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HomeMy WebLinkAboutHousing & Redevelopment Authority Packet 03-13-2012AGENDA SPECIAL MEETING PLYMOUTH HOUSING AND REDEVELOPMENT AUTHORITY TUESDAY, MARCH 13, 2012 - 6:30 p.m. WHERE: Council Chambers City of Plymouth 3400 Plymouth Boulevard Plymouth, MN 55447 1. CALL TO ORDER - 6:30 P.M. 2. NEW BUSINESS A. Plymouth Housing and Redevelopment Authority. Adopt Post - Issuance Debt Compliance Policy and Procedures. B. Vicksburg Crossing. Award the Sale of General Obligation Refunding Bonds 3. ADJOURNMENT Agenda Number ;I• 4 • PLYMOUTH HOUSING AND REDEVELOPMENT AUTHORITY STAFF REPORT TO: Plymouth Housing and Redevelopment Authority FROM: Jim Barnes, Housing Manager through Steve Juetten, Executive Director MEETING DATE: March 13, 2012 SUBJECT: Plymouth Housing and Redevelopment Authority — Post -Issuance Debt Compliance Policy and Procedures BACKGROUND: The City's financial advisor, Ehlers & Associates Inc., has recommended that the Plymouth Housing and Redevelopment Authority (HRA) and the City each adopt Post -Issuance Debt Compliance Policies and Procedures. Both the City and HRA have been following the policy and procedures in the past, however we have never adopted them formally. RECOMMENDATION: I recommend that the Plymouth Housing and Redevelopment Authority Board of Commissioners adopt the attached Post -Issuance Debt Compliance Policy and Procedures. ATTACHMENTS: 1. Post -Issuance Debt Compliance Policy 2. Post -Issuance Debt Compliance Procedures Housing and Redevelopment Authority in and for the City of Plymouth, Minnesota Post -Issuance Debt Compliance Policy The Board of Commissioners (the "Board") of the Housing and Redevelopment Authority in and for the City of Plymouth, Minnesota (the "HRA") has chosen, by policy, to take steps to help ensure that all obligations will be in compliance with all applicable federal regulations. This policy may be amended, as necessary, in the future. Background The Internal Revenue Service (IRS) is responsible for enforcing compliance with the Internal Revenue Code (the "Code") and regulations promulgated thereunder ("Treasury Regulations") governing certain obligations (for example: tax-exempt obligations, Build America Bonds, Recovery Zone Development Bonds and various "Tax Credit" Bonds). The IRS expects issuers and beneficiaries of these obligations to adopt and implement a post -issuance debt compliance policy and procedures to safeguard against post -issuance violations. Post -Issuance Debt Compliance Policy Objective The HRA desires to monitor these obligations to ensure compliance with the Code and Treasury Regulations. To help ensure compliance, the HRA has developed the following policy (the "Post -Issuance Debt Compliance Policy"), The Post -Issuance Debt Compliance Policy shall apply to the obligations mentioned above, including bonds, notes, loans, lease purchase contracts, lines of credit, commercial paper or any other form of debt that is subject to compliance. Post -Issuance Debt Compliance Policy The Finance Manager of the City is designated as the HRA's agent who is responsible for post -issuance compliance of these obligations. The Finance Manager shall assemble all relevant documentation, records and activities required to ensure post -issuance debt compliance as further detailed in corresponding procedures (the "Post -Issuance Debt Compliance Procedures"). At a minimum, the Post - Issuance Debt Compliance Procedures for each qualifying obligation will address the following: 1. General post -issuance compliance; 2. Proper and timely use of obligation proceeds and obligation -financed property; 3. Arbitrage yield restriction and rebate; 4. Timely filings and other general requirements; 5. Additional undertakings or activities that support points 1 through 4 above; 6. Other requirements that become necessary in the future. The Finance Manager shall apply the Post -Issuance Debt Compliance Procedures to each qualifying obligation and maintain a record of the results. Further, the Finance Manager will ensure that the Post -Issuance Debt Compliance Policy and Procedures are updated on a regular and as needed basis. The Finance Manager or any other individuals responsible for assisting the Finance Manager in maintaining records needed to ensure post -issuance debt compliance, are authorized to expend funds as needed to attend training or secure use of other educational resources for ensuring compliance such as consulting, publications, and compliance assistance. Most of the provisions of this Post -Issuance Debt Compliance Policy are not applicable to taxable governmental obligations unless there is a reasonable possibility that the HRA may refund their taxable governmental obligation, in whole or in part, with the proceeds of a tax-exempt governmental obligation. If this refunding possibility exists, then the Finance Manager shall treat the taxable governmental obligation as if such issue were an issue of tax-exempt governmental obligations and comply with the requirements of this Post - Issuance Debt Compliance Policy. The HRA may issue tax-exempt obligations as "qualified 501(c)(3) bonds" that are not governmental obligations or conduit bonds where the proceeds are loaned to a qualifying party. Prior to the issuance of qualified 501(c)(3) bonds, the Finance Manager shall take steps necessary to ensure that such obligations will remain in compliance with the requirements of this Post -Issuance Debt Compliance Policy. In a case where compliance activities are reasonably within the control of a qualifying party, the Finance Manager may determine that all or some portion of compliance responsibilities described in this Post - Issuance Debt Compliance Policy shall be assigned to the relevant qualifying party. In a case where the Finance Manager is concerned about the compliance ability of a qualifying party, the Finance Manager may require that a Trustee be retained for the obligation and that the Trustee be responsible for all or some portion of the compliance responsibilities. The Finance Manager is additionally authorized to seek the advice, as necessary, of bond counsel and/or its financial advisor to ensure the HRA is in compliance with this Post - Issuance Debt Compliance Policy. Adopted this 13th day of March, 2012 by the Board of Commissioners of the housing and Redevelopment Authority in and for the City of Plymouth, Minnesota Housing and Redevelopment Authority in and for the City of Plymouth, Minnesota Post -Issuance Debt Compliance Procedures The Board of Commissioners (the "Board") of the Housing and Redevelopment Authority in and for the City of Plymouth, Minnesota (the "HRA") has adopted the attached Post - Issuance Debt Compliance Policy dated March 13, 2012. The Post -Issuance Debt Compliance Policy applies to qualifying debt obligations issued by the HRA, As directed by the adoption of the Post -Issuance Debt Compliance Policy, the Finance Manager will perform the following Post -Issuance Debt Compliance Procedures for all of the HRA's outstanding debt. 1. General Post -Issuance Compliance a. Ensure written procedures and/or guidelines have been put in place for individuals to follow when more than one person is responsible for ensuring compliance with Post -Issuance Debt Compliance Procedures. b. Ensure training and/or educational resources for post -issuance compliance have been approved and obtained. c. The Finance Manager of the City understands that that there are options for voluntarily correcting failures to comply with post -issuance compliance requirements (such as remedial actions under Section 1.111-12 of the Treasury Regulations and the ability to enter into a closing agreement under the Tax -Exempt Bonds Voluntary Closing Agreement Program described in Notice 2008-31). 