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Supplemental Resolution #21-1173 Supplementing the General Resolution (CF 88-835) Relating to Sewer Revenue Bonds and providing for the issuance of Sewer Revenue and Refunding Bonds, Series 2021F (Green Bonds) and taking other required actions.
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WHEREAS, the City Treasurer of the Office of Financial Services, has presented proposals received for the sale of Sewer Revenue and Refunding Bonds, Series 2021F (Green Bonds) (the “Series 2021F Bonds” or individually a “Series 2021F Bond”), of the City of Saint Paul, Minnesota (the “City”); and
WHEREAS, the proposals for the purchase of the Series 2021F Bonds set forth on EXHIBIT C attached hereto were received pursuant to the Terms of Proposal at the offices of Baker Tilly Municipal Advisors, LLC (“Baker Tilly MA”), as municipal advisor to the City, on the date hereof; and
WHEREAS, the Director, Office of Financial Services, has advised this Council that the proposal of the Purchaser (as defined herein) was found to be the most advantageous and has recommended that said proposal be accepted by the City; and
WHEREAS, the City Council gave its preliminary approval to the issuance of the Series 2021F Bonds by adopting RES 21-119 on March 30, 2021; and
WHEREAS, on May 24, 1988, the City Council of the City adopted Resolution No. 88-835, entitled “General Resolution Relating to Sewer Revenue Bonds” (the “General Resolution”); and
WHEREAS, the proceeds derived from the sale of the Series 2021F Bonds will be used, along with funds held by the City in the debt service accounts and the debt service reserve accounts for the Refunded Bonds (as defined below), by the City to (i) finance capital improvements to the City’s Sewer System, (ii) refund on a current basis the City’s outstanding Sewer Revenue Bonds, Series 2011C (the “Series 2011C Bonds”) issued in the original aggregate principal amount of $8,900,000, maturing December 1, 2022 through December 1, 2029, (iii) refund on a current basis the City’s outstanding Sewer Revenue and Refunding Bonds, Series 2013D (the “Series 2013D Bonds” and together with the Series 2011C Bonds, the “Refunded Bonds”), issued in the original aggregate principal amount of $11,515,000, maturing December 1, 2022 through December 1, 2031, and (iv) to pay costs of issuance of the Series 2021F Bonds. The portion of the proceeds of the Series 2021F Bonds allocable to the use described in (i) above (including costs of issuance allocable to such purpose) shall be referred to herein as the “New Money Portion” and the portion of the proceeds of the Series 2021F Bonds allocable to the refunding of the Refunded Bonds (including costs of issuance allocable to such purpose) shall be referred to herein as the “Refunding Portion”); and
WHEREAS, the General Resolution contemplates Supplemental Resolutions which supplement or amend the General Resolution, including Supplemental Resolutions that override the provisions of the General Resolution for a series of Additional Bonds (as defined in the General Resolution) and authorizing the issuance of Additional Bonds secured on a parity with the bonds initially issued pursuant to the General Resolution, which were the City’s Sewer Revenue Bonds, Series 1988A (the “Series 1988A Bonds”) and which are no longer outstanding; and
WHEREAS, Section 2.10 of the General Resolution provides that the terms of a Supplemental Resolution may override the provisions of the General Resolution for a particular series of bonds; provided that the terms of the Supplemental Resolution may not materially prejudice the holders of the outstanding bonds issued under the General Resolution, as supplemented and amended; and
WHEREAS, it is necessary and desirable to adopt this resolution (“Supplemental Resolution No. 21”) as a Supplemental Resolution to the General Resolution to provide for the issuance of the Series 2021F Bonds on a parity of lien with the City’s outstanding (i) Sewer Revenue Bonds, Series 2014E (the “Series 2014E Bonds”); (ii) Sewer Revenue Bonds, Series 2015B (Green Bonds) (the “Series 2015B Bonds”); (iii) Sewer Revenue Bonds, Series 2016B (Green Bonds) (the “Series 2016B Bonds”); (iv) Sewer Revenue Refunding Bonds, Series 2016D (the “Series 2016D Bonds”); (v) Sewer Revenue Bonds, Series 2017C (Green Bonds) (the “Series 2017C Bonds”); (vi) Sewer Revenue Bonds, Series 2018D (Green Bonds) (the “Series 2018D Bonds”); (vii) Sewer Revenue Bonds, Series 2019F (Green Bonds) (the “Series 2019F Bonds”); and (viii) Sewer Revenue and Refunding Bonds, Series 2020D (Green Bonds) (the “Series 2020D Bonds”) which are the only bonds outstanding under the General Resolution; and
WHEREAS, the Series 2014E Bonds, the Series 2015B Bonds, the Series 2016B Bonds, the Series 2016D Bonds, the Series 2017C Bonds, the Series 2018D Bonds, the Series 2019F Bonds, and the Series 2020D Bonds (collectively with the Series 2021F Bonds, the “Parity Bonds”) were issued by the City in order to finance or refinance rehabilitation projects to the City’s sanitary and stormwater sewer system, including major sewer repairs, tunnel repairs and stormwater quality improvements; and
WHEREAS, Sections 6.01(B) and (C) of the General Resolution provide for the issuance of parity lien bonds in part as follows:
(B) Except as provided in Section 6.02, no additional revenue obligations (“Additional Bonds”) payable from the moneys in the Sewer Service Enterprise Fund on a parity of lien with the then outstanding Bonds shall be hereafter issued unless the annual Net Revenues of the Sewer System for each of the two (2) completed Fiscal Years immediately preceding the issuance of such Additional Bonds shall have been one and one-quarter (1.25) times the maximum annual principal and interest coming due thereafter on all Bonds (including the Additional Bonds) having a parity of lien upon Revenues. If the annual Net Revenues in either or both of the aforesaid two (2) completed Fiscal Years shall be insufficient to meet the foregoing test, then the City shall be entitled to adjust the Net Revenues for either or both of those Fiscal Years by increasing the Net Revenues based on a projection of additional Revenues which would have been available from any rate increase placed in effect prior to the adjustment, or from new users. The adjustment of Revenues may assume such increase would have been available for the entire Fiscal Year of adjustment. The projection for adjustment and finding of sufficiency of Net Revenues for the issuance of Additional Bonds shall be shown by a certificate issued by the Director, Department of Public Works, or the City Budget Director, or by an independent consulting engineering firm knowledgeable in such matters and shall be a finding of and recited in the resolution of the City authorizing such Additional Bonds. [Balance of (B) omitted].
