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2004-08-16 CC Packet
File COPY be vi - ALBERTVILLE CITY COUNCIL AGENDA Monday August 16, 2004 EDA Meeting at 6:30 p.m. and Council at 7:00 PM 1. 6:30 EDA MEETING REGARDING THE LEASE REVENUE BONDS FOR THE PUBLIC FACILITY BUILDING FINANCING. (pg 3644) a. Adopt Bond Resolution 2. 7:00 PLEDGE OF ALLEGENCE 3. CALL TO ORDER — ROLL CALL — ADOPT AGENDA 4. _ MINUTES: Approve July 27`h, August 2 and August 11, (pg 3-10) 5. CITIZEN FORUM — (10 Minute Limit) 6. CONSENT AGENDA • a. Approve the payment of all claim from check number 20059 to 20179. 11-12 pp p Y �g ) b. Approve the City Engineer's recommendation to lower the letter of credit on the Shoppes of Towne Lakes from $405,628 to 255,550. (pg 13) c. Approve the City Engineer's recommendation to lower the letter of credit on Towne Lakes P from $579,000 to $353,964. (pg 14) d. Adopt the 2003 Annual Audit completed by KDV. e. Michael Potter Site - Technical Evaluation Panel recommendation (request to table until September 7 h) f. Premiun Outlet West Access Road Study (request to table until September 7th.) g. Collector- Infrastructure Fee Study (request to table until September 7a') h. Adopt Resolution # 2004-23 adopting the City of Albertville Investment policy (pg. 15-19) 7. ACTION ON. PULLED CONSENT ITEMS 8. PUBLIC HEARINGS (None) 9. DEPARTMENT BUSINESS a. Planning & Zoning 1). None b. Engineering 1). Heidi's WAC/SAC- Request to reconsider fees (To be presented at the meeting) 1 l 2 City of Albertville Minutes August 2, 2004` Albertville City Hall 7:00 PM PRESENT: Mayor Don Peterson, Council members LeRoy Berning, Tom Fay, Ron Klecker, Dorothy Rich, City Engineer Pete Carlson, City Planner Alan Brixius, City Attorney Mike Couri, and City Administrator Larry Kruse Absent: None Mayor Peterson called the City Council meeting of the City of Albertville to order at 7:00 p.m. MINUTES: MOTION BY Council member Rich, seconded by Council member Klecker to approve the minutes of the July 19`h regular meeting as amended. Motion carried unanimously, AGENDA: MOTION BY Council member Rich, seconded by Council member Klecker to approve the agenda adding the following items: ➢ Legal 0 50th Street Trail Easements o Prairie Run ■ Easement Agreement ■ Developer Agreement ■ Completion date Motion carried unanimously. CONSENT AGENDA: MOTION BY Council member Klecker, seconded by Council member Fay to approve the following consent agenda items pulling check number 20095 and 20066. a. Approve payment of claims check number 20052 to 20121 b. Approve of authorizing FTN Financial as one of Albertville's investment brokers c. Acknowledge receipt of The Cove's of Hunter's Lake EAW and authorize staff to notice it to the public d. Set an Economic Development Authority (EDA) meeting for August 16`h at 6:30 p.m. regarding the Lease Revenue Bond for the Public Works Facility e. Authorize the City Attorney to proceed with collection litigation regarding Edina Development's delinquent developer fees Motion carried unanimously. 3 • PULLED AGENDA ITEMS: Check number 20095 and 20066: A Paynesville Engineering bill was presented, which was not a part of S.E.H.'s bill, and noted that it was not approved and City Attorney's billing regarding codification services. City Attorney Couri explained his involvement with the codification process. MOTION BY Council member Berning, seconded by Council member Fay to authorize payment of check number 20095 and 20066. CITIZEN FORUM Jean Barthel requested a crosswalk and stop sign to be located at Lander and Main Avenue stating numerous pedestrians cross there. City Engineer Carlson stated a stop sign may not be appropriate there, however a cross walk could be an option. Mayor Peterson concurred and suggested staff look into it further. Residents east of the Albertville Crossings stated their dissatisfaction with the lack of maintenance around the storm water pond and their view of the unsightly dumpsters behind Albertville Crossings. City Engineer Carlson reported that he and City Administrator Kruse has reviewed the situation and Carlson will contact Cascade Land Development, owner of the stormwater pond to grade and sod the area in question and further to request regular maintenance. Staff was asked to review the development plan for Albertville Crossings to check for compliance with the plan regarding screening of garbage dumpsters. Clate Voda stated residents along Kagan and Kahl who have big rear lots that back up to a cornfield want to leave a part of it in native prairie rather than a mowed lawn. Mayor Peterson requested that they get documentation of a consensus of the neighbors to allow this and possibly the City ordinance could be amended to add a limited opportunity for something like this in certain situations. DEPARTMENT BUSINESS: STREET AND PARK DEPARTMENT: Public Works Supervisor Guimont submitted a written report regarding how other cities are managing their skate parks. Most have a certain degree of difficulty with managing skate parks. No new ideas or concepts were learned from the survey of neighboring communities. Again, the Council stated they would like a resident group to come forward to work collaboratively on this, if the City is going to re -install the skateboard equipment. PLANNING• None *I 4 ENGINEERING: HEIDI'S CAR WASH WAC/SAC Rob Nelson requested the Council reconsider the WAC/SAC fees. The sales representative was present and projected the average number of car washes per day at 37, and the City's formula would be based on 100 units. City Engineer Carlson reported that the Mobil car wash was calculated at 75 and since then the formula has been changed to 100. Carlson stated that the City Council could consider using the 75-unit amount if they so wished for the SAC portion, but not the WAC, as the majority of that goes to the Joint Water Board. The Council requested to table further discussion of any reduction until staff identified what the City used for D.J.'s car wash and Pat's car wash. Staff was asked to present this information at the next meeting: JOINT WATER BOARD WAC The City Administrators and City Engineers of St. Michael, Hanover and Albertville met with Joint Powers Water Board Administration and Engineers to review operations. During discussion of a WAC fees survey, St. Michael and Hanover suggested that all three cities must adhere to the Metropolitan WAC/SAC manual for how fees are calculated. The City of Albertville deviated on Spectator's, Cobom's and D.Michael B's restaurant. Based on that discussion, staff was seeking direction from the Council on how they wanted to handle the issue. Based on information given the Council as follows: Coborn's Store (WAC) 16.67 Units = $31,688.5 (Met Council formula) WAC Paid = $26,000. (Based on water usage) Difference= $5,688.50 Spectator's (WAC) 15.6 Units (Met Council Formula) 6.1 Units Albertville Modified Formula 9.5 Units Difference times (X) $1,500 = $14,287.50 D.Michael B's (WAC) 24.75 Units (Met Council Formula) $38,362.50 15.84 Units Albertville Modified Formula 8.91 Units difference times (X) %1550= $13,810.5 Total $33,786.50 Staff was directed to send out a revised billing to the three parties and pay Joint Powers Water Board the difference. It was discussed that St. Michael and Hanover will encounter the same dilemma that Albertville has on WAC units. Mayor Peterson and Council member Fay will bring the WAC unit issue up to the board stating that if in the future the WAC calculations get changed, then Albertville should be reimbursed for the difference. MICHAEL POTTER TECHNICAL EVALUATION PANEL (TEP) EXEMPTION DENIAL 5 On July 13, 2004 the TEP submitted a recommendation to deny Michael Potter's request for • Exemption Number 8 be denied. Jack Perry, Attorney for Michael Potter presented his legal arguments for Exemption Number 8. The Council requested the TEP be at the next meeting to present their findings. MOTION BY Council member Berning, seconded by Council member Rich to table the Michael Potter Exemption Number 8 recommendation until the August 16th meeting. CSAH 37 TRAIL ALIGNMENT City Engineer Carlson reviewed the trail alignment asking the Council for direction if it is okay to have the trail meander somewhat around utility poles and other obstacles, or is the council steadfast ' in having it a certain distance from the street. The Council agreed that in certain locations it only makes sense to meander a little, however to keep it separated from the street for pedestrian safety is a priority. It was also agreed that an 8-foot wide trail was adequate. LEGAL: PRAIRIE RUN 50' STREET EASEMENTS MOTION BY Council member Fay, seconded by Council member Klecker to approve the purchase of permanent 50th Street Trail Easements from the Zachman Family Partnership as on file in the office of the City Clerk. Motion carried unanimously. MOTION BY. Council member Fay, seconded by Council member Klecker change the date to remove all the cattle from the Heuring property to September 1, 2004 and all manure issues to October 1, 2004. Motion carried unanimously. MOTION BY Council member Fay, seconded by Council member Rich to change the completion date in the Prairie Run Development Agreement from October 31, 2004 to July 31, 2005. Motion carried unanimously. COUNCIL: MOTION BY Council member Berning, seconded by Council member Fay to leave the 2005 2006 Council salaries as is with no increase. Motion carried unanimously, MOTION BY Council member Rich, seconded by Council member Fay to set 7:00 p.m. on August 9, 23 and September 13 and 27 as council workshop dates. Motion carried unanimously. MOTION BY Council member Berning, seconded by Council member Fay to set Wednesday, August 11, 2004 at 6:00 p.m. for a meeting with the County Sheriff to discuss law enforcement issues. Motion carried unanimously. 6 101 City of Albertville Minutes July 27, 2004 Albertville City Hall 7:OO PM PRESENT: Mayor Don Peterson, Council members Leroy Berning, Tom Fay, Ron Klecker, Dorothy Rich, City Engineer Pete Carlson and City Administrator Larry Kruse. Others Present: Scott McBride and Mark Dierling of SEH; and numerous residents and business " owners. Mayor Peterson called the City Council workshop of the City of Albertville to order at 7:00 p.m. The purpose of the open house is to review various I-94 ramp configurations and associated costs. The open house was held from 6:OOpm-7:OOpm and the council workshop was held from 7:OOpm- 8:00pm. During the open house everyone present was able to review the options and ask questions. Six options were presented along with a matrix indicating the pros and cons of each option and an approximate cost estimate of the options. The options presented were: 1. Two variations of a split -diamond interchange . 2. Two variations of a collector -distributor interchange 3. Two variations of a single point interchange. During the workshop session Scott McBride of SEH presented each option in detail and reviewed the pros, cons, and approximate cost estimate of the options. Comments and questions that were brought up: 1. While all the options presented provided for full access at CSAH 37 and at CSAH 19 the actual exit point off of I-94 for the east -bound I-94 off -ramp at CSAH 37 would be west of CSAH 19. 2. Question was raised regarding if a west -bound on -ramp at CSAH 37 were built as a loop, would that provide enough separation between the ramps at CSAH 37 and 19, thereby eliminating the need for a collector -distributor system on west-bound1-94 SEH is to review possibilities. 3. Question was raised if a quarter diamond was built for west -bound: off --ramp at Kadler Avenue, would that help with traffic movement? SEH to review possibilities. 4. Concern was raised regarding east -bound traffic having to make a decision to exit at CSAH 37 when they are west of CSAH 19. Design and safety criteria were reviewed to show why the exit for CSAH 37 was shown west of CSAH 19. SEH to review further any possibilities of moving the exit location for CSAH 37 to a point east of CSAH 19. 5. Question was raised regarding bridge modifications, if there could be MnDOT cost participation with the bridge modifications if the work was done to meet the future needs of MnDOT. SEH to discuss with MnDOT officials. 6. Many comments were received regarding the importance of maintaining the convienence and accessibility of the CSAH 37 interchange to the downtown business district. *I 8 • 7. Comments were received that whatever option may be chosen, phasing of the construction should be reviewed and strongly considered. SEH to present phasing options. 8. Financing options were briefly discussed. These options included a local -option sales tax, special assessments, tax abatement, MnDOT participation, enlisting local politicians support for special legislative action: After the presentation the council members were polled regarding what option(s) they preferred. While not committing to a specific option at this time, the majority of council members preferred the modified collector distributor option. All council members did say that other options and variations of options still needed to be explored. SEH is to take the comments received and meet with MnDOT officials for their input on the options received. SEH will refine and update the options based on the comments received. A workshop session will be schedule with the city council in late September, 2004. MnDOT officials will be asked to attend the September workshop. ADJOURNMENT Motion by Council Member Klecker, seconded by Council member Berning to adjourn the workshop at 9:00 p.m. Motion carried unanimously. 9 City of Albertville Minutes August 11, 2004 Albertville City Hall 7:00 PM PRESENT: Mayor Don Peterson, Council members LeRoy Berning, Tom Fay, Ron Klecker, Dorothy Rich and City Administrator Larry Kruse Others present: Sheriff Gary Miller and Patrol Division Lieutenant Dan Anselmant Mayor Peterson called the City Council meeting of the City of Albertville to order at 7:00 p.m. Sheriff Miller reviewed the April 1 to June 30t' quarterly report and the 2003 Annual Report- with the City Council Sheriff Miller stated that the growth in law enforcement calls and incidents continues to grow along with the population. Currently Albertville is at 16 hours per day and Sheriff Miller recommended the City consider going to 24 hours per day based on the number of Sheriff s calls exceeding 3,000 per year. The Sheriff stated Otsego put another patrol on duty as of August 2003 and that St. Michael is considering another full-time officer starting January 1 or July 1 depending on the budget. Albertville's current Sheriff s contract is for $278,860 and adding an officer would be an additional $69,715 for a total of $348,575. One option for the City to consider, if the full annual equivalent is not possible, is to start the position in July or some time later in the year. Currently the first shift starts at 9:30 a.m. to 6:00 p.m. and the second shift goes from 6:00 p.m. to 2:30 a.m. The Council had a lengthy discussion about the large number of calls to Spectators and the negative reports about problems there. The Council asked City Administrator Kruse to write a letter to Spectator owners voicing the City Council's concerns about the large number of law enforcement calls there and the negative reputation Spectator's is getting. If the current problems continue, the City may have to reconsider the issuance of their next license. The Council expressed concern that if the Sheriff s Department spent too much time there, it was neglecting other areas of the City. Major problems for the Sheriff s Department continues to be speeding and dog complaints. MOTION BY Council member Rich, seconded by Council member Klecker to adjourn the meeting at 8:30 p.m. 0 CITY 4F ALBERTVILLE 08/11/04 9:29 AM Page 1 *Check Summary Register© August 2004 Name Check Date: Check Amt 10100 Premier Bank Paid Chk# 020059 ACTION RADIO & 8/2/2004 $3,015.76 new radios - from Lions Donati Paid Chk# 020060 AFLAC 8/2/2004 $16.16 AFLAC Insurance Prem Paid Chk# 020061 • ALEX AIR APPARATUS 8/2/2004 $374.25 repair - S.C.B.A. - 2units Paid Chk# 020062 ALPINE HOMES 8/2/2004 $5,500.00 5414 Kali Avenue Paid Chk# 020063 ARAMARK UNIFORM SERVICES 8/2/2004 $258.13 Uniform Sery - Parks Dept Paid Chk# 020064. BARTHEL BUS GARAGE 8/2/2004 $6,280.39 1 st Half of'TIF Payment Paid Chk# 020065 CHOUINARD OFFICE 8/2/2004 $29.81 Signature Stamp Paid Chk# 020066 COURI & MACARTHUR 8/2/2004 $14,830.00 General Attorney fees Paid Chk# 020067 CRESTRIDGE HOMES, INC 8/2/2004 $2750.00 11666 -'53rd Street NE Paid Chk# 020068 DAIN RAUSHER 8/212004 $10.71 Wire Transfer - short Paid Chk# 020069 DAVIES WATER EQUIPMENT 8/2/2004 $212.28 Meters for Re -sale Paid Chk# 020070 DELTA DENTAL 8/2/2004 $539.40 Dental Ins - Lgoeb Paid Chk# 020071 DIRECT SAFETY COMPANY 8/2/2004 $66.29 eye wash - shop supplies Paid Chk# 020072 ELAN FINANCIAL SERVICES 8/2/2004 $537.77 Lunch meeting Paid Chk# 020073 FIRE INSTRUCTION & RESCUE 8/2/2004 $700.00 Liveburn Fire Training Paid Chk# 020074 FUTRELL FIRE CONSULT & 8/2/2004 $460.00 Alshouse Properties -Seasonal C Paid Chk#' 020075 HAWKINS CHEMICAL, INC. 8/2/2004 $2,403.89 Aluminum Sulfate Liquid Paid Chk# 020076 HENNEN CONSTRUCTION 8/2/2004 $2,961.00 repair hydrant Paid Chk# 020077 ` HEWLETT-PACKARD COMPANY 8/2/2004 $115.02 Ink jet cartridges Paid Chk# 020078 KRUSE, LARRY 8/2/2004 $511.50 Mileage Reimbursement Paid Chk# 020079 LAND OF LAKES TILE CO. 8/2/2004 $14,138.57 1st Half TIF #111 Pay-off Paid Chk# 020080_- LANNES, TINA 8/2/2004 $92.24 MNGFOA-Alexandria-mileage Paid Chk# 020081 LARSON ALLEN WEISHAIR & 8/2/2004 $4,006.00 Fire Dept Audit Services Paid Chk# 020082 LARSON PUBLICATIONS 8/2/2004 $641.28 Misc. Legal notices Paid Chk# 020083 METRO FIRE 8/2/2004 $590.00 5-gallon pail Class "A" foam Paid Chk# 020084 . MIDWEST ANALYTICAL 8/2/2004 $139.00 Testing Expense (CBOD-5) Paid Chk# 020085 MINNESOTA COPY SYSTEMS 8/2/2004 $406.51 Copier Maintenance Agreement Paid Chk# 020086 MOLD TECH, INC. 8/2/2004' $4,927.46 1st Half TIF 110 Pay-off Paid Chk# 020087 NATIONAL WATERWORKS 8/2/2004 $9.40 spit cplg Paid Chk# 020088 NEXTEL COMMUNICATIONS 8/2/2004 $489.16 Two-way Cell - Jsutherland Paid Chk# 020089 NORTHLAND CHEMICAL CORP. 8/2/2004 $50.76 General Cleaning Supplies Paid Chk# 020090 OFFICE MAX 8/2/2004 $172.52 Misc Office Supplies Paid Chk# 020091 PINNACLE PRINTING, INC. 8/2/2004 $1,075.66 Printing - Utility Bills Paid Chk# 020092 PITNEY BOWES 8/2/2004 $204.00 Postage Machine Rental Paid Chk# 020093 REED BUSINESS 8/2/2004 $137.52 Legal Notices Paid Chk# 020094 RTK, LLC 8/2/2004 $2,000.00 July Rental -bldg Paid Chk# 020095 S.E.H. 8/2/2004 $96,221.44 AV 3rd Paid Chk# 020096 SENTRY SYSTEMS, INC. 8/2/2004 $55.65 Security - Fire Hall Paid Chk# 020097 SPRINT- MO 8/2/2004 $1,253.58 Phone - 497-2215 Paid Chk# 020098 ST. MICHAEL FLORAL 8/2/2004 $49.52 Floral Arrangement-Dberning Paid Chk# 020099 TOSHIBA AMERICA INFO SYS 8/2/2004 $521.32 Copier Lease Agreement Paid Chk# 020100 U. S. BANK 8/212004 $195.00 Series 1999 Bond Paid Chk# 020101 VERIZON 8/2/2004 $15.73 Cell Phone - fire Dept Paid Chk# 020102 VETSCH CUSTOM CABINETS 8/2/2004 $3,548.51 Pay No. 1 - TIF #108 Paid Chk# 020103 WASTE MANAGEMENT 8/2I2004 $175.51 Refuse Waste Hauler Paid Chk# 020104 XCEL ENERGY 8/2/2004 $5,274.48 Electric -Sewage Plant -Mac Paid Chk# 020122 HEURING, ROBERT AND 8/3/2004 $192,258.50 Pond Easement Paid Chk# 020123 LEONHARDT, TORI A. 8/11/2004 $610.49 Paid Chk# 020124 DAVIDSON, CHARLES D. 8/11/2004 $493.85 Paid Chk# 020125 LINDSAY, KEN 8/11/2004 $1,124.47 Paid Chk# 020126 MEYER, RAYMOND 8/11/2004 $16.00 Paid Chk# 020127 POTTER, DOUG 8/11/2004 $16.00 Paid Chk# 020128 RODEN, BERNARD J all112004 $16.00 Paid Chk# 020129 RODEN, JUDITH A. 8/11/2004 $16.00 Paid Chk# 020130 P.E.R.A 8/11/2004 $1,810.02 Vendor Liability Paid Chk# 020131 PREMIER BANKS 8/11/2004 $3,954.97 Vendor Liability CITY OF ALBERTVILLE 08/11/04 9:29 ANO Page 2 *Check Summary Register0 August 2004 Name Check Date Check Amt Paid Chk# 020132 ACTION RADIO & 8/16/2004 $2,635.88 pagers - pd from donation lio , Paid Chk# 020133 AFLAC 8/16/2004 $16.16 premium - LK Paid Chk# 020134 > ALEX AIR APPARATUS 8/16/2004 $601.73 SCBA testing compressor Maint. Paid Chk# 020135 ARAMARK UNIFORM SERVICES 8/16/2004 $389.03 Uniforms - 629-5509724 Paid Chk# 020136 C & C DESIGN HOMES 8/16/2004 $3,075.00 reimburse escrow Paid Chk# 020137 CARQUEST 8/16/2004 $51.58 antifreeze Paid Chk# 020138 ' CENTER POINT ENERGY 8/16/2004 $91.96 swrplant Paid Chk# 020139 CJ'S LINEN SERVICE 8/16/2004 $53.25 wash turn out gear Paid Chk# 020140 CROW RIVER NEWS NORTH 8/16/2004 $9765 fire prevention ad Paid Chk# 020141 CRYSTEEL TRUCK EQUIPMENT 8/16/2004 $8,687.76 Truck Crane Paid Chk# 020142 DAVIES WATER EQUIPMENT 8/16/2004 $19,010.35 meter supplies Paid Chk# 020143 DENNY'S SMALL 8/16/2004 $80.00 FS 66 FS 75 Curve shaft Paid Chk# 020144 DJ'S HEATING & A/C 8/16/2004 ' $654.86 fasteners Paid Chk# 020145 DON'S AUTO& REPAIR 8/16/2004 $61.31 fuel Paid Chk# 020146 EARL F. ANDERSON, INC. 8/16/2004 $294.50 sign plates and bracket Paid Chk# 020147 EBERT CONSTRUCTION 8/16/2004 $831,729.75 Pmt # 4 PW Bldg Paid Chk# 020148. EGGEN_S DIRECT SERVICE, 8/16/2004 $259.46 motor fuel Paid Chk# 020149 FEDERATED CO-OPS, INC. 8/16/2004 $147.81 choice mix Paid Chk# 020150 FUTRELL FIRE CONSULT & 8/16/2004 $345.00 Albertville Dental Paid Chk# 020151 GREENBERG IMPLEMENT INC 8/16/2004 $2,848.88 Steiner lawn sweeper Paid Chk# 020152 HALLMAN OIL COMPANY -FUEL 8/16/2004 $528.28 fuel Paid Chk# 020153 KERN, DEWENTER, & VIERE, 8/16/2004 $600.00 final billing connection Audit Paid Chk# 020154 KONO, BRIAN 8/16/2004 $2,835.00 reimburse escrow Paid Chk# 020155 - LANNES, TINA 8/16/2004 $100.00 Notary Paid Chk# 020156 MATHISON, LINDSAY 8/16/2004 $1,500.00 Miss Albertville Schol. Paid Chk# 020157 MEDICA 8/16/2004 $13,633.93 Medical Ins - TG Paid Chk# 020158 MENARDS 8/16/2004 $166.54 :landscape supplies Paid Chk# 020159 METROPOLITAN 8/16/2004 $3,690.02 Repair curb/gutter/street/side Paid Chk# 020160 MIDWEST ANALYTICAL 8/16/2004 $565.00 Testing Expense (CBOD-5) Paid Chk# 020161 MILLER 8/16/2004 $123.54 CH Landscape Paid Chk# 020162 MINNESOTA COPY SYSTEMS 8/16/2004 $76.45 usage - Paid Chk# 020163 MN DEPT. OF TRADE/ECON. 8/16/2004 $49,965.26 Bond Principal Pmt Paid Chk# 020164 MONTICELLO ANIMAL 8/16/2004 $40.00 Pick up Spaniel Main Street/RA Paid Chk# 020165 N. A. C. 8/16/2004 $6,090.95 Towne Lakes Swimming Pool Paid Chk# 020166 NORTHERN TOOL & 8/16/2004 $335.95 pressure washer parts Paid Chk# 020167 NORTHERN TRAFFIC SUPPLY, 8/16/2004 $140.05 signs Paid Chk# 020168 PAT'S 66 8/16/2004 $31.50 tire repair Paid Chk# 020169 QUILL CORPORATION 8/16/2004 $57.32 paper Paid Chk# 020170 RC GRADING & EXCAVATING 8/16/2004 $1,286.00 blacktop cut, removal, backfil Paid Chk# 020171 RED'S PORTABLE TOILETS 8/16/2004 $551.26 Rental -Portable Bathrooms Paid Chk# 020172 REED BUSINESS 8/16/2004 $137.52 legal notice Paid Chk# 020173 SCHARBER & SONS 8/16/2004 $466.08 supplies Paid Chk# 020174 UNITED RENTALS 8/16/2004 $75.80 telspar Paid Chk# 020175 WASTE MANAGEMENT 8/16/2004 $157.80 garbage ; Paid Chk# 020176 WRIGHT CTY 8/16/2004 $100.00 notary Paid Chk# 020177 WRIGHT CTY SHERIFFS 8/16/2004 $22,204.00 Sheriff patrol 08104 Paid Chk# 020178 WRIGHT RECYCLING 8/16/2004 $3,297.00 Recycling Contract Paid Chk# 020179 XCEL ENERGY 8/16/2004 $4,676.21 Le Beaux Signal Paid Chk# Bi-Weekly ACH 8/11/2004 $9,309.47 Paid Chk# MNDCP 8/11/2004 $2,940.00 def. Comp PR 18 Total Checks $1,375,091.33 12 SEH MEMORANDUM TO: Larry Kruse Albertville City Administrator FROM: Peter I Carlson, PE Albertville City Engineer DATE: August 10, 2004 RE: Letter of Credit Reduction Request Shoppes of Towne Lakes Albertville, Minnesota SEH No.A-ALBEV0406.00 14 I have reviewed the construction work completed to date. All municipal utilities and streets have been installed. The remaining work is the bituminous wear course, turf restoration and sidewalk installation. Assuming that Contractor Property Developers Company is current with all fees owned to the city, I recommend that the letter of credit be reduced to no less than $255,600. Please call me if you have any questions. c: Tina Lannes, City of Albertville Mike Couri, City Attorney Dave Hempel, CPDC Bob Moberg, SEH tAscm u\pubhc\shoppes.doc 13 RE: Letter of Credit Reduction Request Towne Lakes 3`d Addition Albertville, Minnesota SEH No. A-ALBEV0310.00 14 I have reviewed the construction work completed to date. All municipal utilities and streets have been installed. The remaining work is the bituminous wear course, turf restoration and approximately 30OLF of sidewalk. Assuming that Contractor Property Developers Company is current with all fees owned to the city, I recommend that the letter of credit be reduced to no less than $354,000. Please call me if you have any questions. c: Tina Lannes, City of Albertville Mike Couri, City Attorney Dave Hempel, CPDC Bob Moberg, SEH t>scmu\puW ie\towne3.doc 14 7 ■ A,lbert,vi,'' Small Town Living. 019 City We. TO: City Council FROM: Tina L. Lannes DATE: August 5, 2004 RE: Investment Policy Currently the City of Albertville doesn't have an investment policy. In your packet there is an investment policy. The purpose of this Policy is to establish standards governing the investment of City funds. It is the City's policy that available funds be invested to the maximum extent possible, at the highest rates obtainable at the time of investment, in conformance with the legal and administrative guidelines outlined here and that the City receives the highest quality investment services. The City shall invest only in the following instruments permitted by Minnesota Statute I I8A.03- 118A.05: a. United States Treasury Obligations b. United States Agency Securities c. Certificates of Deposit d. Money Market Funds The purpose of this item is to review the City's investment policy, current list of investments and to answer any questions that, the Council may have. CITY COUNCIL ACTION REQUESTED Motion to approve the resolution adopting the investment policy. 