2. General Recordkeeping a. Retain records and documents for the obligation for a period of at least seven years following the final payment or the date in which the obligation is redeemed unless otherwise directed by Bond Counsel. b. Retain both paper and electronic versions of records and documents for the obligation. c. General records and documentation to be assembled and retained i. Description of the purpose of the obligation (referred to as the project) and the state statute authorizing the project. ii. Record of tax-exempt status or revocation of tax-exempt status, if applicable. iii. Any correspondence between the HRA and the IRS. iv. Audited financial statements, v. Bond transcripts, official statements and other offering documents of the obligation. vi. Minutes and resolutions authorizing the issuance of the obligation. vii. Certifications of the issue price of the obligation, viii, Any formal elections for the obligation (Le. election to employ an accounting methodology other than the specific tracing method), ix. Appraisals, demand surveys, or feasibility studies for property financed by the obligation. x. Documents related to governmental grants, associated with construction, renovation or purchase of property financed with the obligation, xi. Reports of any prior IRS examinations of the HRA or the HRA's obligation. Arbitrage Yield Restriction and Rebate Recordkeeping a. Investment and arbitrage documentation to be assembled and retained L An accounting of all deposits, expenditures, interest income and asset balances associated with each fund established in connection with the obligation, This includes an accounting of all monies deposited to the Debt Service Account to make debt service payments on the obligation, regardless of the source derived. Accounting for expenditures and assets is described in further detail in Section 4. ii. Statements prepared by Trustee or Investment Provider. iii. Documentation of at least quarterly allocations of investments and investment earnings to each obligation (i.e, uncommingling analysis), iv, Documentation for investments made with obligation proceeds such as: L Investment contracts (i.e, guaranteed investment contracts), 2. Credit enhancement transactions (i,e, bond insurance contracts), 3. Financial derivatives (swaps, caps, etc), 4. Bidding of financial products. Investments acquired with obligation proceeds are purchased at fair market value (i.e. three bids for open market securities needed in advance refunding escrows), b. Computations of the arbitrage yield, c, Computations of yield restriction and rebate amounts including but not limited to: i. Compliance in meeting the "Temporary Period from Yield Restriction Exception" and limiting the investment of funds after the temporary period expires. ii. Compliance in meeting the "Rebate Exception". 1. Qualifying for the "Small Issuer Exception" 2, Qualifying for a "Spending Exception" 6 Month Spending Exception 18 Month Spending Exception 24 Month Spending Exception 3. Qualifying for the "Bona Fide Debt Service Fund Exception" 4, Quantifying arbitrage on all funds established in connection with the obligation in lieu of satisfying arbitrage exceptions (including Reserve Funds and Debt Service Funds) d. Computations of yield restriction and rebate payments. e. Timely Tax Form 8038-T filing, if applicable. i. Remit any arbitrage Iiability associated with the obligation to the IRS at each five year anniversary date of the obligation, and the date in which the obligation is no longer outstanding (redemption or maturity date), whichever comes sooner, within 60 days of said date. f. Timely Tax Form 8038-R filing, if applicable. g. Procedures or guidelines for monitoring instances where compliance with applicable yield restriction requirements depends on subsequent reinvestment of obligation proceeds in lower yielding investments (for example: reinvestment in zero coupon SLGS), 4. Expenditure and Asset Documentation to be Assembled and Retained a. Documentation of allocations of obligation proceeds to expenditures (i.e. allocation of proceeds to expenditures for the construction, renovation or purchase of facilities owned and used in the performance of exempt purposes). i. Such allocation will be done not later than the earlier of: eighteen (18) months after the later of the date the expenditure is paid, or the date the project, if any, that is financed by the tax-exempt bond issue is placed in service; or the date sixty (60) days after the earlier of the fifth anniversary of the issue date of the tax-exempt bond issue, or the date sixty (60) days after the retirement of the tax-exempt bond issue. b. Documentation of allocations of obligation proceeds to issuance costs. c. Copies of requisitions, draw schedules, draw requests, invoices, bills and cancelled cheeks related to obligation proceed expenditures during the construction period. d. Copies of all contracts entered into for the construction, renovation or purchase of facilities financed with obligation proceeds. c. Records of expenditure reimbursements incurred prior to issuing bonds for facilities financed with obligation proceeds (Declaration of Official Intent/Reimbursement Resolutions including all modifications). f. List of all facilities and equipment financed with obligation proceeds. g. Depreciation schedules for depreciable property financed with obligation proceeds. h. Documentation that tracks the purchase and sale of assets financed with obligation proceeds. i. Documentation of timely payment of principal and interest payments on the obligation. j. Tracking of all issue proceeds and the transfer of proceeds into the debt service fund as appropriate. k. Documentation that excess earnings from a Reserve Fund is transferred to the Debt Service Fund on an annual basis. Excess earnings are balances in a Reserve Fund that exceed the Reserve Fund requirement. 5. Miscellaneous Documentation to be Assembled and Retained a. Ensure that the project, while the obligation is outstanding, will avoid IRS private activity concerns. i. The Finance Manager shall monitor the use of all obligation -financed facilities in order to: determine whether private business uses of obligation -financed facilities have exceeded the de minimus limits set forth in Section 141(b) of the Code as a result of sale of facilities (including sale of capacity rights, leases and subleases of facilities (including easements or use arrangements for areas outside the four walls, e.g., hosting of cell phone towers), leasehold improvement contracts, licenses, management contracts (in which the HRA authorizes a third party to operate a facility, e.g. cafeteria), research contracts, preference arrangements (in which the HRA permits a third party preference, such as parking in a public parking lot), joint ventures, limited liability companies or partnership arrangements, output contracts or other contracts for use of utility facilities (including contracts with large utility users), development agreements which provide for guaranteed payments or property values from a developer, grants or loans made to private entities (including special assessment agreements), naming rights agreements, or other arrangements that provide special legal entitlements to nongovernmental persons; and determine whether private security or payments that exceed the de minimus limits set forth in Section 141(b) of the Code have been provided by nongovernmental persons with respect to such obligation - financed facilities. ii. The Finance Manager shall provide training and educational resources to any HRA staff that have the primary responsibility for the operation, maintenance, or inspection of obligation -financed facilities with regard to the limitations on the private business use of obligation -financed facilities and as to the limitations on the private security or payments with respect to obligation -financed facilities. b. The Finance Manager shall undertake the following with respect to the obligations: an annual review of the books and records maintained by the HRA with respect to such obligations; and ii. an annual physical inspection of the facilities financed with the proceeds of such obligations, conducted by the Finance Manager with the assistance of any HRA staff who have the primary responsibility for the operation, maintenance, or inspection of such obligation -financed facilities. c. Changes in the project that impact the terms or commitments of the obligation are properly documented and necessary certificates or opinions are on file. 6. Additional Undertakings and Activities that Support Sections 1 through 5 above: a. The Finance Manager will notify the HRA's bond counsel, financial advisor and arbitrage provider of any survey or inquiry by the IRS immediately upon receipt (Usually responses to IRS inquiries are due within 21 days of receipt. Such IRS responses require the review of the above mentioned data and must be in writing. As much time as possible is helpful in preparing the response). b. The Finance Manager will consult with the HRA's bond counsel, financial advisor and arbitrage provider before engaging in post -issuance credit enhancement transactions (i.e. bond insurance, letter of credit, or hedging transactions (i.e. interest rate swap, cap). C. The Finance Manager will monitor all "qualified tax-exempt debt obligations" within the first calendar year to determine if the limit is exceeded, and if exceeded, will address accordingly. For tax-exempt debt obligations issued during years 2009 and 2010, the limit is $30,000,000 The limit was $10,000,000 prior to 2009. In 2011 and thereafter it will remain at $10,000,000 unless changed by Congress). During this period, the limit also applies to pooled financings of the governing body and provides a separate $30,000,000 for each 501 (c)(3) conduit borrower. d. Comply with Continuing Disclosure Requirements. i. If applicable, the timely filing of annual information agreed to in the Continuing Disclosure Certificate. ii. Give notice of any Material Event. e. Identify any post -issuance change to terms of bonds which could be treated as a current refunding of "old" bonds by "new" bonds, often referred to as a reissuance". f. Confirm whether any "remedial action" in connection with a "change of use" must be treated as a "reissuance". g. The Finance Manager will ensure that the appropriate tax form for federal subsidy payments is prepared and filed in a timely fashion for applicable obligations (i.e. Build America Bonds). 