(C) In addition to the requirements of subsection (B) above, the following conditions shall be met prior to the issuance of each series of Additional Bonds:
(1) The payments required to be made (at the time of the issuance of such Additional Bonds) into the various Funds and Accounts provided for in this Supplemental Resolution No. 21 have been made.
(2) The proceeds of such Additional Bonds shall be used only for the purpose of making Improvements to the Sewer System or to refund Bonds or any other bonds or obligations issued to finance the Sewer System, and capitalizing interest or making a deposit to the Reserve Account and paying the costs of such financing; and
WHEREAS, Revenues of the Sewer System in the sixth use at section 4.03(A) of the General Resolution have been pledged (on a subordinate basis) to the payment of the City’s General Obligation Sewer Revenue Note of 2000 (the “General Obligation Note”); and
WHEREAS, the Reserve Account will not be funded for the Series 2021F Bonds and the current deposits in the Reserve Account will secure the outstanding Parity Bonds other than the Series 2021F Bonds, the Series 2020D Bonds, the Series 2019F Bonds, the Series 2018D Bonds, the Series 2017C Bonds, and the Series 2016D Bonds; and
WHEREAS, the City is exercising this power pursuant to the power granted in Sections 2.10 and 4.05 of the General Resolution to override the provisions of the General Resolution and provide a Reserve Account deposit of $0 for the Series 2021F Bonds; and
WHEREAS, the City will deliver the Series 2021F Bonds in “book-entry form” as described in the General Resolution, and the City has heretofore executed a Blanket Issuer Letter of Representations (the “Letter of Representations”) setting forth various matters relating to The Depository Trust Company as Depository and its role with respect to the Series 2021F Bonds; and
WHEREAS, the Bond Registrar (as defined herein) shall maintain the registration books of the City as provided in paragraph 9; and
WHEREAS, pursuant to Minnesota Statutes, Section 475.60, Subdivision 2(9), public sale requirements do not apply to the Series 2021F Bonds, because the City has retained an independent municipal advisor (Baker Tilly MA) and this Council has determined to sell the Series 2021F Bonds by private negotiation, and the City has instead authorized a competitive sale without publication of notice thereof as a form of private negotiation; and
WHEREAS, Rule 15c2-12 of the Securities and Exchange Commission prohibits “participating underwriters”, such as the Purchaser, from purchasing or selling the Series 2021F Bonds unless the City undertakes to provide certain continuing disclosure with respect to the Series 2021F Bonds and the City will provide such continuing disclosure information; and
WHEREAS, proposals for the Series 2021F Bonds have been solicited by Baker Tilly MA, municipal advisor to the City pursuant to a Preliminary Official Statement, dated August 6, 2021 (the “Preliminary Official Statement”), and Terms of Proposal (the “Terms of Proposal”) therein.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Saint Paul, Minnesota, as follows:
1. Supplemental Resolution No. 21; Parity Bonds Findings; Capitalized Terms. This resolution is “Supplemental Resolution No. 21” to the General Resolution, and constitutes a “Supplemental Resolution” as defined therein. The Series 2021F Bonds are “Additional Bonds” which are “Fixed Rate Bonds” and “Tax-Exempt Bonds”, all as defined in the General Resolution. It is hereby found, determined and declared that (1) the Series 2021F Bonds are issued on a parity of lien with the other outstanding Parity Bonds pursuant to Section 6.02 of the General Resolution to finance rehabilitation projects to the City’s sewer system, including major sewer repairs, tunnel repairs and stormwater quality improvements, and (2) the Series 2021F Bonds meet the requirements to be parity bonds, as further set forth in paragraph 31. Capitalized terms used in this Supplemental Resolution No. 21 which are not defined herein but which are defined in the General Resolution shall have the meanings given such terms in the General Resolution.