15 INVESTMENT POLICY Drafted: August 5, 2004 Adopted: August 16, 2004 I1. Purpose: The purpose of this Policy is to establish standards governing the investment of City funds. It is the City's policy that available funds be invested to the maximum extent possible, at the highest rates obtainable at the time of investment, in conformance with the legal and administrative guidelines outlined here and that the City receives the highest quality investment services. III. Applicability: This policy applies to all investments made by the City, irrespective of fund. IV. Delegation: The City Council designates depositories and authorizes the City Finance Director to make all investments for the City in accordance to Minnesota Statute 118A.02. V. Scope: The City will invest only in the following instruments permitted by Minnesota Statute 118A.03-118A.05: a. United States Treasury Obligations b. United States Agency Securities c. Certificates of Deposit d. Money Market Funds These instruments and procedure for their purchase are defined in the Appendix. VI. Objectives: 16 e City's investment objective is to preserve. capital while attaining a market - average rate yield consistent with cash flow needs. Safe .. Safety of principal is the foremost objective. Investments shall be undertaken so as to insure the preservation of capital in the overall portfolio. Diversification is required to limit potential losses to no more than the income .generated by the portfolio. Liquidi1y. The City's portfolio will be structured to be sufficiently liquid to meet all operating requirements, which might be reasonably anticipated. It is essential that money is always available when needed. Yield. The City's investment portfolio shall be designed to attain a market - average rate of return during budgetary and economic cycles, taking into account the City's investment risk constraint and the cash flow characteristics of the portfolio. Everyone participating in the investment process shall seek to act responsibly as custodians of the public trust. Investment officials shall avoid any transaction that might impair public confidence in the City's ability to govern effectively. VII. Maximum Maturities: The City will attempt to batch its investments with cash flow needs. Unless directly matched to a specific cash flow, the City -will not invest in securities maturing more than five years from the date of purchase. No more than 50% o of the dollar value of the City's investments will mature more than two years from the date of purchase. The City will not purchase investments that, at the time of investment, cannot be held to maturity. The City will also not invest in securities, other than money- market mutual funds, without a fixed maturity date and fixed interest or discount rate. This does not mean that an investment cannot be sold prior to maturity. VIII. Authorized Financial Institutions and Dealers: The City will conduct its investment transactions with several legal, competing,: reputable investment security dealers. The vendor's selected will have a verifiable history of service to the governmental entities and familiarity with written confirmation from each vendor that such vendor is familiar with Minnesota State statutes regarding municipal investments and the City's investment policy and agrees to comply with both. IX. Cash Management Procedures: Cash management is essential to a good investment program. The Finance Director has responsibility to organize and establish procedures for effective cash management, based on the following guidelines. i. Cash flow projections will be prepared quarterly. ii. The investment records will be reviewed and updated as investments mature or are purchased. iii. The investment records will be reconciled to the financial records each month. iv. The City Finance Director will submit a report of the City's , investment and cash position to the City Council semi-annually: v. Interest will be allocated to the various City funds at least semi- annually. vi. The City Administrator and the City Finance Director shall meet annually to plan general strategies, check results, review the investment policy and make recommendations to the council. APPENDIX Eligible Instruments for City Investment A. United States Treasury Obligations: These securities are issued as bills, notes and bonds. Treasury bills are sold on a discount basis with maturities of under on year. Treasury notes are issued for maturities of one to seven years. - The original maturity on Treasury bonds is over seven years. Both notes and bonds pay periodic interest. In general, Treasury securities are the safest and most marketable securities, but have the lowest yield for investments of a given maturity. B. Federal Agency Securities: These are obligations of various agencies and corporations chartered by the federal government and guaranteed by the agency issuing the security. Principal agencies issuing securities are the federal land banks, the federal home loan banks, the Federal National Mortgage Association (Fannie Mae), the Government national Mortgage Association (Ginnie Mae) and the banks for cooperatives. Maturities of these issues range upward from a month to approximately fifteen years. They generally have a higher yield than Treasury obligations. C. Certificates of Deposit: This is a deposit of funds at a commercial bank for a specified period of time and at a specified rate of interest. Yields on CDs tend to be higher than on Treasury bills of comparable maturity. The City will purchase certificates of deposit from vendors based on the following criteria: D. Money Market Funds: These are short term, high quality investments, sold by investment companies. These instruments include Treasury bills and notes, certificates of deposit, commercial paper, banker's acceptances, and Eurodollar instruments, 18 CITY OF ALBER TVLLLE RESOLUTION # 2004-23 A RESOLUTION ADOPTING THE CITY OF ALBERTVILLE INVESTMENT POLICY WHEREAS, theCityCouncil designates depositories and authorizes the City Finance Director to make all investments for the City in accordance with Minnesota Statute 118A.02, and WHEREAS, the City has established an Investment Policy to establish standards governing the investment of Cityfunds to insure that available funds are invested to the maximum extent possible and at the highest rates obtainable at the time of investment. NOW THEREFORE BE IT RESOLVED that the City Council of the City of Albertville does hereby adopt the attached Investment Policy establishing standards governing the investment of City funds. Adopted by the City Council of Albertville this 16a` day � of August 2004. Donald Peterson, Mayor ATTEST: Bridget Miller, City Clerk 19 ioo� ■ bertvi C, Small Town living. Big City We. MEMORANDUM Date: -August 11, 2004 To: City Council From: Larry R. Kruse Re: Special Census In June, the State Demographers Office reported our population as 4983, just 17 people short of the 5000 mark. If we had reached 5000, then we would be eligible for Municipal State Aid for streets which is estimated to be around $250,000 to $300,000 per year. Albertville can request a special census, however, I am uncertain if it can be completed prior to year end to meet MnDOT's deadline requirements. I am also uncertain about the cost to complete the special census, however, for a $200 fee, the Census Bureau will prepare an estimate for us. Recommendation: Authorize the City Administrator to seek a special census with the goal to verify Albertville's population based on new building permits. 20 ■ A�I V1 C Small Town Uving. Big City Ufs. TO: City Council FROM: Tina L. Lannes DATE: August 9, 2004 RE: Budget Calendar August 9, 2004 City Council Workshop Budget Preparation -General Overview of information related to the budget August 20, 2004 Last Day for Auditor Office to provide Truth -in -Taxation hearing dates August 23, 2004 Council Workshop Budget September 7, 2004 Council adopts proposed budget and tax levy by resolution and sets initial and continuation dates for Truth -in -Taxation hearings September 15, 2004 City must, certify proposed tax levy and initial and continuation dates for Truth -in -Taxation hearings Nov. 29 - Dec 20 Truth -in -Taxation hearings December 20, 2004 Council adopts final budget and adopts final tax levy to certify to the county auditor December 28, 2004 Certify final property tax levy to county auditor 21 AGREEMENT TO PAY FEES WHEREAS,Edina di 'n a Development Co oration ("Developer") has entered into it Corporation ( p ) Developer's Agreements with the City of Albertville ("City") for the development of residential subdivisions known as Albert Villas, Albert Villa's Second Addition, Albert Villa's Third Addition, Albert Villa's Fourth Addition, Albert Villa's Fifth Addition, and Albert Sixth Second Addition (collectively, "Developments"); and WHEREAS, The City of Albertville has recently billed the Developer for all costs incurred by the City related to the Developments; and WHEREAS, Developer has not aid such costs within the 30 days required of the p p Y q Developer's Agreements; and WHEREAS the City has declared Developer in default under the terms of the � Developer's Agreements for all of the Developments and has suspended the issuance of building permits for lots within the Developments; and WHEREAS, the Developer desires to pay the costs billed by the City; and WHEREAS, the Developer and desire to set out a framework for the payment of all such costs; NOW, THEREFORE, Developer and City agree as follows: l . The City will immediately allow the issuance of building permits for Brack Builders on 10762 49th Court and 4920 Kalenda Avenue, subject to all other building permit and building code requirements being met. 2. The Developer acknowledges that it is responsible as set out in the Developer's Agreements for the costs the City incurred in processing the Developments, subject to the Developer's ability to challenge individual consultant billings on the grounds that the consultant did not provide the services listed on particular billings. 3. The City has provided the Developer with consultant invoices, field logs and payroll summary information to the extent such information is reasonably available. The Developer shall review the billing materials and specifically identify invoices where the Developer has questions noting the invoice number and a notation on the specific question and submit it to the City by August 23rd for further research and response. At the request of the Developer as to the billings of any consultant, the City shall provide, to the extent reasonably possible, additional documentation from such consultant which details the work performed by the consultant on each Development. The City shall provide documentation from for the ._.,.��n initial Development first, and shall provide such requested documentation for the other Developments as soon as it can be made available, beginning with the oldest Development and continuing with the next - oldest until such requested information for all of the Developments has been provided. 22 4. Within two weeks of the City providing the available requested information on a Development to Developer, the Developer shall pay the City one-half of the amount billed by the City related to that Development, except for the amounts specifically disputed by Developer. Any amounts disputed by the Developer must be identified by consultant invoice and amount disputed, and the Developer must provide a specific reason why it disputes such invoice. All disputed invoices and amounts must be identified by the Developer within two weeks of the date the requested information is made available to the Developer by the City or such invoices shall be deemed not in dispute. 5. The Developer shall pay the balance remaining on all undisputed billings no later than November 30, 2004. 6. The City shall not charge the Developer interest on any unpaid amounts provided Developer pays such amounts in accordance with the terms of this Agreement. 7. Upon the payment of one-half of the amount billed by the City related to the initial development, and upon the reinstatement of a letter of credit as required in the Conditional Use/Planned Unit Development, Albert Villas Sixth Addition, in an amount acceptable to the City, the City shall allow building permits to be issued in the Albert Villas Sixth Addition, and shall continue to do so as long as Developer makes the payments required by this Agreement. Upon payment of all amounts owed in all Developments, the City shall allow building permits to be issued intheremaining Albert Villas Developments. 8. The City and Developer shall meet to discuss the disputed invoices in an attempt to resolve the disputes. Upon resolution of a disputed invoice, Developer shall pay such agreed upon amount within two weeks of the resolution of the dispute. In the event a disputed billing cannot be resolved within 30 days of the date Developer identifies the disputedbillingto the City, the City and Developer may exercise any legal remedy available to them under the Developer's Agreement which applies to such disputed billing. 9. Notwithstanding the terms of this Agreement, the City reserves the right to withhold building permits as authorized by the Developer Agreements and exercise any other remedies available to it under the Developer Agreements in the event that the Developer is in default of any other provision of the Developer Agreements. 23 _... .y,� aa�aii�aa Visa VV aLL' xk;, i/al\1 1 a1.IL` i-vnvwmr a�J1GW11Ull u"IVJLJL meeting on the Wright Hennipin Sub -station, it was reported that it is unlikely that they will need the 3000 to 4000 yards of dirt reported earlier. We will not know until they actually get into construction, but it now looks unlikely that they will need any significant quantities. 3. HEALTH IN . SURANCE/WAGE SURVEY: Due to timing issues, City Employees have had to resubmit our health surveys to Medica to evaluate health rates. I anticipate getting the results within 30 days. . 4. CITY MAIN STREET SIGNS: The Albertville Body Shop has purchased the last slot on the sign. 5. Y. The YMCA has conducted approximately 35 to 37 interviews with key leaders to identify the level of excitement and sustaining support that the Albertville, St. Michael area deliver. We hope to get feedback from those interviews shortly. 6. PUBLIC WORKS FACILITY: The Public Works Facility roof is now on and the majority of the structuralportion is completed. Now that the roof is on we will not be affected by weather delays such as rain. The November occupancy is still anticipated. 7. 50" STREET TRAIL: Construction is now underway. 8. CITY HALL RECEPTIONISUSECREARY POSITION: I will continue to re- evaluate the position for a while. In the mean time filling the position with part-time help. 9. CODIFICATION: Staff continues to meet and discussed modifications and improvements to the ordinances. The Codifier reported making significant progress and hopes to submit a draft sometime in October if all goes well. v 24 Staff continues to review areas where our ordinances are lacking and areas where we need to change, amend or remove ordinances. To date, the council is being asked to adopt a Administrative Fine Ordinance and amend an ordinance clarifying the lowest elevation for new homes. Forthcoming will be an Ordinance adopting the most recent Building Code and related amendments, as well as a revised nuisance ordinance. 10. FALL ELECTIONS: August 24`h is the opening of filing for City Council and it closed September 7 h. 25 City of Albertville receives Bond Rating increase from A3 to A2. --- Original Message- --- From: Moody's Investors Service [mailto:epi@moodys.com] Sent: Wednesday, August 11, 2004 12:52 PM To: Paul Donna Subject: Albertville (City of) MN MOODY'S UPGRADES UNDERLYING RATING TO A2 FROM A3 AFFECTING THE CITY OF ALBERTVILLE'S (MN) $6.4 MILLION OF GOULT DEBT NEW YORK, August 11, 2004 -- Moody's Investors Service has upgraded the general obligation rating to A2 from A3 in conjunction with the rating of the Economic Development Authority of the City of Albertville's (MN) Public Project Lease Revenue Bonds, Series 2004. The rating upgrade affects the City of Albertville's (MN) $6.4 million of outstanding general obligation unlimited tax debt and reflects the city's rapidly growing local economy; sound financial operations supported by strong General Fund reserves, which are expected to continue to provide ample liquidity; and high debt burden. RAPIDLY EXPANDING LOCAL ECONOMY APPROACHING RESIDENTIAL MATURITY; SIGNIFICANT COMMERCIAL/INDUSTRIAL DEVELOPMENT EXPECTED TO CONTINUE Albertville has experienced rapid tax base growth, which Moody's expects to continue for the intermediate term until full build -out is reached, due to the city's beneficial location 35 miles northwest of the Minneapolis (rated Aal)/St. Paul (rated Aa2, with positive outlook) metro area. The tax base, valued at a moderate $436 million in 2003, has grown a'strong 30.0% annually over the past five years, and includes a diverse and growing commercial/industrial sector. Officials project full development in the city's residential sector in five to ten years, with a maximum population of 7,500 (Census 2000 population: 3,621). The city still has ample land for commercial and industrial development, which is expected to continue for the next 15-20 years. The majority of the city's largest tax payers are retail concerns, with Albertville Outlet Mall comprising a sizable 13.8% of taxable valuation. The top ten tax payers overall represent a substantial 26.80 of taxable valuation, but iscomprisedof healthy commercial and industrial interests. The city also has a strong residential component with 57% of taxable value classified as homestead residential. Residential growth is steady, with an average of 150 new single family homes built annually over the past several years. Wealth indices indicate levels higher than those of the state, while ,full value per capita is very strong at $96,611, reflecting the city's significant commercial and industrial interests. HEALTHY FINANCIAL OPERATIONS EXPECTED TO CONTINUE, SUPPORTED BY STRONG RESERVES 27 Moody's believes the city's financial operations will remain healthy given support of strong fund balances, which, although not expected to remain at current levels, should continue to provide ample liquidity for city operations. The General Fund balance at year-end fiscal 2003 was $2.5 million, or a substantial 118.5% of General Fund revenues. A nearly $1 million increase in the General Fund balance in 2003 was largely due to the sale of land,, which generated $740,000 -in one-time revenues for the city. Going forward, the city expects to maintain its General Fund balance at a reduced level of approximately 75% of revenues, with a minimum of 50%. The city has budgeted for balanced operations in fiscal 2004, with year to date expenditures tracking to budget. Historical results indicate a trend of favorable year end results, with annual operating surpluses averaging $224,000 over the last three fiscal years. Property taxes comprise the largest source of core revenues (50%), providing overall revenue stability, while more volatile state aid revenues comprise a minimal 3.5% of operating revenues. During the recent state aid reductions, the city lost most of its local government and market value credit aid, which pressured the city's 2003 budget somewhat (total cuts of $147,000), which the city was able to comfortably offset with general - expenditure reductions. The city has not made any significant staffing or program cuts. A new finance director position, which has been funded with a new administration fee charged to all capital projects funds, has allowed the city to manage financial operations more efficiently. Debt service is the largest core expenditure (35.7%), due in part to a rapid rate of debt retirement, although a significant portion of debt is paid by special assessments and developer fees. Moody's believes that maintenance of sound` reserves are important for this fast-growing community characterized by a' high fixed -cost structure and highly leveraged tax base. HIGH OVERALL DEBT EXPECTED TO MODERATE WITH CONTINUED TAX BASE GROWTH AND LIMITED FUTURE BORROWING The city's rapid population expansion has resulted in a high overall debt burden of 8.4%, which Moody's expects will continue to moderate overtime with projected tax base growth and limited borrowing needs of the city and overlapping entities. Overall debt consists mostly of overlapping debt attributable to the city's main school district (St. Michael/Albertville School District, rated Baal with positive outlook). Moody's notes that approximately 34% of the district's debt is supported by state equalization aid, which, when taken into account, results in a more moderate debt burden of 6.5%. Direct debt levels approximate the average at 1.6%, with approximately half of the city's general obligation debt service supported by special assessments. Principal retirement is rapid, with 85.1% repaid in ten years. The current issue by the city's economic development authority of $2 million is included in the city's direct debt calculation. The city is planning upgrading works at the wastewater treatment plant at an estimated cost of up to $4 million in three to four years, although any borrowing towards this project is expected to be supported by enterprise revenues.The city expects to issue an additional $2 million in lease revenue debt for a new city hall and community center. Moody's expects the city's high debt burden to remain affordable and for the overall rate to continue to moderate given projected tax base growth and minimal borrowing plans by the city coupled with a high 28 amortization rate of existing debt. KEY STATISTICS 2000 population (census): 3,621 2002 population (city estimate)": 4,517 -2003 full valuation: $436 million Estimated full value per capita: $96,611 Median family income `(as % of state): 111.8% Per capita income (as % of state): 92.4% Overall debt burden: 8.4% (6.5%, adjusted) Payout (10 years): 85.1% Fiscal 2003 General Fund balance: $2.5 million (118.5% of General Fund revenues) General obligation debt outstanding: $6.4 million Lease revenue debt outstanding: $2.9 million ANALYSTS: Henrietta Chang,Analyst, Public Finance Group, Moody's Investors Service Jonathan North, Backup Analyst, Public Finance Group, Moody's Investors Service CONTACTS: Journalists: (212) 553-0376 Research Clients: (212) 553-1653 Copyright 2004, Moody's Investors Service, Inc. and/or its licensors including Moody.'s. Assurance Company, Inc. (together, "MOODY'S"). All rights reserved. 29 �\Ibcrtvi Ile s TOIAM UWRO.MQ Oty urn. City of Albertville Planning & Zoning Commission Minutes July 13, 2004 Albertville City Hall 7.00 PM CALL TO ORDER - ROLL CALL - ADOPT AGENDA PRESENT: Chair Sharon Leintz, Commission members Dan Wagner, Frank Kocon, Scott Dorenbush and Council Liaison LeRoy Berning, Assistant City Planner Mike Darrow, Zoning Administrator Jon Sutherland and City Clerk/ Secretary Bridget Miller ABSENT: Tiffany Meza ` Chair Leintz called the Planning and Zoning Commission meeting of the City of Albertville to order at 7:00 p.m. MOTION BY Commission member Wagner, seconded by Commission member Dorenbush to approve the agenda as presented. Motion carried unanimously. MINUTES: MOTION BY Commission member Wagner, seconded by Commission member Kocon to approve the June 8, 2004, Planning & Zoning Commission Minutes as submitted. Motion carried unanimously. NEW BUSINESS None PUBLIC HEARINGS: STMA ICE ARENA VARIANCE Chair Leintz opened the public hearing for a variance for the STMA Ice Arena at 7:02 p.m. The St. Michael/Albertville Hockey Association in conjunction with the St. Michael and Albertville School District and City of Albertville is requesting a variance to allow for the expansion of locker rooms within the existing ice arena. The site is located on Lachman Avenue Northeast in the City of Albertville. The lot is approximately 106,330 square feet or 2.44 acres. The site is zoned B-3, Highway Commercial, The area to the north, south, and west is zoned for 30 business uses. The area to the east is a City park. The request involves a variance from the 80% impervious surface coverage requirement. The purpose of the B-3, Highway Commercial District is to provide for the establishment of motor vehicle oriented or dependent high intensity commercial and service activities. The proposal involves the expansion of the building to allow for locker rooms within the facility. The building expansion will utilize similar building materials and design as the existing building. The expansioncalls for approximately 7,360 square feet of locker rooms on the southern portion of the existing building. * The existing building of record is a nonconforming structure in that it does not meet the side yard setback requirements. The required side yard setback requirement for the B-3 district is 20 feet. The building is setback 10 feet from the northern (side yard) property line. The proposed expansion will not further encroach into this nonconformity. The locker room facility will occur on the southern portion of the site, which is well within the _southern side yard setback. The proposed locker room facility will decrease the green space of the site by 7,360 square feet or 7% of the total site. The remaining site is covered by the building itself or by parking, with a small percentage under 2% being open space. In review of the application,' staff finds that the request to expand the ice arena facility will not cause undue hardship on City's services or negatively impact the surrounding area. Furthermore, because the site provides parking for the park to the east, a hardship exists in that future expansion would be prohibited due to conditions imposed by the City for the use of the adjoining park. In review of the application for variance, the Planning Commission and Council should provide a finding for granting the variance and impose any conditions they find appropriate. If the Planning Commission and Council approve the variance, staff has prepared the following finding of fact: 1. Motion to approve the variance to expand the locker room facility and allow impervious surface coverage over the 80% surface requirement with the finding that a hardship exists in that the site is used as parking for the adjoining park to the east and therefore would prohibit a reduction in impervious surface coverage. Chair Leintz asked if there were any questions or concerns from the audience. There were no comments. There was concern with the future of the parking lot. Does the parking lot hold enough now and will there be sufficient room after the expansion? How will it affect the future parking spaces? Chair Leintz closed the public hearing 7:13 p.m. MOTION BY Commission member Dorenbush, seconded by Commission member Wagner to approve the STMA Ice Arena Variance request. Motion carried unanimously. SIGN ORDINANCE AMENDMENT 31' Chair Leintz continued the public hearing from the June 8, 2004 meeting at 7:14 p.m. Assistant City Planner Darrow went over the history of the public hearing before the Commission. Over the past months, the City Council has expressed frustration with proliferation of off - premise real estate signs. The issue became even more prevalent with the onset of the Parade of Homes displays. Concerns exist as far as the location of these signs, the appearance of these signs, and the number of these signs located within the Albertville rights -of -way. The City Council has asked NAC and the Planning Commission to review the Albertville Sign Ordinance to determine what if any changes in the ordinance are necessary to limit the issues related to; off - premise real estate signs and garage sale signs. The purpose of the Albertville Sign Ordinance is to protect and promote the health, safety and welfare and order within the City of Albertville through the establishment of a comprehensive and content neutral series of standards, regulations and procedures. The Sign Ordinance provisions are also intended to reduce confusion, sign clutter, and hazards that result from unnecessary or indiscriminate use of sign devices. Currently, the Albertville Sign Ordinance does not allow for off -premise signs with the exception of advertising devices regulated by Section 8 of the ordinance. These pertain to billboards located along the freeway corridor. Subd. 16 also allows off premise signs in ball fields. All other signs are required to be placed on the property identifying or advertising the event occurring on the premises. Chair Leintz asked if there were any questions or concerns from the audience. There were no comments. Chair Leintz asked why the change to charging was a concern? Council liaison Berning would like to enforce the current Ordinance limiting it to 6 sign per year before changing it to 3 signs per year. Chair Leintz continued the public hearing to the August 10, 2004 meeting. OTHER BUSINESS TOWNE LAKES 5TH ADDITION FINAL PLAT Chair Leintz asked the city planner to review the Final plat for Towne Lakes 5`h Addition. Contractor Property Developers Company (CPDC) is requesting final plat approval for Towne Lakes 5`h Addition. The expressed intention of this application is for the development of 60 . residential lots as part of the overall Towne Lakes development. The area is legally described as Outlots F and G, Towne Lakes 3rd Addition. Towne Lakes 3Cd Addition was granted Preliminary Plat and PUD approval in December 2002 and March 2003. The following is a review of the proposed final plat based on plans dated June 11, 2004. 32 After review of the applicant's submittal, staff recommends approval of the final plat for Towne Lakes 5th Addition. This recommendation is based on the findings made in this report, subject to the conditions herein, and to the comments made by the City Engineer ADJOURNMENT MOTION BY Commission member Wagner, seconded by Commission member Kocon to adjourn the meeting at 8:00 p.m. Motion carried unanimously. 