7. Compliance with Future Requirements a. Take measures to comply with any future requirements issued beyond the date of these Post -Issuance Debt Compliance Procedures which are essential to ensuring compliance with the applicable state and federal regulations, Agenda Number ;1 0 2)r PLYMOUTH HOUSING AND REDEVELOPMENT AUTHORITY STAFF REPORT TO: Plymouth Housing and Redevelopment Authority FROM: Jim Barnes, Housing Manager through Steve Juetten, Executive Director MEETING DATE: March 13, 2012 SUBJECT: Vicksburg Crossing — Award Sale of G.O. Refunding Bonds BACKGROUND: The City's financial advisor, Ehlers & Associates Inc., periodically provides updates on potential refunding opportunities. It was determined that with historically low interest rates, savings would result by selling refunding bonds and paying off the existing bond issue. On January 26, 2012, the HRA authorized Ehler's & Associates Inc, to move forward with the solicitation of bids and adopted a resolution calling for the sale of $9,935,000 General Obligation IIousing Refunding Bonds. While the market has moved since this date it is still anticipated that the annual savings will be between $50,000 and $75,000. Bid opening will occur at 10;00 a.m. on March 13, 2012. The award of the bids is scheduled to occur at a special HRA meeting that evening. Moody's Investor Services and Standard and Poors has rated the bonds and reaffirmed our Aaa & AAA rating respectively. Actual bid data will be brought to the meeting on March 13 along with the final adopting resolution. RECOMMENDATION: I recommend that the PIymouth Housing and Redevelopment Authority Board of Commissioners adopt the resolution awarding the sale of $9,935,000 General Obligation Housing Refunding Bonds for Vicksburg Crossing. ATTACHMENTS: Draft Resolution CERTIFICATION OF MINUTES RELATING TO GOVERNMENTAL HOUSING PROJECT REFUNDING BONDS CITY OF PLYMOUTH, MINNESOTA, GENERAL OBLIGATION), SERIES 2012A Issuer: Housing and Redevelopment Authority in and for the City of Plymouth, Minnesota Governing Body: Board of Commissioners Kind, date, time and place of meeting: A regular meeting held on March 13, 2012, at 6:30 o'clock p.m. at Council Chambers of Plymouth City Hall, Members present: Members absent: Documents Attached: Minutes of said meeting (pages): RESOLUTION NO. RESOLUTION RELATING TO THE ISSUANCE OF GOVERNMENTAL HOUSING PROJECT REFUNDING BONDS (CITY OF PLYMOUTH, MINNESOTA, GENERAL OBLIGATION), SERIES 2012A, BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF PLYMOUTH, MINNESOTA; AUTHORIZING THE ISSUANCE AND AWARDING TIIE SALE OF BONDS AND APPROVING THE EXECUTION OF DOCUMENTS IN CONNECTION THEREWITH I, the undersigned, being the duly qualified and acting recording officer of the public corporation issuing the bonds referred to in the title of this certificate, certify that the documents attached hereto, as described above, have been carefully compared with the original records of said corporation in my legal custody, from which they have been transcribed; that said documents are a correct and complete transcript of the minutes of a meeting of the governing body of said corporation, and correct and complete copies of all resolutions and other actions taken and of all documents approved by the governing body at said meeting, so far as they relate to said bonds; and that said meeting was duly held by the governing body at the time and place and was attended throughout by the members indicated above, pursuant to call and notice of such meeting given as required by law. WITNESS my hand officially as such recording officer this 13th day of March, 2012, Secretary It was reported that proposals for the purchase of $9,935,000 Governmental Housing Project Refunding Bonds (City of Plymouth, Minnesota, General Obligation), Series 2012A were received prior to 12:00 o'clock Noon, Central Time, pursuant to the Official Statement distributed to potential purchasers of the Bonds by Ehlers & Associates, Inc., financial consultants to the Authority. The proposals have been publicly opened, read and tabulated and were found to be as follows: See Attached) RESOLUTION RELATING TO THE ISSUANCE OF GOVERNMENTAL HOUSING PROJECT REFUNDING BONDS (CITY OF PLYMOUTH, MINNESOTA, GENERAL OBLIGATION), SERIES 2012A, BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF PLYMOUTH, MINNESOTA; AUTHORIZING THE ISSUANCE AND AWARDING THE SALE OF BONDS AND APPROVING THE EXECUTION OF DOCUMENTS IN CONNECTION THEREWITH BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Plymouth, Minnesota (the "Authority"), as follows: Section 1, Authorization and Findings. 1.01 General Authorization. The Authority is a housing and redevelopment authority, duly existing under Minnesota Statutes, Sections 469.001 through 469.047. Pursuant to the laws of the State of Minnesota, the Authority is authorized to undertake housing development projects to provide safe and sanitary housing affordable by elderly persons and by persons and families of low and moderate income. Pursuant to Minnesota Statutes, Sections 469.034 and 469.035, the Authority is authorized to issue its bonds for any of its corporate purposes. Pursuant to Minnesota Statutes, Section 469.034, subd. 2, the Authority is further authorized to undertake a particular type of housing development project, called therein a "qualified housing development project," and to pledge the general obligation of the City of Plymouth, Minnesota (the "City") to the repayment of bonds issued to finance the qualified housing development project, all upon the terms set forth in Minnesota Statutes, Section 469.034, subd. 2. 1.02 Refunding. The Authority proposes to issue its Governmental Housing Project Refunding Bonds (City of Plymouth, Minnesota, General Obligation), Series 2012A (the Bonds"), in the principal amount of $9,935,000, pursuant to Minnesota Statutes, Chapters 469 and 475, the proceeds of which will be used to refund on February 1, 2015 (the "Crossover Date") the Authority's Governmental Housing Project Bonds (City of Plymouth, Minnesota General Obligation), Series 2005, dated, as originally issued, as of May 1, 2005 (the "Series 2005 Bonds"), maturing on February 1 in the years 2017 through 2035 (the "Refunded Bonds"), issued pursuant to Minnesota Statutes, Chapter 475, the proceeds of which were used to construct an elderly rental housing development in the City (the "Project"), The Crossover Date is the earliest date upon which the Refunded Bonds may be redeemed without payment of premium. The refunding of the Refunded Bonds is being carried out for the purposes described in Minnesota Statutes, Section 475.67, subdivision 3, subsection (b)(2)(i) and in compliance with Minnesota Statutes, Section 469.034, subdivision 2 and Chapter 475. 1.03 Pledge of General Obligation of City. Pursuant to the provisions of Section 469.034, subd. 1(a) and a resolution adopted by the City Council of the City on February 14, 2012 (the "City Resolution"), the City has approved the issuance of the Bonds and has authorized the Authority to pledge the full faith, credit and taxing powers of the City to the repayment of the Bonds. 1,04 Savings. It is hereby determined that as of the Crossover Date, (i) the present value of the debt service on the Bonds, computed to their stated maturity dates, after deducting any premium, using the yield of the Bonds as the discount rate, plus (ii) any expenses of the refunding payable from a source other than the proceeds of the Bonds or investment earnings thereon, is lower by % (not less than 3%) than the present value of the debt service on the Refunded Bonds, exclusive of any premium, computed to their stated maturity dates, using the yield of the Bonds as the discount rate. Section 2. Sale of Bonds. 