2. Acceptance of Proposal. The proposal of Robert W. Baird & Co. Incorporated, on behalf of itself and a syndicate (the “Purchaser”), to purchase the Series 2021F Bond, in accordance with the Terms of Proposal for the bond sale, at the rates of interest set forth hereinafter, and to pay for the Series 2021F Bonds the sum of $16,866,176.70 (the principal amount of the Series 2021F Bonds ($14,665,000.00), plus original issue premium in the amount of $2,281,826.50, less the Purchaser’s discount of $80,649.80), is hereby found, determined and declared to be the most favorable proposal received and is hereby accepted for Series 2021F Bonds. The City retained the right to increase or reduce the principal amount of the Series 2021F Bonds from the proposed $16,180,000 and the City has determined to reduce the principal amount of the Series 2021F Bonds to $14,665,000. The authorized amount of the Series 2021F Bonds includes the original issue premium of $2,281,826.50. The Director, Office of Financial Services, or his designee, is directed to retain the deposit of the Purchaser. The Director, Office of Financial Services (or his designee), on behalf of the City, is directed to execute a purchase agreement with the Purchaser related to the Series 2021F Bonds.
3. Title; Original Issue Date; Denominations; Maturities. The Series 2021F Bonds shall be titled “Sewer Revenue and Refunding Bonds, Series 2021F (Green Bonds)”, shall be dated their date of issuance and shall be issued forthwith on or after such date as fully registered bonds. The Series 2021F Bonds shall be numbered from R-1 upward. The Series 2021F Bonds shall each be in the denomination of the entire principal amount maturing on a single date, or, if a portion of said principal amount is prepaid, said principal amount less the prepayment. The amount of Series 2021F Bonds authorized to be issued is the purchase price referenced in the Section 2. The Series 2021F Bonds shall mature on the dates and in the amounts as set forth in EXHIBIT B hereto.
4. Purpose. The Series 2021F Bonds shall provide funds to (i) finance rehabilitation projects to the City’s sewer system, including major sewer repairs, tunnel repairs and stormwater quality improvements (the “Improvements”), (ii) refund on a current basis the Refunded Bonds, and (iii) pay costs of issuance of the Series 2021F Bonds.
5. Interest. The Series 2021F Bonds shall bear interest payable semiannually on June 1 and December 1 of each year as provided in Section 2.08 of the General Resolution (each, an “Interest Payment Date”), commencing June 1, 2022. Interest on the Series 2021F Bonds shall be calculated from their date of issuance on the basis of a 360-day year of twelve 30-day months, at the respective rates per annum set forth opposite the maturity dates as set forth in EXHIBIT B hereto.
6. Description of the Series 2021F Bonds. Upon their original issuance the Series 2021F Bonds will be issued in the form of a single Series 2021F Bond for each maturity, deposited with The Depository Trust Company (“DTC”) or its agent as the Depository by the Purchaser.
7. Book-Entry System. The following shall override Section 2.12 of the General Resolution and shall apply to the Series 2021F Bonds.
(a) Book-Entry System - The Depository Trust Company. The Series 2021F Bonds will be initially issued in the form of a separate single typewritten or printed fully registered Series 2021F Bond for each of the maturities of the Series 2021F Bonds. Upon initial issuance, the ownership of each Series 2021F Bond will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee for DTC. Except as provided in this Section 6, all of the outstanding Series 2021F Bonds will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC.
(b) Participants. With respect to Series 2021F Bonds registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, the City, the Registrar, and the Paying Agent will have no responsibility or obligation to any broker dealers, banks, and other financial institutions from time to time for which DTC holds Series 2021F Bonds as securities depository (“Participants”) or to any other person on behalf of which a Participant holds an interest in the Series 2021F Bonds, including but not limited to any responsibility or obligation with respect to: (i) the accuracy of the records of Cede & Co., DTC, or any Participant with respect to any ownership interest in the Series 2021F Bonds; (ii) the delivery to any Participant or any other person (other than a registered owner of Series 2021F Bonds, as shown by the registration books kept by the Registrar), of any notice with respect to the Series 2021F Bonds, including any notice of redemption; or (iii) the payment to any Participant or any other person, other than a registered owner of Series 2021F Bonds, of any amount with respect to principal of, premium, if any, or interest on the Series 2021F Bonds. The City, the Registrar, and the Paying Agent may treat and consider the person in whose name each Series 2021F Bond is registered in the registration books kept by the Registrar as the holder and absolute owner of such Series 2021F Bond for the purpose of payment of principal, premium, and interest with respect to such Series 2021F Bond, for the purpose of registering transfers with respect to such Series 2021F Bonds, and for all other purposes. The Paying Agent shall pay all principal of, premium, if any, and interest on the Series 2021F Bonds only to or on the order of the respective registered owners, as shown in the registration books kept by the Registrar, and all such payments will be valid and effectual to fully satisfy and discharge the City’s obligations with respect to payment of principal of, premium, if any, or interest on the Series 2021F Bonds to the extent of the sum or sums so paid. No person other than a registered owner of a Series 2021F Bond, as shown in the registration books kept by the Registrar, will receive a certificated Series 2021F Bond evidencing the obligation of this Supplemental Resolution No. 21. Upon delivery by DTC to the City Clerk of a written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the words “Cede & Co.” shall refer to such new nominee of DTC; and upon receipt of such a notice, the City Clerk shall promptly deliver a copy of the same to the Registrar and Paying Agent.
(c) Letter of Representations. The City has heretofore executed and delivered to DTC a Blanket Issuer Letter of Representations (the “Letter of Representations”) which shall govern payment of principal of, premium, if any, and interest on the Series 2021F Bonds and notices with respect to the Series 2021F Bonds. Any Paying Agent or Registrar subsequently appointed by the City with respect to the Series 2021F Bonds shall agree to take all actions necessary for all representations of the City in the Letter of Representations with respect to the Registrar and Paying Agent, respectively, to be complied with at all times.
