HomeMy WebLinkAbout2018A Deemed Final Certificate for Prelim Official StatementDEEMED FINAL CERTIFICATE FOR PRELIMINARY OFFICIAL STATEMENT
Ehlers and Associates, Inc. (Ehlers)
Re: City of Gem Lake, Minnesota
Ladies and Gentlemen:
I hereby certify:
1. I, the undersigned, am duly qualified in my position to execute this Deemed Final Certificate
for Preliminary Official Statement as an Issuer which will use this Preliminary Official
Statement with respect to our municipal securities offering.
2. As an issuer of securities, we understand that we are responsible for the content of our
Preliminary Official Statement and Final Official Statement required under securities laws
and are in good faith trying to satisfy these responsibilities.
3. We have reviewed the Preliminary Official Statement and believe that all information
provided in the draft Preliminary Official Statement is accurate, not false, not misleading and
that the Preliminary Official Statement does not omit to state any material fact.
4. We deem the Preliminary Official Statement dated June 7, 2018 as final under SEC Rule
15c2-12, meaning that it includes all material information, except information regarding the
offering price, interest rate, selling compensation, aggregate principal amount, principal
amount per maturity, delivery dates, any other terms or provisions required to be specified in
a competitive bid, ratings, other terms of the securities depending on such matters, and the
identity of the underwriters.
5. We authorize Ehlers to disseminate copies of the Preliminary Official Statement to possible
Underwriters for this municipal security.
6. We understand that the City Council will rely on an accurate Preliminary Official Statement
and required supplements, as necessary, to be deemed as our final Official Statement at the
time of the sale of the municipal securities and that we, as the issuer, have an obligation to
disclose to all participating parties of this transaction any material developments impacting
the Issuer or the municipal securities from this date going forward through the delivery of
these municipal securities to the successful Underwriter.
Executed as of this 'day of2018
City of Gem Lake, Minnesota
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PRELIMINARY OFFICIAL STATEMENT DATED JUNE 7, 2018
In the opinion of Kennedy & Graven, Chartered, Bond Counsel, based on present federal and Minnesota laws, regulations, rulings and decisions (which exclude any
pending legislation which mayhave a retroactive effect), and assuming compliance with certain covenants, interest to be paid on the Bonds is excluded from gross income
for federal income tax purposes and, to the same extent, front taxable net income of individuals, estates and trusts for Minnesota income tax purposes, and is not a
preference item for purposes of computing the federal alternative minimum tax (although interest on the Bonds is included in adjusted current earnings in calculating
corporate alternative minimum taxable income for taxable years that began prior to January], 2018) or the Minnesota alternative minimum tax imposed on individuals,
trusts, and estates. Such interest is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income, No opinion will be
expressed by Bond Counsel regarding other state orfederal tax consequences caused by the receipt or accrual ofinterest on the Bonds or arising i vith respect to ownership
of the Bonds. See "Tax Exemption" herein.
The City will designate the Bonds as "qualified tax-exempt obligations"for purposes of Section 265(b)(3) ofthe Internal Revenue Code of 1986, as amended, relating
to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt
obligations.
New Issue Rating Application Made: S&P Global Ratings
CITY OF GEM LAKE, MINNESOTA
(Ramsey County)
(Minnesota City Credit Enhancement Program)
$665,000* GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2018A
PROPOSAL OPENING: June 19, 2018, 10:00 A.M., C.T. CONSIDERATION: June 19, 2018, 7:00 P.M., C.T.
PURPOSE/AUTHORITY/SECURITY: The $665,000* General Obligation ImprovementBonds, Series 2018A (the'Bonds") are being
issued pursuant to Minnesota Statutes, Chapters 429 and 475, by the City of Gent Lake, Minnesota (the "City") for the purpose of
financing various public improvements within the City. The Bonds will be general obligations of the City for which its full faith, credit
and taxing powers are pledged. Delivery is subject to receipt of an 'approving. legal opinion of Kennedy & Graven, Chartered,
Minneapolis, Minnesota.