2.01 Sale. Pursuant to the Official Statement prepared on behalf of the Authority by Ehlers and Associates, Inc., sealed proposals for the purchase of the Bonds were received at or before the time specified for receipt of proposals. The proposals have been opened, publicly read and considered and the purchase price, interest rates and net interest cost under the terms of each proposal have been determined. The most favorable proposal received is that of the Purchaser), to purchase the Bonds in the principal amount of $9,935,000 at a price of on the further terms and conditions hereinafter set forth. 2.02 Award. The sale of the Bonds is hereby awarded to the Purchaser, and the Chair and Executive Director are hereby authorized and directed on behalf of the Authority to execute a contract for the sale of the Bonds in accordance with the terms of the bid. The good faith deposit of the Purchaser shall be retained and deposited by the Treasurer. The good faith deposit of other bidders shall be returned to them forthwith. Section 3. Bond Terms; Registration; Execution and Delivery, 3.01 Issuance of Bonds. All acts, conditions and things which are required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed precedent to and in the valid issuance of the Bonds having been done, now existing, having happened and having been performed, it is now necessary for the Board of Commissioners to establish the form and terms of the Bonds, to provide security therefor and to issue the Bonds forthwith. 3.02 Maturities; Interest Rates; Denominations andPayment. The Bonds shall be originally dated as of the date of issuance thereof, shall be in the denomination of $5,000 each, or any integral multiple thereof, of single maturities, shall mature on February I in the years and amounts stated below, and shall bear interest from date of issue until paid or duly called for redemption at the annual rates set forth opposite such years and amounts, as follows; 2- Year Amount Rate Year Amount Rate 2016 185,000 % 2026 500,000 % 2017 425,000 2027 510,000 2018 435,000 2028 525,000 2019 440,000 2029 540,000 2020 445,000 2030 555,000 2021 450,000 2031 570,000 2022 460,000 2032 585,000 2023 470,000 2033 605,000 2024 480,000 2034 620,000 2025 490,000 2035 645,000 REVISE MATURITY SCHEDULE FOR ANY TERM BONDS] 3.03 Dates and Interest Payment Dates. The Bonds shall be issuable only in fully registered form, and the ownership of the Bonds shall be transferred only upon the bond register of the Authority hereinafter described. The interest on the Bonds shall be payable on February 1 and August 1 in each year, commencing February 1, 2013, to the owner of record thereof as of the close of business on the fifteenth day of the preceding month, whether or not such day is a business day. The interest on, and upon presentation and surrender thereof, the principal of each Bond shall be payable by check or draft issued by the Registrar described herein, provided that, so long as the Bonds are registered in the name of a securities depository, or a nominee thereof, in accordance with Section 3.08 hereof, principal and interest shall be payable in accordance with the operational arrangements of the securities depository. Upon authentication of any Bond the Registrar described herein shall indicate therein the date of such authentication. 3.04 Redemption, Bonds maturing on February 1, 2023 and later years shall be subject to redemption and prepayment at the option of the Authority, in whole or in part, in such order of maturity dates as the Authority may select and within a maturity by lbt as selected by the Registrar in multiples of $5,000, on February 1, 2022, and on any date thereafter, at a price equal to the principal amount thereof and accrued interest to the date of redemption. Prior to the date set for redemption of any Bond prior to its stated maturity date, the Executive Director shall cause notice of the call for redemption thereof to be published as required by law and, at least 30 days prior to the designated redemption date, shall cause notice of the call to be mailed by certified or registered mail to the registered owners of any Bonds to be redeemed at their addresses as they appear on the bond register described in Section 3.06 hereof, provided that notice shall be given to any securities depository in accordance with its operational arrangements, but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified and from and after such date (unless the Authority shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon partial redemption of any Bond, a new Bond or Bonds will be delivered to the owner without charge, representing the remaining principal amount outstanding. 3- Bonds maturing on February 1, (the "Term Bond") shall be subject to mandatory redemption prior to maturity pursuant to the sinking fund requirements of this Section 3.04 at a redemption price equal to the stated principal amount thereof plus interest accrued thereon to the redemption date, without premium. The Registrar shall select for redemption, by lot or other manner deemed fair, on February 1 in each of the following years the following stated principal amounts of such Bonds: Principal Year Amount Final Maturity Notice of redemption shall be given as provided in the preceding paragraph,] 3.05 Appointment of Initial Registrar. The City Finance Director is hereby appointed as the initial registrar, transfer agent and paying agent. The Authority reserves the right to remove the Registrar, effective upon not less than thirty days' written notice and upon the appointment and acceptance of a successor Registrar, in which event the predecessor Registrar shall deliver all cash and Bonds in its possession to the successor Registrar and shall deliver the Bond Register to the successor Registrar. 3.06 Registration. The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: a) Register. The Registrar shall keep at its principal office a bond register in which the Registrar shall provide 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 any Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new 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 such interest payment date, and after the date of giving notice of redemption of Bonds and until such redemption date. c) Exchange of Bonds. Whenever any Bonds are surrendered by the registered owner for exchange the Registrar shall 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. 0 d) Cancellation. All Bonds surrendered upon any transfer or exchange shall be promptly canceled by the Registrar and thereafter disposed of as directed by the Authority. e) Improper or Unauthorized Transfer. When any Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar shall incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. f) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name any Bond is at any time registered in the bond register as the absolute owner of the Bond, whether the Bond shall be 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 all payments made to any registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability upon Bond to the extent of the sum or sums so paid. g) Taxes, Fees and Charges. For every transfer or exchange of Bonds except for an exchange upon a partial redemption of a Bond), the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange, h) Mutilated, Lost, Stolen or Destroyed Bonds,. In case any Bond shall become mutilated or be destroyed, stolen or lost, the Registrar shall deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any Bond destroyed, stolen or Iost, 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, in which both the Authority and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be canceled by it and evidence of such cancellation shall 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 shall not be necessary to issue a new Bond prior to payment. i) Authenticating A eg_nt. The Registrar is hereby designated authenticating agent for the Bonds, within the meaning of Minnesota Statutes, Section 475.55, Subdivision 1, as amended. 