(d) Transfers Outside Book-Entry System. In the event the City, by resolution of the City Council, determines that it is in the best interests of the persons having beneficial interests in the Series 2021F Bonds that they be able to obtain Series 2021F Bond certificates, the City will notify DTC, whereupon DTC will notify the Participants, of the availability through DTC of Series 2021F Bond certificates. In such event the City will issue, transfer, and exchange Series 2021F Bond certificates as requested by DTC and any other registered owners in accordance with the provisions of this Supplemental Resolution No. 21. DTC may determine to discontinue providing its services with respect to the Series 2021F Bonds at any time by giving notice to the City and discharging its responsibilities with respect thereto under applicable law. In such event, if no successor securities depository is appointed, the City shall issue and the Registrar shall authenticate Series 2021F Bond certificates in accordance with this Supplemental Resolution No. 21 and the provisions hereof shall apply to the transfer, exchange, and method of payment thereof.
(e) Payments to DTC. Notwithstanding any other provision of this Supplemental Resolution No. 21 to the contrary, so long as a Series 2021F Bond is registered in the name of Cede & Co., as nominee of DTC, payments with respect to principal of, premium, if any, and interest on the Series 2021F Bonds and all notices with respect to the Series 2021F Bonds shall be made and given, respectively, in the manner provided in DTC’s Operational Arrangements, as set forth in the Letter of Representations.
8. Redemption.
(a) Optional Redemption. The City may elect on December 1, 2029, and on any day thereafter, to prepay Series 2021F Bonds due on or after December 1, 2030. Optional redemptions may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all Series 2021F Bonds of a maturity are called for redemption, the City will notify DTC (as defined herein) of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant’s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All optional redemptions of the Series 2021F Bonds shall be at a price of par plus accrued interest to the redemption date.
(b) Scheduled Mandatory Redemption. The Series 2021F Bond maturing December 1, 2041 will be subject to mandatory redemption in part and by lot in such manner as the City may determine through the operation of mandatory sinking fund payments, at the principal amount so to be redeemed plus accrued interest to the redemption date, as set forth in Exhibit B.
(c) Due Date. The Series 2021F Bonds or portions thereof called for redemption shall be due and payable on the redemption date, and interest thereon shall cease to accrue from and after the redemption date.
(d) Notice. Mailed notice of redemption shall be given to the paying agent (if other than a City officer) and to each affected Holder. If and when the City shall call any of the Series 2021F Bonds for redemption and payment prior to the stated maturity thereof, the Bond Registrar shall give written notice in the name of the City of its intention to redeem and pay such Series 2021F Bonds at the office of the Bond Registrar. Notice of redemption shall be given by first class mail, postage prepaid, mailed not less than twenty (20) days prior to the redemption date, to each Holder of Series 2021F Bonds to be redeemed, at the address appearing in the Bond Register. All notices of redemption shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) if less than all outstanding Series 2021F Bonds are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Series 2021F Bonds to be redeemed;
(iv) that on the redemption date, the redemption price will become due and payable upon each such Series 2021F Bond, and that interest thereon shall cease to accrue from and after said date;
(v) the place where such Series 2021F Bonds are to be surrendered for payment of the redemption price (which shall be the office of the Bond Registrar); and
(vi) include a statement that the redemption so noticed is conditioned on sufficient funds being held by the City on or before noon on the applicable redemption date to pay the full redemption price, and if at such time the amount so held is not sufficient to pay all amounts required to effect the noticed redemption in full, the redemption shall be cancelled, with all Series 2021F Bonds tendered for such redemption being returned to the holders thereof and no liability on the part of the City shall arise as a result of such cancellation.
(e) Notice to DTC. Notices to DTC or its nominee shall contain the CUSIP numbers of the Series 2021F Bonds. If there are any Holders of the Series 2021F Bonds other than DTC or its nominee, the Bond Registrar shall use its best efforts to deliver any such notice to DTC on the business day next preceding the date of mailing of such notice to all other Holders.
9. Bond Registrar. As provided in Section 2.03 of the General Resolution, the City Treasurer is appointed to act as bond registrar and transfer agent with respect to the Series 2021F Bonds (the “Bond Registrar”), and shall do so unless and until a successor Bond Registrar is duly appointed. A successor Bond Registrar shall be an officer of the City or a bank or trust company eligible for designation as Bond Registrar pursuant to the Municipal Debt Act and may be appointed pursuant to any contract the City and such successor Bond Registrar shall execute which is consistent herewith. The Bond Registrar shall also serve as Paying Agent unless and until a successor Paying Agent is duly appointed. Principal of and interest on the Series 2021F Bonds shall be paid to the registered holder or holders of the Series 2021F Bonds (the “Holder” or “Holders”) in the manner set forth in the form of the Series 2021F Bonds. The effect of registration and the rights and duties of the City and the Bond Registrar with respect thereto are as follows:
(a) Register. The Registrar shall keep a bond register in which the Registrar provides for the registration of ownership of the Series 2021F Bonds and the registration of transfers and exchanges of the Series 2021F Bonds entitled to be registered, transferred, or exchanged.
(b) Transfer of Series 2021F Bonds. Upon surrender for transfer of a Series 2021F Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Series 2021F Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth (15TH) day of the month preceding each interest payment date and until that interest payment date.
