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<br />City of Elk River, Minnesota <br />May 5, 1999 <br /> <br />(d) Economic Ufe <br /> <br />bona fide debt service fund is a fund for <br />which there is an equal matching of revenue <br />to debt service expense, with carry over <br />permitted equal to the greater of the <br />investment earnings in the fund during that <br />year or 1/12 the debt service of that year. <br /> <br />The average life of the bonds cannot <br />exceed 120% of the economic life of the <br />projects to be financed. The economic life <br />of street and utility improvements is 20 and <br />40 years, respectively. The average life of <br />the bonds is 8.27 years; therefore the issue <br />is within the economic life requirements. <br /> <br />. <br /> <br />(e) Federal Reimbursement <br />Regulations <br /> <br />Federal reimbursement regulations require <br />the City to make a declaration, within <br />60 days of the actual payment, of its intent <br />to reimburse itself from expenses paid prior <br />to the receipt of bond proceeds. It is our <br />understanding the City has taken whatever <br />actions are necessary to comply with the <br />federal reimbursement regulations in <br />regards to the bonds. <br /> <br />The bonds are subject to the SEC <br />continuing disclosure requirements. The <br />rules require the City to undertake an <br />annual update of its Official Statement <br />information and report any material events <br />to the national repositories. Springsted <br />currently provides continuing disclosure <br />service to the City. We have provided City <br />staff with a contract amendment to include <br />this issue. <br /> <br />. <br /> <br />11. Continuing Disclosure <br /> <br />. <br /> <br />Composition of the Issue <br />Debt Service Schedules <br />Tax Increment Financing District No. 19 <br />Cash Flow <br />Assessment Income Schedules <br />Terms of Proposal <br /> <br />12. Attachments <br /> <br />. <br /> <br />. <br /> <br />. <br /> <br />. <br /> <br />DISCUSSION <br /> <br />. <br /> <br />The composition of the bonds is shown on the top of page 7 of these recommendations. A <br />cash contribution of $500,000 will be made by the City from its water enterprise fund to reduce <br />the borrowing amount. Capitalized interest has been included in the principal amount of the <br />issue to make the February 1, 2000 interest payment, which is due prior to the first receipt of <br />special assessments and tax increment revenues. Also shown on page 7 are summaries of <br />the projected revenue streams from special assessments, net revenues of the City's water and <br />sewer utilities and tax increment revenues from the City's Tax Increment Financing District <br /> <br />Page 4 <br />