HomeMy WebLinkAboutResolution No. 167-26 - Resolution - Short-Term Borrowing for the Water Utility Fund
RESOLUTION
Resolution Authorizing the Sale of Temporary General Obligation Water Revenue Bond,
Series 2026B and Providing for their Issuance, Subject to Certain Parameters
WHEREAS, the City owns and operates its municipal water utility as a public utility (such
water utility and all properties of every nature constituting a part thereof which may now or
hereafter be owned by the City, including all improvements and extensions thereof, all real and
personal property comprising a part of said system, and all appurtenances, contracts, leases,
franchises, and other intangibles relating thereto, are collectively hereinafter referred to as the
“Water Utility”);
WHEREAS, the City, in cooperation with the Public Utility Board (the “Board”) of Rochester
Public Utilities (“RPU”) established pursuant to the City’s Home Rule Charter, have determined
that it is in their best interests to issue the City’s Temporary General Obligation Water Revenue
Bond, Series 2026B in an aggregate principal amount not to exceed $10,000,000 (the “Bond”) to
finance the acquisition, construction and equipping of certain capital improvements to the Water
Utility including without limitation, to finance designing, acquiring, constructing, improving,
extending, rehabilitating, equipping, and otherwise bettering the municipal water utility system,
including any facilities, infrastructure, equipment, land, easements, technology, and related
improvements comprising or supporting the water supply, treatment, production, transmission,
distribution, pumping, storage, monitoring, metering and delivery system of the municipal water
utility (collectively, the “Utility Improvements”);
WHEREAS, it is necessary and desirable to the sound financial management of the affairs
of the City and of the Water Utility that the City issue the Bond, pursuant to the Home Rule Charter
of the City and the laws of the State of Minnesota, including the applicable provisions of Minnesota
Statutes, Chapters 475 and 444, in order to finance the Project;
WHEREAS, the City is authorized by Minnesota Statutes, Section 475.60, Subdivision
2(9) to negotiate the sale of the Bond, if the City has retained an independent municipal advisor
in connection with such sale. The City has retained Baker Tilly Municipal Advisors, LLC (“Baker
Tilly MA”) as an independent municipal advisor in connection with the sale of the Bond. The
actions of the City staff and the City’s municipal advisor in negotiating the sale of the Bond are
ratified and confirmed in all aspects;
WHEREAS, the City is authorized by the Home Rule Charter of the City, Minnesota
Statutes, Section 444.075 and Minnesota Statutes, Chapter 475, as amended (collectively, the
“Act”), to temporarily finance the Utility Improvements by the issuance of a general obligation bond
of the City payable from the net revenues of the Water Utility, subject to certain parameters
provided herein, to provide financing for the Utility Improvements;
WHEREAS, the City is authorized by the provisions of Minnesota Statutes, Section
475.61, subdivision 6 (the “Temporary Bond Act”), to issue and sell temporary bonds to provide
temporary financing for the costs of the Utility Improvements in anticipation of the issuance by the
City of permanent bonds; and
WHEREAS, as required by the Temporary Bond Act, the maturity date of the Bond will be
no more than three years from the date the Bond will be issued. The City intends to issue
permanent general obligation water revenue bonds (the “Permanent Bonds”) to refinance the
Bond and provide permanent financing for the Utility Improvements;
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BE IT RESOLVED by the Common Council (the “Council”) of the City of Rochester,
Minnesota (the “City,” which term, for purposes of this Resolution, shall include RPU), as follows:
1. Sale of Bond.
1.01 Delegation to Pricing Committee; Purchase Agreement. The City has retained
Baker Tilly Municipal Advisors LLC, St. Paul, Minnesota (“Baker Tilly MA”) as independent
municipal advisor, and, pursuant to Minnesota Statutes, Section 475.60, subdivision 2, paragraph
9, Baker Tilly is hereby authorized to solicit proposals for the Bond on behalf of the City on a
competitive basis without requirement of published notice. The City hereby establishes a pricing
committee with respect to the sale of the Bond comprised of the City Director of Finance, or
designee, the RPU Finance Director, the RPU Assistant General Manager, and the RPU General
Manager (the “Pricing Committee”). The Pricing Committee is authorized in its discretion, upon
satisfaction of the conditions for the issuance of the Bond under the Act and with the advice of
Baker Tilly MA, to (i) review proposals for the sale of the Bond; (ii) award the sale of the Bond to
the prospective purchaser (the “Purchaser”), in an aggregate principal amount not to exceed
$10,000,000, plus any premium, with a true interest cost not to exceed 5.50% and a final maturity
not later than 3 years from the date of issuance thereof; (iii) approve the dates for optional
redemption or any mandatory sinking fund redemption schedule; (iv) approve the principal
amounts and maturities of the Bond; and (v) other details of the Bond, all as set forth in a Pricing
Certificate executed by the Pricing Committee (the “Pricing Certificate”). The City hereby
approves the sale of the Bond to the Purchaser at the price, par bond principal amount, maturity
schedule, and rates to be determined by the Pricing Committee based on the lowest true interest
cost, subject to a determination by the Pricing Committee and with the advice of Baker Tilly MA,
upon satisfaction of the conditions for the issuance of the Bond under the Act.
1.02 Purpose. The Bond is being issued to provide funds to finance the Utility
Improvements. The total cost of the Utility Improvements is estimated to be at least equal to the
net proceeds of the Bond. The City has entered into or will enter into contracts for the construction
of the Utility Improvements, and work on the Utility Improvements shall proceed with due diligence
to completion.
1.03. Contract with the Purchaser. The Mayor and City Clerk are authorized to execute
a contract with the Purchaser on behalf of the City, if requested by the Purchaser.
1.04 Redemption. The Pricing Committee shall determine the optional redemption date
for the Bond. Redemption may be in whole or in part and if in part, at the option of the City and
in such manner as the City will determine. Prepayments will be at a price of par plus accrued
interest. The RPU Finance Director may provide a conditional notice of redemption. If a
conditional notice of redemption has been provided and the conditions are not satisfied, such
notice of redemption shall be of no force and effect and the holder of the Bond shall be restored
to its former position as though no such notice of redemption had been delivered.
Section 2. Registration.
2.01. Registered Form. The Bond will be issued only in fully registered form. The interest
thereon and, upon surrender of the Bond, the principal amount thereof, is payable by check, draft, or
wire transfer issued by the Registrar described herein.
2.02. Dated Date. The 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,
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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 rate or rates on the Bond will be set forth in
the Pricing Certificate.
2.03. Registration. The City appoints the RPU Finance Director as registrar, transfer agent,
authenticating agent and paying agent (the “Registrar”). The effect of registration and the rights and
duties of the City and the Registrar with respect thereto are as follows:
(a) Register. The Registrar will keep a register in which the Registrar provides for the
registration of ownership of the Bond and the registration of any transfers and exchanges of
the Bond entitled to be registered, transferred or exchanged.
(b) Transfer of Bond. Upon surrender for transfer of the 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, a new Bond 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 15th day of the month preceding each
interest payment date and until that interest payment date.
(c) Exchange of Bond. Whenever the Bond is surrendered by the registered owner for
exchange the Registrar will authenticate and deliver a new Bond of a like aggregate principal
amount and maturity as requested by the registered owner or the registered owner’s attorney
in writing.
(d) Cancellation. A Bond surrendered upon a transfer or exchange will be promptly
cancelled by the Registrar and thereafter disposed of as directed by the City.
(e) Improper or Unauthorized Transfer. When the Bond is presented to the Registrar for
transfer, the Registrar may refuse to transfer such Bond until the Registrar 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 will incur no liability for the
refusal, in good faith, to make transfers which it, in its judgment, deems improper or
unauthorized.
(f) Persons Deemed Owners. The City and the Registrar may treat the person in whose
name a Bond, at any time, is registered in the bond register as the absolute owner of such
Bond, whether such Bond is overdue or not, for the purpose of receiving payment of, or on
account of, the principal of and interest on such Bond and for all other purposes, and all such
payments so made to any such 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.
(g) Taxes, Fees and Charges. The Registrar may impose a charge upon the owner
thereof for a transfer or exchange of the Bond, sufficient to reimburse the Registrar for any
tax, fee or other governmental charge required to be paid with respect to such transfer or
exchange.