(c) Exchange of Series 2021F Bonds. When Series 2021F Bonds are surrendered by the registered owner for exchange, the Registrar shall authenticate and deliver one or more new Series 2021F Bonds of a like aggregate principal amount and maturity as requested by the registered owner or the owner’s attorney in writing.
(d) Cancellation. Series 2021F Bonds surrendered upon transfer or exchange shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the City.
(e) Improper or Unauthorized Transfer. When a Series 2021F Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the Series 2021F Bond until the Registrar is satisfied that the endorsement on the Series 2021F Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar shall incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized.
(f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name a Series 2021F Bond is registered in the bond register as the absolute owner of the Series 2021F Bond, whether the Series 2021F Bond is overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on the Series 2021F Bond and for all other purposes, and payments so made to a registered owner or upon the owner’s order shall be valid and effectual to satisfy and discharge the liability upon the Series 2021F Bond to the extent of the sum or sums so paid.
(g) Taxes, Fees, and Charges. The Registrar may impose a charge upon the owner thereof for a transfer or exchange of Series 2021F Bond sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to the transfer or exchange.
(h) Mutilated, Lost, Stolen or Destroyed Series 2021F Bond. If a Series 2021F Bond becomes mutilated or is destroyed, stolen, or lost, the Registrar shall deliver a new Series 2021F Bond of like amount, number, maturity date, and tenor in exchange and substitution for and upon cancellation of the mutilated Series 2021F Bond or in lieu of and in substitution for any Series 2021F Bond destroyed, stolen, or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Series 2021F Bond destroyed, stolen, or lost, upon filing with the Registrar of evidence satisfactory to it that the Series 2021F Bond was destroyed, stolen, or lost, and of the ownership thereof, and upon furnishing to the Registrar an appropriate bond or indemnity in form, substance, and amount satisfactory to it and as provided by law, in which both the City and the Registrar must be named as obligees. Series 2021F Bonds so surrendered to the Registrar shall be cancelled by the Registrar and evidence of such cancellation shall be given to the City. If the mutilated, destroyed, stolen, or lost Series 2021F Bond has already matured or been called for redemption in accordance with its terms, it is not necessary to issue a new Series 2021F Bond prior to payment.
10. Form of Series 2021F Bonds. All of the provisions of the Series 2021F Bonds, when executed as authorized herein, shall be deemed to be a part of this Supplemental Resolution No. 21 as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Series 2021F Bonds shall be issued in the form of registered bonds authorized pursuant to Section 6 hereof, as required by Sections 2.01, 2.14 and 2.17 of the General Resolution. The Series 2021F Bonds shall be substantially in the form attached to this Supplemental Resolution No. 21 as EXHIBIT A, which form is hereby approved, with such necessary and appropriate variations, omissions, and insertions (including changes to the aggregate principal amount of each series of the Series 2021F Bonds, the stated maturities of the Series 2021F Bonds, the interest rates on the Series 2021F Bonds, the terms of redemption of the Series 2021F Bonds, and variation from City policies regarding methods of offering bonds) as the City Treasurer and Director, Office of Financial Services, or their respective deputies, in their discretion, shall determine and delivery of the Series 2021F Bonds by the City shall be conclusive evidence of such determinations. Changes to the form of the Series 2021F Bonds may be approved by bond counsel and the City Attorney.
The City Treasurer is authorized and directed to obtain a copy of the proposed approving legal opinion of Ballard Spahr LLP, as bond counsel to the City, which shall be complete except as to dating thereof and cause the opinion to accompany each Series 2021F Bond.
11. Execution. As provided in Section 2.04 of the General Resolution, the Series 2021F Bonds shall be executed on behalf of the City by the signatures of its Mayor, Clerk and Director, Office of Financial Services, or their respective designees, provided that any of such signatures may be printed or photocopied facsimiles and the corporate seal may be omitted on the Series 2021F Bonds as permitted by law. In the event of disability or resignation or other absence of any such officer, the Series 2021F Bonds may be signed by the manual or facsimile signature of that officer who may act on behalf of such absent or disabled officer. In case any such officer whose signature or facsimile of whose signature shall appear on the Series 2021F Bonds shall cease to be such officer before the delivery of the Series 2021F Bonds, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if he or she had remained in office until delivery.
12. Authentication; Date of Registration. As provided in Section 2.05 of the General Resolution, no Series 2021F Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this Supplemental Resolution No. 21 unless a Certificate of Authentication on such Series 2021F Bond, substantially in the form hereinabove set forth, shall have been duly executed by an authorized representative of the Bond Registrar. Certificates of Authentication on different Series 2021F Bonds need not be signed by the same person. The Bond Registrar shall authenticate the signatures of officers of the City on each Series 2021F Bond by execution of the Certificate of Authentication on the Series 2021F Bond and by inserting as the date of registration in the space provided the date on which the Series 2021F Bond is authenticated. For purposes of delivering the Series 2021F Bonds to the Purchaser, the Bond Registrar shall insert as the date of registration the date of original issue. The Certificate of Authentication so executed on each Series 2021F Bond shall be conclusive evidence that it has been authenticated and delivered under this Supplemental Resolution No. 21.
13. Registration; Transfer; Exchange. As provided in Sections 2.06, 2.15 and 2.18 of the General Resolution, the City will cause to be kept at the principal office of the Bond Registrar a bond register in which, subject to such reasonable regulations as the Bond Registrar may prescribe, the Bond Registrar shall provide for the registration of Series 2021F Bonds and the registration of transfers of Series 2021F Bonds entitled to be registered or transferred as herein provided.