DATE OF BONDS
MATURITY:
MATURITY
ADJUSTMENTS:
TERM BONDS:
INTEREST:
July 12, 20'18
February 1 as follows:
Year
2020 $35,000
2021 40,000
Year Amount* Year Amount*
2025 $40,000 2030 $45,000
2026 45,000 2031 50,000
2022 40,000 2027 45,000 2032 50,000
2023 40,000 2028 45,000 2033 50,000
2024 40,000 2029 45,000 2034 55,000
* The City reserves the right to increase or decrease the principal amount of the Bonds on the day of
sale, in increments of $5,000 each. Increases or decreases may be made in any maturity. If any principal
amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross spread
per $1,000.
See "Term Bond Option" herein.
February 1, 2019 and semiannually thereafter.
OPTIONAL REDEMPTION: Bonds maturing February 1, 2028 and thereafter are subject to call for prior redemption on February 1,
2027 and any date thereafter, at a price of par plus accrued interest.
MINIMUM PROPOSAL: $655,025.
GOOD FAITH DEPOSIT: A good faith deposit in the amount of $13,300 shall be [Wade by the winning bidder by wire transfer of
funds.
PAYING AGENT:
Bond Trust Services Corporation
BOND COUNSEL:
Kennedy & Graven, Chartered
MUNICIPAL ADVISOR:
Ehlers and Associates, Inc.
BOOK -ENTRY -ONLY:
See 'Book -Entry -Only System" herein (unless otherwise specified by the purchaser).
REPRESENTATIONS
No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representation other than
those contained in this Preliminary Official Statement and, if given or made, such other information or representations must not be relied upon
as having been authorized by the City. This Preliminary Official Statement does not constitute an offer to sell or a solicitation of an offer
to buy any of the Bonds in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction.
This Preliminary Official Statement is not to be construed as a contract with the Syndicate Manager or Syndicate Members. Statements
contained herein which involve estimates or matters of opinion are intended solely as such and are not to be construed as representations of
fact. Ehlers & Associates, Inc. prepared this Preliminary Official Statement and any addenda thereto relying on information of the City and
other sources for which there is reasonable basis for believing the information is accurate and complete. Bond Counsel has not participated in
the preparation of this Preliminary Official Statement and is not expressing any opinion as to the completeness or accuracy of the information
contained therein. Compensation of Ehlers & Associates, Inc., payable entirely by the City, is contingent upon the sale of the issue.
COMPLIANCE WITH S.E.C. RULE 15c2-12
Certain municipal obligations (issued in an aggregate amount over $1,000,000) are subject to Rule 15c2-12 promulgated by the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Rule").
Preliminary Official Statement: This Preliminary Official Statement was prepared for the City for dissemination to potential investors.
Its primary purpose is to disclose information regarding the Bonds to prospective underwriters in the interest of receiving competitive proposals
in accordance with the sale notice contained herein. Unless an addendum is posted prior to the sale, this Preliminary Official Statement shall
be deemed nearly final for purposes of the Rule subject to completion, revision and amendment in a Final Official Statement as defined below.
Review Period: This Preliminary Official Statement has been distributed to prospective bidders for review. Comments or requests for the
correction of omissions or inaccuracies must be submitted to Ehlers & Associates, Inc. at least two business days prior to the sale. Requests
for additional information or corrections in the Preliminary Official Statement received on or belbre this date will not be considered a
qualification of a proposal received from an underwriter. If there are any changes, corrections or additions to the Preliminary Official
Statement, interested bidders will be informed by an addendum prior to the sale.
Final Official Statement: Copies of the Filial Official Statement will be delivered to the underwriter (Syndicate Manager) within seven
business days following the proposal acceptance.