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(h) Mutilated, Lost, Stolen or Destroyed Bond. If the 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 such
mutilated Bond or in lieu of and in substitution for such 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 such Bond was destroyed, stolen or lost, and of the
ownership thereof, and upon furnishing to the Registrar an appropriate bond or indemnity in
form, substance and amount satisfactory to it and as provided by law, in which both the City
and the Registrar will be named as obligees. A Bond so surrendered to the Registrar will be
cancelled by the Registrar and evidence of such cancellation must be given to the City. If
the mutilated, destroyed, stolen or lost Bond has already matured or been called for
redemption in accordance with its terms, it will not be necessary to issue a new Bond prior to
payment.
Section 3. Form of Bond and Execution.
3.01 Form of Bond. The Bond will be printed or typewritten in substantially the form set
forth in Exhibit A as a single typewritten bond, numbered R-1 in the denomination of the full
principal amount authorized hereunder.
3.02. Execution, Authentication and Delivery. The Bond will be prepared under the
direction of the RPU Finance Director and executed on behalf of the City by the signatures of the
Mayor and the City Clerk, 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 Bond 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. When the Bond has been so prepared, executed and authenticated, the RPU Finance
Director will deliver the same to the Purchaser upon payment of the purchase price, and the
Purchaser is not obligated to see to the application of the purchase price.
3.03. Approving Legal Opinion. The City Director of Finance is authorized and directed
to obtain a copy of the proposed approving legal opinion of Kutak Rock LLP, Minneapolis,
Minnesota, which will be complete except as to dating thereof and will cause the opinion to be
printed on or accompany the Bond.
Section 4. Payment; Security; Pledges; and Covenants.
4.01. Debt Service Fund. For the convenience and proper administration of the moneys to
be borrowed and repaid on the Bond, and to provide adequate and specific security for the Purchaser
and holders from time to time of the Bond, there is hereby created a special fund to be designated
the “Temporary General Obligation Water Revenue Bond, Series 2026B Debt Service Fund”
(the “Debt Service Fund”). The Debt Service Fund shall be administered and maintained by the RPU
Finance Director as a bookkeeping account separate and apart from all other funds maintained in
the official financial records of the City. The Debt Service Fund will be maintained in the manner
herein specified until the Bond and the interest thereon have been fully paid. The City, through RPU,
will continue to maintain and operate its municipal water utility fund, to which will be credited all gross
revenues of the municipal water utility system (the “Utility System”), and out of which will be paid all
normal and reasonable expenses of current operations of such Utility System. Any balance therein
is deemed net revenues (the “Net Revenues”) and will be transferred, from time to time, to the Debt
Service Fund in an amount sufficient to pay the principal of and interest on the Bond, which will be
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used to pay principal of and interest on the Bond, and any other bonds similarly authorized. There
is also appropriated to the Debt Service Fund (i) any collections of taxes hereafter levied for the
payment of the Bond and interest thereon, (ii) all investment earnings on funds in the Debt Service
Fund; and (iii) any and all other moneys which are properly available and are appropriated by the
Council to the Debt Service Fund or in the availability of Net Revenues to pay principal of and
interest, when due, on the Bond and any other bonds similarly authorized. The RPU Finance
Director must report to the Council any current or anticipated deficiency in the Debt Service Fund
in the amount necessary to pay principal of and interest on the Bond when due. If a payment of
principal or interest on the Bond becomes due when there is not sufficient money in the Debt
Service Fund to pay the same, the RPU Finance Director is directed to pay such principal or
interest from the general fund of the City, and the general fund will be reimbursed for the advances
out of the proceeds of Net Revenues and taxes when collected.
4.02. Construction Fund. The City hereby creates the “Temporary General Obligation
Water Revenue Bond, Series 2026B Construction Fund” (the “Construction Fund”) to be
administered and maintained by the RPU Finance Director as a bookkeeping account separate and
apart from all other funds maintained in the official financial records of the City. Proceeds of the
Bond, as advanced, will be applied directly or deposited in the Construction Fund to be used solely
to defray expenses of the Utility Improvements. Any balance remaining in the Construction Fund
after the Utility Improvements are completed and the cost thereof have been paid may be used as
provided in Minnesota Statutes, section 475.65. Thereafter, the Construction Fund is to be closed
and any balance remaining therein is to be deposited in the Debt Service Fund.