The registration, transfer and exchange of the Series 2021F Bonds shall be governed by Sections 2.06, 2.15 and 2.18 of the General Resolution.
14. Rights Upon Transfer or Exchange. As provided in Section 2.07 of the General Resolution, each Series 2021F Bond delivered upon transfer of or in exchange for or in lieu of any other Series 2021F Bond shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Series 2021F Bond.
15. Interest Payment; Record Date. As provided in Section 2.08 of the General Resolution, interest shall be paid on each Interest Payment Date by check or draft mailed to the Holders, and in each case at the address appearing thereon at the close of business on the fifteenth (15th) day of the calendar month next preceding such Interest Payment Date (the “Regular Record Date”). Any such interest not so timely paid shall cease to be payable to the person who is the Holder thereof as of the Regular Record Date, and shall be payable to the person who is the Holder thereof at the close of business on a date (the “Special Record Date”) fixed by the Bond Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given by the Bond Registrar to the Holders not less than ten (10) days prior to the Special Record Date.
16. Holders; Treatment of Registered Owner; Consent of Holders. Section 2.09 of the General Resolution shall apply to the Series 2021F Bonds.
17. Delivery; Application of Proceeds. The Series 2021F Bonds when so prepared and executed shall be delivered by the Director, Office of Financial Services, to the Purchaser upon receipt of the purchase price, and the Purchaser shall not be obliged to see to the proper application thereof.
18. Fund and Accounts. There has heretofore been created, by the General Resolution, a special fund of the City designated the “Sewer Service Enterprise Fund” (the “Fund”). The Fund shall continue to be operated as provided in the General Resolution, except as provided herein. The Fund shall be maintained as provided in the General Resolution, especially Article IV thereof, except as modified herein, and in the manner herein specified until all of the Series 2021F Bonds and the interest thereon have been fully paid.
(a) Construction Account. Into the Construction Account established by Section 4.02 of the General Resolution, specifically a separate subaccount established for the Series 2021F Bonds, shall be paid a portion of the proceeds from the sale of the Series 2021F Bonds, including (i) all of the premium and unused discount, if any, and (ii) accrued interest, if any, paid by the Purchaser upon delivery. From the Construction Account, specifically said separate subaccount, shall be paid or reimbursed all costs of the Improvements defined in paragraph 4 of this Supplemental Resolution No. 21, including legal, engineering, financing and other expenses incidental thereto. There shall also be paid from the Construction Account, specifically said separate subaccount, the costs of issuance of the Series 2021F Bonds. The provisions of Section 4.02 of the General Resolution apply as to transfers, excess moneys, deposits, earnings and Excess Earnings.
(b) Debt Service Account. Debt service on the Series 2021F Bonds shall be paid as provided in the General Resolution, and payments into the Revenue Bond Debt Service Account with respect to the Series 2021F Bonds shall commence in the month of October 2021. For purposes of the payment of principal, amounts scheduled for mandatory redemption shall be treated as maturities.
(c) Operating Reserve Subaccount. The City Council shall take appropriate action in maintaining the balance on hand in the Operating Reserve Subaccount at the Operating Reserve Requirement.
As provided in Section 5.02 of the General Resolution, no portion of the proceeds of the Series 2021F Bonds shall be used directly or indirectly to acquire higher yielding investments or to replace funds which were used directly or indirectly to acquire higher yielding investments, except (1) for a reasonable temporary period until such proceeds are needed for the purpose for which the Series 2021F Bonds were issued, (2) as part of a reasonably required reserve or replacement fund not in excess of ten percent (10%) of the proceeds of the Series 2021F Bonds (or in a higher amount which the City establishes is necessary to the satisfaction of the Secretary of the Treasury of the United States), and (3) in addition to the above in an amount not greater than $100,000. To this effect, any proceeds of the Series 2021F Bonds and any sums from time to time held in the Fund (or any other City account which will be used to pay principal or interest to become due on the Series 2021F Bonds) in excess of amounts which under then-applicable federal arbitrage regulations may be invested without regard as to yield shall not be invested at a yield in excess of the applicable yield restrictions imposed by said arbitrage regulations on such investments after taking into account any applicable “temporary periods”, “minor portion” or reserve made available under the federal arbitrage regulations. In addition, the proceeds of the Series 2021F Bonds and money in the Fund shall not be invested in obligations or deposits issued by, guaranteed by or insured by the United States or any agency or instrumentality thereof if and to the extent that such investment would cause the Series 2021F Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the federal Internal Revenue Code of 1986, as amended (the “Code”).
(e) Series 2011C Refunding Account. There is hereby created a special account to be designated as the “Series 2011C Refunding Account”. The City will deposit proceeds of the Series 2021F Bonds, in an amount to be determined by the City, along with any funds allocable to the Series 2011C Bonds from the Reserve Account, to the Series 2011C Refunding Account. The City Treasurer, as paying agent, will use the funds in the Series 2011C Refunding Account to current refund the Series 2011C Bonds on December 1, 2021 in compliance with the requirements of the General Resolution and the Supplemental Resolution that issued the Series 2011C Bonds (the “Series 2011C Redemption Date”).
