Rate" (TIC) basis, so as to reflect the present value of their bids antl, thereby, ensure the award is based on the lowest cost to the City. We have encfosed bid tabulation forms for each Issue summarizing the bid specifics and composition of each underwriting syndicate. Premium Bidding The curreni interest rate market has caused investors to look for protection from upward pressures on interest rates by requinng premium bonds. Premium bonds are securities where investors are willing to provide the issuer with more funds than the debt requirement in exchange for interest rate payments in excess of current market levels. This situation was reflected in all of the Issues. This payment beyond the debt requirement is used to reduce the amount of debt so the resulting total principal and interest payments reflect the City's objectives. For these Issues the Note principai was reduced to $14,235,000 from $14,4D0,000; the tax-exempt TIF Refunding issue to $20,695,000 from $21,510,000; and the taxable TIF Refunding Issue to $8,655,000 from $8,845,0��. Recommendation We recommend award(sj of sale to: BMO Capital Markets for the Note and lax-exempt TIF Refunding Bonds, and Northland Securities for the Taxahle TIF Refunding Bonds. Sasis of Recommendation We believe the interest rates received by the City today refilect aggressive market levels. This is evidenced by the number of bidders, their general close proximity to one another, and the significant actual results being well below estimate. On the tax-exempt and taxable TlF refunding issues, the respective net present value savings, net of afl issuance costs, are $2,510,993.70 and $631,141.48, respectively. We evaluate savings levels by determining the percent of net present value savings to the present value of refunded tlebt service. The actual results are 10.36% and 6.60%, respectiveiy. This percentage is well in excess of generally recommended levels for this type of refiunding. These net savings levels are well in excess of original estimates. Finally, the broad market is in this very low range which has yielded these benefits for the City. Credit Rating The City's ge�eral obiigation rating for these Issues were reaffirmed by Standard & Poor's at AAA and Moody's at Aa2. The respective rating age�cy reports present each agency's perspectives on the City's credit quafity. The Gity conducted a series of discussions with the two agencies as part of this rating process. The AAA rating is an exceptional credit designation and its continuance by the Cit�+ in diffioult budget and economic times demonstrates 09-1012 City of Saint Paul, Minnesota Septem6er 16, 2��9 Page 4 the qua�ity of decision-making by its elected officiais and the management of its stafif. We have attached copies of the rating reports for the City. We welcome any questions regarding this sale process and congratulate the City on completion of a successful sale process. Respectfuity, �J>� � ��c_�; l / David N. MacGiliivray, Chairman Client Representative �� Enclosures cc: Mr. Todd Hurley, City Treasurer Mr. Robed Geurs, City Debt, Structured Finance and TIF Manager 09-1012 SBI 25-bond (Revenue) and 20-bond (G.O.} Rates tor 5 Years Ending 9/10i2009 6.6% 6.4% 62% 6.0% 5.8% 5.6% ,a 5.4% � 52% 5.0°l0 4.8% 4.6% 4�.4% 4.2% 4. � o � o °` o\o� o � o h o � o h o � o � o � o � o � o � o � o � Q � o 1 0 � 0 1 o � o �a o � o w o � o w o � o � o � o � o � o � ��'� �.�'� h�'� ��'� �.�� h�� ��'� �.