33 JOINT POWERS WATER BOARD MINUTES Regular Meeting of July 26, 2004 6:00 PM JPWT Plant Board Room _ 600 P M Call to Order. b Chairperson, DPeterson on v _ yt.; Board Members Present: Joyce Paullin Wayne y yn Kessler, To Hagerty, Gerhardt Kottke, Tom Fay Board Members Absent: None; Staff Present: Kelly Browning, Veolia Water NA; Shelly Keyes, Veolia Water NA Staff Absent: Chris Catlin, H.R. Green ''' MOTION BY KESSLER, SECOND BY FAY TO ADOPT. THEYAGENDA. MOTION CARRIED UNANIMOUSLY. HrA There was no one present under the Citizen Forum., y.q Paullin good-naturedly requested corrections be made'a the June minutes.. The incorrect time of 6:08 pm was given as Paullin's arrival for the June 28 ' mee # ."Paullin had verified the clock in the board room was at least 7 xmnutes fast so she actually arrived at 6:01 pm. Paullin also requested that the minutes reflect,Hagerty volunteered himself and Paullin since she did not actually volunteer. MOTION BY HAGERTY, SECOND BY PAULLIN TO APPROVE THE REVISED MINUTES OF THE JUNEa28, 2004 REGULAR MEETING. MOTION CARRIED UNANIMOUSLY, 1 MOTION BY PAULL N SECOND BY KESSLER TO APPROVE THE CONSENT AGENDA AS PRESENTED. MOTION CARRIED UNANIMOUSLY. Under Unfifshed Business, Browning discussed the Auditor selection. Abdo, Eick & Meyers was selected with, the assistance of Board Members Hagerty and Paullin. Hagerty explained that about one hour was.,spent with each of the three firms interviewed and Abdo, Eick & Meyers was chosen unanimously"after additional discussion among the interviewers. Keyes explained that she offered Abdo, Eick & Meyers the 2003 audit contract with additional years contingent on performance and Browning noted data collection had already begun. Hagerty added the contract price was clear for the 2003 audit services and hoped that any questions regarding the 2002 audit by LarsonAllen would be cleared as the 2003 audit was completed. Any remaining questions could be answered by paying for additional services. MOTION BY HAGERTY, SECOND BY PAULLIN TO ACCEPT ABDO, EICK & MEYERS AS CONTRACTED AUDITORS FOR THE 2003 AUDIT. MOTION CARRIED UNANIMOUSLY. MOTION BY PAULLIN, SECOND BY FAY, TO APPROVE THE LIST OF CLAIMS AS PRESENTED. MOTION CARRIED UNANIMOUSLY. 34 In Other Business, Paullin presented Browning and Keyes with phone number 586-6000 to verify the correct time for adjusting the Board Room clock. MOTION BY PAULLIN, SECOND BY KOTTKE TO ADJOURN THE MEETING AT 6:13 P.M. MOTION CARRIED UNANIMOUSLY. 35 GROUND LEASE Between CITY OF ALBERTVILLE, MINNESOTA As Lessor and. ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ALBERTVH LE, MINNESOTA As Lessee Dated as of 92004 This instrument was drafted by: KENNEDY &GRAVEN, CHARTERED 470 Pillsbury Center Minneapolis, Minnesota 55402 (612) 337-9300 36 THIS GROUND LEASE, made as of this day of 2004, by and between the CITY OF ALBERTVILLE,'MINNESOTA, a statutory city and political subdivision of the State of Minnesota (the "City"), as Lessor and the ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ALBERTVILLE, MINNESOTA, a public body corporate and politic and political subdivision of the State of Minnesota (together with its successors and assigns as lessee hereunder, the "Authority), as Lessee. WITNESSETH: In consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows: ARTICLE I Demise Of Site And Warranties Section 1.01. Demise. Subject to and upon the terms, conditions, covenants and undertakings hereinafter set forth, the City hereby -leases and permits the use to, and the Authority hereby leases from the City, the property described in Exhibit A attached hereto, located in Hennepin County, Minnesota (hereinafter called the "Site). Section 1.02. Warranties. The City covenants and warrants to the Authority: (1) That the City has good and merchantable title to the Site, has authority to enter into, execute and deliver this Ground Lease, has duly authorized the execution and delivery of this Ground Lease and has duly executed and delivered this Ground Lease; (2) That the Site is not subject to any dedication, easement, right-of-way, reservation in patent, covenant, condition, restriction, lien or encumbrance which would prohibit or materially interfere with the construction of certain facilities (hereinafter called the "Facilities") on the Site, as contemplated by that certain Lease -Purchase Agreement by and between the City and the Authority of even date herewith (hereinafter called the "Lease"); (3) That all taxes, assessments or impositions of any kind with respect to the Site, except current taxes, have been paid in full; (4) That the Site is properly zoned for the purpose of the Facilities; and (5) That the City has authority to enter into, execute and deliver the Lease, has duly authorized its execution and delivery, and has duly executed and delivered the Lease. Section 1.03. Environmental Covenant. To the best knowledge of the City, after due inquiry, (i) no dangerous, toxic or hazardous pollutants, contaminants, chemicals, waste, materials or substances, as defined in or governed by the provisions of any federal, state or local law, statute, code, ordinance, regulation, requirement or rule relating thereto (collectively, "Environmental Regulations"), and also including ureaformaldehyde, polychlorinated biphenyls, asbestos, asbestos containing materials, nuclear fuel or waste, radioactive materials, explosives, carcinogens and 410 petroleum products, or any other waste, material, substance, pollutant or contaminant which would subject the owner of the Site and the Facilities to any damages, penalties or liabilities under any applicable Environmental Regulation (collectively, "Hazardous Substances") are now or have been stored, located, generated, produced, processed, treated transported, incorporated, discharged.; emitted, released, deposited or disposed of in, upon, under, over or from the Site or the Facilities in violation of any Environmental Regulation; (ii) no threat exists of a discharge, release or emission of a Hazardous Substance upon or from the Site into the environment; (iii) the Site has not been used as or for a mine, a landfill, a dump or other disposal facility, an industrial or manufacturing facility, or a gasoline service station; (iv) no underground storage tank is located at the Site or has previously been located therein but has been removed therefrom; (v) no violation of any Environmental Regulation now exists relating to the Site or the Facilities, no notice of any such violation or any alleged violation thereof has been issued or given by any governmental entity or agency, and there is not now any investigation or report involving the Site or the Facilities by any governmental entity or agency which in any way relates to Hazardous Substances; (vi) no person, party or private or governmental agency or entity has given any notice of or asserted any claim, cause of action, penalty, cost or demand for payment or compensation, whether or not involving any injury or threatened injury to human health, the environment or natural resources, resulting or allegedly resulting from any activity or event described in (i) above; (vii) there are not now any actions, suits, proceedings or damage settlements relating in any way to Hazardous Substances, in, upon, under, over or from the Site, (viii) the Site is not listed in the United States Environmental Protection Agency's National Priorities List of Hazardous Waste Sites or any other list of Hazardous Substance sites maintained by any federal, state or local governmental agency; and (ix) the Site is not subject to any lien or claim for lien or threat of a lien in favor of any governmental entity or agency as a result of any release or threatened release of any Hazardous Substance. The City shall not store, locate, generate, produce, process, treat, transport, incorporate, discharge, emit, release, deposit or dispose of any Hazardous Substance in, upon, under, over or from the Site or the Facilities in violation of any Environmental Regulation, shall not permit any Hazardous Substance to be stored, located, generated, produced, processed, treated, transported, incorporated, discharged, emitted, released, deposited, disposed of or to escape therein, thereupon, thereunder, thereover or therefrom in violation of any Environmental Regulation, shall cause all Hazardous Substances to be properly removed therefrom and properly disposed of in accordance with all applicable Environmental Regulations, shall not install or permit to be installed any underground storage tank therein or thereunder in violation of any Environmental Regulations which are applicable to the Site and the Facilities. In the event any Hazardous Substance is found upon, under, over or from the Site or the Facilities in violation of any Environmental Regulation or if any lien or claim for lien in favor of any governmental entity or agency as a result of any release of any Hazardous Substance is threatened, the City, at its sole cost and expense, shall, within ten days of such finding, deliver written notice thereof to the Authority and shall promptly remove such Hazardous Substances upon, under, over or from the Site or the Facilities and prevent the imposition of any liens against the Site or the Facilities for the cleanup of any Hazardous Materials. Such removal shall be conducted and completed in compliance with all applicable federal, state and local laws, regulations, rules ordinances and policies, in accordance with the orders and directives of all federal, state and local governmental authorities. In the event the City has not removed such Hazardous Substances within -2- a time period deemed reasonable by the Authority, the City shall, at the written direction of the Authority, take such remedial action as the Authority shall direct. In the event the City shall not comply with the written directions of the Authoritywithin the time frame established within its written directions, the City hereby grants to the Authority an irrevocable license to remove Hazardous Substances from, repair, clean up, and detoxify the Site and the Facilitiesandagrees to reimburse the Authority for all of its costs therefor. The City fiuther agrees; to the extent permitted by Minnesota law, to reimburse the Authority for any and all claims, demands, judgments, penalties, liabilities, costs, damages and expenses, including court costs and attorneys' fees directly or indirectly incurred by the Authority (prior to trial, at trial and on appeal) in any action against or involving the Authority, resulting from any breach of the foregoing covenants, or from the discovery of any Hazardous Substance, in, upon, under or over, or emanating from the Site or the Facilities, whether or not the City is responsible therefor, it being the intent of the City and the Authority that the Authority shall have no liability or responsibility ` for damage or injury to human' health, the environment or natural resources caused by, for abatement and/or clean up of, or otherwise with respect to, Hazardous Substances by virtue of the interest of the Authority in the Site and the Facilities pursuant to this Ground Lease, or hereafter created, or as the result of the Authority exercising any of its rights or remedies with respect thereto hereunder or under any other instrument, including but not limited to becoming the owner thereof by foreclosure or conveyance in lieu of foreclosure. The foregoing representations, warranties and covenants of this Section shall be deemed continuing covenants, representations and warranties for the benefit of the Authority, including but not limited to any purchaser at a foreclosure sale; any transferee of the title of the Authority or any other purchaser at a foreclosure sale, and any subsequent owner of the Site or the Facilities, and shall survive the satisfaction or release .of this Ground Lease, any foreclosure of a mortgage lien under any. instrument, and/or, any acquisition of title to the Site or the Facilities or any part thereof by the Authority, by deed in lieu of foreclosure of otherwise. Any amounts covered by the foregoing shall bear interest from the date incurred at the maximum rate permitted by law and shall be payable on demand. ARTICLE II Term And Rent Section 2.01. Term. The term of this Ground Lease shall commence as of the day and year first above written, and shall end on the date the term of this Ground Lease is terminated in accordance with Section 3.01 hereof. Section 2.02. Rent. The rent for the entire term of this Ground Lease shall be One Dollar ($1.00), payable in one installment in advance on the Closing Date, as defined in the Lease. -3- ARTICLE III Termination Section 3.01. Termination. Subject to the other provisions of this Ground Lease, this Ground Lease shall terminate upon the occurrence of any one of the following events: (1) - The payment by the City of all Lease Payments owing by the City as lessee under the Lease. (2) The exercise by the City of its option to prepay the Lease Payments and all other sums due in accordance with the terms and conditions of the Lease. (3) The termination of the Lease Term by the City for nonappropriation pursuant to Section 5.6 of the Lease and the receipt by the Authority of amounts from the sublease or other disposition of the Authority's interest in the Site and the Facilities sufficient to: (a) Reimburse the Authority for all administrative costs and expenses, including reasonable attorneys' fees, incurred by the Authority as a result of the termination of the Lease Term and the sublease or sale of the Authority's interest in the Site and the Facilities; and Reimburse the Authority for all capital costs an (b) ty p d expenses in any manner incurred by the Authority with respect to preparing the Site and the Facilities for sublease for commercial or other lawful purposes (as used in this Ground Lease, the right to sublease the Site includes the right to sell all leasehold interests in the Site); and (c) Pay the unpaid principal of and interest on the Bonds described in the Lease. (4) The termination of the Lease Term upon the occurrence of an Event of Default by the City under Article X of the Lease and the receipt by the Authority of amounts from the sublease or sale of the Authority's interest in the Site and the Facilities sufficient to: (a) Reimburse the Authority for all administrative costs and expenses, including reasonable attorneys' fees, incurred by the Authority as a result of the Event of Default and the termination of the Lease and the sublease or sale of the Authority's interest in the Site and the Facilities; and (b) Reimburse the Authority for all capital costs and expenses in any manner incurred by the Authority with respect to preparing the Site and the Facilities for sublease for commercial or other lawful purposes; and (c) Pay the unpaid principal of and interest on the Bonds described in the Lease. The amounts referred to in paragraphs (a), (b) and (c) of Subsection 3.01(3) or 3.01 4 , as applicable, are hereinafter referred to as the "Reimbursement Amount." -4- Section 3.02. Use of Revenues. After ternnation of the Term of the Lease by .the City because of nonappropriation pursuant to Section 5.6 of the Lease or termination of the Term of the Lease upon the occurrence of an Event of Default under Article X of the Lease, revenues received by the Authority from the Site and the Facilities as contemplated in Subsection 3.01(3) or 3.01(4) shall be applied as follows: FIRST -- An amount thereof equal to ongoing administrative costs and costs of operation of the Site and the Facilities may be retained by the Authority; SECOND -- An amount thereof equal to interest on the outstanding Reimbursement Amount at the rate of percent per annum may be retained by the Authority; and THIRD -- Any remaining amount thereof shall be retained by the Authority and credited to the payment of the Reimbursement Amount. Use of the Site and the Facilities by the Authority or any affiliate of the Authority, other than for the purpose of assuming control, making any necessary changes in the Site or the Facilities, and the initial 'subleasing thereof, shall be treated as the sublease thereof on a monthly basis at the then current monthly value. Section 3.03. Ro In the event that the Term of the Lease is terminated by the City because of nonappropriation-pursuant to Section 5.6 of the Lease or terminated by the Authority as a result of the occurrence of an Event of Default by the City thereunder, the Authority shall keep complete and accurate records regarding any sublease of the Site and the Facilities and shall, within sixty days after the end of each Fiscal Year of the City, deliver a written report to the City showing: (a) all amounts received by the Authority from any sublease of the Site and the Facilities; (b) an analysis as to whether the Authority has received the Reimbursement Amount, with all supporting calculations; and (c) the date, if any, during the next Fiscal Year of the City on which the Authority expects to receive the Reimbursement Amount. Such written report shall be verified by a certified public accountant or firm of certified public accountants not in the regular employ of the Authority. The City shall have the right, at its own expense, to examine all of the Authority's records insofar as they relate to the Site and the Facilities. Such examination shall be made at the Authority's offices during normal business hours. Section 3.04. City's Option to Pay Reimbursement Amount. In the event that the Lease Term is terminated by the City because of nonappropriation pursuant to Section 5.6 of the Lease or terminated by the Authority as a result of the occurrence of an Event of Default by the City thereunder, the unpaid balance of the Reimbursement Amount and any other payment required under Section 3.02 hereof may be paid by the City at any time. Upon such payment, this Ground Lease and the Authority's interest in the Site and the Facilities shall tenminate; provided, that if the Authority's interest in the Site or the Facilities has been subleased to any sublessee pursuant to any sublease that is still in effect, this Ground Lease shall not terminate, but the Authority shall assign and set over to the City all of the Authority's interest in the Site and the Facilities granted under this -5- Ground Lease, subject to all existing rights created in the Site and the Facilities by all such subleases, and the City shall be entitled to all rent payments with respect to any subleases of the Site and the Facilities. Section 3.05. Effect of Termination of Lease. In the event that the Lease Term is terminated by the City because of nonappropriation pursuant to Section 5.6 of the ;Lease or terminated by the Authority as a result of the occurrence of an Event of Default by the City thereunder, the City shall have no continuing obligation under this Ground Lease after such termination, other than to continue to allow the Authority to continue to use and enjoy the Site and the Facilities as provided herein. ARTICLE IV Use Of Site; Additional Covenants Section 4.01. Use. The Authority shall not use or permit the use of the Site for any unlawful purpose. Section 4.02. Quiet Enjoyment. The City covenants that upon the Authority's paying the rent reserved herein, and performing all conditions and covenants set forth in this Ground Lease and the Lease, the Authority shall and may peaceably have, hold and enjoy the Site for the term of this Ground Lease. - The Authority covenants that upon expiration of this Ground Lease, it shall give the City peaceable possession of the Site, together with the Facilities and any other improvements constructed thereon pursuant to the Lease. Section 4.03. Assignment and Subletting. The Authority shall have the right to assign its interest in this Ground Lease, and to sublet the Site in accordance with the Lease. Section 4.04. Additional Covenants. In the event that any person or entity, however organized (other than the Authority or any assignee of the Authority), shall be determined to hold any interest that in any manner affects the City's good and merchantable title to the Site, the City shalluse its best efforts to acquire the interest so held, such acquisition to be made at the City's sole cost and expense. The City hereby agrees to save and keep harmless the Authority, or any assignee of the Authority, from and against any and all liabilities, .obligations, losses, damages, penalties, claims, actions, costs and expenses (including reasonable attorneys' fees, but only in the event that litigation is actually commenced by the Authority) of whatever kind and nature, imposed on, incurred by or asserted against the Authority, or any assignee of the Authority, that in any way relate to or arise out of the assertion of any interest affecting the City's good and merchantable title to the Site by any person or entity, however organized (other than the Authority or any assignee of the Authority). -6- ARTICLE V Miscellaneous Section 5.01. Binding Effect. This Ground Lease shall be binding upon, and inure to the benefit of, the parties hereto, and their successors and assigns. Section 5.02. Certain Defined Terms. Unless the context hereof clearly requires otherwise, capitalized terms used in this Ground Lease and defined in the Lease are used herein with the same meanings as set forth in the Lease. -7- IN WITNES S WHEREOF the parties hereto v p o have executed this Ground Lease as of the date first above written. CITY OF ALBERTVILLE, MINNESOTA i By Its Mayor By Its City Clerk - STATE OF MINNESOTA ) ss. COUNTY OF WRIGHT ) On this day of 2004 before me a Notary Public within and for said County, personally appeared and to me personally known, who being by me duly sworn, did say that they are the Mayor and City Clerk of the CITY OF ALBERTVILLE, a statutory city and political subdivision of the State of Minnesota, the subdivision referred to in the foregoing instrument; that the seal affixed to said instrument is the corporate seal of said political subdivision; that said instrument was signed and sealed in behalf of said political subdivision by authority of its City Council; and said Mayor and City Clerk acknowledged said instrument to be the free act and deed of said political subdivision. Notary Public -8- ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ALBERTVILLE, MINNESOTA By Its Chair By Its Executive Director STATE OF MINNESOTA ) ss. COUNTY OF WRIGHT ) On this day of , 2004, before me, a Notary Public within and for said County, personally appeared and , to me personally known, who, being each by me duly sworn, did say that they are the Chair and Executive Director, respectively, of the Economic Development Authority for the City of Albertville, Minnesota, the Authority referred to in the foregoing instrument; that said instrument was signed and sealed in behalf of said authority by authority of its Board of Commissioners; and they acknowledged said instrument to be the free act and deed of said Authority: Notary Public -9 EXHIBIT A TO GROUND LEASE The Site described in the referenced instrument is located in Hennepin County, Minnesota, and is legally described as follows: EMT-250989v 1 AL141-39 This instrument drafted by: KENNEDY & GRAVEN, Chartered 470 Pillsbury Center Minneapolis, Minnesota 55402 (612)337-9300 EMT-250989v 1 AL141-39 TABLE OF CONTENTS Page PARTIES AND RECITALS........................................................................................................ I ARTICLE I Definitions And Exhibits Section 1.1. Definitions............................................................................................................. 2 Section1.2. Exhibits................................................................................................................... 5 ARTICLE II Representations, Covenants And Warranties -Section 2.1. Representations, Covenants and Warranties of the City ....................................... 6 Section 2.2. Representations, Covenants and Warranties of the Authority ................................ 7 ARTICLE III Acquisition and Construction of Facilities; Payment of Project Costs Section 3.1. Project Costs 8 Section 3.2. Acquisition and Construction of Facilities, Payment of Cost.................................... 8 Section 3.3. City to Provide Title Insurance.............................................................................. 9 ARTICLE IV Sale and Lease of Facilities Section 4.1. Lease and Sale of Facilities..................................................................... .......... 10 Section 4.2. Lease Payments................................................................................................... 10 Section 4.3. Additional Lease Payments............................................................................... 10 Section 4.4. Source of Lease Payments.......................................................................... .......... 11 Section 4.5. City's Obligations and Remedies................................................................ .......... 11 Section 4.6. Possession and Enjoyment ........................... ...... 12 Section 4.7. Authority Access to Site and Facilities............................................................... 12 i Term of Lease; Transfer or Surrender of Site and Facilities Section 5.1. Lease Term....................................:............................................... .......... 13 Section 5.2. Termination of Lease Term.......::.....:....::...:............:..:.:.::......:..:..:.:.. ....:.::. 13 Section 5.3. Authority's Interest in the Site and Facilities............................................................ 13 Section 5.4. Surrender of Site and Facilities................................................................ .......... 13 Section 5.5. Purchase; Conveyance of Title............................................................................... 14 Section 5.6. Non -Appropriation .................................. :................................................................... 14 Section 5.7. Intent to Continue Term; Appropriations........: ............................ `..................... 14 Section 5.8. Effect of Termination.........................:.................................................................. 14 ARTICLE VI General Matters I0 Section 6.1. Use; Permits......................................................................................... .......... 15 Section 6.2. Maintenance and Modification of Facilities by the City .........:.............................. 15 Section 6.3. Taxes, Other Governmental Charges and Utility Charges ................. ................... 16 Section 6.4. Liens 16 Section 6.5. Easements..................................................._................................ ,........ ..........17 Section 6.6. Addition and Substitution of Land.............................................................. .......... 17 Section 6.7. Compliance with Bond Resolution........................................................ .......... 17 Section 6.8. Tax Covenants ........................... .................................................... .......... 18 ARTICLE VII Insurance and Indemnification; Damage, Destruction and Condemnation Section 7.1. Liability Insurance.....::....................................................................... ............... 19 Section 7.2. Property Insurance........................................:.............................................: ......... 19 Section 7.3. Administration of Claims, Etc............................................................................. 19 Section 7.4. Other Insurance and Requirements for All Insurance ............................................. 19 Section 7.5. Indemnification..................................................................................................... 20 Section 7.6. Hazardous Substance Indemnification...................................................................... 20 Section 7.7. Damage, Destruction and Condemnation.................................................................. 21 Section 7.8. Insufficiency of Net Proceeds................................................................................. 22 Section 7.9. Cooperation of Authority............................................................................. .......... 22 Section 7.10. Condemnation of Other Property Owned by the City ............................................... 