(f) Series 2013D Refunding Account. There is hereby created a special account to be designated as the “Series 2013D Refunding Account”. The City will deposit proceeds of the Series 2021F Bonds, in an amount to be determined by the City, along with any funds allocable to the Series 2013D Bonds from the Reserve Account, to the Series 2013D Refunding Account. The City Treasurer, as paying agent, will use the funds in the Series 2013D Refunding Account to current refund the Series 2013D Bonds on December 1, 2021 in compliance with the requirements of the General Resolution and the Supplemental Resolution that issued the Series 2013D Bonds (the “Series 2013D Redemption Date”).
(g) Allocation of Investment Earnings. Investment earnings, net of rebatable arbitrage, shall be credited to the fund or account from which the investment was made.
19. Parity Bonds. To provide money for payment of the principal and interest on the Series 2021F Bonds, there is hereby pledged to the payment of the Series 2021F Bonds as “Additional Bonds” under the General Resolution all those items pledged to the payment of Series 2021F Bonds in the General Resolution. The covenants made in Article V of the General Resolution shall apply to the Series 2021F Bonds, except that paragraph 30 shall control and override Section 5.05 of the General Resolution. As provided in Section 5.05 of the General Resolution, each and all of the terms and provisions of this Supplemental Resolution No. 21 shall be and constitute a covenant on the part of the City to and with each and every Holder from time to time of the Series 2021F Bonds. Additional Bonds may be issued as provided in Article VI of the General Resolution. Suits by Bondholders, amendments and discharge shall be governed by Article VII of the General Resolution.
20. General Obligation Notes: Priority; Sufficiency Finding. The General Obligation Notes are hereby confirmed to have a priority of lien on Revenues subordinate to the priority of lien of the Series 2021F Bonds, specifically the priority derived from their pledge of Revenues in the sixth use at Section 4.03(A) of the General Resolution. Pursuant to paragraph 10 of each of the Resolutions authorizing the General Obligation Notes, the Series 2021F Bonds shall have a lien on Revenues that is superior to the General Obligation Notes, specifically the priority derived from the pledge to the Series 2021F Bonds of Revenues in the first use at Section 4.03(A) of the General Resolution. As required by said paragraphs 18 and 10, the City Council hereby finds, determines and declares that estimated Revenues of the Sewer System will be sufficient, with other sources and used in the order of the General Resolution, for payment of the General Obligation Notes and the Series 2021F Bonds.
21. [Reserved].
22. No Funded Reserve Account. The Reserve Requirement for the Series 2021F Bonds will be $0 and the Series 2021F Bonds, along with the Series 2020D Bonds, the Series 2019F Bonds, the Series 2018D Bonds, the Series 2017C Bonds, and the Series 2016D Bonds, will not be secured by the Reserve Account that secures the other outstanding Parity Bonds. The Series 2021F Bonds will never have any right to amounts on deposit in the Reserve Account.
23. Records and Certificates. As provided in Section 7.05 of the General Resolution, the officers of the City are hereby authorized and directed to prepare and furnish to the Purchaser, and to the attorneys approving the legality of the issuance of the Series 2021F Bonds, certified copies of all proceedings and records of the City relating to the Series 2021F Bonds and to the financial condition and affairs of the City, and such other affidavits, certificates and information as are required to show the facts relating to the legality and marketability of the Series 2021F Bonds as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the facts recited therein.
All documents, certificates, and instruments relating to the issuance of the Series 2021F Bonds, including the forms of the Series 2021F Bonds may be executed and delivered by the Mayor, the City Clerk, and Director, Office of Financial Services, or proper designees or executive assistants, or, in the case of the Mayor, the Deputy Mayor, as determined by Ballard Spahr LLP, as bond counsel to the City, and the Office of the City Attorney.
24. Negative Covenants as to Use of Proceeds and Improvements. As provided in Section 5.03 of the General Resolution, the City hereby covenants not to use the proceeds of the Series 2021F Bonds or to use the Improvements financed with the proceeds of the Series 2021F Bonds, or to cause or permit them or any of them to be used, or to enter into any deferred payment arrangements for the cost of such improvements, in such a manner as to cause the Series 2021F Bonds to be “private activity bonds” within the meaning of Sections 103 and 141 through 150 of the Code. The City reasonably expects that no actions will be taken over the term of the Series 2021F Bonds that would cause them to be private activity bonds, and the average term of the Series 2021F Bonds is not longer than reasonably necessary for the governmental purpose of the issue. The City hereby covenants not to use the proceeds of the Series 2021F Bonds in such a manner as to cause the Series 2021F Bonds to be “hedge bonds” within the meaning of Section 149(g) of the Code.
25. Tax-Exempt Status of the Series 2021F Bonds; Rebate; Elections. As provided in Section 5.04 of the General Resolution, the City shall comply with requirements necessary under the Code to establish and maintain the exclusion from gross income under Section 103 of the Code of the interest on the Series 2021F Bonds, including without limitation requirements relating to temporary periods for investments, limitations on amounts invested at a yield greater than the yield on the Series 2021F Bonds, and the rebate of excess investment earnings to the United States.
The City expects that the two-year expenditure exception to the rebate requirements may apply to the construction proceeds of the Series 2021F Bonds.
If any elections are available now or hereafter with respect to arbitrage or rebate matters relating to the Series 2021F Bonds, the Mayor and Director, Office of Financial Services, or any of them, are hereby authorized and directed to make such elections as they deem necessary, appropriate or desirable in connection with the Series 2021F Bonds, and all such elections shall be, and shall be deemed and treated as, elections of the City.