�'� h� ��'� ��� h� a�� ��� h�� e�� �=3=1F�i:• •I �l:li��:... Dates o9-ioia � Springsted $8,845,000" CITY OF SAINT PAUL, MINNESOTA Springsted tncotporffied 38Q .tackson SUeet, Suite 300 SaintPaul,MN 55101-2887 Tel: 651-223-3000 Fax: 651-2233002 Email: advisors@springsted.com www.springsted.com TAXABLE GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2009H (BOOK ENTRY ONLY) AWARD: SALE: NORTHLAND SECURIT{ES September 16, 2009 Moody's Rating: Aa2 Standard & Poor's Rating: AAA Interest Netlnterest True Interest Bidder Rates Price Cost Rate NORTHLAND SECURITIES PIPER JAFFRAY & CO. BMO CAPfTAL MARKETS GKST INC. CITfGROUP GLOBAL MARKETS, 4NC. CABRERA CAPITAL MARKETS, LLC ROBERT W. BAIRD & COMPANY, INCORPORATED C.L. KING 8 ASSOCIATES DAVENPORT & COMPANY LLC LOOP CAPITAL MARKETS, LLC KILDARE CAPITAL SAMCO CAPITAL MARKETS, {NC. WEDBUSH MORGAN SECURITIES CREWS & ASSOCIATES UMB BANK, N.A. UNITED BANKERS' BANK CRONiN & COMPANY, INC. 3.10°l0 2010-2015 D.50% 2010 120°/a 2011 1.95% 2012 2.25°/a 2013 2.85% 2014 3.30% 2015 1.25% 2010 1.50°10 2011 1.75°/a 2012 2,45°fo 2013 2.75% 2014 3.3�°!0 2�15 0.90% 2010 1.20% 2011 1.95°l0 2012 2.25°fo 2013 2.85% 2014 3.10% 2015 2.00% 2010-2012 2.20% 2013 2.95% 2014 3.10% 2015 $8,987,710.74 $589,542.84 $8,834,362.75 $594,317.67 $8,832,A69.05 $661,367.20 $8,517,821.25 $603,332.00 $8,841,435.05 $606,901.49 2.4659% 2.5086°fo 2.5400°fo 2.5514% 2.5639% (Continued) Pubfic Sector Advisors 09-1012 Interest Netlnterest True Interest Bidder Rates Price Cost Rate UBS FINANCIAL SERVICES WELLS FARGO BROKERAGE SERViCES, LLC MORGAN KEEGAN & COMPANY, INC. 2.00% 2010-2012 225°/a 2013 2.75% 2014 3.25% 2D15 2.00% 2010-2011 2.50% 2Q12-2013 3.00°/a 2014 3.25% 2015 2.00% 2010-2012 2.25°k 2013 2.85% 2014 3.15% 2015 9.00% 2010 1.50% 2017 2.00% 2012 2.4p% 2013 3.00% 2014 325% 2015 $8,831,001.75 $8,875,489.15 $8,824,656.50 $612,091.17 2.5882°/a $618,646.06 2.6067% $627,307.92 2.6288% FTN FINANCiAL CAPITAL MARKETS STIFEL, NICOLAUS & COMPANY, dNCORPORATED $8,802,070.65 $653,668.97 2.7683% REOFFERING SCHEDULE OF THE PURCHASER Rate 3.10% 3.10% 3.10% 3.10% 3.10% 3.10% Year 2010 2011 2012 2013 2014 2015 Yield 0.50% 1.15°k 1.75% 225% 2.85% Par BBI: 4.33% Average Maturity: 2.671 Years ' Subsequent fo bid opening, the issue size decreased from $8, 845, 000 to $8, 655, 000. 09-1012 � Springsted $21,510,000' CITY OF SAINT PAUL, MINNESOTA Springsted lncorporated 380 Jackson Street, Suite 300 Saint Paui, MN 551D1-2887 Tel: 651-223-3W� Fa�c: 651-223-3002 Email: advisorseo springsted.com mvwspringsted.com GENERAL OBLIGATION TAX INCREMENT REFUNDtNG BONDS, SERIES 2�09G (BOOK ENTRY ONLY) AWARD: SALE: SeQtember 16, 2009 Moody's Rating: Aa2 Standard & Poor's Rating: AAA Interest Netinterest True Interest Bidder Rates Price Cost Rate BMO CAPITAL MARKETS GKST INC. CITIGROUP GLOBAL MARKETS, iNC. CABRERA CAPITAL MARKETS, LLC J.P. MORGAN SECURITIES INC. ROBERT W. BAIRD & COMPANY, INCORPORATED FIDEUTY CAPiTAL MARKETS SERVICES STIFEL, NICOLAUS & COMPANY, INCORPORATED DAVENPORT & COMPANY LLC LOOP CAPITAL MARKETS, LLC C.L. KING & ASSOCIATES OPPENHEIMER & CO. INC. SAMCO CAPITAL MARKETS, {NC. KILDARE CAPITAL EDWARD D. JONES & COMPANY 4.00°fo 2015-2018 3.00°l0 2019 3.125°/a 2020-2021 3.5�% 2022-2025 4.00°l0 2015-2025 3.�0°fo 2015-2017 4.00% 2018-2019 3.00% 2020 4.00°!0 2021-2025 $22,187,882.45 $22,959,719.76 $7,426,9t3.28 3.1419% $7,816,46Q.24 3.2321 % $22,497,SQ3.35 $7,507,454.15 3.2593% CRONIN 8 COMPANY, INC. 2.50% 2015-2016 $22,259,564.69 $7,932,428.85 3.3291% WELLS FARGO BftOKERAGE 3.00°!0 2017-2018 SERVICES, LlC 4.00% 2019-2023 WELLS FARGO ADVISORS 3.75% 2024 RBC CAPITAL MARKETS CORPORATION 4.00% 2025 UBS FINANCIAL SERVICES MORGAN STANLEY & CO. INC. BMO CAPITAL MARKETS GKST 1NC. CITIGROUP GLOBAL MARKETS, INC. CABRERA CAPITAL MARKE7S, LLC 2.5Q% 2015 3.00°Io 2016 325°!0 2017-2018 3.50% 2019 4.00% 2020-2025 $22,357,725.25 $7,955,365.08 3.3311% (Continued) Pubiic Sector Advisors os-ioiz tnterest Net Interest True lnteres! Bidder Rates Price Cost Rate HUTCHINSON, SHOCKEY, ERLEY 8 COMPANY PIPER JAFFRAY & CO. BB&T CAPITAL MARKETS 3.00% 2015-2016 5.00°h 2017 4.00% 2018-2023 4.50% 2024-2025 3.00°/a 2015-2016 5.00% 2017-2018 4.00% 2019-2025 4.00% 2015-2019 5.00% 2020-2025 $23,Oi4,466.84 $22,834,125.70 $8,100,451.80 $23,950,586.29 $8,548,359.54 $8,111,603.16 3.3425% REOFFERING SCHEDULE OF THE PURCHASER Rate 4.00% 4,00% 4.00% 4.00% 3.00% 3.125% 3.125% 3.50% 3.50% 3.50% 3.50% Year 2015 2016 2Q17 2018 2019 2020 2021 2022 2023 2024 2025 Yield 1.97% 220% 2.45% 2.68% 2.84% 2.96% 3.08% 3.18°/a 3.289'0 3.375% 3.47% 3.3643°!0 3.4305% 861: 4.33% Average Maturity: 10.804 Years * Subsequent fo bid opening, the issue size decreased from $29,510,000 to $20,695,000. 