22 ii ARTICLE VIII Option to Purchase; Option to Prepay Section 8.1. Option to Purchase or Prepay ................................... ......... .................... 23 Section 8.2. Exercise of Option.....................................:..........................:........:..::................ 23 Section 8.3. Provision for Payment of Purchase Price; Discharge of City's Obligation .........::.. 23 Section 8.4. Prerequisite; No Default....:...............................................................:........... 23 ARTICLE IX Assignment, Subleasing, Indemnification, Mortgaging and Selling Section 9.1. Assignment by Authority..............................................................;.........:........... 24 Section 9.2. Assignment and Subleasing by the City................................................................ 24 Section 9.3. Restriction on Mortgage or Sale by the City............................................................. 24 ARTICLE X Events of Default and Remedies Section 10.1. Events of Default Defined .................... Section 10.2. Remedies on Default........................................................................... ................... 26 Section 10.3. Delay; Notice.................................................................................. ......... .......... 26 Section 10.4. No Remedy Exclusive ................................................. ................... ................... 26 Section 10.5. No Additional Waiver Implied by One Waiver........................................................ 27 ARTICLE XI Administrative Provisions Section 11.1. Notices 28 Section 11.2. Binding Effect............................................................................................... 28 Section 11.3. Severability .........................::........................................................................ 28 Section 11.4. Amendments, Changes and Modifications....................................................... 28 Section 11.5. Further Assurances and Corrective Instruments ...................... ............... ......... 28 Section 11.6. Execution in Counterparts ........................................... .................. ......... .......... 29 Section 11.7. Applicable Law ..................... Section 11.8. , Authorized Officers................................................................................... .......... 29 Section 11.9. Captions.............................................................................................................. 29 EXHIBIT A Description Of Site And Facilities EXHIBIT B Schedule of Lease Payments EXHIBIT C Form of Certificate as to Completion Date iii THIS LEASE -PURCHASE AGREEMENT "dated as of , 2004 (the "Lease"), by and between the ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ALBERTVILLE, MINNESOTA, a public body corporate and politic and political subdivision of the State of Minnesota, as lessor (the "Authority"), and the CITY OF ALBERTVILLE; a statutory city and political subdivision of the State of Minnesota (the "City"), as lessee; WITNESSETH: WHEREAS, the City is authorized by law to acquire such items of real and personal property as are needed to carry out its governmental and proprietary functions, and to acquire such real and personal property by entering into lease -purchase contracts; and WHEREAS,, the City has determined that it is necessary for it to acquire pursuant to this Lease the Authority's interest in certain real property described on Exhibit A hereto (the "Site"), together with certain public works buildings, structures and improvements to be constructed thereon, and certain equipment to be contained therein (the "Facilities"); and WHEREAS, the development of the Site and the Facilities is consistent with and furthers the economic development functions of the Authority; and WHEREAS, the Authority is willing to acquire a leasehold interest in the Site pursuant to a Ground Lease of even date herewith (the "Ground Lease") from the City to the Authority and to acquire title to the Facilities and to lease and sell the Site and the Facilities to the City, pursuant to this Lease; and WHEREAS, to provide funds for the acquisition and construction of the Facilities, the Authority will issue its $2,355,000 Economic Development Authority for the City of Albertville, Minnesota Public Project Lease Revenue Bonds, Series 2004, pursuant to a Resolution (the "Bond Resolution") adopted by the Authority on August 16, 2004; and NOW, THEREFORE, in the joint and mutual exercise of their powers, and in consideration of the mutual covenants herein contained, the parties hereto recite and agree as follows: ARTICLE I Definitions And Exhibits Section 1.1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Lease and Exhibits attached hereto, have the meanings herein specified: "Additional Lease Payments" means. payments due from the City pursuant to Section 4.3 hereof. "Authority" means the Economic Development Authority for the City of Albertville, Minnesota, a public body corporate and politic and political subdivision of the State of Minnesota, and its successors and assigns as lessor hereunder. "Authorized Officer," when used with respect to the City, means its Mayor, its City Clerk or any other person who is designated in writing by the City as an Authorized Officer for purposes of this Lease, and when used with respect to the Authority means its Executive Director or any other person who is designated in writing by the Authority as an Authorized Officer for purposes of this Lease. Bond Counsel means any attorney or law firm having a national reputation as bond counsel in connection with the issuance of state and local governmental obligations and appointed by the Authority as bond counsel. "Bond Registrar" means Northland. Trust Services, Inc., in Minneapolis, Minnesota, or any successor Bond Registrar appointed by the Authority pursuant to the Bond Resolution. "Bond Resolution" means the Resolution authorizing the issuance and sale of the Bonds, adopted by the Authority on August 16, 2004. "Bonds" means the $2,355,000 Economic Development Authority for the City of Albertville, Minnesota Public Project Lease Revenue Bonds, Series 2004, issued pursuant to the Bond Resolution. "City" means the City of Albertville, a statutory city and political subdivision of the State of Minnesota, and any successor to its functions. "City Council" means the City Council of the City and any successor as governing body of the City. "Closing Date" means the date upon which the Bonds are delivered to the original purchaser thereof against payment therefor. 2 pietion Date" means the date of completion of acquisition and construction of the Facilities, as evidenced by the certificate'of the City described in Section 3.2(d). "Costs of Issuance" means all fees and expenses incurred by the City and the Authority in connection with the execution and delivery of the Lease and the issuance of the .Bonds, including, but not limited to, costs of preparing and printing the Bonds, this Lease, the Ground Lease, the Official Statement relating to the Bonds, and related documents; legal fees (including, without limitation, those of Bond Counsel and counsel to the Authority and the `City); recording fees and title insurance premiums; Rating Agency fees; financial advisor's fees; and the Bond Registrar's initial fees. "Facilities" means any buildings, structures and improvements to be constructed on the Site, and all furniture, fixtures and equipment to be acquired with proceeds of sale of the Bonds and located thereon. "Fiscal Year" means the twelve-month fiscal period of the City, which commences on January 1 and ends on December 31 of each year. "Ground Lease" means the Ground Lease, dated as of , 2004, by which the City leases the Site to the Authority, as amended or supplemented from time to time. "Independent," when used with reference to an attorney, engineer, architect, certified public accountant, consultant or other professional person, means a person who (i) is in fact independent, (ii) does not have any material financial interest in the City or the transaction to which such person's Certificate or opinion relates (other than payment to be received for professional services rendered), and (iii) is not connected with the Authority or the City as an officer, director or employee. "Independent Counsel" means an Independent attorney duly admitted to practice law before the highest court of any state. "Interest Payment Date" means August 1, 2005, and each February l and August I thereafter until the Bonds are paid in full. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended. "Lease" means this Lease -Purchase Agreement, between the Authority, as lessor, and the City, as lessee, as amended or supplemented from time to time. "Lease Payment" means each of the payments due from the City to the Authority on each Lease Payment Date during the Tenn of this Lease, as shown on Exhibit B. "Lease Payment Date" means the date upon which any Lease Payment is due and payable as provided in Exhibit B. 3 "Net Proceeds," when used with respect to proceeds of insurance or a condemnation award, means moneys received or receivable by the City, as owner or as lessee hereunder, or the Authority, as lessee under the Ground Lease or as secured party, of the Site or the Facilities, less the cost of recovery (including attorneys' fees) of such moneys from the insuring company or the condemning authority. "Owner" means the registered owner of any Outstanding Bond. "Permitted Encumbrances" means, as of any particular time: (i) liens for taxes and assessments not then delinquent, or which the City may, pursuant to provisions of Section 6.3 hereof, permit to remain unpaid, (ii) the Ground Lease, this Lease and amendments hereto or thereto, (iii) the Authority's interest in the Facilities, (iv) any mechanic's, laborer's, materialmen's, supplier's or vendor's lien or right not filed or perfected in the manner prescribed by law, (v) such minor defects, irregularities, encumbrances, easements, rights -of -way and clouds on title as normally exist with respect to properties similar in character to the Site and which do not, in the opinion of Independent Counsel, materially impair the property affected thereby for the purpose for which it was intended, and (vi) easements, restrictions or encumbrances, if any, shown on Exhibit A hereto. "Project" means the Site and the Facilities, as they exist at any time. "Purchase Price" means, with respect to any date, cash or obligations of or guaranteed by i the United States of America maturing at such times and in such amounts as to provide for the full and timely payment of all interest and premium, if any, on and principal of the Outstanding Bonds to maturity or an earlier redemption date, if applicable. The City shall be entitled to credit against the Purchase Price the amount of any moneys theretofore paid to and held by the Authority or the Bond Registrar and available for the payment of the Outstanding Bonds. "Site" means the real property described in Exhibit A hereto, including any property added to or substituted for any portion of the Site, and less any real property released from this Lease pursuant to Article VI hereof. "State and Federal Laws" means the Constitution and any law of the State and any ordinance, rule or regulation of any agency or political subdivision of the State; and any law of the United States, and any rule or regulation of any executive department or federal agency, "Term" means the period during which this Lease may remain in effect as specified in Section 5.1. Section 1.2. Exhibits. The following Exhibits are attached to and by reference made a part of this Lease: Exhibit A: A legal description of the Site and Facilities being leased and purchased by the City pursuant to this Lease, and a listing of Permitted Encumbrances. 4 ARTICLE II Representations, Covenants And Warranties Section 2.1. Representations, Covenants and Warranties of the City. The City represents, covenants and warrants as follows: (a) The City is authorized under the Constitution and laws of the State of Minnesota to enter into this Lease and the transactions contemplated hereby, and to perform all of its obligations hereunder. (b) Neither the execution and delivery of this Lease, nor the fulfillment of or " compliance with the terms and conditions thereof, nor the consummation of the transactions contemplated thereby, conflicts with or results in a breach of the terns, conditions or provisions of any restriction or any agreement or instrument to which the City is now a party or by which the City is bound, constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the _ property or assets of the City, or upon the. Site and the Facilities except Permitted Encumbrances. (c) This. Lease is entered into under authority of and pursuant to Minnesota ! ' Statutes, Section 465.71. (d) The officers of the City executing this Lease have been duly authorized to do SO. (e) The City will not pledge, mortgage or assign this Lease, or its rights, duties and obligations hereunder to any other person, firm or corporation except as provided under the terms of this Lease. (f) Subject to the City's rights under Section 5.6 hereof, the Facilities will be used until the Bonds have all been paid primarily to carry out the essential governmental or ' proprietary purposes of the City. (g) Subject to the provisions of Section 5.6 hereof, the City administration will include in the annual budget of the City submitted to the City Council, for each Fiscal Year during the Lease Term, moneys sufficient to pay and for the purpose of paying all Lease Payments and Additional Lease Payments and other obligations of the City under this Lease, and for this purpose the City will make a reasonable estimate of Additional Lease Payments to become due in the next fiscal year, and will take all other actions necessary to provide moneys for the payment of the obligations of the City under this Lease from sources of the City lawfully available for this purpose. Except to the extents specifically provided (h) p p y p d herein, the City is not obligated to appropriate or otherwise provide moneys for the payment of the Lease Payments or any 6 other amounts coming due hereunder; and in the event of non -appropriation or non -renewal by the City, the City shall not be liable for general, special, incidental, consequential or other damages resulting therefrom. This Lease does not constitute a general obligation of the City, and the full faith and credit and taxing powers of the City are not pledged for the payment of the Lease Payments or other amounts coming due, or other actions required to be performed, hereunder. (i) The City hereby declares its current need for the Facilities. The City has determined that the purchase price to be paid for the Facilities under this Lease represents the fair market value of the Facilities;that Lease Payments and Additional Lease Payments hereunder during the Lease Term represent the fair value of the use of the Facilities, and that the Purchase Price represents the fair ;purchase price of the Facilities. The City hereby determines that the Lease Payments and Additional Lease Payments do not exceed a reasonable amount so as to place the City under an economic compulsion to renew this Lease ,or to exercise its option to purchase the Facilities hereunder. In making such determinations the City has given consideration to the costs of the Facilities, the uses and purposes for which the Facilities will be employed by the City, the benefit to the City by , reason of the acquisition of the Facilities pursuant to the terms and provisions of this Lease ' and the City's option to purchase the Facilities. The City hereby determines and declares that the acquisition of the Facilities and the leasing of the Facilities pursuant to this Lease will result in facilities of .comparable quality and meeting the same requirements and standards as would be necessary if the acquisition of the Facilities were performed by the City other than pursuant to this Lease. The City hereby determines and declares that the period during which the City has an option to purchase the Facilities (i.e., the Term of this Lease) does not exceed the useful life of the Facilities: Section 2.2. Representations, Covenants and Warranties of the Authority. The Authority represents, covenants and warrants as follows: (a) The Authority is a public body corporate and politic and political subdivision of the State of Minnesota; has power to enter into this Lease; is possessed of full power to own and hold real and personal property, and to sell the same; and has duly authorized the execution and delivery of this Lease. (b) Neither the execution and delivery of this Lease, nor the fulfillment of or compliance with the terms and conditions thereof, nor the consummation of the transactions contemplated thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the Authority is now a party or by which the Authority is bound, constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Authority, or upon the Site and the Facilities except Permitted Encumbrances. 7 ARTICLE III Acquisition and Construction of Facilities; Payment of Costs ; Section 3.1. Costs. The City has caused estimates of the costs of acquisition and construction of the Facilities to be prepared, which estimates have been reviewed and approved by the Authority. Based on such estimates, the total costs of acquisitionand construction of the Facilities, when added to the costs of issuance of the Bonds, are estimated to be not less than $ . In order to provide the moneys needed to pay such costs when due, and in consideration - of the actions agreed to be performed by the City under this Lease, the Authority has adopted the Bond Resolutions pursuant to which the proceeds of sale of the Bonds in the amount of $2,355,000 (plus accrued interest received on the Closing Date, and less any discount in the purchase price paid by the Original Purchaser) will be deposited with the City. Section 3.2 Acquisition and Construction of Facilities; Payment of Cost. (a) The Authority shall deposit the proceeds of the issuance and sale of the Bonds with the City, as provided in the Bond Resolution. (b) The Authority shall cause the Facilities to be acquired .and constructed with all reasonable dispatch. The Authority hereby appoints the City as its agent for the: purpose of acquisition and construction of the Facilities and the City may perform the same itself or through its agents, and may make or issue such contracts, orders, receipts and instructions, and in general do or _ cease to be done all such other things as it may consider requisite or advisable for the completion of the acquisition and construction of the Facilities and for fulfilling its obligations under this Article. The City shall have full authority and the sole right under this Lease to supervise and control, directly or indirectly, all aspects of the acquisition and construction of the Facilities. (c) If the proceeds of the Bonds, together with any other moneys available to pay the costs of acquisition and construction of the Facilities, shall not be sufficient to pay such costs in full, then the City shall pay all that portion of the costs in excess of the moneys available therefor. If the City shall make any payments pursuant to this paragraph (c), it shall not be entitled to any reimbursement therefor from the Authority or the Owners of the Bonds, nor shall it be entitled to any diminution in or postponement of the payment of the Lease Payments, the Additional Lease Payments or the payment of any other amounts payable under this Lease. (d) The Completion Date shall be the date on which the acquisition and construction of the Facilities are completed in their entirety and the Facilities are ready to be placed in service and all other property which constitutes the Facilities has been acquired and installed, all as determined by the City. Promptly after the Completion Date, the City shall submit to the Authority a certificate signed by an officer of the City, substantially in the form of Exhibit C hereto, which shall specify the Completion Date and shall state that construction and acquisition of the Facilities has been completed and the costs thereof have been paid, except for any portion thereof which has been incurred but is not then due and payable, or the liability for the payment of which is being contested 8 i ARTICLE IV Sale and Lease of Facilities Section 4.1. Lease and Sale of Facilities. The Authority hereby leases and sells its leasehold interest in the Site and the Facilities to the City, and the City hereby leases and purchases the Authority's interest in the Site and the Facilities from the Authority, ,upon the terms and conditions set forth in this Lease. The sale shall be completed in accordance with the terms of , Section 5.5 hereof. The Site and the Facilities are leased and sold in their present condition without representation or warranty of any kind by the Authority, and subject to the rights of parties in possession, to the existing state of title, to all applicable legal requirements now or hereafter in effect, and to Permitted Encumbrances. The City has examined the Site and title thereto and has found all of the same to be satisfactory for the purposes of this Lease. Section 4.2. Lease Payments. Subject to the provisions of Section 4.4, the City shall to the Authority Lease Payments at the times and in the manner specified in the attached Exhibit B. The Lease Payments shall be paid in lawful money of the United States of America, in same -day funds, directly to the Bond Registrar. It is acknowledged that the Lease Payment to be made on each February l or August 1 shall be applied by the Bond Registrar to payment of the principal of i and interest on the Bonds to be paid on the same date. Section 4.3. Additional Lease Payments. During the Term of this Lease, the City shall pay or cause to be paid as Additional Lease Payments the following amounts: (a) All fees, charges and expenses, including agent and counsel fees, of the Bond Registrar and any Paying Agent, as and when the same become due. (b) All costs incident to the payment of the principal of, premium, if any, and interest on the Bonds as the same become due and payable, including redemption premiums, if any, and all other costs and expenses in connection with the call, redemptionand payment of Bonds. (c) An amount sufficient to reimburse the Authority for all expenses reasonably incurred by the Authority hereunder and in connection with the performance of the Authority's obligations under this Lease or the Bond Resolution. (d) All expenses incurred in connection with the enforcement of any rights under this Lease by the Authority or the Owners of the Bonds. (e) All payments required by the rebate covenants of Section 6.8(b). •I 10 (t) All other payments of whatever nature which the City has agreed to pay or assume. under the provisions of this Lease (including, without limitation, any amounts advanced under Section 6.2(b) hereof and interest thereon). (g) All costs, charges, expenses and other amounts and obligations due and owing by the Authority under the Ground Lease, as and when the same become due. Section-4.4. Source of Lease Payments. Notwithstanding any other provision of this Lease apparently to the contrary, this Lease shall not constitute a general obligation of the City, and the full faith and credit of the City are not pledged for the payment of the Lease Payments or the performance by the City of its obligations hereunder. The Lease Payments and Additional Lease Payments shall be paid, and other obligations of the City hereunder shall be met, solely from the amount appropriated by the City Council for such purpose in the City's annual budget and shall constitute a current expense of the City for the Fiscal > Year then in effect. It shall not constitute an indebtedness of the City within the meaning of the Constitution and laws of the State of Minnesota. The other obligations of the City hereunder shall be met solely from one or more of the following: (a) Net Proceeds of insurance or self-insurance required to be maintained by the City " under Article VII; (b) Net; Proceeds of any condemnation -award with respect to the Site and Facilities; and (c) moneys from time to time appropriated by the City Council for this purpose, provided that the City Council shall have no legal obligation to appropriate moneys for this purpose. Section 4.5. City's Obligations and Remedies. (a) Except as provided in Section 5.6 hereof, the City's obligation to- pay Lease Payments due with respect to the Site and the Facilities, and to perform and observe all other covenants and agreements of the City contained herein, shall be absolute and unconditional; and the Lease Payments and Additional Lease Payments due and payable hereunder shall be made without notice or demand and without set-off, counterclaim, abatement, deduction or defense including, without limitation, any failure or delay by the Authority in the performance of any of its obligations hereunder, and irrespective of whether the Facilities shall have been started or completed, or whether the City's or the Authority's title thereto or to any part thereof is defective or nonexistent, and notwithstanding any damage to, loss, theft or destruction of the Facilities or any part thereof, any failure of consideration, the taking by eminent domain of title to or of the right of temporary use of all or any part of the Facilities, legal curtailment of the City's use thereof, the eviction or constructive eviction of the City, any change in the tax or other laws of the United States of America, the State of Minnesota or any political subdivision thereof, any change in the Authority's legal organization or status, or any default of the Authority hereunder, and regardless of the invalidity of any action of the Authority, and regardless of the invalidity of any portion of this Lease. (b) Notwithstanding any provision or covenant contained in this Lease or the Bonds, the City is not obligated to renew the Lease beyond any Fiscal Year from time to time in effect, nor is it obligated to budget or appropriate moneys or to pay Lease Payments or Additional Lease Payments beyond the end of the Fiscal Year in effect at a given time. 11 (c) Nothing in this Lease shall be construed to release the Authority from the performance of any agreement on its part herein contained or as a waiver by the City of any rights or claims which the City may have against the Authority under this Lease or, otherwise, but any recovery upon such rights and claims shall be had from the Authority separately, it being the intent of this Lease that the City shall be unconditionally and -absolutely obligated to perform fully all of its obligations, agreements and covenants under this Lease 'during the Term of this Lease unless sooner terminated in accordance with section 5.2 hereof (including the obligation to make Lease Payments and Additional Lease Payments) for the benefit of the Owners of the Bonds. The City may, however, at its own cost and expense and in its own name or in the -name of the Authority, prosecute or defend any action or proceeding or take any other action involving third persons which the City deems reasonably necessary in order to secure or protect its right of possession,; occupancy and use hereunder, and in such event the Authority hereby agrees to cooperate fully with the City and to take all action necessary to effect the substitution of the City for the Authority in any such action or proceeding if the City shall so request. Section 4.6. Possession and Enjoyment. The Authority hereby covenants to provide the City during the Term of this Lease with quiet use and enjoyment of the Site and Facilities, and the City shall during such Term peaceably and quietly have and hold and enjoy the Site and Facilities, without suit, trouble or hindrance from the Authority, except as expressly set forth in this Lease. At the request of the City and at the City's cost, the Authority will join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so. Section 4.7. Authority Access to Site and Facilities. The Authority shall have the right at all reasonable times to examine and inspect the Site and Facilities, and shall have such rights of access to the Site and Facilities as may be reasonably necessary to cause the proper maintenance thereof in the event of failure by the City to perform its obligations hereunder. 