Continuing Disclosure: Subject to certain exemptions, issues in an aggregate amount over $1,000,000 may be required to comply with
provisions of the Ib.,lr which require that underwriters obtain from the issuers of municipal securities (or other obligated party) an agreement
for the benefit of the owners of the securities to provide continuing disclosure with respect to those securities. This Preliminary Official
Statement describes the conditions under which the Bonds are exempt or required to comply with the Rule.
CLOSING CERTIFICATES
Upon delivery of the Bonds, the underwriter (Syndicate Manager) will be furnished with the following items: (1) a certificate ofthe appropriate
officials to the effect that at the time of the sale of the Bonds and all times subsequent thereto up to and including the time of the delivery of
the Bonds, this Preliminary Official Statement did not and does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light ofthe circumstances under which they were made, not misleading; (2) a receipt signed
by the appropriate officer evidencing payment for the Bonds; (3) a certificate evidencing the due execution of the Bonds, including statements
that (a) no litigation of any nature is pending, or to the knowledge of signers, threatened, restraining or enjoining the issuance and delivery of
the Bonds, (b) neither the corporate existence or boundaries of the City nor the title of the signers to their respective offices is being contested,
and (c) no authority or proceedings for the issuance of the Bonds have been repealed, revoked or rescinded; and (4) a certificate setting forth
facts and expectations of the City which indicates that the City does not expect to use the proceeds of the Bonds in a manner that would cause
them to be arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or within the meaning of
applicable Treasury Regulations.
TABLE OF CONTENTS
INTRODUCTORY STATEMENT ........................ 1 FINANCIAL STATEMENTS .......................... A-1
THE BONDS ......................................... 1
GENERAL ....................................... 1
OPTIONAL REDEMPTION ......................... 2
AUTHORITY; PURPOSE ........................... 2
ESTIMATED SOURCES AND USES ................. 2
SECURITY ...................................... 2
RATING.........................................3
STATE OF MINNESOTA CREDIT ENHANCEMENT
PROGRAM....................................3
CONTINUING DISCLOSURE ....................... 4
LEGAL OPINION ................................. 4
TAX EXEMPTION ................................ 4
QUALIFIED TAX-EXEMPT OBLIGATIONS ........... 5
MUNICIPAL ADVISOR ............................ 5
MUNICIPAL ADVISOR AFFILIATED COMPANIES .... 6
INDEPENDENT AUDITORS ........................ 6
RISK FACTORS..................................6
VALUATIONS ....................................... 8
OVERVIEW...................................... 8
CURRENT PROPERTY VALUATIONS .............. 9
2017/18 NET TAX CAPACITY BY CLASSIFICATION.. 10
TREND OF VALUATIONS ........................ 10
LARGER TAXPAYERS ........................... I 1
DEBT.............................................. 12
DIRECT DEBT ................... . .............. 12
SCHEDULES OF BONDED INDEBTEDNESS ......... 13
DEBT LIMIT .................................... 15
OVERLAPPING DEBT ............................ 15
DEBT RATIOS ............................... .. 16
DEBT PAYMENT HISTORY ....................... 16
FUTURE FINANCING .......................... 16
TAX RATES, LEVIES AND COLLECTIONS .............. 17
TAX LEVIES AND COLLECTIONS ................. 17
TAX CAPACITY RATES .......................... 17
LEVY LIMITS ................................ 18
THE ISSUER ..................................... . 19
CITY GOVERNMENT ............................ 19
EMPLOYEES; PENSIONS; UNIONS ................ 19
POST EMPLOYMENT BENEFITS ................. 19
LITIGATION .............................. 19
MUNICIPAL BANKRUPTCY ................ .... 19
FUNDS ON HAND ............................ .. 20
ENTERPRISE FUNDS ......................... 20
SUMMARY GENERAL FUND INFORMATION .... 21
GENERAL INFORMATION ............................ 22