09-1ai2 � Springsted $14,400,000` Spri�gstedlncorporated 38D Jackson SVeei, Suite 300 SainiPauV,MN 55101-2887 Tel: 651-2233000 Fax: 651-2233DD2 Email: advisors@springsied.com wwwspringsted.com C1TY OF SAINT PAUL, MINNESOTA GENERAL OBLIGATION CAPITAL NOTES, SERIES 2009P �BOOK ENTRY ONLI� AWARD; SALE: September 16, 2009 Moody's Rating: Aa2 Standard & Poor's Rating: AAA Interest Net Interest True Interest Bidder Rates Price Cost Rate BMO CAPITAL MARKETS GKST INC. CIT4GROUP GLOBAL MARKETS, INC. CABRERA CAPITAL MARKETS, LLC J.P. MORGAN SECURITIES INC. ROBERT W. BAIRD 8 COMPANY, INCORPORATED FIDEL4TY CAPITAL MARKETS SERVICES STIFEL, NICOLAUS & COMPANY, INCORPORATED DAVENPORT & COMPANY LLC LOOP CAPITAL MARKETS, LLC C.L. KING & ASSOCIATES OPPENHEIMER & CO. INC. SAMCO CAPITAL MARKETS, INC. KILDARE CAPITAL EDWARD D. JONES & COMPAfVY PIPER JAFFRAY & CO. 2.00°!0 2011-2014 2.25% 2015 2.50% 2016 2.625°Jo 2017 2.75°!0 201$ 3.00% 2019 4.00% 2011-2019 2.00% 2011-2013 2.50°l0 2014 3.00°fo 2015-2016 4.00% 2017-2019 4.00% 2071-2019 $14,566,973.60 $2,034,020.46 $15,746,975.65 $2,15A,824.35 $15,173,387.79 $2,137,945.96 $15,728,366.50 $2,'173,433.50 2.2952°10 2.3181 % 2.3392% 2.3399% WELLS FARGO BROKERAGE 2.00% 2011-2Q13 $14,713,161.7Q $2,124,260.80 2.3784% SERVICES, LLC 2.50°l0 2014-2016 UBS FINANCIAL SERVICES 3.00% 2017-2018 CRONIN & COMPANY, INC. 3.50% 2019 RBC CAPITAI MARKETS CORPORATION (Continued) Publit Settor Advisors BMO CAPITAL MARKETS GKST INC. CiTIGROUP GLOBAL MARKETS, INC. CABRERA CAPITAL MARKETS, LLG 09-1012 lnterest Net Interest True Interest Bidder Rates Price Cost Rate BBBT CAPtTAL MARKETS 3.00% 2011-2013 325% 2014 3.50% 2015 4.00% 2016-20t9 $15,434,652.65 $2,228,035.47 2.4198% REOFFERING SCHEDULE OF THE PURCHASER Rate Year Yield 2.00% 2.00% 2.00% 2.00% 2.25% 2.50% 2.625°k 2.75% 3.00% 2011 2092 2013 2074 2015 2016 2017 2018 2019 0.70% 1.07% 1.40% 1.72% 1.979'0 2.20% 2.45% 2.68% 2.84% BBI: 4.339'0 Average Maturity: 6.130 Years ' Subsequent to bid opening, the issue size decreased from $14, 400, 000 to $14, 235, 000. 09-1012 Summary: St. Paul, Minnesota; General Obligation USS2757 mil GO tax incre rfdg bnds ser 2009G dtd 10(19/2009 tlue OZ(07(2025 Te�m A.4A(Sta61e New US$1A A md GO cap ms ser 2009F dftl 70i0912009 due tOJD712019 AAA1Stable New US$8.845 mil taxable GO tax mcre rfdg 6nds ser 2W9H dtd 1 �J19/2�09 due 02/01/2015 Cong Term Rating AAA1Stable New St Paul St Paul Port Auth, Minnesota St Paul, Minnesota St Paul Port Auth (St Paul{ 60 AAA(Stable Affumeci UnenhancedRatmg AAA(SPUR�(Sta6fe Affirmed Many issues are enhanced by bond msurence Rationale In Standaxd & Poox's Racing Seivices' opinion, t�ie 'AAA' long-term racing on Sc Pau(, Mi�n.'s general obligation (GO) capital note sexies 2009F, GO tax increment refunding bonds series 2009G, and taxable GO tax inerement refunding bonds series 2009H reflecxs the citq's • Deep and diverse local economy, w6ich participaces m the even bcoader Minneapolis-Sc. Pau( (Twin Gittes) metropolitan scaciscical area (MSA) economy; • Stiong management, with the city takmg a strong stand co keep hndget to aemal pecformance more aligned with and backed by the maintenance of a 1S% fund balance of next year's budget; • Successful redevelopmznt efforts, which have helped spur downtown St. Paul's recovery; and • Moderace debc burden. The 'AAA' longterm rating and Standaid & Poox's underlying ranng (SPUR) on the city's GO bonds have been affirmed. The seeies 20Q9F capital notes are general obligations of the city for which the city has pledged ics full faith and credit and powei to levy