1998-06-10 Packet - Laserfiche WebLink

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CONTINUING DISCLOSURE Participating underwriters in the primary offering of the Bonds need not comply with paragraph (b)(5) of Rule 15c2 -12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, because the aggregate principal amount of the Bonds and any other securities required to be integrated with the Bonds is less than $1,000,000. Consequently, the Issuer will not enter into any undertaking to provide continuing disclosure of any kind with respect to the Bonds. RISK FACTORS Following is a description of possible risks to holders of these Bonds without weighing as to probability. This description of risks is not intended to be all - inclusive and there may be other risks not now perceived or listed here. Taxes: The Bonds of this offering are general obligations of the City, the ultimate payment of which rests in the City's ability to levy and collect sufficient taxes to pay debt service should other revenue (special assessments and revenues) be insufficient. Interest Rates: In the future, interest rates for this type of obligation may rise generally, possibly resulting in a reduction in the value of the obligations for resale prior to maturity. Tax Exemption: If the federal government or the State of Minnesota taxes the interest on municipal obligations directly or indirectly, the value of the Bonds may fall for purposes of resale. Noncompliance following the issuance of the Bonds with certain requirements of the Code and covenants of the bond resolution may result in the inclusion of interest on the Bonds in gross income of the recipient for United States or in taxable net income of individuals, estates or trusts for State of Minnesota income tax purposes. No provision has been made for redemption of the Bonds, or for an increase in the interest rate on the Bonds, in the event that interest on the Bonds becomes subject to United States or State of Minnesota income taxation, retroactive to the date of issuance. The 1995 Minnesota Legislature has enacted a statement of intent that interest on obligations of Minnesota governmental units and Indian tribes be included in net income of individuals, estates and trusts for Minnesota income tax purposes if a court determines that Minnesota's exemption of such interest unlawfully discriminates against interstate commerce because interest on obligations of governmental issuers located in other states is so included. This provision applies to taxable years that begin during or after the calendar year in which any such court decision becomes final, irrespective of the date on which the obligations were issued. The Issuer is not aware of any judicial decision holding that a state's exemption of interest on its own bonds or those of its political subdivisions or Indian tribes, but not of interest on the bonds of other states or their political subdivisions or Indian tribes, unlawfully discriminates against interstate commerce or otherwise contravenes the United States Constitution. Nevertheless, the Issuer cannot predict the likelihood that interest on the Bonds would become taxable under this Minnesota statutory provision. State Economy; Local Government Aids: State cash flow problems could affect local governments and possibly increase property taxes. Book- Entry -Only System: The timely credit of payments for principal and interest on the Bonds to the accounts of the Beneficial Owners of the Bonds may be delayed due to the customary practices, standing instructions or for other unknown reasons by DTC participants or indirect participants. Since the notice of redemption or other notices to holders of these obligations will be delivered by the City to DTC only, there may be a delay or failure by DTC, DTC participants or indirect participants to notify the Beneficial Owners of the Bonds. Economy: The economy of the City consists of light industry and commerce, and agriculturally related businesses. A combination of economic, climatic, political or civil disruptions could affect the local economy and result in reduced tax collections and /or increased demands upon local government. 7