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Basis for Based on our knowledge of your situation, your objectives communicated to us, Recommendation: our advisory relationship as well as.characteristics. of various municipal financingoptions, we are recominending. the issuance: of 'general obligation bonds as a suitablefinancing option for. the following reasons: 0 The .City's policy and past practice. has been to finance municipal projects like this with this type of debt issue. • This is. a cost-effective option among the: limited other options.available. to.finance this type of project. General obligation bonds provide the lowest possible 'interest cost. Method .of To: obtain the lowest interest cost to the City, we will competitively bid the purchase Sale/Placement:. of the Bands from local and national underwriterslbanks: We have included an allowance for discount bidding equal to 1.50% of the principal amount of -the issue. The discount provides: the underwriter with all or a portion of its compensation` in. the transaction. If the Bonds are purchased at a.price greater than the minimum bid amount (maximum discount),. the unused allowance may be used to louver your borrowing amount. Premium Bids:: Under current:market.conditions, most investors in municipal bonds: prefer ".premium" pricing structures. A premium is achieved when the coupon for any maturity (the interest rate paid by the. issuer) exceeds the.yield to the investor, resulting in a price paid that. is greater than the face value of the bonds.. The sum of the amounts paid more than face value is. considered "reoffering. premium." For this issue of Bonds, we have been .directed to use the premium to reduce'the size of the issue, The adjustments may slightly change the true interest cost of the original bid, either up or down. Review of Existing Debt: We have reviewed all outstanding indebtedness for the City and find that there: are no refunding opportunities at -this. time. We will continue to.monitor the market and the call dates. for the .City's outstanding. debt and will alert you to any future refunding opportunities.. Continuing Disclosure: Because the amount of the Bonds to lie issued is less than.$1,000,000, this issue will be exempt from the Continuing Disclosure requirements of the Securities and Exchange. Commission (SEC). Presale Report June 20i `2017 City .of Gem Lake, Minnesota: Page 0 . 2