direct general ad valorem xaxes. The cixy will use proceeds to finance the acquisition of eapital equipment. The series 2009G GO tax increment refunding bonds and sedes 2009H caxa6le GO tax incremenc eefunding bonds wi11 be general obligarions of rhe city for which it �vill pledge i[s full faith and credit and powex to levy direet general ad valorem taxes. In addition, the St. Paul Housing and Redevelopmenc Authority will also pledge tax increment revenue derived from the Biock 39JArena Redevelopmen� Tax Ineremenc Financing District and �et parking revenues from rhe B1ock 39 parking ramp. The city will use the proceeds ro refund its GO [ax increment bonds S�andard & Poor's RatingsDi�ect � September 14, 2009 2 Smndar0&POOfsAlinghtsraserved NorepnntotdisseminaeanwithoutS&P'spermission SeeTermsofUse[DisClaimeronthelastpage 7.+&:S2f30P2�"5°e Summary: St. Paul, Minnesota; General Obligation series 1998A and serles 199$B. Each year's col(ections oY taxes and tax increment revenues, if collected in full, wilI be sufficient xo pay 105% of the interest due on Aug. 1 of the collettion year and the principal and interest due on Feb. 1 of the followi� year, St. Paul (populacion: 286,620) continues to benefic from growth in the Twin Cities area; downtown St. Paul, meanwhile, continues to be the scene of redevelopment. The ciry is the seat for Ramsey County ('AAA' GO rating). Residents have employment opportunicies throughout the MSA and counry. The MSA's unemploymenc rate averaged 7.9% xhrough July 2009, on par with che state's 7.S% rate. The tax base condnues to grow as Sc. Paul has successfully developed public and private partnerships throughout the city to encourage residential, commercial, and industrial redeve7opment. The tax base is diverse, with the 101eading taxpayers accoundng for just 6.4% of tota] assessed value. The assessor's indicaced market value grew at an average annual rate of 3.2% between 2005 and 2009 to $24.053 billion, transladng to, in our opinion a very strong $53,922. We consider the city's wealth and income levels to be average, as demonstrated by median household effective buying income at 80.8% of the scate and 89.0% of the narional levels. The ciry's financial position has remained strong, despire cuts in state ]ocal governmenc aid, no property tax increases since 1992, and the maintenance of a consiscent level of services for residents. As a result, the cixy lowered Sts fund balance to $27.2 million in fiscal 2005 {] 6.9% of expenditures) from $43J million (26.5%) in fiscal 2001. Beginning x�ith fisca12006, che city changed its budgeting scrategy such that budgex-co-actual results will be more closely aligned than in rhe past. With chis approach, che city showed a$3.0 million general fund surplas in fiscal 2006 and an ending unreserved general fund balance of $27.0 million, or, in our opinion, a very sttong 15.7% of expendirures. Audited figures for fiscal Z067 showed a betterthan-expected $4.7 million surplus in the general fund for an ending unreserved fund balance of $31J million, o, in our opinion, a very strong 17.9% of expenditures. Audiced results for fiscal 2008 show the ciry drawing on reserves as a result of a year-end state unallounent of $S.9 million, reducing the unreserved fund balance to 15.6% of e�sendixures. The city projected its original fisca12009 budget ro be rough(y $2.6 million short of its adopted 15% of expenditure reserve policy, but made budgexary reductions equa] to rhe shortfall in order to mainxain the fund balance in line wixh the board poliry. The city projects ending fiscal 2009 with an unreserved general fund balance of $32.29 million, or 15.4% of expenditures. St. Paul's management practices have been assigned a Financial Management Assessment (FVIA) of "strong". The strong assessment indicaces that management practices are strong, well embedded, and likely sustainable. We consider che