3.07 Execution and Authentication. The Bonds shall be prepared under the direction of the Executive Director and shall be executed on behalf of the Authority by the signatures of the Chair and the Executive Director, provided that the signatures may be printed, engraved or lithographed facsimiles of the originals. In case any officer whose signature or a facsimile of 52 whose signature shall appear on the Bonds shall cease to be such officer before the delivery of any Bond, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if he or she had remained in office until delivery. Notwithstanding such execution, no Bond shall 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 each Bond shall be conclusive evidence that it has been authenticated and delivered under this Resolution. When the Bonds have been prepared, executed and authenticated, the Executive Director shall deliver them to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore executed, and the Purchaser shall not be obligated to see to the application of the purchase price, 3.08 Securities Depository, (a) For purposes of this section the following terms shall have the following meanings; Beneficial Owner" shall mean, whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant, or such person's subrogee. Cede & Co." shall mean Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Bonds. DTC" shall mean The Depository Trust Company of New York, New York. Participant" shall mean any broker-dealer, bank or other financial institution for which DTC holds Bonds as securities depository. Representation Letter" shall mean the Representation Letter pursuant to which the Authority agrees to comply with DTC's Operational Arrangements. b) The Bonds shall be initially issued as separately authenticated fully registered bonds, and one Bond shall be issued in the principal amount of each stated maturity of the Bonds. Upon initial issuance, the ownership of such Bonds shall be registered in the bond register in the name of Cede & Co., as nominee of DTC. The Registrar and the Authority may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal of or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed, if any, giving any notice permitted or required to be given to registered owners of Bonds under this resolution, registering the transfer of Bonds, and for all other purposes whatsoever; and neither the Registrar nor the Authority shall be affected by any notice to the contrary. Neither the Registrar nor the Authority shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any Participant, or any other person which is not shown on the bond register as being a registered owner of any Bonds, with respect to the accuracy of any records maintained by DTC or any Participant, with respect to the payment by DTC or any Participant of any amount with respect to the principal of or interest on the Bonds, 6- with respect to any notice which is permitted or required to be given to owners of Bonds under this resolution, with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or with respect to any consent given or other action taken by DTC as registered owner of the Bonds. So long as any Bond is registered in the name of Cede & Co., as nominee of DTC, the Registrar shall pay all principal of and interest on such Bond, and shall give all notices with respect to such Bond, only to Cede & Co. in accordance with DTC's Operational Arrangements, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to the principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than DTC shall receive an authenticated Bond for each separate stated maturity evidencing the obligation of the Authority to make payments of principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the Bonds will be transferable to such new nominee in accordance with paragraph (e) hereof, c) In the event the Authority determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bonds in the form of bond certificates, the Authority may notify DTC and the Registrar, whereupon DTC shall notify the Participants of the availability through DTC of Bonds in the form of certificates, In such event, the Bonds will be transferable in accordance with paragraph (e) hereof. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the Authority and the Registrar and discharging its responsibilities with respect thereto under applicable law. In such event the Bonds will be transferable in accordance with paragraph (e) hereof. d) The execution and delivery of the Representation Letter to DTC, if not previously filed with DTC, by the Chairperson or Executive Director is hereby authorized and directed. e) In the event that any transfer or exchange of Bonds is permitted under paragraph (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this resolution. In the event Bonds in the form of certificates are issued to owners other than Cede & Co., its successor as nominee for DTC as owner of all the Bonds, or another securities depository as owner of all the Bonds, the provisions of this resolution shall also apply to all matters relating thereto, including, without limitation, the printing of such Bonds in the form of bond certificates and the method of payment of principal of and interest on such Bonds in the form of bond certificates. 3.09 Form of Bonds. The Bonds shall be prepared in substantially the following form: 7- HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF PLYMOUTH, MINNESOTA STATE OF MINNESOTA GOVERNMENTAL HOUSING PROJECT REFUNDING BONDS CITY OF PLYMOUTH, MINNESOTA, GENERAL OBLIGATION), SERIES 2012A Interest Rate Q 4 REGISTERED OWNER: PRINCIPAL AMOUNT: Maturity Date February 1, 20_ CEDE & CO. E.1 Date of Ori ignalIssue April 5, 2012 CUSIP THOUSAND DOLLARS THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF PLYMOUTH, MINNESOTA, a public body corporate and politic and a political subdivision organized and existing under the Constitution and laws of the State of Minnesota (the Authority"), acknowledges itself to be indebted and for value received hereby promises to pay to the registered owner named above, or registered assigns, the principal amount specified above on the maturity date specified above and promises to pay interest thereon from the date of original issue specified above or from the most recent Interest Payment Date (as hereinafter defined) to which interest has been paid or duly provided for, at the annual interest rate specified above, payable on February 1 and August 1 of each year, commencing February 1, 2013 (each such date, an "Interest Payment Date"), all subject to the redemption of this Bond prior to maturity. The interest so payable on any Interest Payment Date shall be paid to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a business day) of the calendar month next preceding such Interest Payment Date. Interest hereon shall be computed on the basis of a 360 -day year composed of twelve 30 -day months. The interest hereon and, upon presentation and surrender hereof at the principal office of the Registrar described below, the principal hereof are payable in lawful money of the United States of America by check or draft drawn on the City Finance Director, as bond registrar, transfer agent and paying agent, or its successor designated under the Resolution described herein (the Registrar"), or other agreed-upon means of payment by the Registrar or its designated successor. For the prompt and full payment of such principal and interest as the same become due, the Authority has been authorized to pledge, and has duly pledged, the full faith, credit and taxing power of the City of Plymouth, Minnesota (the "City"), This Bond is one of an issue in the aggregate principal amount of $9,935,000 issued pursuant to a resolution adopted by the City on February 14, 2012 (the "City Resolution"), and a resolution adopted by the Authority on March 13, 2012 (the "Bond Resolution), to refund in advance of maturity, on February 1, 2015, the Authority's Governmental Housing Project Bonds City of Plymouth, Minnesota General Obligation), Series 2005, dated, as originally issued, as of May 1, 2005 (the "Series 2005 Bonds"), maturing on February 1 in the years 2017 through 2035, the proceeds of which were used to construct an elderly rental housing development in the City the "Project") and is issued pursuant to and in full conformity with the Constitution and laws of 8- the State of Minnesota thereunto enabling, including particularly Minnesota Statutes, Chapter 475 and Section 469.034. The Bonds are issuable only in fully registered form, in denominations of $5,000 or any integral multiple thereof, of single maturities. Bonds maturing on February 1, 2023 and later years are each subject to redemption and prepayment at the option of the Authority, in whole or in part, in such order of maturity dates as the Authority may select and, within a maturity, by lot as selected by the Registrar in multiples of $5,000 on February 1, 2022, and on any date thereafter, at a price equal to the principal amount thereof plus interest accrued to the date of redemption. The Authority will cause notice of the call for redemption to be published as required by law and, at least thirty days prior to the designated redemption date, will cause notice of the call thereof to be mailed by first class mail or, if applicable, provided in accordance with the operational arrangements of the securities depository) to the registered owner of any Bond to be redeemed at the owner's address as it appears on the bond register maintained by the Registrar, but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date unless the Authority shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon partial redemption of any Bond, a new Bond or Bonds will be delivered to the registered owner without charge, representing the remaining principal amount outstanding. Bonds maturing in the year 20_ shall be subject to mandatory redemption, at a redemption price equal to their principal amount plus interest accrued thereon to the redemption date, without premium, on February 1 in each of the years shown below, in an amount equal to the following principal amounts: Sinking Fund Aggregate Payment Date Principal Amount February 1, 20_ $ February 1, 20 Final Maturity Notice of redemption shall be given as provided in the preceding paragraph.] As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the Authority at the principal office of the Registrar, by the registered owner hereof in person or by the owner's attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner or the owner's attorney, and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange the Authority will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on 9- the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The Bonds have been designated by the Authority as "qualified tax-exempt obligations" pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986. The Authority and the Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and shall not be affected by any notice to the contrary. Notwithstanding any other provisions of this Bond, so long as this Bond is registered in the name of Cede & Co., as nominee of The Depository Trust Company, or in the name of any other nominee of The Depository Trust Company or other securities depository, the Registrar shall pay all principal of and interest on this Bond, and shall give all notices with respect to this Bond, only to Cede & Co. or other nominee in accordance with the operational arrangements of The Depository Trust Company or other securities depository as agreed to by the Authority. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order to make it a valid and binding general obligation of the Authority and City in accordance with its terms, have been done, do exist, have happened and have been performed as so required; that, prior to the issuance hereof, the Authority has pledged to the payment of the principal of and interest on the Bonds when due, on a parity (as to Project revenues and tax increments) with a pledge to the Series 2005 Bonds, certain revenues of the Project, certain revenues legally available from the Authority's Tax Increment Financing (Redevelopment) District No. 1-1 and escrow account earnings, which are estimated to be collectible in the years and in aggregate amounts sufficient to pay the interest on and principal of the Bonds as they respectively become due, but the Authority has, pursuant to the Bond Resolution and with the consent of the City as expressed in the City Resolution, pledged the full faith, credit and taxing powers of the City to the payment of the Bonds and, if necessary for payment of principal of and interest on the Bonds as such becomes due, the Authority is authorized and required to levy ad valorem taxes upon all taxable property in the City, without limitation as to rate or amount; that the issuance of this Bond, together with all other indebtedness of the Authority outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the Authority or City to exceed any constitutional or statutory limitation of indebtedness. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Resolution until the Certificate of Authentication hereon shall have been executed by the Registrar by manual signature of one of its authorized representatives. IN WITNESS WHEREOF, the Housing and Redevelopment Authority in and for the City of Plymouth, Minnesota, by its Board of Commissioners, has caused this Bond to be executed in its behalf by the facsimile signatures of its Chair and Executive Director and has caused this Bond to be dated as of the date set forth below. 10- HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF PLYMOUTH, MINNESOTA facsimile signature - Chair Attest: facsimile signature - Executive Director) CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the City Resolution and Bond Resolution mentioned within. Date of Authentication: CITY OF PLYMOUTH, MINNESOTA, Finance Director, as Registrar Finance Director The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to the applicable laws or regulations: TEN COM --as tenants in common UTMA...............as Custodian for.................... Cust) (Minor) TEN ENT --as tenants by the entireties under Uniform Transfers to Minors Act ................. State) JT TEN --as joint tenants with right of survivorship and not as tenants in common 11- Additional abbreviations may also be used. ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and does hereby irrevocably constitute and appoint transfer the said Bond on the books kept for registration of the within Bond, substitution in the premises. Dated: Signature Guaranteed: Signature(s) must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in STAMP or such other "signature guaranty program" as may be determined by the Registrar in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: attorney to with full power of NOTICE: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever. End of Bond Form] Section 4. Use of Proceeds. Upon payment for the Bonds by the Purchaser, the proceeds shall be applied as follows: (a) the amount of $ shall be deposited in the Escrow Account established with U.S. Bank National Association, as escrow agent (the "Escrow Agent") under an Escrow Agreement described hereinafter, the funds so deposited, together with funds of the Authority in such amount as may be required, to be invested in securities authorized for such purpose by Minnesota Statutes, Section 475,67, subdivision 13, maturing on such dates and bearing interest at such rates as are required to provide funds sufficient, with cash retained in the escrow account, (i) to pay all interest to become due on the Bonds to and including the 12- Crossover Date and (ii) to pay and redeem the outstanding principal of the Refunded Bonds on the Crossover Date; (b) the amount of $ shall be used to pay issuance expenses of the Bonds; and (c) the amount of $ shall be deposited in the Bond Fund created pursuant to Section 5.01 hereof. The Chair and Executive Director are hereby authorized to enter into the Escrow Agreement with the Escrow Agent establishing the terms and conditions for the escrow account in accordance with Minnesota Statutes, Section 475.67. All funds on hand in the Escrow Account and Bond Fund shall be deposited or invested in accordance with Minnesota Statutes, Chapter 118A. All securities so purchased shall mature at or before the time when it is estimated that the proceeds thereof will be needed for the purposes of the Rind from which funds are withdrawn for the purchase Section 5. Security Provisions. 5.01 Governmental Housing Project Refunding Bonds Cit of P1 mouth Minnesota General Obligation), Series 2012A Bond Fund. There is hereby established on the official books and records of the Authority a Governmental Housing Project Refunding Bonds (City of Plymouth, Minnesota, General Obligation), Series 2012A Bond Fund (the "Bond Fund"), and so long as any of the Bonds are outstanding and any principal of or interest thereon unpaid, the Executive Director shall continue to maintain the Bond Fund, and the principal of and interest on the Bonds shall be payable therefrom. The Authority irrevocably appropriates to the Bond Fund a) from and after the Crossover Date, Project Revenues (as hereinafter defined) appropriated to the payment of the Bonds and interest thereon in accordance with Section 5.03 hereof, on a parity with the pledge of such Project Revenues to the Series 2005 Bonds remaining outstanding after the Crossover Date (b) all taxes collected pursuant to Section 5.06 hereof, (c) the amount specified in Section 4 hereof, (d) all receipts of principal and interest on the investments held in the escrow account established pursuant to Section 4 to and including the Crossover Date (other than the stun of $9,215,000 received from maturing investments on the Crossover Date to be used to retire the Refunded Bonds); (e) certain revenues legally available from the Authority's Tax Increment Financing (Redevelopment) District No. 1-1 (the "HRA District"), as fiirther described in Section 5.04 hereof (the "TIF Revenues"; the TIF Revenues together with the Project Revenues, the "Pledged Revenues") and (f) any other funds appropriated by the Board for the payment of the Bonds, including additional revenues collected pursuant to Section 5.07 hereof. 