4.03. City Covenants with Respect to the Bond. The Council covenants and agrees with
the holder of the Bond that so long as the Bond remains outstanding and unpaid, the City will
keep and enforce the following covenants and agreements:
(a) The City will continue to maintain and efficiently operate the Utility System
as a public utility and convenience free from competition of other like municipal utilities
and will cause all revenues therefrom to be deposited in bank accounts and credited to
the account of the Utility System as hereinabove provided, and will make no expenditures
from the account except for a duly authorized purpose and in accordance with this
resolution.
(b) The City will also maintain the Debt Service Fund as a separate account in
the account for the Utility System and will cause money to be credited thereto from time
to time, out of Net Revenues from the Utility System in sums sufficient to pay principal of
and interest on the Bond when due.
(c) The City will keep and maintain proper and adequate books of records and
accounts separate from all other records of the City in which will be complete and correct
entries as to all transactions relating to the Utility System and which will be open to
inspection and copying by any bondholder, or the bondholder's agent or attorney, at any
reasonable time, and it will furnish certified transcripts therefrom upon request and upon
payment of a reasonable fee therefor, and said account will be audited at least annually
by a qualified public accountant and statements of such audit and report will be furnished
to the Purchaser upon request.
(d) The Council will cause persons handling revenues of the Utility System to
be bonded in reasonable amounts for the protection of the City and the holder of the Bond
and will cause the funds collected on account of the operations of the Utility System to be
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deposited in a bank whose deposits are guaranteed under the Federal Deposit Insurance
Law.
(e) The Council will keep the Utility System insured at all times against loss by
fire, tornado and other risks customarily insured against with an insurer or insurers in good
standing, in such amounts as are customary for like plants, to protect the holders, from
time to time, of the Bond and the City from any loss due to any such casualty and will
apply the proceeds of such insurance to make good any such loss.
(f) The City and each and all of its officers will punctually perform all duties
with reference to the Utility System as required by law.
(g) The City will impose and collect charges of the nature authorized by
Minnesota Statutes, Section 444.075 at the times and in the amounts required to produce
Net Revenues adequate to pay all principal and interest when due on the Bond and to
create and maintain such reserves securing said payments as may be provided in this
resolution.
(h) The Council will levy general ad valorem taxes on all taxable property in
the City, when required to meet any deficiency in pledged Net Revenues.
(i) The City hereby determines that the estimated collection of Net Revenues
herein pledged for the payment of principal and interest on the Bond will produce at least
5% in excess of the amount needed to meet, when due, the principal and interest
payments on the Bond.
4.04. City Covenants - Temporary Bonds. The Council covenants and agrees in
accordance with its statutory duties as provided under the Temporary Bond Act, that to the extent
that the Bonds cannot be paid out of moneys available in the Debt Service Fund or out of other
municipal funds which are available and appropriated by the Council to such purpose when due, the
City will pay and retire the Bonds and the interest thereon with the proceeds of Permanent Bonds
which the Council will issue and sell at or prior to the maturity of the Bonds. The City intends to issue
the Permanent Bonds. The proceeds of such additional temporary bonds or Permanent Bonds, and
any taxes hereafter levied for that purpose are pledged to the Debt Service Fund.
4.05. Debt Service Coverage. It is hereby determined that additional temporary bonds or
permanent bonds and the Net Revenues herein pledged will produce at least 5% in excess of the
amount needed to pay, when due, the principal and interest payments on the Bond.
4.06. General Obligation Pledge. For the prompt and full payment of the principal of and
interest on the Bond, as the same respectively become due, the full faith, credit and taxing powers
of the City will be and are hereby irrevocably pledged. If the balance in the Debt Service Fund is
ever insufficient to pay all principal and interest then due on the Bond and any other bonds payable
therefrom, the deficiency will be promptly paid out of monies in the general fund of the City which are
available for such purpose, and such general fund may be reimbursed with or without interest from
the Debt Service Fund when a sufficient balance is available therein.