ciry's overall net debt burden, which includes overlapping debt and debt paid from nongeneral obligation sources, moderate at $2,115, buc low ac 2.5% of market value. The city's GO debt is suppotted by a tax [evy {50%), special assessmencs, (23%), tax increments (20%), and water and sewer revenues (7%). The city's debt service carrying charge has historically been low. Amortization of GO debt is average, wich about 53% rexired in 10 years and nearly 100% in 20 years. Outlook The stable outlook reflects Standard & Poor's expectation that the city's economic stability will continue, as rvill progress in cedeveloping the downtown St. Paul area. The outlook also reflects our expectation chat the city will be able to maintain ics strong financial position, despite the reductions in state local government aid and the new budgeting strategy. www.standardandpoors.com/ratingsdirect 3 StantlazB & PooYS Nl rigMs rv_aaved. No reprint ur tGsseminafion wiMOUt 5&P's Derm�ssion. SeeTerms of Use/�isGaimer on Ihe Wst pagz 746452 � 3�0211Fi94 09-1012 �. � �L � � Jlipad�PS Eorsst�rs :isrrlea New Issue: St. Paul (City o� MN Global Credit Research New Issue 9 SEP 2009 MOODY'S ASSIGNS Aa2 RATING TO ST. PAUL'S (MN) GO CAPITAL NOTES, SERIES 2009F, GO TAX INCREMENT REFUNDING BONDS, SERIES 2009G, AND TAXABLE GO TAX INCREMENT REFUNDING BONDS, SERIES 2009H CIT�' NAS $225.4 MILLION OF OUTSTANDING GO QEBT, INCLUDING CURRENT OFFERINGS Municipality MN Moody's Rating ISSUE General Obligation Capital Notes, Series 2009F Sale Amount $14,400,000 Expected Sale Date Rating Description 09J16/09 General Obligation General Obligation Tax Increment Refunding Bonds, Series 2009G Sale Amount $21,510,000 Ezpected Sale Date Rating Description 09/16/09 General Obligation RATING Aa2 Aa2 Taxable General Obligation Tax Increment Refunding Bonds, Series 2009H Aa2 Sale Amount $8,845,000 Expected Sale Date Rating Description Opinion 09/16/09 General Obligation NEW YORK, Sep 9, 2009 -- Moody's Investors Service has assigned a Aa2 rating with a stable outlook to the City of St. Paul's (MN) $14.4 million General Obligation Capital Notes, Series 2009F, $21.51 million General Obligation Tvc Increment Refunding Bonds, Series 20Q96, and $8.845 m+llion Taxable General Obligation Ta�c Increment Refunding Bonds, Series 2009H. Concurrently, Moody's has affirmed the Aa2 rating on previously issued debt. The city has a total of $225.394 million of General Obligation outstanding, inGuding the current sales. The bonds are secured by the city's general obligation unlimited tax pledge. Proceeds of the Series 2009F notes will finance the acquisition and impiementation of a new financial management system and the Series 2009G and Series 2009H bonds will refinance 1998 bonds for net present value savings and restructure to level debt service. The Aa2 rating reflects the city's sizable tax base anchored by the state capital and continued redevelopment resuiting in improved housing stock and commercial diversification, with moderate impact from the housing downturn and increased rate of foreclosures; satisfactory though narrowed financial operations characterized by revenue pressures; and favorable overall debt profile. Moody's stable outlook reflects the stability of the tax base as part of the relatively strong Twin Cities economy, the expectation that financial operations have stabilized as planned after several years of financial challenges and declining reserves, and our expectation that the city's debt profile will remain favorable. Credit Strengths: * State capital and part of the strong Twin Cities economy which continues to experience regional growth. * Residential growth as evidenced by recent net gains in housing units and population gains in Census 2000. ' Healthy financial position supported by city's commitment to maintaining minimum fund balance policy. ' Attainment of structural operating pertormance