LOCATION ..................................... 22
LARGER EMPLOYERS ........................... 22
BUILDING PERMITS ........................... 23
U.S. CENSUS DATA ............................. 24
EMPLOYMENT/UNEMPLOYMENT DATA ......... 24
FORM OF LEGAL OPINION .......................... B-1
BOOK -ENTRY -ONLY SYSTEM ....................... C-1
FORM OF CONTINUING DISCLOSURE CERTIFICATE ... D-1
TERMS OF PROPOSAL .............................. E-1
111
CITY OF GEM LAKE
CITY COUNCIL
Robert Uzpen
Faith Kuny
Jim Linder
Gretchen Artig-Swomley
Len Cacioppo
Mayor
Council Member
Council Member
Council Member
Council Member
ADMINISTRATION
Dori L.eunhardt. City Administrator -Clerk
Tom Kell-, City Treasurer
PROFESSIONAL SERVICES
Term Expires
January 2021
January 2021
January 2021
January 2019
January 2019
Kennedy & Graven, Chartered, Bond Counsel, Minneapolis, Minnesota
Ehlers & Associates, Inc., Municipal Advisors, Roseville, Minnesota
(Other offices located in Waukesha, Wisconsin, Chicago, Illinois and Denver, Colorado)
iv
INTRODUCTORY STATEMENT
This Preliminary Official Statement contains certain information regarding the City of Gem Lake, Minnesota (the
"City") and the issuance of its $665,000* General Obligation Improvement Bonds, Series 2018A (the "Bonds"). Any
descriptions or summaries of the Bonds, statutes, or documents included herein are not intended to be complete and
are qualified in their entirety by reference to such statutes and documents and the form of the Bonds to be included
in the resolution authorizing the sale of the Bonds ("Award Resolution") to be adopted by the City Council on June
19, 2018.
Inquiries may be directed to Ehlers & Associates, Inc. ("Ehlers" or the "Municipal Advisor"), Roseville, Minnesota,
(651) 697-8500, the City's Municipal Advisor. A copy of this Preliminary Official Statement may be downloaded
from Ehlers' web site at www.ehiers-inc.com by connecting to the Bond Sales link and following the directions at
the top of the site.
THE BONDS
GENERAL
The Bonds will be issued in fully registered form as to both principal and interest in denominations of $5,000 each
or any integral multiple thereof, and will be dated, as originally issued, as of July 12, 2018. The Bonds will mature
on February 1 in the years and amounts set forth on the cover of this Preliminary Official Statement. Interest will be
payable on February 1 and August 1 of each year, commencing February 1, 2019, to the registered owners of the
Bonds appearing of record in the bond register as of the close of business on the 15th day (whether or not a business
day) of the immediately preceding month. Interest will be computed upon the basis of a 360-day year of twelve 30-
day months and will be rounded pursuant to rules of the Municipal Securities Rulemaking Board ("MSRB" ). The
rate for any maturity may not be more than 1.00% less than the rate for any preceding maturity. (For
example, if a rate of 4.50% is proposed for the 2020 maturity, then the lowest rate that may be proposed for
any later maturity is 3.50%.) All Bonds of the same maturity must bear interest from the date of issue until paid
at a single, uniform rate. Each rate1nust be expressed in an integral multiple of 51100 or 1/8 of 1%.
Unless otherwise specified by the purchaser, the Bonds will be registered in the name of Cede & Co., as nominee for
The Depository Trust Company, New York, New York ("DTC"). (See "Book -Entry -Only System" herein.) As long
as the Bonds are held under the book -entry system, beneficial ownership interests in the Bonds may be acquired in
book -entry form only, and all payments of principal of, premium, if any, and interest on the Bonds shall be made
through the facilities of DTC and its participants. If the book -entry system is terminated, principal of, premium, if
any, and interest on the Bonds shall be payable as provided in the Award Resolution,
The City has selected Bond Trust Services Corporation, Roseville, Minnesota, to act as paying agent (the "Paying
Agent"). Bond Trust Services Corporation and Ehlers are affiliate companies. The City will pay the charges for
Paying Agent services. The City reserves the right to remove the Paying Agent and to appoint a successor.