5.02 Sufficiency of Project Revenues It is projected that the Project Revenues will be sufficient, together with any other pledged funds, including escrow account earnings and TIF Revenues, for the payment when due of the principal of and interest on the Bonds and on any other bonds to which such revenues are pledged. 5.03 Project Revenues. The Authority hereby covenants and agrees with the registered owners from time to time of the Bonds, that until the Bonds are paid in full, or are discharged as provided in Section 6, the Authority will impose and collect reasonable charges for the use of the Project according to schedules sufficient, with other Pledged Revenues, to produce Project Revenues sufficient to pay the Bonds, the Series 2005 Bonds and any other bonds to which said Project Revenues have been pledged; and the Project Revenues, to the extent necessary, are 13- hereby irrevocably pledged and appropriated to the payment of the Bonds and such other obligations when due. Nothing herein shall preclude the Authority from hereafter making further pledges and appropriations of the Project Revenues for payment of additional obligations of the Authority hereafter authorized if the Board determines before the authorization of such additional obligations that the estimated Project Revenues will be sufficient, together with any other sources pledged to the payment of the outstanding and additional obligations, for payment of the outstanding bonds and such additional obligations. Such further pledges and appropriations of Project Revenues may be made superior or subordinate to or on a parity with, the pledge and appropriation herein made 5.04 Pledge of Certain Revenues of HRA District. The Authority hereby pledges an amount equal to no more than 15 percent of tax increment revenues generated by the HRA District to the Bond Fund in order to finance certain eligible costs under Minnesota Statutes, Sections 469.174-1799, as amended. 5.05 Notification to City of Deficiency; Payment by City. If the Executive Director determines at least 15 days prior to an interest payment date that there will be insufficient funds on deposit in the Bond Fund to pay the debt service on the Bonds on the next following February I or August 1, the Executive Director shall immediately notify the Authority, the City and the Registrar that a deficiency exists. Pursuant to the provisions of the City Resolution, the City has covenanted and agreed, as part of the pledge of its general obligation to the payment of the Bonds, to immediately pay to the Registrar from any fund of the City available for such purpose, including its general fund, the amount of such deficiency, 5.06 Cash Flow Projections; Payment by City; Levy of Taxes; Pledge of Taxing Powers. For the prompt and full payment of the principal of and interest on the Bonds as such payments respectively become due, the Authority has been authorized to pledge, and hereby does irrevocably pledge, the full faith, credit and unlimited taxing powers of the City and covenants to exercise such powers on behalf of the City in accordance with this Section 5.06. It is hereby estimated that the Pledged Revenues will produce amounts not less than five percent in excess of the amounts needed to meet when due the principal and interest payments on the Bonds, and therefore no ad valorem taxes are required to be levied by the Authority at this time. However, to assure the timely availability of funds to pay the principal of and interest on the Bonds when due, the Authority shall proceed as follows: a) On or before August 1 of each year in which Bonds are outstanding, the Authority shall prepare, or cause to be prepared, on the basis of actual occupancy rates of the Project and the then -current Operating Costs and Revenues (with reasonably projected adjustments applicable to the next calendar year) and taking into account moneys then on deposit with or pledged by the Escrow Agreement to the Registrar for the payment of principal of, premium, if any, and interest on the Bonds, a cash flow projection for the next calendar year and shall deliver a copy of such projection to the Registrar and the City. b) In the event that such cash flow projection does not show Project Revenues, plus other Pledgcd Revenues, equal to at least 105% of scheduled debt service on the Bonds for the August 1 of the next calendar year and the February I of the second- 14- following calendar year, the Authority shall notify the City and, if the City has not provided funds to the Authority by the immediately following September 1 from its available general funds in an amount which, together with the projected Project Revenues, will equal 105% of such scheduled debt service (the "City Contribution"), the Authority shall levy ad valorem taxes against all taxable property in the City for collection in the next calendar year in an amount equal to the required City Contribution, which taxes may be levied without limitation as to rate or amount. c) Notwithstanding the foregoing, the Authority recognizes and affirms that its liability with respect to the Bonds is not limited to the levy of taxes as set forth in (b) above, and the Authority affirms and covenants that it shall levy and cause to be extended, assessed and collected any additional ad valorem taxes on all taxable property in the City found necessary for the full payment of principal and interest on the Bonds, which taxes may be levied without Iimitation as to rate or amount. d) For purposes of this section the following terms shall have the following meanings: Project Revenues" shall mean, for any period, Revenues less Operating Costs. Operating Costs" shall mean, for any period, the sum of (i) all out-of-pocket operating expenditures due in the period incurred by the Authority in the operation and maintenance of the Project (excluding depreciation, interest and amortization), (ii) capital expenditures due in the period and to be paid from current operations, and (iii) a reasonable operating reserve. Revenues" shall mean the sum of (i) all rents, fees, charges or payments received by the Authority from the ownership or operation of the Project, (ii) investment income on the foregoing while held by the Authority, (iii) investment income on funds held by the Authority pursuant to the provisions of this Resolution, (iv) proceeds from business or rent interruption insurance, after costs of collections, and (v) any other available amounts deposited by the Authority with the Registrar with instructions to deposit said amounts in the Bond Fund, but excluding any net proceeds of insurance or condemnation awards and tenant security deposits. Any amounts received by the Authority from the City pursuant to subsection (b) or from the Ievy of ad valorem taxes pursuant to subsections (b) or (c) shall be transmitted to the Authority and deposited into the Bond Fund. Notwithstanding the foregoing, in the event the date for the Authority to certify a proposed ad valorem tax levy to the County Auditor is required to be prior to September 15, then the dates in this section shall be modified upon written notice by the Authority to the City to dates selected by the Authority. 15- Section b. Defeasance. When all of the Bonds have been discharged as provided in this section, all pledges, covenants and other rights granted by this Resolution to the registered owners of the Bonds shall cease. The Authority may discharge its obligations with respect to any Bonds which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full, or, if any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued from the due date to the date of such deposit. The Authority may also discharge its obligations with respect to any prepayable Bonds called for redemption on any date when they are prepayable according to their terms, by depositing with the Registrar on or before that date an amount equal to the principal, interest and redemption premium, if any, which are then due, provided that notice of such redemption has been duly given as provided herein. The Authority may also at any time discharge its obligations with respect to any Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a bank or trust company qualified by law as an escrow agent for this purpose, cash or securities which are authorized by law to be so deposited, bearing interest payable at such time and at such rates and maturing or callable at the holder's option on such dates as shall be required to pay all principal, interest and redemption premiums to become due thereon to maturity or earlier designated redemption date. Section 7. Issuance of Additional Bonds. In addition to the principal amount of Bonds, whose authentication and delivery is provided for herein, Additional Bonds, payable from the Bond Fund on a parity with the Bonds, may