5.2. A & B SR 08-12-2002 - Laserfiche WebLink

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The Authority is authorized to construct the Project within the City and to enter into the Indenture, the Lease, and other related agreements. The City has the right and lawful authority to lease the Project from the Authority and to make Rental Payments as set forth in the Lease. The Project will be leased to the City, pursuant to a Lease Agreement dated as of September 1, 2002 (the "Lease") between the Authority and the City, and under the statutory authority of Minnesota Statutes, Section 465.71. The Authority will assign to the Trustee its interest in the Lease and the Rental Payments to be made thereunder (except for the certain rights of the Authority to indemnification and payment of expenses) and will grant to the Trustee a security interest in the financed Project. The Lease: Pursuant to the Lease, the Authority will lease the Project to the City, subject to the City's right to terminate the Lease at the end of any Fiscal Year. Rental Payments are to be made by the City in amounts sufficient to pay the principal of and interest on the Series 2002A Bonds when due. The Indenture: The Authority will issue the Series 2002A Bonds pursuant to the Indenture, and the Indenture sets forth the rights and obligations of the Authority, the Trustee and the Bondholders. STRUCTURE AND REPAYMENT The Series 2002A Bonds are valid and binding special, limited revenue obligations of the Authority payable solely from a pledge of Rental Payments to be made to the Authority by the City pursuant to the Lease. The Series 2002A Bonds do not constitute a general obligation of the Authority or the City and are not a charge against the general credit of the Authority and shall not constitute a charge, lien or encumbrance legal or equitable, upon any property of the Authority, except the interest of the Authority in the Lease. The City's obligation to make Rental Payments under the Lease is subject to its annual right to terminate the Lease at the end of any fiscal year by failure to appropriate the funds. The City has also chosen to purchase bond insurance for the Series 2002A Bonds from MBIA ("Insurer"). Therefore, this issue will be rated "Aaa" by Moody's Investors Service. The cost of the premium and the associated rating fee should be offset by the lower interest rates the Authority will receive by offering this issue "Aaa" rated and insured. The Insurer will agree to make bond payments to bondholders in the event of a failure to appropriate sufficient funds for annual debt service on the Series 2002A Bonds. It is the intent of the City to levy ad valorem taxes to provide revenues needed to make Rental Payments. The levy for this purpose is currently not subject to any statutory limit as to rate or amount, but it is subject to the City's general obligation debt limit of approximately $20,000,000 or 2% of market value.. Page 3