12 ARTICLE V Term of Lease; Transfer or Surrender of Site and Facilities Section 5.1. Lease `Term. Subject to the provisions of Section 5.6, this Lease shall be in effect for a Term commencing upon the execution hereof and ending on February 1,'2025. Section 5.2. Termination of Lease Term. The Term of this Lease will terminate upon the occurrence of the first of the following events: (a) non -appropriation by the City pursuant to Section 5.6 hereof; (b) the payment by the City of the Purchase Price, pursuant to Section 8.1; (c) the discharge by the City of its obligation to pay the Lease Payments and Additional Lease Payments required to be paid by it hereunder pursuant to Section 8.3; or (d) a default by the City and the Authority's election to terminate this Lease pursuant to Article X. Section 5.3. Authority's Interest in the Site and Facilities. Upon payment of all Lease Payments and Additional Lease Payments due hereunder, or upon prepayment of the Lease Payments and Additional Lease- Payments or discharge of the City's obligation to make the Lease Payments and Additional Lease Payments in accordance with Article VIII hereof, and in either event, upon defeasance of the Bonds, full and unencumbered legal title to the Facilities shall pass to the City, and the Authority shall have no further interest therein. In such event the Authority and its officers shall take all actions necessary to authorize, execute and deliver to the City any and all documents necessary to vest in the City, all of the Authority's right, title and interest in and to the Site and Facilities, free and clear of all liens, leasehold interests, encumbrances (other than Permitted Encumbrances), including, if necessary, a release of any and all interests or liens created under the provisions of this Lease. Section 5.4. Surrender of Site and Facilities. Upon termination of the Term of this Lease pursuant to Section 5.2, clause (a) or (d), or upon exercise by the Authority of its right to take possession of the Site and Facilities under Section 10.2, the City shall surrender the Site and Facilities to the Authority in the condition in which they were originally received from the Authority, except as repaired, rebuilt, restored, altered or added to as permitted or required hereby, ordinary wear and tear excepted. The City shall have the right to remove from the Site and Facilities at or prior to such termination or possession all personal property located therein which was not financed with proceeds of the Bonds, or which has not replaced personal property so, financed, and which is not otherwise owned by the Authority, but the City shall repair any damages caused by such removal. 13 Section 5.5. Purchase; Conveyance of Title. At any time when the Purchase Price, together with any unpaid or delinquent interest, has been fully paid or provided for, whether by (i) payment of all Lease Payments and Additional Lease Payments as provided in Section 5.1 hereof, or (ii) payment or provision for payment of the Purchase Price as provided in Article VIII hereof, then the purchase of the Site and the Facilities by the City shall be deemed to have been completed. The Authority shall thereupon deliver to the City such instruments of conveyance or release as, in the opinion of the City, may be necessary to release the interest of the Authority in the Site and Facilities. Section 5.6. Non-Appro nation. If the City Council does not appropriate or budget moneys sufficient to pay the Lease Payments and reasonably estimated Additional Lease Payments coming , due in the next Fiscal Year, as determined by the City's budget for the Fiscal Year in question, then the Tenn of this Lease shall terminate at the end of the preceding Fiscal Year. The City Council shall effect such non -appropriation by adoption of a resolution specifically referring to this Lease and determining (i) not to provide moneys for payments due hereunder in the next Fiscal Year and (ii) that the Lease shall terminate at the end of the then -current Fiscal Year, and the City shall give the Authority a written notice of such non -appropriation and shall pay to the Authority any Lease Payments and Additional Lease Payments which are due and have not been paid at or before the end of its then current Fiscal Year. The City shall endeavor to give as much notice of non -renewal as possible prior to the end of such Fiscal Year, but in any event the City shall not be required to give more than twelve (12) months' notice, and the City shall notify the Authority of. any anticipated termination. In the event of termination of this Lease as provided in this Section, the City shall surrender possession of the Site and Facilities to the Authority in accordance with Section 5.4 and convey to the Authority or release its interest in the Site and Facilities within ten (10) days after the expiration of the then -current term. Section 5.7. Intent to Continue Term; Appropriations. The Citypresently intends to continue this Lease for its entire Tenn and to pay all Lease Payments specified in Exhibit B and Additional. Lease Payments. The City reasonably believes that moneys in an amount sufficient to make all such Lease Payments and Additional Lease Payments can and will ' lawfully be appropriated or budgeted and made available. Section 5.8. Effect of Termination. Upon termination of this Lease as provided in Section 5.6, the City shall not be responsible for the payment of any Lease Payments or Additional Lease Payments coming due with respect to succeeding Fiscal Years, but if the City has not delivered possession of the Site and Facilities to the Authority in accordance with Section 5.4 and conveyed to the Authority or released its interest in the Site and Facilities within ten (10)- days after the termination date, the termination shall nevertheless be effective, but the City shall be responsible for the payment of damages in an amount equal to the amount of the Lease Payments thereafter coming due under Exhibit B and Additional Lease Payments which are attributable to the number of days during which the City fails to take such actions and for any other loss suffered by the Authority as a result of the City's failure to take such actions as required. The City shall be required to pay over to the Authority any moneys which it has appropriated or budgeted for the purpose of paying obligations under this Lease for any Fiscal Years preceding the Fiscal Year for which non -renewal under Section 5.6 is effective. 14 • ARTICLE VI General Matters Section6.1. Use; "Permits. The City shall exercise due care in the use, operation and maintenance of the Site and Facilities, and shall not use, operate or maintain the Site and Facilities improperly, carelessly, in violation of any State and Federal Law or for a purpose or in a manner contrary to that contemplated by this Lease. The City shall obtain or cause to be obtained all permits and licenses necessary for the operation, possession and use of the Site and Facilities. The City shall comply with all State and Federal Laws applicable to the operation, possession and use of the Site and Facilities, and if compliance with any such State and Federal Law requires changes or additions to be made to the Site and Facilities, such changes or additions shall be made by the City at its expense. Section 6.2. Maintenance and Modification of Facilities by the (a) During the Term of this Lease the City shall; at its own expense, maintain, preserve and keep the Site and the Facilities in good repair, working order and condition, and shall from time to time make all repairs, replacements and improvements necessary to keep the Site and the Facilities in such condition. The Authority shall have no responsibility for any of these repairs, areplacements or improvements. In addition, the City shall, at its own expense, have the right to remodel the Facilities or to make additions, modifications and improvements thereto. All such additions, modifications and improvements shall thereafter comprise part of the Facilities and be subject to the provisions of this Lease. Such additions, modifications and improvements shall` not in any way damage the Facilities; and the Facilities, upon completion of any additions, modifications and improvements made pursuant to, this Section, shall be of a value not less than the value of the Facilities immediately prior to the making of such additions, modifications and improvements. Any property for which a substitution or replacement is made pursuant to this Section may be disposed of by the City in such manner and on such terms as are determined by the City. The City will not permit any mechanic's or other lien to be established or remain against the Site and Facilities for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City pursuant to this Section; provided that if any such lien is established and the City shall first notify the Authority of the City's intention to do so, the City may in good faith contest any lien filed or established against the Site or the Facilities, and in such event may permit the items so ' contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom unless the Authority shall notify the City that, in the opinion of Independent Counsel, by nonpayment of any such item the interest of the Authority in the Site or the Facilities will be materially endangered or the Site or the Facilities or any part thereof will be subject to loss or forfeiture, in which event the City shall promptly pay and cause to be satisfied and discharged all such unpaid items or provide the Authority with full security against any such loss or forfeiture, in form satisfactory to the Authority. The Authority will cooperate fully with the City in any such contest, upon the request and at the expense of the City. (b) In the event the Authority becomes aware of any condition on the Site or in the Facilities which, in the reasonable opinion of the Authority, creates a risk to the health and safety of any users of the Facilities or creates a risk of significant deterioration of the Facilities if not corrected, the Authority may, but shall be under no obligation to, notify the City of such condition ` and request that it be cured as promptly as is reasonably possible. In the event the City does not promptly cure such condition, the Authority may, but shall be under no obligation to, take reasonable steps to correct such condition. ; In such event, the cost to the Authority and interest thereon at the highest rate specified in any Bond until paid will be charged to the City as an Additional Lease Payment. Section 6.3. Taxes, Other Governmental Charges and Utility Charges. During the Term of this Lease the City shall also pay or cause to be paid when due all gas, water, steam, electricity, heat, power and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Site and the Facilities. The City shall also pay all property and excise taxes and governmental charges of any kind whatsoever which may at any time be lawfully assessed or levied against or with respect to the Site or the Facilities or any part thereof or the Lease Payments, and which become due during the Term of this Lease with respect thereto; and all special assessments and charges lawfully made by any governmental body for public improvements that maybe secured by a lien on the Site or the Facilities; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over aperiod of years; the City shall be obligated to pay only such installments as are required to be paid during the Term of this Lease as and when the same become due. The City shall not be required to pay any federal, state or local income, inheritance, estate, succession, transfer, gift, franchise, gross receipts, profit, excess profit, capital stock, corporate, or other similar tax payable by the Authority, its successors or assigns, unless such tax is made in lieu of or as a substitute for any real estate or other tax upon property. The City may, at the City's expense and in the City's name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, .may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority shall notify the City that, in the opinion of Independent Counsel, by nonpayment of any such items the interest of the Authority in the Site or the Facilities will be materially endangered or the Site, the Facilities or any part thereof will be subject to loss or forfeiture, in which event the City shall promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may resultfrom nonpayment, in form satisfactory to the Authority. Section 6.4. Liens. The City shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Site or the Facilities, except the respective rights of the Authority and the City as herein provided and Permitted Encumbrances. Except as expressly provided in this Article, the City shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim if the same shall arise at any time. The City shall reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim. 16 Section 6.5. Basements. The Authority will from time to time, at the request of the City and at the City's cost and expense, cooperate and join with the City: (a) in granting easements and other rights in the nature of easements, releasing existing easements or other rights in nature of easements which are for the benefit of the Site or the Facilities; (b) in executing amendments to any covenants and restrictions affecting the Site or the Facilities; (c) in executing and delivering to any person any instrument appropriate (1) to confirm or to the effect that such grant, release or execution is not detrimental to the proper conduct of the operations of the City on or in the Site or the Facilities, (ii) to show the consideration, if any, being paid for such grant, release or amendment, (iii) to show that such grant, release, dedication, transfer, petition or amendment does not materially impair the use of the Site or the Facilities or reduce the value of the Site. or the Facilities, or (iv) to confirm that the City will remain obligated hereunder to the same extent as if such grant, release, or amendment had not been made, <and,the City will perform all obligations under such instrument. The consideration, if any, received by the Authority or the City for such grant, release, or amendment shall be applied to the payment of the Bonds. Section 6.6. Addition and Substitution of Land. The Authority and the City agree to add to the Ground Lease and this Lease certain additional interests in latid, and to release from the Ground Lease and this Lease certain portions of the Site, and to substitute other interests in real property for some or all of the portions of the Site so released, but only upon the conditions hereinafter set forth: (1) The City may, from time to time, add additional real property to the Site subject to the Ground Lease and this Lease if (i) the additional real property is to be the site of a portion of the Facilities, and (ii) the City provides the Authority with an adequate legal description and survey of the Site, satisfactory to the Authority, and an endorsement to the title insurance policy described in Section 3.3 hereof covering the -additional real property and showing only such further exceptions to title as are acceptable to the Authority. (2) The City may, from time to time and with the prior written consent of the Authority, obtain the release of a portion of the Site as now described, if (i) the City certifies that such portion of the Site is not reasonably necessary for the construction of the Facilities and (ii) the unreleased portion of the site is not impaired by such release with respect to ingress and egress, access to dedicated roads and use of the unreleased portion of the site for its then current or intended purposes. (3) To accomplish the addition, release or substitution of real property as described in paragraph (1) or (2), the City shall prepare and furnish to the Authority amendments or supplements to this Lease, the Ground Lease and any UCC Financing Statements filed in connection with this Lease. The City shall pay all expenses, including attorney's fees, incurred in accomplishing any such addition, release or substitution. Section 6.7. Compliance with Bond Resolution. During the Term of this Lease, the City agrees to perform all obligations imposed upon the Authority or the City by the Bond Resolution. 17 Section 6.8. Tax Covenants. (a) The City covenants and agrees with the Authority for the benefit of the Owners from time to time of the Bonds that it will take, and will cause its officers, employees or agents to take, all actions necessary to comply with the applicable provisions of the Internal Revenue Code, and that it will not take or permit to be taken by any of its officers, employees or agents any actions that would cause the interest on the. Bonds to become subject to federal income taxation under the applicable provisions of the Internal Revenue Code. (b) The City shall take such actions and make all calculations, transfers and payments that may be necessary to comply with the rebate requirements contained in Section 148(f) of the Internal Revenue Code. The City will compute the rebate requirement and make rebate payments in accordance with law. The City must make periodic computations of the amount to be paid to the United States under Section 148(f) of the Internal Revenue. Code, and transfer the appropriate amount to a special Rebate Fund held by the City. The City will use any funds legally available to make any required deposit to or payment from the Rebate Fund. (c) None of the proceeds of the Bonds will be used, directly or indirectly, to replace funds which were used in any business carried on by any person other than a state or local governmental unit. (d) The payment of the Lease Payments will not be (A) directly or indirectly secured by any interest in (i) property used or to be used for a private business use by any person other than a state or local governmental unit or (ii) payments in respect of such property, or (B) directly or indirectly derived from payments (whether or not by or to the Authority or the City), in respect of property or borrowed money, used or to be used for a private business use by any person other than a state or local governmental unit. (e) None of the proceeds of the Bonds will be used, directly or indirectly, to make or finance loans to persons other than a state or local governmental unit. (f) Except as provided below, no user of the Facilities or other property financed with proceeds of the Bonds will use the Facilities or such other property in a trade or business on any basis other than the same basis as the general public; and no person other than a state or local governmental unit will be a user of the Facilities or such other property in a trade or business as a result of (i) ownership, or (ii) actual or beneficial use pursuant to a lease or a management or incentive payment contract, or (iii) joint venture or any other similar arrangement. Notwithstanding the foregoing, the City may permit up to five percent (5%) of the useable square footage of the Facilities to be used in the trade or business of a person other than a governmental unit. 18 ARTICLE VII Insurance ra ce and Indemnification; . Damage, Destruction and Condemnation Section 7.1. Liability Insurance. During the Term of this Lease the City shall procure and maintain continuously in effect with respect to the Site and the Facilities, insurance against liability for injuries to or death of any person or, damage to or loss of property arising out of or in any way relating to the maintenance, use or operation of the Site, ,the Facilities or any part thereof, in amounts not less than the City's tort liability limits under Minnesota Statutes, Chapter 466 for death of or personal injury to any one person, in amounts not less than the City's tort liability limits under Minnesota Statutes, Chapter 466 for all personal injuries and deaths arising out of any one occurrence, and in amounts not less than the City's tort liability limits under Minnesota Statutes, Chapter 466 for property damage arising out of any one occurrence. The Net Proceeds of all such insurance shallbe applied toward extinguishment or satisfaction of the liability with respect to which the insurance proceeds may be paid. It is understood that with respect to persons or entities other than the Authority, this insurance covers any and all liability of the City and its officers, employees and agents. As an alternative to the purchase of liability insurance, the City may self insure against such liabilities in accordance with the provisions of applicable law. Policies of commercial insurance may include deductibles of no more than ten percent (10%) of policy amounts: Section 7.2. Property Insurance. During the Term of this Lease, the City shall procure and maintain continuously in effect, to the extent of the full insurable value of the Facilities;' other than building foundations, but in an amount at least equal to the principal amount of the outstanding Bonds from time to time, insurance against loss from or damage by vandalism and fire, with a uniform standard extended coverage endorsement limited only as may be provided in the standard form of extended coverage` endorsement at the time in use in the State of Minnesota, in such amount as will be at least sufficient so that a claim may be made for the full replacement cost of any part thereof damaged or destroyed. All policies (or endorsements or riders) evidencing insurance required in this Section shall be carried in the names of the City and the Authority, as their respective interests may appear. The Net Proceeds of Insurance required by this Section shall be applied as provided in Article VII. Section 7.3. Administration of Claims, Etc. Neither the City nor the Authority shall be required to prosecute any claim against or contest any settlement proposed by any insurer, but any of them may prosecute any such claim or contest any such settlement. In the event of a contest by the City, it shall be at the City's expense, and the City may bring such claim or contest in the name of the Authority, the City or both, and the Authority will join therein at the City's written request upon the receipt by the Authority of an indemnity from the City against all costs, liabilities and expenses in connection with such claim or contest. • Section 7.4. Other Insurance and Requirements for All Insurance. All insurance required by this Article may be carried under a separate policy or a rider or endorsement; shall be taken out and maintained with responsible insurance companies organized under the laws of one of the states 19 of the United States and qualified to do business in the State of Minnesota; shall contain a provision that the insurer shall not cancel or revise coverage thereunder without giving written notice to the City and the Authority at least thirty (30) days before the cancellation or revision becomes effective; and shall name the City and the Authority as insured parties. The insurance required by Sections 7.1 and 7.2 hereof may be provided by the City pursuant to an umbrella policy which provides coverage for the amounts and the insurable incidents provided in such Sections. Annually, the City shall deposit with the Authority policies evidencing any, such insurance procured by it, or a certificate or certificates of the respective insurers stating that such insurance is in force and effect. Before the expiration of any such policy, the City shall furnish to the Authority evidence that the policy has been renewed or replaced by another policy conforming to the provisions of this Article, unless such insurance is no longer obtainable. Section 7.5. Indemnification. As between the Authority and the City, to the extent permitted by the laws of the State of Minnesota, the City assumes all risks and liabilities, whether or not covered by insurance, for loss or damage to the Facilities and for injury to or death of any person or damage to any property, whether such injury or death be with respect to agents or employees of the City, the Authority or of third parties, and whether such property damage be to the City or the Authority's property or the property of others, which is proximately caused by the negligent conduct of the City, its officers, employees, agents and lessees, or arising out of the operation, maintenance or use of the Site and the Facilities by the City, its officers,. employees, agents and lessees. The City hereby assumes responsibility for and agrees to reimburse the Authority for all liabilities, obligations, losses, damages, claims, actions, penalties, costs and expenses (including reasonable attorney's fees) of whatsoever kind and nature, imposed on, incurred by or asserted against the Authority or its officers or employees that in any way relate to or arise out of a claim, suit or proceeding based in whole or in part on the foregoing, to the maximum extent permitted by law. Section 7.6. Hazardous. Substance Indemnification. The City agrees, to the extent permitted by the laws of the State of Minnesota, to defend, indemnify and hold harmless the Authority, its officers, employees, agents, successors and assigns (the "Indemnitees") from and against, and shall reimburse the Indemnitees for, any and all doss, claim, liability, damage, judgment, penalty, injunctive relief, injury to personal property or natural resources, cost, expense, action or cause of action arising in connection with or as the result of any past, present or future existence, use, handling, storage, transportation, manufacture, release or disposal of any Hazardous Substance in, on or under the land upon which the Project is located, whether foreseeable or unforeseeable, regardless of the source, the time of occurrence or the time of discovery (collectively referred to as "Loss"). This indemnification against Loss includes, without limitation, indemnification against all costs in law or in equity or removal, response, investigation, or remediation of any kind, and disposal of such Hazardous Substances, all costs of determining whether the land upon which the Project is located, is in with, and of causing the land upon which the Project is located, to be in compliance with, all applicable Environmental Laws, all costs associated with claims for damages to persons, property, or natural resources, and the Indemnitees' reasonable attorneys' and consultants' fees, court costs and expenses incurred in connection with any of the. above. For this purpose "Hazardous Substance" shall be defined as any substance, the presence of which requires investigation, permitting, control or remediation under any federal, state or local statute, regulation, ordinance or order, including without limitation: (a) any substance defined as "hazardous waste' 20 LJ • under the Resource Conservation and Recovery Act, as amended (42 U.S.C. §6901, et seg.); (b)' any substance defined as a "hazardous substance" under the Comprehensive Environmental 'Response, Compensation and Liability Act, as amended (42 U.S.C. §9601, et s ); (c) any substance defined as a "hazardous material" under the Hazardous Materials Transportation Act (49 U.S.C. §5101, et seg.); (d) any substance defined under any Minnesota statute analogous to (a), (b) or (c), to the extent that said statute defines any term more expansively; ' (e) asbestos: (0 urea formaldehyde; (g) polychlorinated biphenyls; ` (h) petroleum, or any distillate or fraction thereof; (i) any hazardous or toxic substance designated pursuant to the laws of the State of Minnesota; and (j) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority. Section 7.7. ' Damage, Destruction and Condemnation. If the Facilities or any portion thereof is destroyed (in whole or in part) or is damaged by fire or other casualty or title to or the temporary use of the Facilities or any part thereof, or the interest of the City or the Authority in the Site or the Facilities or any part thereof is taken under the exercise of the power of eminent domain by any governmental body or by any person, firm or corporation acting under governmental authority, the City shall have the rights with respect to: the Net Proceeds of any insurance or condemnation award specified in this Section, but the City shall be obligated to continue to pay the Lease Payments and Additional Lease Payments due with respect to the Facilities. All Net Proceeds shall be applied to the prompt repair, restoration, modification, improvement or replacement of the Site and the Facilities by the City, or, if the City elects not to repair or rebuild, all Net Proceeds shall be applied to prepay the Lease Payments and Additional Lease Payments; in either event all Net Proceeds not needed for the purpose shall belong to the City. Section 7.8. Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in full the cost of any repair, restoration, modification, improvement or replacement of the Site and the Facilities, the City shall either: (a) complete the work and pay any cost in excess of the amount of the Net Proceeds, and the City agrees that if by reason of any such insufficiency of the Net Proceeds, the City shall make any payments pursuant to the provisions of this Section 7.8, the City shall not be entitled to any reimbursement therefor from the Authority nor shall the City be entitled to any diminution of the Lease Payments or Additional Lease Payments due with respect to the Facilities; or`(b) prepay the Lease Payments and Additional Lease Payments, in which event the Net Proceeds shall be used for this purpose. If the City elects not to repair, rebuild or restore, the City shall prepay or discharge the Lease Payments and Additional Lease Payments to the full extent of the Net Proceeds. Section 7.9. Cooperation of Authority. The Authority shall cooperate fully with the City at the expense of the City in filing any proof of loss with respect to any insurance policy covering the casualties described in Section 7.7 hereof and in the prosecution or defense of any prospective or pending condemnation proceeding with respect to the Site or the Facilities or any part thereof and will, to the extent it may lawfully do so, permit the City to litigate in any proceeding resulting therefrom in the name of and on behalf of the Authority. In no event will the Authority voluntarily settle, or consent to the settlement of, any proceeding arising out of any insurance claim or any prospective or pending condemnation proceeding with respect to the Site or the Facilities or any part thereof without the written consent of the City. 21 ARTICLE VIII Option to Purchase; Option to Prepay Section 8.1. Option to Purchase or Prepay.. The City shall have the option at any time to purchase the Site and Facilities by payment to the Authority of the Purchase Price then applicable, or to prepay unpaid Lease Payments and Additional Lease Payments, in whole or in part. Section 8.2. Exercise of QDption. The City shall give notice to the Authority of its intention to exercise its purchase or prepayment option not less than forty-five (45) days in advance of the date of prepayment or purchase, and shall pay to the Authority on the date of prepayment or purchase the prepayment amount or (in the event of a purchase) an amount equal to the then current Purchase Price, less any Net Proceeds to be applied to the amount to be so paid in accordance with Section 7.8. Section 8.3. Provision for Payment of Purchase Price; Discharge of City's Obligation. The City may at any time provide for the payment of the Purchase Price or discharge its obligation to pay Lease Payments due under this Lease by depositing irrevocably in escrow with a bank or trust company, cash or direct obligations of the United States; bearing interest payable at such times and at such rates and maturing on such dates, but not callable prior thereto, as shall be required to provide moneys sufficient to pay or prepay all unpaid Lease Payments and the applicable redemption premium, if any, on the Outstanding Bonds, on the dates when they are due or subject to prepayment as provided in Section 8.1, as determined by the City, together, with (i) computations and an opinion letter of a certified public accounting firm showing and attesting to the sufficiency of such moneys and securities for this purpose, (ii) an opinion letter of Bond Counsel stating that the deposit of such cash or securities will not cause the Bonds to become "arbitrage bonds" under Section 148 of the Internal Revenue Code, and (iii) an opinion letter of Independent Counsel who is nationally recognized bankruptcy counsel that payment of principal and interest on the Bonds with such moneys or securities will not constitute a voidable preference under the provisions of 11 U.S.C. §544 or 547. Section 8.4. Prerequisite; No Default. The City may exercise the rights specified in Sections 8.1, 8.2, and 8.3 only if it is not in default under this Lease or if such exercise cures any default then existing. ARTICLE IX Assignment, Subleasing, Indemnification, Mortgaging and Selling Section 9.1. Assignment by Authority. Except as expressly provided in this Section, the Authority's rights and obligations under this Lease, including the right to receive and enforce payment of the Lease Payments and Additional Lease Payments to be made by the City under this Lease and its interest in the Site and the Facilities, shall not be ` assigned, pledged, mortgaged or transferred, in whole or in part. The rights and obligations of the Authority may be transferred and assigned to any legal successor to the functions of the Authority. Section 9.2. Assignment and Subleasing by the City.' The rights and obligations of the City under this Lease may not be assigned by the City without the written consent of the Authority. The City may sublease the Project, or any portion thereof, to any other entity, provided that the City furnishes to the Authority an Opinion of Counsel, who is nationally recognized bond counsel, that such sublease' will not adversely affect the validity of the Outstanding Bonds or the exemption of the interest thereon from federal income taxation. Section 9.3. Restriction on Mortgage or Sale by the CitX. Without the prior written consent of the Authority, the City will not mortgage, sell, assign, transfer or convey the Site or the Facilities or any portion thereof during the Term of this Lease. 23 ARTICLE X Events of Default and Remedies Section 10.1. Events of Default Defined. Any one or more of the following events shall be an "Event of Default" under this Lease: (a) Failure by the City to pay any Lease Payment, Additional Lease Payment, or other payment required to be paid hereunder at the time and from the sources specified herein. (b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in clause (a) of this Section, for a period of sixty (60) days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority, unless the Authority shall agree in writing to an extension of such time prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Authority shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the City within the applicable period and diligently pursued until the default is corrected. (c) The occurrence of any of the following events: (i) The City shall (a) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or the like of the City or of all or a substantial part of its property, (b) commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect), or (c) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding -up or composition or adjustment of debts; or (ii) A proceeding or case shall be commenced, without the application or consent of the City, as the case may be, in any court of competent jurisdiction, seeking (a) the liquidation, reorganization, dissolution, winding -up, or the composition or adjustment of debts, of the City, (b) the appointment of a trustee, receiver, custodian, liquidator or the like of the City, or (c) similar relief in respect of the City under any law relating to bankruptcy, insolvency, reorganization, winding -up or composition or adjustment of debts, and such proceeding or case has not been dismissed within sixty (60) days of the filing thereof. The provisions of Section 10.1(b) are subject to the following limitation: if by reason of force majeure either party is unable in whole or in part to carry out its obligations under this Lease, it shall not be deemed in default during the continuance of such inability or during any other delays which are a direct consequence of the force majeure inability, and the time for such performance shall be extended to cover such delays. The term "force majeure" as used herein shall mean, without limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders or restraints of any kind of the government of the United States of 24 America or any of its departments, agencies or officials, or any civil or military authority, or the State of Minnesota or any of its departments, agencies or officials; insurrections; riots; landslides; earthquakes; fires; storms; droughts; floods; explosions; breakage or accident to machinery, transmission pipes or canals; or any other cause or event not reasonably within the control of a party and not resulting from its negligence. Each party agrees, however, to remedy with all reasonable dispatch the cause or causes preventing it from carrying out its agreements.` Section 10.2. Remedies on Default. Whenever any Event of Default shall have happened and be continuing, the Authority may take, but only upon not less than five (5) days' written notice to the City, one or any combination of the following remedial steps: (a) Without terminating this Lease, re-enter and take possession of the Site and the Facilities and exclude the City from using the Site and the Facilities until the Event of Default is cured; or (b) Subject to the provisions of Section 5.6, take any action at law or in equity which may appear necessary or desirable to: (i) collect the Lease Payments and Additional Lease Payments then due for the Fiscal Year then in effect, (ii) collect any Lease Payments and Additional Lease Payments to become due and payable during the current Fiscal Year, or (iii) enforce performance and observance of any obligation, agreement or covenant of the City under this Lease; or (c) Terminate the Term of this Lease, exclude the City from possession of the Site and the Facilities, and use its best efforts to lease the Site and the Facilities to another for the account of the City, holding the City liable for the difference between the rentals received and the Lease Payments and Additional Lease Payments which would have been receivable hereunder for the Fiscal Year then in effect. This provision does not limit any other remedies which the Authority may have under any other document or provision of law. Section 10.3. Delay; Notice. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle any part to exercise any remedy reserved to it in this Lease it shall not be necessary to give any notice, other than such notice as may be required in this Lease. Section 10.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient.' Section 10.5. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Lease is breached by either party and thereafter waived by the other party, such 25 26 ARTICLE XI Administrative Provisions Section 11.1. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or deposited in the United States mail in certified or registered form with postage. fully prepaid: , If to the City: City of Albertville 5975 Main Avenue Northeast Albertville, Minnesota 55301 Attention: City Clerk If to the Authority: Economic Development Authority for the City of Albertville, Minnesota 5975 Main Avenue Northeast Albertville, Minnesota 55301 Attention: Executive Director The above -named persons, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent. Section 11.2. Binding Effect. This Lease shall inure to the benefit of and shall be binding upon the Authority and the City and their respective successors and assigns. Section 11.3. Severability. In the event any provision of this Lease shall be held invalid or unenforceable by any court or competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 11.4. Amendments, Changes and Modifications. This Lease may be amended or any of its terms modified only by written amendment authorized and executed by the City and the Authority. Section 11.5. Further Assurances and Corrective Instruments. The Authority and the City agree that they will, if necessary, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Site and the Facilities or for carrying out the expressed intention of this Lease. Section 11.6. Execution in Counterparts. This Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 11.7. Applicable Law. This Lease shall be governed by and construed in accordance with the laws of the State of Minnesota 27 Section 11.8. Authorized Officers. Whenever under the provisions of this Lease the approval of the Authority or the City is required, or the Authority or the City is required to take some action at the request of the other, such approval of such request shall be given for the Authority or for the City by an Authorized Officer, and any party hereto shall be authorized to rely upon any such approval or request. Section 11.9. Captions. The captions or headings in this Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions, or Sections of this Lease. 28 IN WITNESS WHEREOF, the Authority has caused this Lease to be executed in its corporate name by its duly authorized officers; and the City has caused this Lease to be executed in its name by its duly authorized officers and sealed with its corporate seal, as of the date first above written. ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ALBERTVILLE, MINNESOTA By Its Chair By Its Executive Director STATE OF MINNESOTA ) ss. COUNTY OF WRIGHT On this day of ; 2004, before me, a Notary Public within and for said County, personally appeared and , to me personally known, who, being each by me duly sworn, did say that they are the Chair and Executive Director, respectively, of the Economic Development Authority for the City of Albertville, Minnesota, the Authority referred to in the foregoing instrument; that said instrument was signed" and sealed in behalf of said authority by authority of its Board of Commissioners; and they acknowledged said instrument to be the free act and deed of said Authority. Notary Public 29 CITY OF ALBERTVILLE, MINNESOTA By Its Mayor By Its City Clerk STATE OF MINNESOTA ) ss. COUNTY OF WRIGHT ) On this day of , 2004, before me, a Notary Public within and for said County, personally appeared and to me personally known, who being by me duly sworn, did say that they are the Mayor and City Clerk of the CITY OF ALBERTVILLE, a statutory city and political subdivision of the State of Minnesota, the subdivision referred to in the foregoing instrument; that the seal affixed to said instrument is the corporate seal of said political subdivision; that said instrument was signed and sealed in behalf of said political subdivision by authority of its City Council; and said Mayor and City Clerk acknowledged said instrument to be the free act and deed of said political subdivision. Notary Public 30 EXHIBIT A Description Of Site And Facilities l . The legal description of the Site is as follows: 2. The description of the Facilities is as follows: 3. The Site is subject to the following Permitted Encumbrances: A-1 EXHIBIT C Form of Completion Certificate I,, the undersigned, hereby certify that I am the duly qualified and acting of the CITY OF ALBERTVILLE, MINNESOTA (the "City'); and, with respect to the Lease -Purchase Agreement dated as of , 2004 (the "Lease"), by and between the City and the Economic Development Authority for the City of Albertville, Minnesota (the "Authority"), that: 1. The Facilities described in the Lease have been constructed, delivered and installed in accordance with the City's specifications. 2. The City has appropriated and/or taken other lawful actions necessary, to provide moneys sufficient to pay all Lease Payments required to be paid under the Lease during the current fiscal year of the City, and such moneys will be applied in payment of all Lease Payments due and payable during such current fiscal year. Dated: , CITY OF ALBERTVILLE, MINNESOTA By Its 2 Extract of Minutes of Meeting of the Economic Development Authority for the City of Albertville, Wright County, Minnesota Pursuant to due call and notice thereof, a regular meeting of the Economic Development Authority for the City of Albertville, Minnesota, was duly held in the City Hall in said City on Monday August 16, 2004, commencing at 7:00 o'clock P.M. The following members were present: and the following were absent: The President announced that the next order of business was consideration of a proposal for the purchase of the Authority's_$2,355,000 Public Project Lease Revenue Bonds, Series 2004. The Executive Director presented the proposal. After due consideration of the proposal, Member then introduced the following resolution, and moved its adoption: In accordance with the official Terms of Proposal the following adjustments were made: Principal Amount: Maturities: Minimum Purchase Price: 3 RESOLUTION NO. A RESOLUTION AWARDING THE SALE OF $2,355,000 PUBLIC PROJECT LEASE REVENUE BONDS, SERIES 2004; FIXING THEIR FORM AND SPECIFICATIONS; DIRECTING THEIR EXECUTION AND DELIVERY; AND PROVIDING FOR THEIR PAYMENT BE IT RESOLVED By the Economic Development Authority for the City of Albertville, Minnesota (the "Authority") as follows: Section 1. Sale of Bonds. 1.01. The City of Albertville (the "City") is authorized by law to acquire such items of real and personal property as are needed to carry out its governmental and proprietary functions, and to acquire such real and personal property by entering into lease - purchase contracts. The City has determined that it is necessary for it to acquire pursuant to a Lease -Purchase Agreement dated as of , 2004 (the "Lease") the Authority's interest in certain real property described in the Lease (the "Site"), together with certain buildings, structures and improvements to be constructed thereon, and certain equipment to be contained therein (the "Facilities"). The development of the Site and the Facilities is consistent with and furthers the economic development functions of the Authority, and the Authority is willing to acquire a leasehold interest in the Site pursuant to a Ground Lease dated as of , 2004 (the "Ground Lease") from the City to the Authority and to acquire title to the Facilities and to lease and sell the Site and the Facilities to the City, pursuant to the Lease. To provide funds for the acquisition and construction of the Facilities, the Authority will issue its $ Economic Development Authority for the City of Albertville, Minnesota Public Project Lease Revenue Bonds, Series 2004 (the "Bonds"). 1.02. The proposal of Northland Securities, Inc. (the "Purchaser") to purchase the Bonds is hereby found and determined to be a reasonable offer and is hereby accepted, the proposal being to purchase the Bonds at a price of $ plus accrued interest to date of delivery, for Bonds bearing interest as follows: Year of Interest Maturity Rate 2006 2007 2008 2009 2010 2011 2012 Year of Interest Maturity Rate 2016 2017 2018 2019 2020 2021 2022 4 2013 2023 2014 2024 2015 - 2025 True interest cost: 1.03. The President and Executive Director are directed to execute a contract with the Purchaser on behalf of the Authority. 1.04. The Authority will forthwith issue and sell the Bonds pursuant to Minnesota Statutes, Sections 469.001 to 469.047, as amended (the "Act') in the total principal amount of $2,355,000, originally dated September 1, 2004, in the denomination of $5,000 each or any integral multiple thereof, numbered No. R-1, upward, bearing interest as above set forth, and maturing serially on February 1 in the years and amounts as follows: Year Amount Year Amount 2006 $35,000 2016 $115,000 2007 85,000 2017 120,000 2008- 8500 2018 130,000 2009 90,000 2019 135,000 2010 90,000 2020 140,000 2011 95,000 2021 150,000 2012 100,000 2022 155,000 2013 100,000 2023 165,000 2014 105,000 2024 170,000 2015 - 110,000 2025 180,000 1.05.: Redemption. The Bonds due on or after February 1, 2012 are subject to optional redemption and prepayment on February 1, 2013 and on any day thereafter. Redemption may be in whole or in part and if in part, at the option of the City, so long as the Lease is in effect, and in such manner as the City will determine. The Bonds are also subject to extraordinary redemption on any Business Day in whole or in part in certain events of damage to or destruction or condemnation of the Site or the Facilities, or change of law as provided in the Lease. If less than all Bonds of a maturity are called for redemption, the Authority will notify DTC (as defined in Section 7 hereof) 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. Prepayments will be at a price of par plus accrued interest. Section 2. Registration and Payment. 2.01. Registered Form. The Bonds will be issued only in fully registered form. The interest thereon and, upon surrender of each Bond, the principal amount thereof, is payable by check or draft issued by the Registrar described herein. 2.02. Dates; Interest Payment Dates. Each Bond will be dated as of the last interest payment date preceding the date of authentication to which interest on the Bond has been paid or made available for payment, unless (i) the date of authentication is an interest payment date to which interest has been paid or made available for payment, in which case the Bond will be dated as of the date of authentication, or (ii) the date of authentication is prior to the first interest payment date, in which case the Bond will be dated as of the date of original issue.. The interest on the Bonds is payable on February 1 and August 1 of each year, commencing August 1, 2005, to the registered owners of record thereof as of the close 6 of business on the fifteenth day of the immediately preceding month, whether or not that day is a business day. 2.03. Registration.: The Authority will appoint a bond registrar, transfer agent, authenticating agent and paying agent (the "Registrar"). The effect of registrationand the rights and duties of the Authority and the Registrar with respect thereto are as follows: (a) Register. The Registrar must keep at its principal corporate trust office a bond register in which the Registrar provides for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. (b) Transfer- of Bonds. Upon surrender for transfer of a 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 will authenticate and deliver, in the name of the designated transferee or transferees, one or more new 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 day of the month preceding each interest payment date and until that interest payment date. (c) Exchange of Bonds. When Bonds are surrendered by the registered owner for exchange the Registrar will authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity as requested by the registered owner or the owner's attorney in writing. (d) Cancellation. Bonds surrendered upon transfer or exchange will be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (e) Improper or Unauthorized Transfer. When a 'Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is satisfied that the endorsement on the Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar will incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (0 Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name a Bond is registered in the bond register as the absolute owner of the Bond, whether the Bond is overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on the Bond and for all other purposes and payments so made to registered owner or upon the owner's order will be valid and effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or sums so paid. 7 (g)Taxes, Fees and Charges. The Registrar may impose a charge upon the owner thereof for a transfer or exchange of Bonds,' 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 Bonds. If a Bond becomes mutilated or is destroyed, stolen or lost .the Registrar will deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for; a 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 Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance and amount satisfactory to it and as provided by law, in which both the Authority and the Registrar must be named as obligees. Bonds so surrendered to the Registrar will be cancelled by the Registrar and evidence of such cancellation must be given to the Authority. If the mutilated, destroyed, stolen or lost Bond has already matured or been called for redemption in accordance with its terms it is not necessary to issue a new Bond prior to payment. (i) Redgmp ion. In the event any of the Bonds are called for redemption, notice thereof identifying the Bonds to be redeemed will be given by the Registrar by mailing a copy of the redemption notice by first class mail (postage prepaid) to the registered owner of each Bond to be redeemed at the address shown on "the registration books kept by the Registrar and by publishing the notice if required by law. Failure to give notice by publication or by mail to any registered owner, or any defect therein, will not affect the validity of the proceedings for the redemption of Bonds. Bonds so called for redemption will cease to bear interest after the specified redemption date, provided that the funds for the redemption are on deposit with the place of payment at that time. 2.04. Appointment of Initial Registrar: The Authority appoints Northland Trust Services, Inc., Minnesota, as the initial Registrar. The President and the Executive Director are authorized to execute and deliver, on behalf of the Authority, a contract with the Registrar. Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized by law to conduct such business, the resulting corporation is authorized to act as successor Registrar. The Authority agrees to pay, from Additional Lease Payments paid by the City under the Lease, the reasonable and customary charges of the Registrar for the services performed. The Authority reserves the right to remove the Registrar upon 30 days' notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar must deliver all cash and Bonds in its possession to the successor Registrar and must deliver the bond register to the successor 0 Registrar. 