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(b) The proceeds of the Bonds will be loaned to the Borrower and the proceeds of the loan will be applied to: (i) the acquisition and renovation of the Project; (ii) the funding of one or more reserve funds to secure the timely payment of the Bonds; (iii) the payment of certain interest on the Bonds during the renovation of the Project; and (iv) the payment of certain costs of issuing the Bonds. The City will enter into a loan agreement (or other revenue agreement) with the Borrower requiring loan repayments from the Borrower in amounts sufficient to repay the loan when due and requiring the Borrower to pay all costs of maintaining and insuring the Project, including taxes thereon. (c) The Bonds will be limited obligations of the City payable solely from the revenues pledged to the payment thereof, and will not be a general or moral obligation of the City and will not be secured by or payable from revenues derived from any exercise of the taxing powers of the City. Section 3. Public Hearin. The City on the date hereof conducted a public hearing on the Housing Program, the Project, and the issuance of the Bonds by the City, notice of which hearing (the "Public Notice") was published in the City's official newspaper on June 12, 2010. The Public Notice provided a general, functional description of the Project, the expected maximum aggregate face amount of the Bonds, the identity of the Borrower, and the location of the Project. At the public hearing reasonable opportunity was provided for interested individuals to express their views on the Project and the proposed issuance of the Bonds. Section 4. Housing Program. Prior to the date hereof, Gray, Plant, Mooty, Mooty & Bennett, P.A., as Bond Counsel, prepared and submitted the Housing Program to City staff for review. The Housing Program is hereby approved and adopted. Section 5. Preliminary Approval. The City Council hereby provides preliminary approval to the issuance of the Bonds in the approximate aggregate principal amount of $7,000,000 to finance a portion of the costs of the Project pursuant to the Housing Program of the City, subject to: (i) a final approval following the preparation of applicable documents; and (ii) final determination by the City Council that the financing of the Project and the issuance of the Bonds are in the best interests of the City. Section 6. Submission of an A~?plication for an Allocation of Bonding Authority. The City Council hereby authorizes the submission of an application for allocation of bonding authority pursuant to Section 146 of the Code and the Allocation Act in accordance with the requirements of the Allocation Act. The Mayor, City Administrator, Finance Director and Director of Economic Development of the City, with the assistance of Bond Counsel, shall take all actions, in cooperation with the Borrower, as are necessary to submit an application for an allocation of bonding authority to the Minnesota Office of Management & Budget. Section 7. Reimbursement of Costs under the Code. The United States Department of the Treasury has promulgated regulations governing the use of the proceeds of tax-exempt obligations, all or a portion.of which are to be used to reimburse project expenditures paid prior to the date of issuance of such obligations: Those regulations (Treasury Regulations, Section 1.150-2) (the "Regulations") require that the City adopt a statement of official intent to reimburse an ongmal expenditure not later than sixty (60) 2