Furthermore, in accordance with its statutory duties under the Temporary Bond Act and
Section 4.04 hereof, the City covenants and agrees with the holder of the Bonds that if the Bonds
cannot be paid at maturity from the Net Revenues or from other funds appropriated by the Council,
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the Bond will be paid from the proceeds of the Permanent Bonds that will be issued and sold prior to
the maturity date of the Bond.
4.07 Registration of Resolution. The City Director of Finance is authorized and directed
to file a certified copy of this resolution with the County Director of Property Records and Licensing
of Olmsted County, Minnesota (the “County Auditor”), and to obtain the certificate required by Section
475.63 of the Act.
Section 5. Authentication of Transcript.
5.01. City Proceedings and Records. The officers of the City are authorized and directed
to prepare and furnish to the Purchaser and to the attorneys approving the Bond, certified copies
of proceedings and records of the City relating to the Bond and to the financial condition and
affairs of the City, 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 Bond, and such instruments,
including any heretofore furnished, may be deemed representations of the City as to the facts
stated therein.
5.02. Offering Document. The Council expects that the Bond will be sold in a private
placement directly to a financial institution or other institutional buyer and that no official statement
or prospectus will be prepared or circulated by the City in connection with the sale of the Bond.
Materials for the purpose of soliciting bids from prospective purchasers may be prepared as
determined by the Pricing Committee.
5.03. Other Certificates. The Mayor, City Clerk, City Administrator, City Director of
Finance, RPU Assistant General Manager, RPU General Manager and RPU Finance Director, or
any of them, are hereby authorized and directed to furnish to the Purchaser at the closing such
certificates as are required as a condition of sale. Unless litigation shall have been commenced
and be pending questioning the Bond or the organization of the City or incumbency of its officers,
at the closing the Mayor, City Clerk, City Administrator, City Director of Finance, RPU Assistant
General Manager, RPU General Manager and RPU Finance Director, or any of them, shall also
execute and deliver to the Purchaser a suitable certificate as to absence of material litigation, and
the City Director of Finance or RPU Finance Director shall also execute and deliver a certificate
as to payment for and delivery of the Bond.
5.04. Electronic Signatures. The electronic signature of the Mayor, City Clerk, City
Administrator, City Director of Finance, RPU Assistant General Manager, RPU General Manager
and RPU Finance Director, or any of them, to this resolution and to any certificate authorized to
be executed hereunder shall be as valid as an original signature of such party and shall be
effective to bind the City thereto. For purposes hereof, (i) “electronic signature” means (a) a
manually signed original signature that is then transmitted by electronic means or (b) a signature
obtained through DocuSign or Adobe or a similarly digitally auditable signature gathering process;
and (ii) “transmitted by electronic means” means sent in the form of a facsimile or sent via the
internet as a portable document format (“pdf”) or other replicating image attached to an electronic
mail or internet message.
Section 6. Tax Covenants.
6.01 Tax-Exempt Bond. The City covenants and agrees with the holders from time to
time of the Bond that it will not take or permit to be taken by any of its officers, employees, or
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agents any action which would cause the interest on the Bond to become subject to taxation under
the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations
promulgated thereunder, in effect at the time of such actions, and that it will 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
Bond. To that end, the City will comply with all requirements necessary under the Code to
establish and maintain the exclusion from gross income of the interest on the Bond under Section
103 of the Code, including without limitation requirements relating to temporary periods for
investments and limitations on amounts invested at a yield greater than the yield on the Bond.
6.02. Rebate. The City will comply with requirements necessary under the Code to
establish and maintain the exclusion from gross income of the interest on the Bond 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 Bond, and the
rebate of excess investment earnings to the United States (unless the City qualifies for any exception
to the rebate requirements based on timely expenditure of proceeds of the Bond, in accordance with
the Code and applicable Treasury Regulations).
6.03. Not Private Activity Bonds. The City 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 Bond to be “private activity bonds” within the meaning of Sections 103 and 141 through 150
of the Code.
6.04. No Designation of Qualified Tax-Exempt Obligations. The Bond has not been
designated as a “qualified tax-exempt obligation” within the meaning of Section 265(b)(3) of the
Code.