8 2.05. Execution, Authentication and Delivery. The Bonds will be prepared under the direction of the Executive Director and executed on behalf of the Authority by the signatures of the President and the Executive Director, provided that all signatures may be printed, engraved or lithographed facsimiles of the originals. If an officer whose signature or a facsimile of whose signature appears on the Bonds ceases to be such officer before the delivery of any Bond, that signature or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. Notwithstanding such execution, a Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until ;a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on a Bond is conclusive evidence that it has been authenticated and delivered under this Resolution. When the Bonds have been so prepared, _executed and authenticated, the Authority will deliver the same to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Purchaser is not obligated to see to the application of the purchase price. _ 2.06. Temporary Bonds. The Authority may elect to deliver in lieu of printed definitive Bonds one or more typewritten temporary Bonds in substantially the form set forth in Section 3 with such changes as may be necessary to reflect more than one maturity in a single temporary bond. Upon the execution and delivery of definitive Bonds the temporary Bonds will be exchanged therefor and cancelled. Section 3. Form of Bond. 3.01. The Bonds will be printed or typewritten in substantially the following form: UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF WRIGHT CITY OF ALBERTVILLE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ALBERTVILLE, MINNESOTA No. R $ Public Project Lease Revenue Bond, Series 2004 Date of Interest Rate Maturity Original Issue CUSIP September 1, 2004 ..Registered Owner: CEDE & CO. 9 u iw Principal Amount: The Economic Development Authority for the City of Albertville, Minnesota, a public body corporate and politic and political subdivision of the State of Minnesota (the "Authority'), for value received, hereby promises to pay, but solely from the sources hereinafter described, to the Registered Owner specified above or registered assigns, the Principal Amount set forth above on the Maturity date specified above, upon the presentation and surrender hereof, and to pay to the Registered Owner hereof interest on such Principal Amount from such sources at the Interest Rate specified above from the Date of Original Issue set forth above, or the most recent interest payment date to which interest has been paid or duly provided for as specified below, on February l and August l of each year, commencing August 1, 2005, until said principal amount is paid. Principal and the redemption price are payable in lawful money of the United States of America at the office of Northland Trust Services, Inc., Minneapolis, Minnesota, or of its successor, as Bond Registrar. Interest shall be paid on each interest payment date by check or draft mailed to the person in whose name this Bond is registered at the close of business on the fifteenth (15th) day of the month immediately preceding such interest payment date (whether or not a business day) at the Owner's address set forth on the registration records maintained by the Bond Registrar. Upon written request to the Bond Registrar, delivered at least fifteen (15) days prior to an interest payment date by a registered Owner of $500,000 or more in aggregate original principal amount of the Bonds, payment of interest may be made by wire transfer to such registered Owner. Any such interest not punctually paid or provided for will cease to be payable on such regular record dates and such defaulted interest may be paid to the person in whose name this Bond is registered at the close of business on a special record irate Ior the payment VI SUM ueIULULeu Interest estaDnsneu vy ule r30nu rwpstrar. It is hereby certified and recited and the Authority has found: that all acts, conditions and things required to be done precedent to and in the issuance of this Bond and the series of which it is a part have been properly done, have happened and have been performed in regular and due time, form and manner as required by law; and that this Bond and the series of which it is a part does not constitute a debt of the Authority within the meaning of any constitutional or statutory limitation. This Bond is issued pursuant to Minnesota Statutes, Sections 469.001 to 469.047, as amended (the "Act"), and in conformity with the provisions, restrictions and limitations thereof This Bond does not constitute or give rise to a charge against the general credit or properties or taxing powers of the Authority or the City of Albertville, Minnesota (the "City") and does not grant to the Owner of this Bond any right to have the Authority or the City levy any taxes or appropriate any funds for the payment of the principal hereof or interest hereon, nor is this Bond a general obligation or a pecuniary liability of the Authority or the City or the individual officers or agents thereof. This Bond does not constitute an indebtedness of the Authority or the City, within the meaning of any state constitutional provision or statutory limitation. This Bond and interest hereon are payable solely from Lease Payments to be paid by the City pursuant to a Lease -Purchase Agreement dated as of 2004 (the "Lease"), from the Authority to the City, or other moneys held 10 by the Bond Registrar in a Fund or Account appropriated to the payment of the Bonds of this series under the Bond Resolution adopted by the Authority on August 16, 2004 (the "Resolution"). THE OBLIGATION OF THE CITY TO MAKE LEASE PAYMENTS PURSUANT TO THE LEASE IS SUBJECT TO ANNUAL APPROPRIATION BY THE CITY COUNCIL OF THE CITY. IN THE EVENT THE CITY COUNCIL DETERMINES NOT TO APPROPRIATE MONEYS FOR THE PAYMENT OF LEASE PAYMENTS DUE IN A FISCAL YEAR, THE LEASE WILL TERMINATE AT THE END OF THE THEN -CURRENT FISCAL YEAR, AND THE CITY WILL HAVE NO FURTHER OBLIGATION TO MAKE LEASE . PAYMENTS PURSUANT TO THE LEASE. This Bond is one of a duly authorized series of special, limited obligation Bonds in an aggregate principal amount of $2,355,000, in denominations of $5,000 or integral multiples thereof not exceeding the principal amount maturing in any year, and numbered from R-1 upwards, and of like tenor and effect except as to serial number, denomination, interest rate, maturity and right of prior redemption, all of which have been authorized by law to be issued and have been issued or are to be issued by the Authority pursuant to the Resolution, to provide financing for the acquisition and construction of the Site and Facilities described in the Lease. The Bonds are equally and ratably secured by the Resolution and the Lease. Pursuant to a Ground Lease dated as of , 2004 (the "Ground Lease") from the City to the Authority, the City has leased the Site described in the Lease to the Authority. Reference is hereby made to the Ground Lease, the Lease, the Resolution, and any amendments or supplements thereto for a description and limitation of the property, revenues and funds pledged and appropriated to the payment of the Bonds, the nature and extent of the security thereby created, the rights of the Owners of the Bonds, the rights, duties and immunities of the Bond Registrar, and the rights, immunities and obligations of the Authority and the City thereunder. Certified copies of the Resolution and executed counterparts of the Ground Lease and the Lease are on file at the office of the Authority. The Bonds are subject to extraordinary redemption on any Business Day in whole or in part in certain events of damage to or destruction or condemnation of the Site or the Facilities, or change of law as provided in the Lease, at a redemption price equal to par plus accrued interest. - The Bonds due on or after February 1, 2013 are subject to optional redemption, at the election of the City, so long as the Lease is in effect, in whole or in part, and if in part in such manner as the City shall determine, on February 1, 2012 and any date 'thereafter, at a redemption price of par plus accrued interest. Notice of any such redemption shall be given to the registered Owner of each Bond to be redeemed by first class mail, addressed to the Owner's registered address, not later than thirty (30) days prior to the date fixed for redemption.. Priorto the date fixed for 11 redemption, funds shall be deposited with the Bond Registrar sufficient to pay the Bonds called and accrued interest thereon, plus any premium required. Upon the happening of the above conditions, Bonds thus called shall not bear interest on or after the call date and, except for the purpose of payment from the funds so deposited, shall no longer be protected by the Resolution. This Bond is transferable, as provided in the Resolution, only upon the registration records maintained by the Bond Registrar by the Registered Owner hereof in person or by the Owner's duly authorized attorney, upon surrender of this Bond for transfer at the office of the Bond Registrar, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Bond Registrar duly executed by, the Registered Owner hereof or the Owner's duly authorized attorney, and, upon payment of any tax, fee or other governmental charge required to be paid with respect to such transfer, one or more Bonds of the same maturity, aggregate principal amount and interest rate will be issued to the designated transferee or transferees. The Bonds are issuable only as fully registered bonds without coupons in denominations of $5,000 or any integral multiple thereof not exceeding the principal amount maturing in any year. As provided in the Resolution and subject to certain limitations set forth therein, the Bonds are exchangeable for a like aggregate principal amount of Bonds of the same maturity and interest rate, of different authorized denominations, as requested by the Registered Owner or the Owner's duly authorized attorney upon surrender thereof to the Bond Registrar. In case an Event of Default as defined in the Resolution or the Lease occurs, or in the event of non -appropriation by the City Council of the -City, the principal of this Bond `and all other Bonds Outstanding may be declared or may become due and payable prior to the stated maturity hereof in the manner and with the effect and subject to the conditions provided in the Resolution, but no Owner of any Bond shall have any right to enforce the provisions of the Resolution, the Lease or the Ground Lease except as provided in the Resolution. With the consent of the Authority and the Bond Registrar, and to the extent permitted by and as provided in the Resolution, the terms and provisions of the Resolution, the. Lease and the Ground Lease, or of any instrument supplemental thereto, may be modified or altered by the assent or authority of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding thereunder. This Bond shall not be valid or become obligatory for any purpose until it shall have been authenticated by the execution of the certificate hereon endorsed by the Bond Registrar under the Resolution. , IN WITNESS WHEREOF, the Economic Development Authority for the City of Albertville, Minnesota has caused this Bond to be executed in its name by the facsimile signatures of its duly authorized officers, all as of the Date of Original Issue specified above. 12 ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ALBERTVILLE, MINNESOTA (Facsimile) President (Facsimile) Executive Director Date: (Form of Bond Registrar's Certificate) This is one of the Bonds described in the within mentioned Resolution. NORTHLAND TRUST SERVICES, INC. - Bond Registrar Date: By Authorized Signature ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (Please Print or Typewrite Name and Address of Transferee) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Please Insert Social Security Number or Other Notice: The signature to this assignment Identifying Number of Assignee must correspond with the name as it appears on the face of this Bond in every particular, without alteration or any change whatever. PROVISIONS AS TO REGISTRATION 13 The ownership of the principal of and interest on the within Bond has been registered on the books of the Bond Registrar in the name of the person last noted below. Signature of Date of Registration Registered Owner Bond Registrar Cede & Co. Federal ID #13-2555119 Section 4. Payment; Security; Pledges and Covenants. 4.01. (a) The Bonds are payable from the Debt Service Fund hereby created, and the Lease Payments payable by the City under the Lease are hereby pledged to the Debt Service Fund. There is also appropriated to the Debt Service Fund (i) capitalized interest financed from Bond proceeds, if any, (ii) any amount over the minimum purchase price paid by the Purchaser, and (iii) the accrued interest paid by the Purchaser upon closing and delivery of the Bonds. -So long as there is no Event of Default under the Lease and the City has not -terminated the Lease due to nonappropriation, the Debt Service Fund shall be held and administered by the City. (b) The proceeds of the Bonds, less the appropriations made in paragraph (a), will be deposited with the City in a separate construction account to be used solely to defray expenses of the construction of the Facilities and the payment of principal and interest on the Bonds prior to the completion and payment of all costs of the Facilities. When the Facilities are completed and the cost thereof paid, the construction account is to be closed. 4.02. The Authority covenants to apply all Lease Payments received by the Authority for the City pursuant to the Lease to the payment of the principal of and interest on the Bonds. The Bonds shall not constitute or give rise to a charge against the general credit or properties or taxing powers of the Authority or the City and shall not grant to the Owners of the Bonds any right to have the Authority or the City levy any taxes or appropriate any funds for the payment of the principal thereof or interest thereon, nor are the Bonds a general obligation or a pecuniary liability of the Authority or the City or the individual officers or agents thereof. The Bonds shall not constitute an indebtedness of the Authority or the City, within the meaning of any state constitutional provision or statutory limitation. The Bonds and interest thereon are payable solely from Lease Payments to be paid by the City pursuant to the Lease, or other moneys held by the Bond Registrar in a Fund or Account appropriated to the payment of the Bonds. The obligation of the City to make Lease Payments pursuant to the Lease is subject to annual appropriation by the City Council of the City. In the event the City Council determines not to appropriate moneys for the payment of Lease Payments due in a fiscal year, the Lease will terminate at the end of the then -current fiscal year, and the City will have no further obligation to make Lease Payments pursuant to the Lease. 14 In case an Event of Default as defined in the Lease occurs, or in the event of non - appropriation by City Council of the City, the Authority may declare the principal of all Bonds Outstanding to be due and payable prior to the stated maturity thereof, and upon such declaration, the principal of all Bonds Outstanding shall become due and payable. After such declaration, all moneys received by the Authority and applicable to the Bonds pursuant to the Ground Lease shall be applied to the equal and proportional payment of all Bonds Outstanding and claims for interest thereon, without priority of any Bond over another Bond, or of principal over interest or interest over principal. 4.03. The Authority staff is authorized and directed to file a certified copy of this - resolution with the County Auditor of Wright County and to obtain the certificate required by Minnesota Statutes, Section 475.63. Section 5. Authentication of Transcript. 5.01. The officers of the Authority are authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records of the Authority relating to the Bonds and to the financial condition and affairs of the Authority, and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books and records in their custody and under their control, relating to the validity and marketability of the Bonds, and such instruments, including any heretofore furnished, may be deemed representations of the Authority a' to the facts stated therein. 5.02. The President and Executive Director are authorized and directed to certify that they have examined the Official Statement prepared and circulated in connection with the issuance and sale of the Bonds 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. 5.03. The Ground Lease and the Lease are hereby approved. The President and Executive Director are authorized and directed to execute and deliver the Ground Lease and the Lease on behalf of the Authority, substantially in the forms on file, but with all such changes therein as shall be approved by the officers executing the, same, which approval shall be conclusively evidenced by the execution thereof. Copies of all of the transaction documents shall be delivered, filed and recorded as provided therein. The President, the Executive Director and other officers of the Authority are also authorized and directed to execute such other instruments as may be required to give effect to the transactions herein contemplated. Section 6. Tax Covenant. 6.01. The Authority covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the "Code), and the Treasury 15 Regulations promulgated thereunder, in effect at the time of such actions and that it will g , take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. 6.02. (a) The Authority will comply with requirements necessary under the Code to establish and maintain the exclusion from gross income of the interest on the Bonds under Section 103 of the Code, including without limitation requirements relating to temporary periods for investments, limitations on amounts invested at a yield greater than the yield on the Bonds, and the rebate of excess investment earnings to the United States if the Bonds (together with other obligations reasonably expected to be issued in calendar year 2004) exceed the small -issuer exception amount of $5,000,000. (b) For purposes of qualifying ' for the small -issuer exception to the federal arbitrage rebate requirements, the Authority finds, determines and declares that the aggregate face amount of all tax-exempt bonds (other than private activity bonds) issued by the Authority during the calendar year in which the Bonds are issued is not reasonably expected to exceed $5,000,000, within the meaning of Section 148(f)(4)(C) of the Code. 6.03. The Authority further covenants not to use the proceeds of the Bonds or to cause or permit them or any of them to be used, in such a manner as to cause the Bonds to be "private activity bonds" within the meaning of Sections 103 and 141 through 150 of the Code. 6.04. In order to qualify the Bonds as "qualified "tax-exempt obligations""'within the meaning of Section 265(b)(3) of the Code, the. Authority makes the following factual statements and representations: (a) the Bonds are not "private activity bonds" as defined in Section 141 of the Code; (b) the Authority hereby designates the Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than any private activity bonds that are not qualified 501(c)(3) bonds) which will be issued by the Authority (and all subordinate entities of the Authority) during calendar year 2004 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the Authority during calendar year 2004 have been designated for purposes of Section 265(b)(3) of the Code. 6.05. The Authority will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. 16 Section 7. Book-Entry Svstem; Limited Obliaation of Authority. 7.01. The Bonds will be initially issued in the form of a separate single typewritten or printed fully registered Bond for each of the maturities set forth in Section 1.03 hereof. Upon initial issuance, the ownership of each Bond will be registered in the registration books kept by the Bond Registrar in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York, and its successors and assigns (DTC). Except as provided in this section, all of the outstanding Bonds will be registered in the registration books kept by the Bond Registrar in the name of Cede & Co., as nominee of DTC. 7.02. With respect to Bonds registered in the registration books kept by the Bond Registrar in the name of Cede & Co., as nominee of DTC, the Authority, the Bond 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 Bonds as securities depository ("Participants") or to any other person on behalf of which a Participant holds an interest in the Bonds, including but not limited to any: responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person (other than a registered owner of Bonds, as shown by the registration books kept by the Bond Registrar,) of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any Participant or any other person, other than a registered owner of Bonds, of any amount with respect to principal of, premium, if any, or interest on the Bonds. The Authority, the Bond Registrar and the Paying Agent may treat and consider the person _ in whose name each Bond is registered in the registration books kept by the Bond Registrar as the holder and absolute owner of such Bond for the purpose of payment of principal, premium and interest with respect to such Bond, for the purpose of registering transfers with respect to such Bonds, and for all other purposes. The Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to or on the order of the respective registered owners, as shown in the registration books kept by the Bond Registrar, and all such payments will be valid and effectual to fully satisfy and discharge the Authority's obligations with respect to payment of principal of, premium, if any, or interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner of Bonds, as shown in the registration books kept by the Bond Registrar, will receive a certificated Bond evidencing the obligation of this resolution. Upon delivery by DTC to the Authority 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.," will refer to such new nominee of DTC; and upon receipt of such a notice, the Authority will promptly deliver a copy of the same to the Bond Registrar and Paying Agent. 7.03. Representation Letter The form of Blanket Issuer Letter of Representations proposed to be submitted to DTC, which is on file with the Authority and presented to this meeting (the "Representation Letter"), is hereby approved, and the Executive Director is authorized to execute and deliver the Representation Letter in substantially the form on file, with such changes therein not inconsistent with law as the Executive Director may approve, 17 which approval will be conclusively evidenced by the execution thereof. Any Paying Agent or Bond Registrar subsequently appointed by the Authority with respect to the Bonds will agree to ; take all action necessary for all representations of the Authority in the Representation letter with respect to the Bond Registrar and Paying Agent, respectively, to be complied with at all times. 7.04. - Transfers Outside Book -Entry System. In the event the Authority, by resolution, determines that it is in the best interests of the persons having beneficial interests in the Bonds that they be able to obtain Bond certificates, the Authority will notify DTC, whereupon DTC will notify the Participants, of the availability through DTC of Bond certificates. In such event the Authority will issue, transfer and exchange Bond certificates as requested by DTC and any other registered owners in accordance with the provisions of this Resolution. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the Authority and discharging its responsibilities with respect thereto under applicable law. In such event, if no successor securities depository is appointed, the Authority will issue and the Bond Registrar will authenticate Bond certificates in accordance with this resolution and the provisions hereof will apply to the transfer, exchange and method of payment thereof. 7.05. Payments to Cede & Co. Notwithstanding any other provision of this Resolution to the contrary, so long as a 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 Bond and notices with respect to the Bond will be made and given, respectively in the manner provided in DTC's Operational Arrangements, as set forth in the Representation Letter. Section 8. Continuing Disclosure. 8.01. Participating underwriters need not comply with the continuing disclosure requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule"), because the offering is in a principal amount less than $1,000,000. Consequently, the Authority will not enter into any undertaking to provide continuing disclosure of any kind with respect to the Bonds. 18 The motion for the adoption of the foregoing resolution was duly seconded by Member , and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. 20 STATE OF MINNESOTA ) COUNTY OF WRIGHT ) `SS. CITY OF ALBERTVILLE ) 1, the undersigned, being the duly qualified and acting Executive Director of the Economic Development Authority for the City of Albertville, Minnesota, do hereby certify that I have carefully compared the attached and foregoing extract of minutes of a regular meeting of the Authority held on August 16, 2004 with the original minutes on file in my office and the extract is a full, true and correct copy of the minutes insofar as they relate to the issuance and sale of $2,355,000 Public Project Lease Revenue Bonds, Series 2004 of the Authority. WITNESS My hand officially as such Executive Director and the corporate seal of the Authority this day of , 2004. Executive Director (SEAL) 21 STATE OF MINNESOTA COUNTY AUDITOR'S CERTIFICATE AS TO COUNTY OF WRIGHT REGISTRATION I, the undersigned County Auditor of Wright County, Minnesota, hereby certify that a resolution adopted by the Economic Development Authority of the City of Albertville, Minnesota, on August 16, 2004, relating to Public Project Lease Revenue Bonds, Series 2004, in the amount of $2,355,000, dated September 1, 2004, has been filed in my office and said obligations have been registered on the register of obligations in my office. WITNESS My hand and official seal this day of , 2004. County Auditor Wright County, Minnesota (SEAL) By _.. .Deputy _. 22 ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ALBERTVILLE, MINNESOTA OFFICERS' CERTIFICATE We, the undersigned, hereby certify that we are, respectively, the duly qualified and acting Chair and Executive Director of the Economic Development Authority for the City of Albertville, Minnesota (the "Authority"), and that: 1. The Authority is a corporate body corporate and politic and political subdivision of the laws of the State of Minnesota, and has full power and authority to own and hold real and personal property and to lease and sell the same. 2. In our official capacity as such officers, we caused facsimiles of our signatures to be affixed to $2,355,000 Economic Development Authority for the City of Albertville, Minnesota Public Project Lease Revenue Bonds, Series 2004 (the "Bonds"), and we did sign our names to the Ground Lease dated as of , 2004 (the "Ground Lease") by and between City of Albertville, Minnesota (the "City") and the Authority and the Lease -Purchase Agreement dated as of , 2004 (the "Lease"), by and between the Authority and the City. 3. We are now, and were on the date of issuance of the Bonds and execution of the Lease and the Ground Lease the duly qualified and acting officers indicated therein and duly authorized to execute the same; and the Bonds, the Lease and the Ground Lease have been in all respects duly executed for delivery pursuant to authority conferred upon us as such officers. 4. The issuance of the Bonds and the execution and delivery of the Lease and the Ground Lease and the fulfillment of or compliance with the terms and conditions thereof, and the consummation of the transactions contemplated thereby, do not conflict with or result in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the Authority is now a party or by which the Authority is bound, and do not constitute a default under any of the foregoing, or result in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Authority. 5. There is no litigation, action, suit or proceeding pending or before any court, administrative a enc , arbitrator or governmental body, that g Y g y, 23 challenges the h ' g e authority of the .Authority or .its officers or its employees to issue the Bonds and to enter, into the Lease or the Ground Lease; the proper authorization, approval and execution of the Bonds, the Lease and the Ground Lease; or the ability of the Authority to otherwise perform its obligations under the Bonds, the Lease and the Ground Lease and the transactions contemplated thereby. 24 CITY OF ALBERTVILLE, MINNESOTA OFFICERS' CERTIFICATE We, the undersigned, hereby certify that we are, respectively, the duly qualified and acting Mayor and City Clerk of the City of Albertville, Minnesota (the "City'), and that: 1. The City is a statutory city and political subdivision of the State of Minnesota, and has full power and authority to own and hold real and personal property andlto lease and sell the same. 2. In our official capacity as such officers, in connection with the issuance by the Economic Development Authority for the City of Albertville, Minnesota (the "Authority") of its $2,355,000 Economic Development Authority for the City of Albertville, Minnesota Public Project Lease Revenue Bonds, Series 2004 (the "Bonds") we did sign our names to the Ground Lease dated as of 2004 (the "Ground Lease"), by and between the City and the Authority and the Lease -Purchase' Agreement dated as of , 2004 (the "Lease"), by and between the Authority and the City. 3. We are now, and were on the date of execution of the Lease and the Ground Lease, the duly qualified and acting officers indicated therein and duly authorize to execute the same; and the Lease and Ground Lease have been in all respects duly executed for delivery pursuant to authority conferred upon us as such officers. 