and expected stabilization of General Fund reserve levels. * Moderate debt profile Credit Challenges: ' Continued expected revenue challenges, exacerbated by state budgetary pressures resulting in unpredictable and deciining state aid. ' Narrowed, but satisfactory, financial liquidity following planned draw downs through 2005 ' Socio-economic indices that have kept pace with national levels, but slipped slightly compared to state levels. ' Local manifestation of national housing challenges with increased foreclosure and vacant housing units. STATE CAPITAL AND ONGOING RESIDENTIAL REDEVELOPMENT PROVIDE STABLE ECONOMIC BASE St. Paul is the state's capital and second largest city. Although generally a mature urban city, redevelopment and new residential development have resulted in relatively robust growth trends that have moderated in light of the recent housing downtum. Moody's expects these more moderate trends to continue in the near-term as the city fights to address foreGosure concerns. Full market valuation, at $252 billion in 2009, reflected a slight decline of 1.4°/a from the prior year, largely due to modest growth and the sales ratio determined by the State DepaRment of Revenue. The five year average annual growth rate is a moderate 4.7%, driven by healthy growth prior to 2008. The value of building permits also fell in 2008, reflecting just 63% of total permit values in 2007. While specific redevelopment projects do continue, overaU growth is expected to remain modest until new construction activity and appreciation trends return. Population grew by 5% from 1990 to 2000, evidencing a shift in the prior trend of population out-migration or stagnaYion, however 2005 census estimates show a 42% decline since 2000. As the state capital, the economic base is characterized by a sizable government sector with a significant heafth care and education presence. Over 70,000 higher education students provide an additional measure of economic stability. The city has continued to redevelop its downtown, adhering to a long-tertn strategy to revitalize the city's 09-1012 office, entertainment and culturai facilities, which have anchored the central business districYs redevelopment efforts, while an aggressive housing effort complimented the growth with residential development. The riverfront remains an asset that the city is continuing to tap. Favorably, the St. Paul's Ford pla�t closure has been delayed to 2011 in accordance with a recently settled union contract. However, following the previously announced closure, city officials formulated a redevelopment plan and remains prepared to facilitate redevelopment as the opportunity becomes available. Although the Ford plant is among the city's top taxpayers, St. Paul's tax base is very diverse, and Moody's does not expect property tax revenues to be impacted. Unempioyment increased to 8.4% as of July 2009, which is more favorabie than state and national rates of 7.8% and 9.7%, respectively, for the same time period. Despite evidence of a slowed local economy, Moody's expects the city's aggressive commercial and residential redevelopment efforts to contribute to economic expansion going forward. The city notes that property foreclosures have gone up dramatically since 2005, increasing annually and reaching a peak of 2,289 in 2008, compared to 635 in 2005. The increased foreclosures only account for a manageabie 2% of the total housing stock. In addition to efforts at the state and local level to mitigate this growing problem, the city has also begun aggressive efforts to counsel residents undergoing foreclosure, reaching 915 families since October 2008, bringing 276 cases to resolution to date. Moody's believes that the city's proactive efforts in addressing these issues will help to offset any continued foreclosure pressures as the economic downturn continues. DESPITE UNEXPECTED REVENUE