6.05. Procedural Requirements. The City 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.
Section 7. Continuing Disclosure. The Council expects that the Bond will be sold in a
limited offering directly to a financial institution or other institutional buyer and that the Purchaser
and the City will not be obligated to 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 Pricing Committee is authorized to negotiate with the Purchaser
regarding any undertaking to provide continuing disclosure with respect to the Bond, if necessary.
Section 8. Defeasance. When the Bond and all accrued interest thereon have been
discharged as provided in this section, all pledges, covenants and other rights granted by this
resolution to the holder of the Bond will cease, except that the pledge of the full faith and credit of
the City for the prompt and full payment of the principal of and interest on the Bond will remain
in full force and effect. The City may discharge all the Bond 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 by depositing irrevocably in escrow, with a suitable institution qualified by law as an escrow
agent for this purpose, cash or securities which are backed by the full faith and credit of the United
States of America, or any other security authorized under Minnesota law for such purpose,
bearing interest payable at such times and at such rates and maturing on such dates and in such
amounts as shall be required and sufficient, subject to sale and/or reinvestment in like securities,
to pay said obligation(s), which may include any interest payment on such Bond and/or principal
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amount due thereon at a stated maturity (or if irrevocable provision shall have been made for
permitted prior redemption of such principal amount, at such earlier redemption date). 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 to the date of such deposit.
Section 9. Effective Date. This Resolution, having been concurred in by the Public
Utility Board of Rochester Public Utilities by resolution adopted July 28, 2026, shall be effective
immediately.
PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF
ROCHESTER, MINNESOTA, THIS __________ DAY OF _______________, 2026.
___________________________________
PRESIDENT OF SAID COMMON COUNCIL
ATTEST: __________________________
CITY CLERK
APPROVED THIS _____ DAY OF ______________________, 2026.
_
__________________________________
MAYOR OF SAID CITY
(Seal of the City of
Rochester, Minnesota)
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EXHIBIT A
FORM OF BOND
No. R-_____ UNITED STATES OF AMERICA $__________
STATE OF MINNESOTA
COUNTY OF OLMSTED
CITY OF ROCHESTER
TEMPORARY GENERAL OBLIGATION WATER REVENUE BOND, SERIES 2026B
Date of
Interest Rate Maturity Date Original Issue
% ________ 1, 20____ __________, 2026
Registered Owner: ________________
The City of Rochester, Minnesota, a duly organized and existing municipal corporation in
Olmsted County, Minnesota (the “City”), acknowledges itself to be indebted and for value received
hereby promises to pay to the Registered Owner specified above or registered assigns, the
principal sum of set forth above on the Maturity Date specified above, or so much thereof as has
been advanced and is outstanding, unless called for earlier redemption, with interest thereon from
the date hereof at the Interest Rate per annum specified above (calculated on the basis of a 360-
day year of twelve 30-day months), payable \[periodically\] on each ______ and _______,
commencing _________, to the Registered Owner specified above or registered assigns. For
the prompt and full payment of such principal and interest as the same respectively become due,
the full faith and credit and taxing powers of the City have been and are hereby irrevocably
pledged.
This Bond is issued pursuant to a resolution adopted by the Common Council on
September 9, 2026 (the “Resolution”) and a concurring resolution of the Public Utility Board of
Rochester Public Utilities on July 28, 2026, for the purpose of providing monies in part for various
utility improvements, in the City and pursuant to and in full conformity with its home rule charter,
and the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Chapters
444 and 475. The principal hereof and interest hereon are payable from net revenues of the
municipal water enterprise system and from ad valorem taxes, if necessary, as set forth in the
Resolution to which reference is made for a full statement of rights and powers thereby conferred.
The full faith and credit of the City are irrevocably pledged for payment of this Bond and the Common
Council has obligated itself to issue and sell additional temporary bonds or permanent bonds to
redeem the Bonds and to levy additional ad valorem taxes on all taxable property in the City in the
event of any deficiency in net revenues, permanent or additional temporary bonds issued for the
Project, and taxes pledged, which additional taxes may be levied without limitation as to rate or
amount. The Bond is issued only as a fully registered Bond in denominations of $5,000 or any
integral multiple thereof of single maturities.