*Preliminary, subject to change.
OPTIONAL REDEMPTION
At the option of the City, the Bonds maturing on or after February 1, 2028 shall be subject to optional redemption
prior to maturity on February 1, 2027 and on any date thereafter, at a price of par plus accrued interest.
Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the selection
of the amounts and maturities of the Bonds to be redeemed shall be at the discretion of the City. If only part of the
Bonds having a common maturity date are called for redemption, then the City or Paying Agent, if any, will notify
DTC of the particular amount of such maturity to be redeemed. DTC will determine by lot the amount of each
participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial
ownership interest in such maturity to be redeemed.
Notice of redemption shall be sent by mail not more than 60 days and not less than 30 days prior to the date fixed for
redemption to the registered owner of each Bond to be redeemed at the address shown on the registration books.
AUTHORITY; PURPOSE
The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475, by the City for the purpose of
financing construction of the 2018 Scheuneman Road Reconstruction Project in the City.
ESTIMATED SOURCES AND USES*
Sources
Par Amount of Bonds $665,000
Total Sources $665,000
Uses
TotalVerwriteis�unt (1.500%) $9,975
Costs 33,000
DeposInterest (CIF) Fund 11,188
Deposit to Project Construction Fund 610,179
Rounding Amount 658
Total Uses $665,000
*Preliminary, subject to change
SECURITY
The Bonds are general obligations of the City for which its full faith, credit and taxing powers are pledged without
limitation as to rate or amount. The City anticipates that the debt service will be paid from a combination of special
assessments levied against properties benefitted by improvements financed by the Bonds and from ad valorem
property taxes. The City anticipates the ad valorem taxes to be cancelled each year with available sewer revenues and
any future water revenues. Receipt of special assessments and collection of ad valorem taxes will be sufficient to
provide not less than 105% of principal and interest on the Bonds as required by Minnesota law.
Should the revenues pledged for payment of the Bonds be insufficient to pay the principal and interest as the same
shall become due, the City is required to pay maturing principal and interest from moneys on hand in any other fund
of the City not pledged for another purpose and/or to levy additional taxes for this purpose upon all the taxable
property in the City, without limitation as to rate or amount.
RATING
The City will be participating in the State of Minnesota Credit Enhancement Program ("MNCEP") for this issue and
is requesting a rating from S&P Global Ratings ("S&P"). S&P has a policy which assigns a minimum rating of
"AA+" to issuers participating in the MNCEP. The "AA+" rating is based on the State of Minnesota's current "AA+"
rating from S&P. See "STATE OF MINNESOTA CREDIT ENHANCEMENT PROGRAM" for further details.
Such rating reflects only the views of such organization and explanations of the significance of such rating may be
obtained from the rating agency furnishing the same. Generally, a rating agency bases its rating on the information
and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that such
rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by such
rating agency, if in the judgement of such rating agency circumstances so warrant. Any such downward revision or
withdrawal of such rating may have an adverse effect on the market price of the Bonds.
Such rating is not to be construed as a recommendation of the rating agency to buy, sell or hold the Bonds, and the
rating assigned by the rating agency should be evaluated independently. Except as may be required by the Disclosure
Undertaking described under the heading "CONTINUING DISCLOSURE" neither the City nor the underwriter
undertake responsibility to bring to the attention of the owner of the Bonds any proposed changes in or withdrawal
of such rating or to oppose any such revision or withdrawal.
The City currently does not have an underlying rating and will not be reque5iig�aii"underlying rating on this issue.