26. No Designation of Qualified Tax-Exempt Obligations. The Series 2021F Bonds, together with other obligations issued by the City in 2021, exceed in amount those which may be qualified as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code, and hence are not designated for such purpose.
27. Letter of Representations. The Letter of Representations for the Series 2021F Bonds is hereby confirmed to be the Blanket Issuer Letter of Representations dated March 22, 2019, by the City and received and accepted by DTC. So long as DTC is the depository or it or its nominee is the Holder of any Series 2021F Bond, the City shall comply with the provisions of the Letter of Representations, as it may be amended or supplemented by the City from time to time with the agreement or consent of DTC.
28. Negotiated Sale. The City has retained Baker Tilly MA as an independent municipal advisor, and this Council has heretofore determined, and does hereby determine, to sell the Series 2021F Bonds by private negotiation, all as provided by Minnesota Statutes, Section 475.60, Subdivision 2(9).
29. Continuing Disclosure. In order to satisfy the continuing disclosure requirements of Rule 15c2-12(b)(5), 17 CFR §240.15c2-12, promulgated by the Securities Exchange Commission under the Securities Exchange Act of 1934, as amended, the appropriate officials of the City are hereby authorized and directed to execute and deliver a continuing disclosure undertaking substantially in the form of the Continuing Disclosure Certificate set forth in the Official Statement (the “Continuing Disclosure Certificate”). The Continuing Disclosure Certificate is hereby approved with such changes, modifications, additions, and deletions as shall be necessary and appropriate and approved by the City Attorney and Ballard Spahr LLP, as bond counsel to the City.
30. Override of General Resolution. The use of accrued interest, if any, on the Series 2021F Bonds shall be as provided in paragraph 18, notwithstanding Section 4.04(B)(1) of the General Resolution, and no interest is necessary to be capitalized for purposes of Section 4.04(B)(2) of the General Resolution.
In addition, as provided in paragraph 22, the Reserve Account will not be funded for the Series 2021F Bonds and the Series 2021F Bonds will not have any right, title or interest in the Reserve Account. The Reserve Requirement for the Series 2021F Bonds will be $0.
Notwithstanding Section 5.05 of the General Resolution, the terms and provisions of this Supplemental Resolution No. 21 shall be and constitute a covenant on the part of the City to and with only each and every Holder from time to time of the Series 2021F Bonds.
31. Parity Findings. It is hereby found, determined and declared that:
(a) The City does not have any outstanding bonds, warrants, certificates, or other obligations or evidences of indebtedness, or money borrowed for or on account of the Sewer System or indebtedness for which any of the Revenues of all or a part of the Sewer System have been pledged which are a prior lien on such Revenues, except the Series 2014E Bonds, Series 2015B Bonds, Series 2016B Bonds, Series 2016D Bonds, Series 2017C Bonds, Series 2018D, Series 2019F Bonds, and Series 2020D Bonds.
(b) All payments required to be made prior to the date hereof into the various Funds and Accounts established by the General Resolution have been made.
(c) The proceeds of the Series 2021F Bonds shall be used only for the purpose of making Improvements to the Sewer System (as each of said terms is defined in the General Resolution).
(d) The annual Net Revenues of the Sewer System for each of the two (2) completed Fiscal Years immediately preceding of the issuance of the Series 2021F Bonds have been at least one and one-quarter (1.25) times, the maximum annual principal and interest coming due after June 1, 2021, on all Bonds (as defined in the General Resolution) having a parity of lien upon Revenues, including the Series 2021F Bonds proposed to be issued.
This City Council has been furnished with the Certificate of the Director, Department of Public Works, attesting to the fact that the issuance of the Series 2021F Bonds complies with the financial requirements of Article VI of the General Resolution relating to the issuance of Additional Bonds on a parity with prior senior lien bonds.
(e) This City Council, pursuant to advice from the Director, Department of Public Works, hereby finds, determines and declares that the estimated Revenues to be derived from the operation of the Sewer System during the term of the Series 2021F Bonds will be more than sufficient to provide Net Revenues adequate to pay principal and interest when due on the Series 2021F Bonds and on those other bonds which are now outstanding and to maintain the Reserve Account required therefor.
(f) The Series 2021F Bonds have December 1 maturities (as shown on Exhibit B hereto) and have interest payments on June 1 and December 1, commencing June 1, 2022.
32. [Reserved].
33. Official Statement. There has been submitted to this City Council the form of the Preliminary Official Statement dated August 6, 2021. The use and distribution of the Preliminary Official Statement and of a final Official Statement (collectively, the “Official Statement”) by the Purchaser in connection with the offer and sale of the Series 2021F Bonds is hereby approved. The Mayor, Director, Office of Financial Services and Debt Manager (or proper designees) are authorized and directed to certify that they have examined the Official Statement, and that to the best of their knowledge and belief the Official Statement is a complete and accurate representation of the facts and representations made therein as of the date of the Official Statement and that the Official Statement does not, at the date of closing, and did not, as of its date, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
34. Severability. As provided in Section 7.06 of the General Resolution, if any section, paragraph or provision of this Supplemental Resolution No. 21 shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this Supplemental Resolution No. 21.
35. Headings. As provided in Section 7.07 of the General Resolution, headings in this Supplemental Resolution No. 21 are included for convenience of reference only and are not a part hereof, and shall not limit or define the meaning of any provision hereof.