5.1. ERMUSR 06-14-2016 - Laserfiche WebLink

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Litigation claiming personal or property injury arising from alleged stray voltage has resulted in some damage awards against some electric utilities (other than the Utility). In 1993, the Minnesota Legislature extended service requirements governing grounding and stray voltage to electric utilities that provide or furnish retail electric service to agricultural customers in Minnesota. It cannot be predicted at this time whether such legislation or litigation may affect the operations and costs of the Utility. The Utility cannot predict at this time whether any additional legislation or rules will be enacted which will affect the Utility's operations, and if such laws or rules are enacted, what the costs to the Utility might be in the future because of such action. Secondary Markets and Prices Neither the City nor the Commission will be obligated to repurchase any of the Bonds, and no representation is made concerning the existence of any secondary market for the Bonds. No assurance can be given that any secondary market will develop following the completion of the offering of the Bonds and no assurance can be given that the initial offering prices for the Bonds will continue for any period of time. AUTHORITY AND PURPOSE The Bonds are being issued pursuant to Minnesota Statutes, Chapters 475 and 453, and Sections 412.321 through 412.391,all as amended,the City Resolutions,and the Awarding Resolutions. The Series 2016A Bonds The proceeds of the Series 2016A Bonds will be used to finance a portion of the cost of the acquisition of the Commission's membership interest in the Minnesota Municipal Power Agency(MMPA). The Commission, on behalf of the City, entered into a New Member Agreement with MMPA dated May 14, 2013 (the "Agreement") under which the City became a member of MMPA effective June 4, 2013. Pursuant to the Agreement, to become a member of MMPA, the Commission is required to pay a buy-in fee to MMPA prior to October 1, 2018, the date on which the City will begin purchasing electric power and energy from MMPA. The buy-in fee is based on the Commission's proportionate share of MMPA's net position (equity) and rate-related accruals as of October 1, 2018. Based on current projections, the Commission will represent approximately 20% of MMPA based on an energy consumption basis, and it is anticipated that the City will be the fourth largest source of member revenue as of October 1,2018. The Series 2016B Bonds The proceeds of the Series 2016B Bonds, along with available City funds, will be used to refund the February 1, 2017 through February 1, 2022 maturities (the "Refunded Maturities") of the City's Electric Revenue Bonds, Series 2007A,dated March 28, 2007 (the"Series 2007A Bonds"). The Series 2016B Bonds have been structured as a current refunding and are being issued to achieve debt service savings. Specifically, it is anticipated that the Refunded Maturities will be called and prepaid at a price of par plus accrued interest on September 1, 2016, which is within 90 days of settlement of the Series 2016B Bonds. - 10 - 128