STATE OF MINNESOTA CREDIT ENHANCEMENT PROGRAM.0
By resolution adopted for this issue on May 15, 2018 (tlie "Resolution"), the City has covenanted and obligated itself
to be bound by the provisions of Minnesota Statutes. Section 446A.086 (the "Act"), which provides for payment by
the State of Minnesota in'the event of a potential default of certain obligations. The City has entered into a Credit
Enhancement Program Agteement (the "Agreement") with the Minnesota Public Facilities Authority (the
"Authority"), which is acting on behalf of the -State of Minnesota. The provisions of the Agreement shall be binding
on the City as long as any obligations of the issue remain outstanding.
W-.
The City covenants in the Agreement to deposit with the paying agent for the issue three business days prior to the
date on which a payment is due an amount sufficient to make that payment. Under the Agreement, if the City believes
it may be unable to make a principal or interest payment for this issue on the due date, it must notify the Authority
not less than 15 business days prior to the date a payment is due on the Bonds if the City will be unable to make all
or a portion of the payment. The City's agreement with the Paying Agent for the Bonds requires the Paying Agent
to immediately inform the Minnesota Commissioner of Management and Budget, with a copy to the Authority, if the
Paying Agent becomes aware of a default or potential default in the payment of principal or interest on the Bonds,
or if, on the day two business days before the date a payment is due on the Bonds, there are insufficient funds on
deposit with the Paying Agent to make the payment.
If the City is unable to make any portion of the payment on the Bonds on or before the date due, the State of
Minnesota, acting through the Authority, shall make such payment in its place pursuant to the Act, providing that
funds are available in the State General Fund. The obligation to snake a payment under the Act is not a general
obligation of the State of Minnesota. The Act does not obligate the Minnesota legislature to provide for the
availability of funds in the General Fund for this purpose.
CONTINUING DISCLOSURE
In order to assist the underwriters in complying with Rule 15c2-12 promulgated by the Securities and Exchange
Commission, pursuant to the Securities Exchange Act of 1934, as amended (the "Rule"), the City shall covenant to
take certain actions pursuant to the Award Resolution adopted by the Common Council by entering into a Continuing
Disclosure Certificate (the "Disclosure Undertaking") for the benefit of holders, including beneficial holders. The
Disclosure Undertaking requires the City to provide electronically or in the manner otherwise prescribed certain
financial information annually and to provide notices of the occurrence of certain events enumerated in the Rule. The
details and terms ofthe Disclosure Undertaking for this issue are set forth in Appendix D to be executed and delivered
by the City at the time of delivery of the Bonds. Such Disclosure Undertaking will be in substantially the form
attached hereto.
In the previous five years, the City believes it has not failed to comply in all material respects with its prior
undertakings under the Rule.
A failure by the City to comply with any Disclosure Undertaking will not constitute an event of default on this issue
or any issue outstanding. However, such a failure may adversely affect the transferability and liquidity of the Bonds
and their market price.
The City will file its continuing disclosure information using the Electronic Municipal Market Access ("EMMA")
system or any system that may be prescribed in the future. Investors will Ile ahle to access continuing disclosure
information filed with the MSRB at www.emma.msrb.orF-.
LEGAL OPINION
An opinion as to the validity of the Bonds and the exemption from taxation of the interest thereon will be furnished
by Kennedy & Graven, Chartered, Minneapolis, Minnesota, Bond Counsel to the City, and will be available at the
time of delivery of the Bonds. The legal opinion will state that the Bonds are valid and binding general obligations
of the City; provided that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited
by bankruptcy, insolvency, `reorganization, moratorium, and other similar laws affecting creditors' rights and by
equitable principles (which may be applied in either a legal or equitable proceeding). See "FORM OF LEGAL
OPINION" found in Appendix B.
TAX EXEMPTION
In the opinion of Bond Counsel, under existing statutes, regulations, rulings and decisions, interest on the Bonds is
excluded from gross income of the owners thereof for purposes of federal income taxation and is excluded from
taxable net income of individuals, estates or trusts for purposes of State of Minnesota income taxation, but is subject
to State of Minnesota franchise taxes measured by income that are imposed upon corporations, including financial
institutions.
