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CITY OF GEM LAKE RESOLUTION NO.2006-06 21 February 2006 A RESOLUTION DECLARING THE OFFICIAL INTENT OF THE CITY OF GEM LAKE, RAMSEY COUNTY, MINNESOTA TO REIMBURSE CERTAIN ORIGINAL EXPENDITURES FOR GOVERNMENTAL PURPOSES FROM THE PROCEEDS OF EXEMPT BONDS TO BE ISSUED BY THE CITY OF GEM LAKE, RAMSEY COUNTY, MINNESOTA AFTER THE PAYMENT OF SUCH ORIGINAL EXPENDITURES. WHEREAS, Treasury Regulations, Section 1.150-2 (the "Reimbursement Regulation"), promulgated pursuant to Section 150 of the Internal Revenue Code of 1986 as amended (the "Code"), provides that the allocation of proceeds oftax-exempt bonds to expenditures for governmental purposes originally paid from a source other than such tax-exempt bonds will be treated as expenditures of such tax-exempt bonds only if certain requirements of the Reimbursement Regulation are satisfied by the issuer of such tax-exempt bonds; and WHEREAS, the City of Gem Lake, Ramsey County, Minnesota, a statutory city and a political subdivision of the State of Minnesota (the "City"), expects to incur certain original expenditures for governmental purposes to be financed temporarily from sources other than proceeds of tax-exempt bonds and which are expected to be reimbursed from the proceeds of one or more series tax-exempt bonds; now, therefore, be it RESOLVED, by the City Council of the City of Gem Lake as follows: 1. The City has a reasonable expectation (within the meaning of Treasury Regulations, Section 1.148-1(b)) that it will make expenditures for the projects generally described in EXHIBIT A attached to this resolution (the "Projects"). The City has a reasonable expectation that it will issue one or more series of tax-exempt bonds (the "Bonds") for each of the Projects in the estimated maximum principal amounts set forth in EXHIBIT A and that it will make reimbursement allocations with respect to such original expenditures from the proceeds of such Bonds. 2. The City Clerk is authorized to designate appropriate additions to EXHIBIT A in circumstances where time is of the essence, and any such designation shall be reported to the City Council at the earliest practicable date and shall be filed with the official books and records of the City as provided in Section 3. 3. This resolution shall be maintained as part of the books and records of the City at the main administrative office of the City, and shall be continuously available during normal business hours of the City on every business day of the period beginning not more than thirty (30) days after adoption of this resolution and ending on the last date of issue of any Bonds issued to reimburse expenditures described in EXHIBIT A. 4. This resolution has been adopted not later than sixty (60) days after payment of any original expenditure to be subject to a reimbursement allocation with respect to the proceeds of the Bonds. 5. All reimbursement allocations with respect to the Bonds will be made not later than eighteen (18) months after the later of: (I) the date the original expenditure is paid; or (ii) the date the Project is placed in service or abandoned, but in no event more than three (3) years after the original expenditure. 6. All original expenditures to which reimbursement allocations are to be made constitute: (I) capital expenditures; (ii) costs of issuance of the Bonds; (iii) expenditures for extraordinary, non -recurring items that are not customarily payable from current revenues, such as casualty losses or extraordinary legal judgements in amounts in excess of reasonable insurance coverage, and for which no reserve is maintained; or (iv) a grant (as defined in Treasury Regulations, Section 1.148-6(d)(4), as a transfer for a governmental purpose of money or property to a transferee that is not a related party to or an agent of the transferor with respect to which no obligation or condition is imposed to directly or indirectly repay any amount to the transferor). 7. The limitations set forth in paragraphs 4 and 5 of this resolution do not apply to: (I) the costs of issuance of the Bonds; (ii) an amount not in excess of the lesser of $100,000 or five (5%) percent of the proceeds of the Bonds; or (iii) preliminary expenditures up to an amount not in excess of twenty (20%) percent of the aggregate issue price of the Bonds that finance or are reasonably expected by the City to finance the Projects for which the preliminary expenditures were incurred. The term "preliminary expenditures" includes architectural, engineering, surveying, soil testing, reimbursement for bond issuance, and similar costs that are incurred prior to commencement of acquisition, construction or rehabilitation of a Project, other than land acquisition, site preparation, and similar costs incident to commencement of construction. Page 4 of 6