4. The execution and delivery of the Lease and the Ground Lease, and the fulfillment of or compliance with the terms and conditions thereof, and the consummation of the transactions contemplated thereby, do not conflict with or result in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the City is now a party or by which the City is bound, and do not constitute a default under any of the foregoing, or result in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the City. 26 5. There is no litigation, action, suit or proceeding pending or before any court, administrative agency, arbitrator or governmental body, that challenges the authority of the City or its officers or its employees to enter into the Lease and the Ground Lease, the proper authorization, approval and execution of the Lease and the Ground Lease, or the ability of the City to otherwise perform its obligations under the Lease and the Ground Lease and the transactions contemplated thereby. 6.- The City intends to appropriate all Lease Payments under the Lease for the term of the Bonds. It has'reviewed the schedule of Lease Payments and finds the annual payments stated therein constitute fair consideration of the benefits to the City of the Leased Property in ' light of its value. ` The 'Leased Property constitµtes essential governmental property. 7. The City has deposited in the Project Fund, or has expended for Project Costs, or has on hand such amounts of money as are currently estimated to be needed to meet Project Costs for the Project in excess of the proceeds of the Bonds deposited in the Project Fund pursuant to the Indenture. 8. Attached as Exhibit A is a resolution of the City Council of the City dated August 16, 2004, granting final approval to the issuance of the Bonds and the transactions described herein. Said resolution has not been amended, rescinded or repealed and remains in full force and effect. 9. The undersigned have reviewed the No -Arbitrage Certificate and Internal Revenue Service Form 8038-Gprepared and executed by the Authority in connection with the issuance of the Bonds. To the best knowledge of the undersigned, the information included in the No -Arbitrage Certificate and Form 8038-G is accurate and complete. 10. The Official Statement for the Bonds dated , 2004, does not contain any misstatement of a material fact and does not fail to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 27 28 NO -ARBITRAGE CERTIFICATE We, the undersigned, hereby certify pursuant to Section 148 of the Internal Revenue Code of.1986, as amended, and the regulations promulgated thereunder, the facts, estimates, and expectations of the Economic Development Authority for the City of Albertville, Minnesota (the "Authority") on the date of this certificate as to future events regarding the $293559000 Public Project Lease Revenue Bonds, Series 2004 (the "Bonds") as set forth below. To the best of our knowledge such facts, estimates and expectations are reasonable. The Authority has not been notified of any listing or proposed listing of the Authority in the Internal Revenue Bulletin by the Commissioner of the Internal Revenue Service of the Department of the Treasury of the government of the United States of America as an issuer that may not certify as to its reasonable expectations on the date of issue of its bonds as to future events. a. Purpose The Bonds are being issued for the purpose of providing funds to pay or reimburse for the payment of costs of a project (the "Project') consisting of the construction and equipping of a public works facility (the "Leased Property'). The Leased Property will be leased from the Authority to the City of Albertville, Minnesota (the "City") pursuant to a Lease -Purchase Agreement dated as of , 2004 (the "Lease"), by and between the Authority and the City. b. Yield (i) The Bonds are dated September 1, 2004, and are issued as fully registered Bonds without coupons, in denominations of $5,000 or any authorized integral multiple thereof. The Bonds mature on the dates and bear interest at the rates set forth in the Resolution of the Authority dated August 16, 2004. 29 (ii) The prices at which a substantial amount of the Bonds of each maturity will be purchased by the first buyer of the obligation, not including any bond house, broker, or other intermediary, is par plus accrued interest. (iv) The yield on the Bonds is %: For this purpose, "yield" means that yield which, when used in computing the present value of all payments of principal and interest to be paid on the Bonds, produces an amount equal to the purchase price. The yield on the Lease is not materially higher than the yield on the Bonds. C. Proceeds and Uses. Deposit to Project Construction Fund $2,284,230.00 Underwriter's Discount (2.10%) 49,455.00 Costs of Issuance 19,500.00 Rounding Amount 1,815.00 Total Bond Issue $2,355,000.00 d. Governmental Purpose; No Over -Issuance. The stated purpose of the 'Bonds is a governmental purpose within the meaning of applicable law and regulations. Proceeds of the Bonds in an amount equal to the face amount of the Bonds (less the amount of the discount and other issuance expenses), together with estimated investment earnings thereon, will not exceed the -estimated dollar cost of the Project less all other funds to be expended for paying such costs. e. Funds. The Bonds are payable from the funds created by the Resolution, such funds being the Construction Account and the Debt Service Fund. Operation of each of these funds is described herein. f. Construction Account. Other than proceeds deposited in the Debt Service Fund as accrued interest, proceeds of the Bonds will be deposited in the Construction Account. The costs of the construction, acquisition and installation of the Project will be paid from the Construction Account. Earnings on the Construction Account (other than any amounts required to be rebated to the United States) will be deposited in the Construction Account and used to pay costs of the Project. In connection with the operation of the Construction Account; (i) Time Test. Binding contracts or commitments for acquisition of the Project obligating the expenditure of not less than $100,000 have heretofore been 30 (ii) Due Diligence Test. The acquisition of the Project will proceed with due diligence to completion, and the Project is estimated to be completed by , 20 (iii) Expenditure Test. Any contract or commitment for the acquisition and installation of the Project heretofore or hereafter executed has provided or will provide for the acquisition and installation of the Project in less than three (3) years from the date hereof; and proceeds of the Bonds in an amount equal to at least eighty-five percent (85%) of the face amount of the Bonds will be spent in paying the cost of the construction of the Project within three (3) years from the date hereof. (iv) Transfer. Any moneys remaining in the Construction Account after completion of the Project and payment of the costs of issuing the Bonds will be transferred to the Debt Service Fund. (v) Investments. Amounts in the Construction Account shall be invested ' without regard to yield restriction, provided that if and to the extent moneys remain therein after three (3) years from the date hereof and are, together with those moneys in the Debt Service Fund and Reserve Fund which are not entitled to a temporary period and which are in excess of the minor portion ($100,000), such moneys shall be invested at a yield not materially higher than the yield on the Bonds. g. The Debt Service Fund. (i) Principal of and interest on the Bonds will be derived from rental payments made pursuant to the Lease. Pursuant to the Lease, the City will make semi-annual payments of rent on or prior to each February 1 and August 1 that the Bonds are outstanding in an amount equal to debt service due on the Bonds on the corresponding February l or August l interest payment date. Amounts in the Debt Service Fund will be credited against such rental payments otherwise due. (ii) All payments made by the City under the Lease will be made to the Trustee, on account of the Authority. All such payments will be credited to the Debt Service Fund. (iii) The following revenues are pledged to and will be deposited in the Debt Service Fund upon receipt: (a) accrued interest on the Bonds; and (b) Lease Payments made by the City pursuant to the Lease. (iv) Amounts in the Debt Service Fund will be applied to debt service on the Bonds within twelve months after the date of deposit. 31 (v) Investment earnings on amounts in the Debt Service Fund will be credited to the Debt Service Fund. (vi) The Debt Service Fund will be depleted annually except for a reasonable carryover amount not exceeding one year's earnings on the Debt Service Fund or one -twelfth of annual debt service. (vii) The amounts held in the Debt Service Fund will be invested without limitation as to yield. h. Restricting Yield; Valuing Investments. For purposes of determining the amount of moneys at any time allocated to the Bonds, investments and accrued but unpaid interest thereon shall be deemed a part thereof. For purposes of determining whether moneys must be invested at a restricted yield to comply with the Regulations, the City reasonably expects to continue to value investments allocated to the Bonds at their par value or the price at which they were purchased, whichever is greater. If the City determines later to value investments allocated to the Bonds on a fair market value basis for purposes of determining whether moneys may only be invested at a restricted yield, it shall in doing so apply the principles of Revenue Procedure 85-38 promulgated by the Internal Revenue Service; after switching to such valuation basis, the City shall apply such fair market value basis consistently thereafter and shall make such valuation at least annually. In lieu of restricting yield, moneys may be invested in tax-exempt bonds, and such investments may bear a yield materially higher than the yield on the Bonds. i. Rebate, Yield. The City shall pay to the United States rebates of excess investment earnings in amounts at least equal to the amounts, and at times no later than the times, required by Section 148(f) of the Code and any Regulations promulgated pursuant thereto. On the date hereof, the yield of the Bonds has been calculated to be as set forth in paragraph (b)(iv) hereof; this yield on the Bonds will be recalculated if and as required by the Code or the Regulations. In applying the rebate requirement the City intends not to take into account any amount earned on the Debt Service Fund, which will constitute a bona fide debt service fund following expenditure of the initial deposits thereto (as described in paragraph h), if the gross earnings on such fund for the bond year (being years ending on the anniversary of the date hereof) are less than $100,000. The City expects that the Debt Service Fund will in fact function as a bona fide debt service fund and will generate aggregate earnings which are less than $100,000 in each bond year. The City will purchase investments at fair market value and will avoid "prohibited payments" with respect to the investments. When required by the Code and Regulations, the City shall make determinations of 32 the yield on the Bonds and the yield on investments and shall maintain records thereof until six (6) years after the retirement of the last of the Bonds. If Regulations permit the City to comply with the rebate requirement in a different manner, the City may do so. j. Intentional Acts. The City shall not intentionally use any portion of the proceeds of the Bonds directly or indirectly to acquire higher yielding investments or to replace funds which were used directly or indirectly to acquire higher yielding investments except to the extent such investments would not have caused the Bonds to be arbitrage bonds if reasonably expected on the date hereof. k. No Other Facts. To the best of the knowledge and belief of the undersigned, there are no other facts, estimates or circumstances which would materially change the foregoing facts and conclusions. 1. Basis for Expectations. The facts and estimates on which the foregoing expectations are based are (a) the documents entered into in connection with the issuance of the Bonds, (b) all reports, recommendations and certificates of the City's consultants relating to the financing of the Project and the scheduling of payments of debt service on the Bonds, (c) all contracts, if any, heretofore executed for the acquisition of the Project, (d) all expenditures which were heretoforemadeby the City for the acquisition of the Project and which are to be reimbursed out of the proceeds of the Bonds, and (e) such other facts and estimates, if any, as may be set forth in exhibits attached hereto, which exhibits are hereby incorporated herein by reference and made a part hereof. m. Familiarity; Conclusion. We are generally familiar with the requirements of the federal arbitrage regulations, and nothing has been called to our attention to cause us to believe; that the proceeds of the Bonds will be used in a manner which would cause the Bonds to be arbitrage bonds within the meaning of Section 148 of the Code. • 33 CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the City of Albertville, Minnesota (the "City") in connection with the issuance by the Economic Development Authority for the City of Albertville, Minnesota (the "Authority") of $2,355,000 Public Project Revenue Bonds (the "Securities"). The Securities are being issued pursuant to a Bond Resolution adopted by the Authority on August 16, 2004 (the "Bond Resolution") and a Resolution adopted by the City Council of the City on , 2004 (the "City Resolution") and are being delivered to the Purchaser(s) on the date hereof. Pursuant to the City Resolution, the City has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events. In addition, the City hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Holders of the Securities in order to assist the Participating Underwriters within the meaning of the Rule (defined herein) in complying with SEC Rule 15c2-12(b)(5). This Disclosure Certificate, together with the Resolutions, constitutes the written Undertaking required by the Rule. Section 2. Definitions. In addition to the defined terms set forth in the Resolutions, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" means any annual report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Audited Financial Statements" means the City's annual financial statements, prepared in accordance with generally accepted accounting principles ("GAAP") for Governmental Units as Prescribed by the Governmental Accounting Standards Board ("GASB"). "Authority" means the Economic Development Authority for the City of Albertville, Minnesota. "City" means the City of Albertville, Minnesota which is the obligated person with respect to the Securities. "Fiscal Year" means the fiscal year of the City. "Final Official Statement" means the deemed final official statement dated , 2004, plus the addendum thereto, which together constitute the final official statement delivered in connection with the Securities, which is available from the MSRB. 35 "Holder" means the person in whose name a Security is registered or a beneficial owner of a Security. "Material Event" means any of the events listed in Section 5(a) of this Disclosure Certificate. "MSRB" means the Municipal Securities Rulemaking Board located at 1900 Duke Street, Suite 600, Alexandria, VA 22314. ' NRMSIR" means any nationally recognized municipal securities information repository as recognized from time to time by the SEC for purposes of the Rule. "Participating Underwriter" means any of the original underwriter(s) of the Securities (including the Purchaser(s)) required to comply with the Rule in connection with the offering of the Securities. "Repository" means each NRMSIR and each SID, if any. "Resolutions" means the Bond Resolution and the City Resolution described in the recitals hereto. "Rule" means SEC Rule 15c2-12(b)(5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and including written interpretations thereof by the SEC. "SEC" means Securities and Exchange Commission. "SID" means any public or private repository or entity designated by the State of Minnesota as a state information depository for the purpose of the Ruler As of the date of this Certificate, there is no SID. Section 3. ' Provision of Annual Financial Information and Audited Financial Statements. (a) The City shall, as soon as available, but not later than 12 months after the end of the Fiscal Year commencing with the year that ends December 31, 20_, provide each Repository with an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may .be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the Audited Financial Statements of the City may be submitted separately from the balance of the Annual Report and will be submitted as soon as available. 36 (b) If the City is unable or fails to provide to the Repositories an Annual; Report by the date required in subsection (a), the City shall send a notice of that fact to the NRMSIRs, the MSRB and SID. (c) The City shall determine each year prior to the date for providing the Annual Report the name and address of each NRMSIR and the SID, if any. Section 4. Content of Annual Reports. The City's Annual Report shall contain or incorporate by reference the following sections of the Final Official Statement: 1. City Property Values. 2 City Indebtedness. 3. City Tax Rates, Levies and Collections. In addition to the items listed above, the Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Disclosure Certificate. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the City or related public entities, which have been submitted to each of the Repositories or the SEC. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The City shall clearly identify each such other document so incorporated by reference. Section 5. Reporting of Material Events. (a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events if material with respect to the Securities: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the security; 7. Modifications to rights of security holders; 37 8. Securities calls; 9. Defeasances; 10. Release, substitution or sale of property securing repayment of the securities; and 11. Rating changes. (b) Whenever the City obtains knowledge of the occurrence of a Material Event, the City shall promptly file a notice of such occurrence with either all NRMSIRs or with the MSRB and with any SID. Notwithstanding the foregoing, notice of Material Events described in subsections (a)(8) and (9) need not given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Securities pursuant to the Resolutions: (c) Unless otherwise required by law and subject to technical and economic feasibility, the City shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the City's information. Section 6. Termination of R o in Obligation. The Ci 's obligations under the � rt �—� t3' g Resolutions and this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all the Securities. Section 7. Agent. The City may, from time to time, appoint or engage a dissemination agentto assist it in carrying out its obligations under the Resolutions and this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent. Section 8. Amendment; Waiver. Notwithstanding any other provision of the Resolutions or this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause the undertakings to violate the Rule. The provisions of the Resolutions constituting the Undertaking and this Disclosure Certificate, or any provision hereof, shall be null and void in the event that the City delivers to each then existing NRMSIR and the SID, if any, an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require the Resolutions and this Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Securities. The provisions of the Resolutions constituting the Undertaking and this Disclosure Certificate may be amended without the consent of the Holders of the Securities, but only upon the delivery by the City to each then existing NRMSIR and the SID, if any, of the proposed amendment and an opinion of nationally recognized bond counsel to the effect 38 that such amendment, and giving effect thereto, will not adversely affect the compliance of the Resolutions and this Disclosure Certificate and by the City with the Rule. Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event: Section 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate any Holder of the Securities may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under the Resolutions and this Disclosure .Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to'ihe Securities and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance. Section 11. Beneficiaries. This Disclosure. Certificate shall muse. solely to the benefit of the City, the Participating Underwriters and Holders from time to time of the Securities, and shall create no rights in any other person or entity. IN WITNESS WHEREOF, we have executed this Certificate in our official capacities effective the day of , 2004. CITY OF ALBERTVILLE, MINNESOTA By Mayor By City Clerk 39 CERTIFICATE OF REGISTRAR $2,355,000 ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ALBERTVILLE, MINNESOTA PUBLIC PROJECT LEASE REVENUE BONDS, SERIES 2004 Dated: September 1, 2004 The undersigned duly authorized officer of Northland Trust Services, Inc., acting in its capacity as Bond Registrar for the Economic Development. Authority for the City of Albertville, Minnesota, in connection with the above Bonds, hereby certifies that the Certificate of Authentication on each of the Bonds, numbered No.-R-1 upwards, has been manually executed by one of the authorized representatives of the Registrar as listed in the attached list of authorized signatures of the Registrar. NORTHLAND TRUST SERVICES, INC. By Its CERTIFICATE OF PURCHASER I, the undersigned, being duly authorized to execute this certificate on behalf Northland Securities, Inc., (the "Purchaser"), as its authorized representative, DO HEREBY CERTIFY, as follows: 1. The Purchaser has purchased $2,355,000 Public 'Project Lease Revenue Bonds, Series 2004(the "Bonds") issued by the Economic Development Authority of the City of Albertville, Minnesota. 3. The initial offering price of each maturity of the Bonds to the public (not including bond houses and brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers), at which price a substantial amount of the Bonds of each maturity (i.e., at least 10%) have been or will be sold, is par plus accrued interest. 4. The weighted average maturity of the Bonds is years, the net interest cost of the Bonds is %, and the yield on the Bonds is calculated to be 5. I hereby acknowledge receipt of the Bonds, which were delivered to The Depository Trust Company in New York, New York, on behalf of the Purchaser. Dated this day of , 2004. NORTHLAND SECURITIES, INC. By Its Authorized Representative 41 • 470 Pillsbury Center 200 South Sixth Street Minneapolis MN 55402 (612) 337-9300 telephone - (612) 337-9310 fax http://www.keppLdy-gLaven.com CHARTERED $2,355,000 Economic Development Authority for the City of Albertville, Minnesota Public Project Lease Revenue Bonds, Series 2004 We have acted as bond counsel in connection with the issuance by the Economic Development Authority for the City of Albertville, Minnesota .(the "Authority"), of its Public Project Revenue Bonds, Series 2004, originally dated September 1, 2004 (the "Bonds"), in the total principal amount of $2,355,000. The Bonds are being issued pursuant to a Bond Resolution adopted by the Authority on August 16, 2004 (the "Bond Resolution'). Proceeds of the Bonds will be used to construct certain Facilities on a Site leased by the Authority from the City of Albertville, Minnesota (the "City') pursuant to a Ground Lease dated as of 20 (the "Ground Lease"). Pursuant to a Lease - Purchase Agreement dated as of , 20 (the "Lease"), the Authority has leased the Site and the Facilities to the City. For the purpose of rendering this opinion we have examined certified copies of certain proceedings taken by the Authority and the City in the authorization, sale and issuance of the Bonds, including the Bond Resolution, the Ground Lease, the Lease and the form of the Bonds, and certain other proceedings and documents furnished by the Authority and the City. From our examination of such proceedings and other documents, assuming the genuineness of the signatures thereon and the accuracy of the facts stated therein and continuing compliance by the Authority and the City with the covenants in the Bond Resolution and the Lease to comply with the Internal Revenue Code of 1986, as amended, and based upon laws, regulations, rulings and decisions in effect on the date hereof, it is our opinion, as of the date hereof that: 1. The Bonds are in due form, have been duly executed and delivered, and are valid and binding limited obligations of the Authority, enforceable in accordance with their terms, except as such enforcement may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights, 42 2. The Ground Lease and the Lease have been duly executed and delivered by the parties thereto, and are valid and binding obligations of such parties, enforceable in accordance with their terms, except as such enforcement may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights. 3. The Bonds are not a general obligation of the Authority, and no Owner of a Bond shall ever have the power to compel the exercise of any taxing power of the Authority for the payment of the Bonds. The principal of and interest on the Bonds are payable solely from Lease Payments to be made by the City under the Lease and amounts, if any, received by the Authority from re -leasing the Site and the Facilities following an Event of Default under the Lease or termination of the Lease upon non - appropriation by the City. The Lease Payments payable under the Lease are payable solely from moneys to be appropriated by the City Council of the City for this purpose each year in the City's annual budget, but the City Council is not required to appropriate or provide moneys for this purpose. If moneys are not appropriated by the City Council for any year, the Lease will be terminated at the end of the preceding year, and the City is not required to pay Lease Payments coming due after such termination. Neither the Lease nor the City's obligation to pay Lease Payments thereunder, nor the Bonds,_ are a general obligation or indebtedness of the City, and the full faith and credit of the City is not pledged for their payment. 4. Interest on the Bonds is not includable in gross income of the recipient for federal income tax purposes or in taxable net income for Minnesota income tax purposes, and is not a preference item for purposes of the computation of the federal alternative minimum tax, or the computation of the Minnesota alternative minimum tax imposedon individuals, trust and estates, but such interest is includable in the computation of "adjusted current' earnings," used in the calculation of federal alternative minimum taxable income of corporations, and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income and the alternative minimum tax base. We express no opinion regarding other federal or state tax consequences arising with respect to the Bonds. The Bonds are not arbitrage bonds and are not private activity bonds. We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. Dated at Minneapolis, Minnesota, 52004. 43