Noncompliance following the issuance of the Bonds with certain requirements of the Internal Revenue Code of 1986,
as amended (the "Code") and covenants of the Award Resolution may result in the inclusion of interest on the Bonds
in gross income (for federal tax purposes) and taxable net income (for State of Minnesota tax purposes) of the owners
thereof. 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.
The Code imposes an alternative minimum tax with respect to individuals on alternative minimum taxable income
(although interest on the Bonds is included in adjusted current earnings in calculating corporate alternative minimum
taxable income for taxable years that began prior to January 1, 2018). Adjusted current earnings include income
received that is otherwise exempt from taxation such as interest on the Bonds.
The Code provides that in the case of an insurance company subject to the tax imposed by Section 831 of the Code,
the amount which otherwise would be taken into account as "losses incurred" under Section 832(b)(5) shall be reduced
by an amount equal to 15% of the interest on the Bonds that is received or accrued during the taxable year.
Interest on the Bonds may be included in the income of a foreign corporation for purposes of the branch profits tax
imposed by Section 884 of the Code. Under certain circumstances, interest on the Bonds may be subject to the tax
on "excess net passive income" of Subchapter S corporations imposed by Section 1375 of the Code.
The above is not a comprehensive list of all federal tax consequences which may arise from the receipt of interest on
the Bonds. The receipt of interest on the Bonds may otherwise affect the federal or State income tax liability of the
recipient based on the particular taxes to which the recipient is subject and the particular tax status of other items or
deductions. Bond Counsel expresses no opinion regarding any such consequences. All prospective purchasers of the
Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax considerations for,
purchasing or holding the Bonds.
Legislative proposals .90014
Bond Counsel's opinion is given as of its date and Bond Counsel assumes no�bbligation to update, revise, or
supplement such opinion to reflect any changes in facts or circumstances
r any changes in law that may hereafter
occur. Proposals are regularly introduced in both the United States House of Representatives and the United States
Senate that, if enacted, could alter or affect the tax-exempt status on municipal bonds. For example, legislation has
been proposed that would. among other things, limit the amount,9f exclusions (including tax-exempt interest) or
deductions that certain higher -income taxpayers could use to reduce their tax liability. The likelihood of adoption
of this or any other such legislative proposal relating to tax-exempt bonds cannot be reliably predicted. If enacted
into law, current or future proposals may have a prospective or retroactive effect and could affect the value or
marketability of tax-exempt bonds (including the Bonds). Prospective purchasers of the Bonds should consult their
own tax advisors regarding the impact of any such change in law.
QUALIFIED TAX-EXEMPT OBLIGATIONS
The City will designate the Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the
Code relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest
expense that is allocable to carrying and acquiring tax-exempt obligations. "Qualified tax-exempt obligations" are
treated as acquired by a financial institution before August 8, 1986. Interest allocable to such obligations remains
subject to the 20% disallowance under prior law.
MUNICIPAL ADVISOR
Ehlers has served as municipal advisor to the City in connection with the issuance of the Bonds. The Municipal
Advisor cannot participate in the underwriting of the Bonds. The financial information included in this Preliminary
Official Statement has been compiled by the Municipal Advisor. Such information does not purport to be a review,
audit or certified forecast of future events and may not conform with accounting principles applicable to compilations
of financial information. Ehlers is not a firm of certified public accountants. Ehlers is registered with the Securities
and Exchange Commission and the MSRB as a Municipal Advisor.
MUNICIPAL ADVISOR AFFILIATED COMPANIES
Bond Trust Services Corporation ("BTSC") and Ehlers Investment Partners, LLC ("EIP") are affiliate companies of
Ehlers. BTSC is chartered by the State of Minnesota and authorized in Minnesota, Wisconsin, and Illinois to transact
the business of a limited purpose trust company. BTSC provides paying agent services to debt issuers. EIP is a
Registered Investment Advisor with the Securities and Exchange Commission. EIP assists issuers with the investment
of bond proceeds or investing other issuer funds. This includes escrow bidding agent services. Issuers, such as the
City, have retained or may retain BTSC and/or EIP to provide these services. If hired, BTSC and/or EIP would be
retained by the City under an agreement separate from Ehlers.
