5.5. ERMUSR 05-10-2016 - Laserfiche WebLink

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POST ISSUANCE The issuance of these bonds will result in post-issuance compliance responsibilities. The COMPLIANCE: responsibilities are in two primary areas: i)compliance with federal arbitrage requirements and ii)compliance with secondary disclosure requirements. Federal arbitrage requirements include a wide range of implications that have been taken into account as your issue has been structured. Post-issuance compliance responsibilities for your tax-exempt issue include both rebate and yield restriction provisions of the IRS Code. In general terms the arbitrage requirements control the earnings on unexpended bond proceeds, including investment earnings, moneys held for debt service payments (which are considered to be proceeds under the IRS regulations), and/or reserves. The City expects to meet the 6-month spending exception for the Series 2016A Bonds. Because the Series 2016B Bond refunding transaction is being conducted as a current refunding in which proceeds will be spent within 90 days, the City expects to meet the 6- month spending exception and gross proceeds that meet the test will qualify for an exception to rebate. Yield restriction provisions will apply to the debt service fund and the debt service reserve account and the funds should be monitored throughout the life of the Bonds. Secondary disclosure requirements result from an SEC requirement that underwriters provide ongoing disclosure information to investors. To meet this requirement, any prospective underwriter will require the City to commit to providing the information needed to comply under a continuing disclosure agreement. Springsted will provide arbitrage and continuing disclosure compliance services to the City under separate contracts.Contracts for these services will be provided to City staff. AUTHORITY: Statutory Authority: The Bonds are being issued pursuant to Minnesota Statutes, Chapters 453 and 475. Parity Debt: In addition to the Bonds, the Utility has two other outstanding issues payable from net revenues of the Electric Utility system—the Electric Revenue Bonds, Series 2007A (the "Series 2007A Bonds"), today outstanding in the aggregate principal amount of$1,535,000 with a final maturity of February 1,2022 and the Electric Revenue Refunding Bonds, Series 2014A (the "Series 2014A Bonds"), today outstanding in the aggregate principal amount of$1,235,000 with a final maturity of August 1,2018. The Series 2007A Bonds are being refunded and redeemed in their entirety on September 1, 2016 with the proceeds of the Series 2016B Bonds. Rate Covenant: The Utility has pledged to establish user rates and charges for the Electric System so that annual net revenues shall not be less than 110%of the average annual debt service on the Bonds,the Series 2014A Bonds and any additional parity bonds. Additional Bonds Test:Additional obligations may be issued on a parity of lien with the Bonds and the Series 2014A Bonds so long as the net revenues of the Electric System for the audited fiscal year immediately preceding the issuance of such additional bonds are not less than 125%of the average annual principal and interest due on all outstanding bonds and the additional bonds to be issued, during the remaining term of the outstanding bonds. The average annual principal and interest payment on the Series 2014A Bonds and the Bonds will be approximately$796,837. Springsted Page2 167