PRESSURES, STRUCTURAL BALANCE AND MAINTENANCE OF FUND BALANCE POLICIES EXPECTED Following five years of increasing General Fund operating deficits (FY01 - FY05), FY06 results reversed that trend, with a$1.6 million operating surplus. Including other one-time revenue sources, the General Fund balance increased by $3 million to $30 million, or a satisfactory 17.4% of FY06 General Fund revenues. Favorable variances resulted in a$4.7 miilion operating surplus in FY07 and were aiso projected for FY08. However, following the state's unallocation of local government aid just days prior to the end of the city's FY08 year-end, a nearly $3 million deficit is expected to be realized. Given that the state unallotment for the city was $5.7 million, the more modest deficit reflects other positive variances in budgetary results, reflecting the city's overall conservative budgeting. State aid comprises a large, but declining, component of operating revenues, with intergovernmental aid falling from 51 %(FY02) to 28.6% (FY07) of operating revenues. Moody's believes that in the long-run, the city's declining reliance on state aid will help insulate the city from declining aid or mid-year reductions; however, the city will continue to be challenged to find growth in alternate revenues sources. Property tax levy growth for most Minnesota cities and counties is limited to 3.9% annually, with exemptions for certain expenditures. However, city officials do not expect property tax levy limits to adversely impact financial operations. Favorably, the ability to raise the property levy and the demonstrated will to exercise that ability following several years of flat property taxes will give the city much more flexibility to offset this revenue loss. Moodys believes that the citys strong financial management is reflected in the fiscal discipline it has demonstrated to regain structural balance as weil as adhere to its fiscal policies. The city has achieved a structurally balanced budget as of FY09, one year ahead of the mayor's original goal. The struggle to regain structural balance has been the result of considerable effort and cooperation among city officials, including levy increases following years of minimal levy growth. Further, as the city realized that the unexpected draw on reserves at the end of FY08 would result in a FY09 year end General Fund balance below its 15% policy, officials made one-time adjustments to the budget in order to maintain adequate reserves by year-end. To that end, City Council passed a budget resolution May 6, 2009, immediately replenishing the FY08 year-end draws to bring General Fund reserves back in line with the city's 15% policy. Moody's believes that the city's demonstrated discipline and immediate reaction to unexpected rayarn�a nrocg�irc¢ �yill rcmairi �r,ritiCBl 25 fF1° S+?±° CC.^.t!.^.L°S ±^ f2C° SL�C�^°t8 ressures. The cit s abilit t0 � r. -- o-. �`1 P Y Y maintain structural balance in the long-run is important for the city's overall credit profile. MODERATED DEBT PROFILE EXPECTED TO REMAIN MANAGEABLE St. Paul's debt burden, currently an above average 3.6%, is manageable given expected continued tax base growth (albeit more moderate growth trends) and the use of special assessments and tax increment revenue to repay approximately 25% of the city's direct debt. The debt burden has declined from previous highs, 8% as recenUy as 1998, due largely to substantial market value increases, although limiting debt issuance has also been an important component to this trend. Debt is amortized rapidly; with approximately 73% retired in 10 years. The city expects to issue debt in a pattern consistent with the past several years, with approximately $30 million issued annually to fund various public improvements. The city's capital program is supplemented by the city's one-half cent sales tax that is used to support debt associated with