BY COUNCILOR REINERT:
BE IT RESOLVED, by the city council (city council) of the city of Duluth, Minnesota (the city), as follows:
Section 1. Recitals.
1.01 The Duluth economic development authority (the issuer) issued its $2,720,000 lease revenue bonds, Series 1995A (the Series 1995A bonds), of which $1,640,000 in principal amount is outstanding on the date hereof. The proceeds of the Series 1995A bonds were used to develop community center facilities, including meeting rooms, community police offices, storage space and athletic facilities, consisting of a gymnasium, swimming pool and changing facilities and related improvements for parking and park/open space within the city’s portion of the former Washington Junior High School (the project).
1.02 Pursuant to Resolution 95-0428, the city council approved and proper city officials executed and/or approved the following documents in connection with the project and the issuance of the Series 1995A bonds:
(a) A primary lease (the primary lease) entered into between the city and the issuer, pursuant to which the city, as lessor, leases the city portion (as defined in the primary lease) to the issuer, as lessee;
(b) A lease (the lease) entered into between the issuer and the city, pursuant to which the issuer, as lessor, leased the city portion (as defined in the lease) to the city, as lessee;
(c) The trust indenture (the indenture) between the issuer and Norwest Bank Minnesota, National Association, now known as Wells Fargo Bank, National Association (the trustee).
1.03 It is hereby found, determined, and declared to be necessary, and in the best interests of the city and its residents, for debt service savings, and the city has requested that the issuer issue its $1,345,000 lease revenue refunding bonds, Series 2007A (the bonds), to provide funds to prepay and redeem the outstanding Series 1995A bonds, to establish a reserve fund and to pay the costs of issuance of the bonds. The principal of and interest on the bonds shall be payable from lease rentals from the city’s Lease of the project sufficient to provide for the prompt and full payment of the bonds and interest accruing thereon.
1.04 As authorized by Minnesota Statutes, chapters 469 and 475, including Section 469.103 (the act), the Issuer has agreed to enter into an amendment to the lease with the city and to issue the bonds to prepay and redeem the Series 1995A bonds maturing in 2007 and thereafter, to fund a reserve fund and to pay the costs of the refunding and the costs of issuance of the bonds. The debt service on the bonds will be payable from the basic rent provided for in the Lease, as amended. The lease, as amended, is subject to annual appropriation by the city council with a right of the city to terminate the lease upon nonappropriation of funds to pay the rents due thereunder.
1.05 The forms of the following documents have been prepared and submitted to the city council (Public Document No. _________):
(a) A first amendment to lease (the first amendment to lease) proposed to be entered into between the issuer and the city, pursuant to which the issuer, as lessor, will amend the lease, will continue to lease the city portion (as defined in the lease) to the city, as lessee, and the city will agree to pay rent, including amounts sufficient to pay the principal of and interest on the bonds; and
(b) The first supplemental trust indenture (the first supplemental indenture) between the issuer and the trustee.
Section 2. Findings.
2.01 The terms of the first amendment to lease and first supplemental indenture are found to be advantageous to the city and are hereby approved.
2.02 The primary lease, the lease, as amended by the first amendment to lease, and the indenture, as amended and supplemented by the first supplemental indenture, are hereby approved and affirmed.
2.03 The terms of the bonds as set forth in the first supplemental indenture are hereby approved.
Section 3. Authorization and approval of the documents. The first amendment to lease and first supplemental indenture are hereby made a part of this resolution as though fully set forth herein and are hereby approved in substantially the forms presented to the city council. The mayor and the city clerk are authorized and directed to execute, acknowledge and deliver the first amendment to lease on behalf of the city with such changes, insertions and omissions therein as the attorney for the city may hereafter deem appropriate. Such execution is to be conclusive evidence of approval of such document in accordance with the terms hereof.
Section 4. Other documents. The mayor, the city clerk and the other officers of the city are authorized and directed to arrange for the notices for and the redemption and prepayment of the outstanding series 1995a bonds, execute and deliver all of the certificates, documents and agreements, which may be required under the terms of the first amendment to lease and first supplemental indenture or by attorneys approving the bonds and to take such other action as may be required or deemed appropriate for the performance of the duties imposed thereby to carry out the purposes thereof.
Section 5. Other proceedings.
5.01 The mayor, the city clerk and the other officers of the city are authorized to furnish to the purchaser of the bonds, the issuer, the trustee and counsel approving the bonds certified copies of all proceedings and records of the city and such other affidavits and certificates as may be required to show the facts relating to the legality and marketability of the transactions contemplated herein, as such facts appear from the books and records in the officers’ custody and control or as otherwise known to them; and all such certified copies of certificates and affidavits, including any heretofore furnished, shall constitute representations of the city as the truth of all statements contained therein.
5.02 The city acknowledges that the Bonds are subject to the continuing disclosure requirements of Rule 15c2-12 promulgated by the securities and exchange commission under the Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2-12) (the rule). The rule governs the obligations of certain underwriters to require that obligated persons of municipal bonds enter into agreements for the benefit of the bondholders to provide continuing disclosure with respect to the obligations. To provide for the public availability of certain information relating to the bonds and the security therefor and to permit underwriters of the bonds to comply with the rule, which will enhance the marketability of the bonds, the mayor and the city clerk are hereby authorized and directed to execute a continuing disclosure certificate substantially in the form of the certificate currently on file in the office of the city clerk as Public Document No. _________.
5.03 The city covenants and agrees with the issuer and the holders of the bonds that the city will (i) take all action on its part necessary to cause the interest on the bonds to be exempt from federal income tax, including, without limitation, restricting, to the extent necessary, the yield on investments made with the proceeds of the bonds and investment earnings thereon, making required payments to the federal government, if any, and maintaining books and records in a specified manner, where appropriate, and (ii) refrain from taking any action which would cause interest on the bonds to be subject to federal income taxes, including, without limitation, refraining from spending the proceeds of the bonds and investment earnings thereon on specified periods.
Section 6. Maintenance of account.
6.01 There has been created, and the city agrees to maintain, a separate rental payment account for payment of rent under the lease, as amended, which shall be a separate segregated account within the city’s general fund. The monies in the rental payments account shall be used for no purpose other than the payment of the basic rent and the additional rent under the lease. The treasurer is authorized and directed to transfer monies of the city to the rental payments account at the times and in an amount sufficient to ensure that rent under the lease is paid when due. The city will pay promptly when due, all of the rent and other amounts required by the lease, as amended, from the sources at the times and in the amounts specified herein and in the lease, as amended.
STATEMENT OF PURPOSE: The purpose of this resolution is to prescribe the form of and authorize the execution and delivery of an amendment to lease and to approve the form of a supplemental trust indenture, all in connection with the issuance and sale of lease revenue refunding bonds, Series 2007A, to be issued by the Duluth economic development authority in connection with the refunding of its lease revenue bonds, Series 1995A, the proceeds of which financed the Washington School Community Center project.