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Debt issuance Services <br /> lower your borrowing amount. <br /> Other Considerations: When undertaking an advance refunding ahead of the call date of the <br /> Prior Bonds, the EDA and City are determining that interest rates <br /> today meet its refunding savings goals and that interest rates are <br /> unlikely to stay the same or be lower over that period. <br /> Another option is to wait to refund the bonds until closer to the call <br /> date to reduce the"negative arbitrage" in the escrow. <br /> Review of Existing Debt: We have reviewed all outstanding indebtedness for the EDA and City <br /> and find that, other than the obligation proposed to be refunded with <br /> the Bonds, there are no other refunding opportunities at this time. <br /> We will continue to monitor the market and the call dates for the <br /> EDA and City's outstanding debt and will alert you to any future <br /> refunding opportunities. <br /> Continuing Disclosure: Because the City has more than $10,000,000 in outstanding debt <br /> (including this issue) and this issue is over $1,000,000, the City will <br /> be agreeing to provide certain updated Annual Financial Information <br /> and its Audited Financial Statement annually as well as providing <br /> notices of the occurrence of certain "material events" to the <br /> Municipal Securities Rulemaking Board (the "MSRB"), as required <br /> by rules of the Securities and Exchange Commission (SEC). The <br /> City is already obligated to provide such reports for its existing <br /> bonds, and has contracted with Ehlers to prepare and file the reports. <br /> Arbitrage Monitoring: Because the Bonds are tax-exempt securities/tax credit securities, the <br /> Issuer must ensure compliance with certain Internal Revenue Service <br /> (IRS) rules throughout the life of the issue. These rules apply to all <br /> gross proceeds of the issue, including initial bond proceeds and <br /> investment earnings in construction, escrow, debt service, and any <br /> reserve funds. How issuers spend bond proceeds and how they track <br /> interest earnings on funds (arbitrage/yield restriction compliance) are <br /> common subjects of IRS inquiries. Your specific responsibilities will <br /> be detailed in the Tax Certificate prepared by your Bond Attorney <br /> and provided at closing. You have retained Ehlers to assist you with <br /> compliance with these rules. <br /> Presale Report December 10, 2012 <br /> IKPF City of Elk River Economic Development Authority, Minnesota Page 3 <br />