cultural facilities (10%), the RiverCenter (40%) and the city's HRA / Neighborhood program (50%). The city has one outstanding issue of variable rate debt, issued May 1, 2009 as a result of a forward swap agreement entered into in 2007 to allow for interest rate savings upon refunding its Series 7999 bonds at its call date. The city's $65.455 million Sales Tax Revenue Refunding Bonds, Series 2009 refunded its parity 1999 bonds to variable rate demand bonds, backed by a direct pay letter of credit from US Bank (Moody's issuer rating Aa1). Concurrently, the forward starting swap also became effective, and is composed of two swap agreements with Piper Jaffray and Royal Bank of Canada (Moodys issuer rating Aa3). Each swap hedges approximately $33 million, respectively, and are synthetic fixed rate swaps. The city pays each counterparty 523% and receives one-month LIBOR. The Piper Jaffi'ay swap is based on counterparty enhancement from Morgan Stanley (Moody's issuer rating A1 }. The city has a one-way option to terminate on both swaps and collateral posting thresholds that would not require the city to post collateral unless the city's sales tax revenue bond rating falis into the A range. Moody's does not have an underlying rating on the city's sales tax revenue debt. Outlook Moody's stable ouUook reflects our expectation that the city will continue to benefrt from its stable economic base as the state capital and part of the strong Twin Cities economy, despite the recent economic downturn. Further, despite uncertain revenue streams due to budgetary pressures at the state level, city officials have demonstrated strong fiscal discipline, which should stabilize its financial position through this current cycle. Additionally, the city's current and expected debt profile remains favorable. What could change the rating - UP - Attainment and maintenance of structural balance over the long-term. - Economic growth within the city and the region continue to bolster revenue potential and reverse vacancy trends. What could change the rating - DOWN - Inability to maintain structural balance and offset state aid revenue losses. - Persistent economic challenges that would lead to revenue pressures or increased expenditure demands. - Revenue raising challenges due to general economic conditions, resufting in continued stagnation of stffie aid and limiting the ability to further leverage the tax base. KEY STATISTICS: 2005 population: 275,150 Change in population from 1990 to 2000: 5.5% 2008 full valuation: $25.2 billion Average annual full value growth (5 years): 4.7% 09-1012 Full value per capita: $90,880 Unemployment (7/09): 8.4% Debt burden: 3.6% (2.6%, adjusted for sales tax and parking revenue supported debt) Fiscal 2008 General Fund balance: $32 miliion (17.4% of General Fund revenues) Post-sale GO debt outstanding: $225.394 million The principal methodology used in this rating action was "Local Government General Obligation and Related Ratings," which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Index of Special Reports - U.S. Public Finance. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Credit Policy & Methodologies directory. The last rating action and report with respect to the City of St. Paul was published on May 18, 2009 when the Aa2 rating and stable outlook on the city's outstanding general obligation unlimited tax debt was affirmed. Analysts Henrietta Chang Analyst Public Finance Group Moody's Investors Service Rachel Cortez Backup Analyst Public Finance Group Moody's Investors Service Contacts Journalists: (212) 553-0376 Research Clients: (212) 553-1653 CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE, INC: S(MIS) CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. O Copyright 2009, Moody's investors Service, Inc. and/or its licensors including Moody's Assurance Company, Inc. (together, "MOODY'S"). All rights reserved.