The City may elect on ____________, and on any date thereafter to prepay this Bond.
Redemption may be in whole or in part and if in part, at the option of the City and in such manner
as the City will determine. Prepayments will be at a price of par plus accrued interest.
A-1
IT IS HEREBY CERTIFIED AND RECITED that in and by the Resolution, the City has
covenanted and agreed that it will continue to own and operate the municipal water enterprise
system free from competition by other like municipal utilities; that adequate insurance on said
system and suitable fidelity bonds on employees will be carried; that proper and adequate books
of account will be kept showing all receipts and disbursements relating to municipal water
enterprise system fund, into which it will pay all of the gross revenues from the municipal water
enterprise system; that it will also create and maintain a Temporary General Obligation Water
Revenue Bond, Series 2026B Debt Service Fund, into which it will pay, out of the net revenues
from the municipal water enterprise system, a sum sufficient to pay principal of and interest on
the Bond when due; and that it will provide, by ad valorem tax levies, for any deficiency in required
net revenues of the municipal water enterprise system.
As provided in the Resolution and subject to certain limitations set forth therein, this Bond
is transferable upon the books of the City 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 a Bond
of other authorized denominations. Upon such transfer or exchange the City 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 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 City 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 neither the City nor the Registrar will be affected
by any notice to the contrary.
The City has not designated the issue of Bonds of which this Bond forms a part as
“qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Internal Revenue
Code of 1986, as amended (the “Code”) relating to disallowance of interest expense for financial
institutions.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts,
conditions and things required by its home rule charter, 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 City in accordance
with its terms, have been done, do exist, have happened and have been performed in regular and
due form, time and manner, that prior to the issuance of this bond the Common Council of the
City has provided funds for the payment of principal and interest on the bonds of this issue as the
same become due, but the full faith and credit of the City is pledged for their payment and
additional taxes will be levied, if required for such purpose, without limitation as to the rate of
amount; and that this bond, together with all other indebtedness of the City outstanding on the
date of its issuance, does not exceed any constitutional, statutory or charter limitation on
indebtedness.
This Bond is not valid or obligatory for any purpose or entitled to any security or benefit
under the Resolution until the Certificate of Authentication hereon has been executed by the
Registrar by manual signature of one of its authorized representatives.
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IN WITNESS WHEREOF, the City of Rochester, Olmsted County, Minnesota, by its
Common Council, has caused this Bond to be executed on its behalf by the facsimile or manual
signatures of the Mayor and City Clerk and has caused this Bond to be dated as of the date set
forth below.
Dated: __________, 2026
CITY OF ROCHESTER, MINNESOTA
City Clerk Mayor
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds delivered pursuant to the Resolution mentioned within.
By
RPU Finance Director
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________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Bond, will be
construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants UNIF GIFT MIN ACT
in common _____ Custodian _______
(Cust) (Minor)
under Uniform Gift or Transfer to
TEN ENT -- as tenants
Minors Act
by entireties
of……………………..
(State)
JT TEN -- as joint tenants
with right of
survivorship and
not as tenants in
common
Additional abbreviations may also be used though not in the above list.
_______________________
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 ____________________ attorney to transfer the
said Bond on the books kept for registration of the within Bond, with full power of substitution in
the premises.
Dated:
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 any change whatever.
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the
Securities Transfer Agent Medallion Program (“STAMP”), the Stock Exchange Medallion Program
(“SEMP”), the New York Stock Exchange, Inc. Medallion Signatures Program (“MSP”) or other
such “signature guarantee program” as may be determined by the Registrar in addition to, or in
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substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange Act of
1934, as amended.
The Registrar will not effect transfer of this Bond unless the information concerning the
assignee requested below is provided.
Name and Address:
(Include information for all joint owners
if this Bond is held by joint account)
Please insert social security or
other identifying number of assignee
PROVISIONS AS TO REGISTRATION
The ownership of the principal of and interest on the within Bond has been registered on
the books of the Registrar in the name of the person last noted below.
Signature of
Date of Registration Registered Owner RPU Finance Director
__________, 2026 Federal ID #_________
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