at any time and from time to time be executed by the appropriate officials of the Authority and delivered to the Registrar for authentication, for the purpose of funding improvements to the Project or for refunding outstanding Bonds (or previously issued Additional Bonds), but only if the Authority shall, in its discretion, deem it advisable and only upon the Authority obtaining for its files the following: a) an opinion of nationally recognized bond counsel (i) stating that the series of Additional Bonds, when issued and executed by the Authority and authenticated and delivered by the Registrar, will be the valid and binding general obligations of the Authority in accordance with their terms and (ii) stating that the issuance of such Additional Bonds will not affect the tax-exempt nature for federal income tax purposes of the Bonds then Outstanding; b) a certified copy of the resolution adopted by the City approving the issuance of the Additional Bonds and authorizing the pledge of the general obligation of the City to secure such Additional Bonds; and c) a certified copy of the resolution adopted by the Authority authorizing the execution and delivery of such series of Additional Bonds. Any Additional Bonds shall be dated, shall bear interest at a rate or rates not exceeding the maximum rate, if any, permitted by law, shall have stated maturity dates, and may be subject to redemption prior to their stated maturities at such times and prices and on such terms and conditions, all as may be provided by the bond resolution authorizing their issuance; provided that the principal payment date of any series of Additional Bonds shall be February 1 and the interest payment dates of any series of Additional Bonds shall be February 1 and August 1. 16- Section 8. Certification of Proceedings; Execution of Documents and Certificates. 8.01 Registration of Bonds. The Executive Director is hereby authorized and directed to file a certified copy of this Resolution with the County Auditor of Hennepin County and obtain a certificate that the Bonds have been duly entered upon the Auditor's bond register. 8.02 Authentication of Transcript. The officers of the Authority and the County Auditor are hereby authorized and directed to prepare and furnish to the Purchaser and to Dorsey Whitney LLP, Bond Counsel, certified copies of all proceedings and records relating to the Bonds and such other affidavits, certificates and information as may be required to show the facts relating to the legality and marketability of the Bonds, as the same appear from the books and records in their custody and control or as otherwise known to them, and all such certified copies, affidavits and certificates, including any heretofore furnished, shall be deemed representations of the Authority as to the correctness of all statements contained therein. 8.03 Official Statement. The Official Statement relating to the Bonds, dated March 2012, prepared on behalf of the Authority by Ehlers and Associates, Inc., is hereby approved, and the officers of the Authority are hereby authorized and directed to execute such certificates as may be appropriate concerning the accuracy, completeness and sufficiency thereof. 8.04 Execution of other Documents and Certificates. The Chair and Executive Director of the Authority are authorized and directed to execute such other documents and closing certificates as may be reasonably necessary in connection with the issuance and delivery of the Bonds. 8.05 Costs of Issuance. The Authority authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses to Klein Bank on the closing date for further distribution as directed by the Authority's financial advisor, Ehlers & Associates, Inc. Section 9. Certain Covenants Relating to Operation of Project and Tax Matters. 9.01 Covenant Relating to Operation of Project as Qualified Housing Development Pr_ oject. The Authority covenants that, so long as the Bonds remain outstanding, it will operate the Project as a "qualified housing development project" within the meaning of Minnesota Statutes, Section 469.034. 9.02 General Tax Covenant; Change of Ownership; Leases and Other Contracts. The Authority covenants and agrees with the registered owners 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 payable on the Bonds to become subject to taxation under the Code and applicable Treasury Regulations (the "Regulations"), and covenants to take any and all actions within its powers to ensure that the interest on the Bonds will not become includible in gross income of the recipient under the Code and the Regulations. So long as the Bonds remain outstanding, the Authority will remain the owner of the Project unless the Authority shall obtain for its files an opinion of nationally recognized bond counsel to the effect that the change in ownership will not result in a violation of the Act and will not prejudice the exemption from federal income tax of the interest on the Bonds. Further, the Authority will not enter into any lease, use agreement, 17- management agreement, or other agreement or contract with any non-governmental person relating to the use of the Project or the security for the payment of the Bonds which might cause the Bonds to be considered "private activity bonds" or "private loan bonds" pursuant to Section 141 of the Code, and will obtain a confirming opinion of bond counsel prior to entering into any such lease, agreement or contract (other than Ieases of rental units in the Project in the ordinary course of business to persons and families intending to reside in such units). 9.03 Arbitrage Certification. The Chair and Secretary being the officers of the Authority charged with the responsibility for issuing the Bonds pursuant to this Resolution, are authorized and directed to execute and deliver to the Purchaser a certificate in accordance with the provisions of Section 148 of the Code and applicable Regulations, stating that on the basis of facts, estimates and circumstances in existence on the date of issue and delivery of the Bonds, it is reasonably expected that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of the Code and the applicable Regulations. 9.04 Arbitrage Rebate. The Authority acknowledges that the Bonds are subject to the rebate requirements of Section 148(f) of the Code. The Authority covenants and agrees to retain such records, make such determinations, file such reports and documents and pay such amounts at such times as are required under said Section 148(f) and applicable Regulations unless the Bonds qualify for an exception from the rebate requirement pursuant to one of the spending exceptions set forth in Section 1.148-7 of the Regulations and no "gross proceeds" of the Bonds other than amounts constituting a "bona fide debt service fund") arise during or after the expenditure of the original proceeds thereof. 9.05 Qualified Tax-Exempt_Obli atm. The Authority hereby designates the Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code relating to the disallowance of interest expense for financial institutions, and hereby finds that the reasonably anticipated amount of tax-exempt obligations which are not private activity bonds not treating qualified 501(c)(3) bonds under Section 145 of the Code as private activity bonds for the purpose of this representation) which will be issued by the Authority and all subordinate entities during calendar year 2012 does not exceed $10,000,000. Section 10. Redemption of Refunded Bonds, The Executive Director is hereby directed to advise the City Finance Director, as paying agent for the Refunded Bonds, to call such bonds for redemption and prepayment on the Crossover Date, and to give thirty days mailed Notice of Redemption, all in accordance with the provisions of the resolutions authorizing the issuance of such bonds. Upon a vote being taken on the foregoing Resolution, the following Commissioners voted in favor thereof: and the following voted against the same: whereupon the Resolution was declared duly passed and adopted. 18- COUNTY AUDITOR'S CERTIFICATE AS TO REGISTRATION The undersigned, being the duly qualified and acting County Auditor of Hennepin County, Minnesota, hereby certifies that there has been filed in my office a certified copy of a resolution duly adopted on March 13, 2012, by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Plymouth, Minnesota, setting forth the form and details of an issue of $9,935,000 Governmental Housing Project Refunding Bonds (City of Plymouth, Minnesota General Obligation), Series 2012A, dated as of April 5, 2012. I further certify that the issue has been entered on my bond register as required by Minnesota Statutes, Sections 475.62 and 475.63. WITNESS my hand and official seal County Auditor SEAL)