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1. The City hereby finds, determines and declares that the construction and operation by the Issuer of the Project in the City are in the best interest of the City and its residents. 2. That the City hereby specifically pledges to the Issuer the sum of approximately $100,000. being the present value of the cumulative amount by which Project Revenues and Issuer Pledge less Operating Cost in each year are less than 1 10% of debt service on the Bonds determined by Ehlers and Associates, Inc. Based upon final terms of the Bonds, in a separate account on the books and records of the City until December 3 I, 2010, to be transferred to the Issuer as necessary to pay debt service on the bonds. "Project Revenues" means all revenues and receipts derived by the Issuer from the operation of the Project, including tenant rentals and all other monies as may be paid to or on behalf of the Issuer or to which the Issuer may be entitled with respect to the Project (excluding security deposits) and all proceeds from use and occupancy insurance and rental loss insurance, including investment earnings on the foregoing; "Issuer Pledge" means, in any year, the lesser of (i) the actual proceeds of the Issuer levy within the City for such year, net of the Issuer's general operation expenses allocated to the City for the year, or (ii) the amount by with Project Revenues for such period including: (i) current maintenance and repairs necessary to maintain the Project in adequate operating condition; (ii) labor and costs of materials, service, and supplies used for such current operation, maintenance and repairs; (iii)costs of insurance of the Project incurred in the period, whether or not actually paid in such period; (iv) management fees and financing fees payable by the Issuer with respect to the Project; (v) special assessment, taxes and payments in lieu of taxes incurred in the period, whether or not actually paid in such period; (vi) current utility charges; and (vii) the Issue's annual management fee in an amount not to exceed $4,000 per year, as adjusted annually in accordance with the Consumer Price Index. Amounts pledged and segregated hereunder may be sooner released from the pledge created by this resolution at any time that the sum of Project Revenues and Issuer Pledge less Operating Costs for the immediately preceding year was not less than 110% of scheduled debt service on the Bonds in such year, and a cash flow projection, and the then-current Operating Costs, Project Revenues and Issuer Pledge (with reasonably projected adjustments for future years) shows that Project Revenues and Issuer Pledge less Operation Cost in each remaining year that the Bonds will be outstanding is at least equal to 110% of scheduled debt service in such year. 3. That the City hereby approves the issuance by the Issuer of $1,290,000 aggregate principal amount of Housing Development Gross Revenue Bonds (City ofCenterville Unlimited Tax General Obligation), Series 1997B (the "Bond"), to which Bonds, and the payment of principal of the interest thereon, the Issuer will pledge the City's general obligation, being its full faith and credit and taxing power, as authorized by Minnesota Statutes, Section 469.034, subd. 2. 4. That such approval is subject to final determination by the Issuer to be made in the Issuer's Resolution approving the sale of the Bonds that the projected revenues pledged to the payment of the Bonds will equal or exceed 110% of the principal and interest due on the Bonds for each year of their term, and subject further to the condition that the net interest cost of the Bonds shall not be greater than 6.0%. 5. That the City hereby approves the use of the proceeds of the Bonds to acquire and