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APPENDIX I
<br /> PROPOSED FORM OF LEGAL OPINION
<br /> $2,125,000
<br /> Electric Revenue Refunding Bonds, Series 2014A
<br /> City of Elk River
<br /> Elk River Municipal Utilities Commission
<br /> Sherburne County,Minnesota
<br /> We have acted as bond counsel in connection with the issuance by the City of Elk River, Sherburne
<br /> County, Minnesota, and the Elk River Municipal Utilities Commission (collectively, the "Issuer"), of
<br /> Electric Revenue Refunding Bonds, Series 2014A, originally dated the date hereof, in the total principal
<br /> amount of$2,125,000. For the purpose of rendering this opinion we have examined certified copies of
<br /> certain proceedings taken by the Issuer in the authorization, sale and issuance of the Bonds, including the
<br /> form of the Bonds, and certain other proceedings and documents furnished by the Issuer. From our
<br /> examination of such proceedings and other documents, assuming the genuineness of the signatures thereon
<br /> and the accuracy of the facts stated therein and continuing compliance by the Issuer with its covenants to
<br /> comply with the Internal Revenue Code of 1986,as amended,and based upon laws, regulations,rulings and
<br /> decisions in effect on the date hereof,it is our opinion that:
<br /> 1. The Bonds are in due form, have been duly executed and delivered, and are valid and
<br /> binding special revenue obligations of the Issuer,enforceable in accordance with their terms,except as such
<br /> enforcement may be limited by Minnesota or United States laws relating to bankruptcy, reorganization,
<br /> moratorium or creditors'rights.
<br /> 2. As provided in a resolution adopted by the Municipal Utilities Commission on February 11,
<br /> 2014, and a concurring resolution of the City Council on January 21,2014, the Bonds constitute a first and
<br /> prior parity lien upon the net revenues of the electric utility plant and system in accordance with and subject
<br /> to the provisions of the resolutions.
<br /> 3. Interest on the Bonds is excludable from gross income of the recipient for federal income
<br /> tax purposes and, to the same extent, is excludable from taxable net income of individuals, trusts, and
<br /> estates for Minnesota income tax purposes, and is not a preference item for purposes of the computation
<br /> of the federal alternative minimum tax, or the computation of the Minnesota alternative minimum tax
<br /> imposed on individuals, trusts and estates. However, such interest is taken into account in determining
<br /> adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on
<br /> certain corporations and is subject to Minnesota franchise taxes on corporations (including financial
<br /> institutions) measured by income. The opinion set forth in this paragraph is subject to the condition that
<br /> the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be
<br /> satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be,
<br /> excludable from gross income for federal income tax purposes and from taxable net income for
<br /> Minnesota income tax purposes. The Issuer has covenanted to comply with all such requirements.
<br /> Failure to comply with certain of such requirements may cause interest on the Bonds to be included in
<br /> gross income for federal income tax purposes and taxable net income for Minnesota income tax purposes
<br /> retroactively to the date of issuance of the Bonds. We express no opinion regarding tax consequences
<br /> arising with respect to the Bonds other than as expressly set forth herein.
<br /> 4. The rights of the owners of the Bonds and the enforceability of the Bonds may be limited
<br /> by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditor's rights
<br /> generally and by equitable principles,whether considered at law or in equity.
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