INDEPENDENT AUDITORS
The basic financial statements of the City for the fiscal year ended December 31, 2016 have been audited by
CliftonLarsonAllen LLP, Minneapolis, Minnesota, independent auditors (the "Auditor"). The report of the Auditor,
together with the basic financial statements, component units financial statements, and notes to the financial
statements are attached hereto as "APPENDIX A — FINANCIAL STATEMENTS". The Auditor has not been
engaged to perform and has not performed, since the date of its report included herein, any procedures on the financial
statements addressed in that report. The Auditor also has not performed any procedures relating to this Preliminary
Official Statement.
RISK FACTORS
r�
Following is a description of possible risks to holders of the Bonds without weighting as to probability. This
description of risks is not intended to be all-inclusive. and there may other risks not now perceived or listed here.
Taxes: The Bonds are ger eral obligations of the Cite, tlie,ultimate payment of which rests in the City's ability to levy
and collect sufficient taxes td,pay debt service sliouId other revenue (special assessments) be insufficient. In the event
of delayed billing, collection's! dtstrib4tion of property taxes, sufficient funds may not be available to the City in time
to pay debt service when du�
State Actions: Many elements of local government finance, including the issuance of debt and the levy of property
taxes, are controlled by state government. Future actions of the state may affect the overall financial condition of the
City, the taxable value of property within the City, and the ability of the City to levy and collect property taxes.
Future Changes in Law: Various State and federal laws, regulations and constitutional provisions apply to the City
and to the Bonds. The City can give no assurance that there will not be a change in or interpretation of any such
applicable laws, regulations and provisions which would have a material effect on the City or the taxing authority of
the City.
Ratings; Interest Rates: In the future, the City's credit rating may be reduced or withdrawn, or interest rates for this
type of obligation may rise generally, either possibility resulting in a reduction in the value of the Bonds for resale
prior to maturity.
Tax Exemption: If the federal government or the State of Minnesota taxes all or a portion of the interest on
municipal obligations, directly or indirectly, or if there is a change in federal or state tax policy, 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 Award Resolution may result in the inclusion of interest on the Bonds in gross income of
the recipient for United States income tax purposes 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 federal or State of Minnesota
income taxation, retroactive to the date of issuance.
Continuing Disclosure: A failure by the City to comply with the Disclosure Undertaking for continuing disclosure
(see "CONTINUING DISCLOSURE") will not constitute an event of default on the Bonds. Any such failure must
be reported in accordance with the Rule and must be considered by any broker, dealer, or municipal securities dealer
before recommending the purchase or sale of the Bonds in the secondary market. Such a failure may adversely affect
the transferability and liquidity of the Bonds and their market price.
State Economy; State Aids: State of Minnesota 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.'
v
Economy: A combination of economic, climatic, political or civil disruptions orIrrorist actions outside of the
control of the City, including loss of major taxpayers or major employers, could affect the local economy and result
in reduced tax collections and/or increased demands upon local government. Real or perceived threats to the financial
stability of the City may have an adverse :effect on the value of the Bonds in the secondary market.
Secondary Market for the Bonds: No assurance can be given that a secondary market will develop for the purchase
and sale of the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. The
underwriters are not obligated to -engage in secondary market trading or to repurchase any of the Bonds at the request
of the owners thereof. Prices of the Bonds as traded in the secondary market are subject to adjustment upward and
downward in response to changes in the credit markets and other prevailing circumstances. No guarantee exists as
to the future market value of the Bonds. Such market value could be substantially different from the original purchase
price.
Bankruptcy: The rights and remedies of the holders may be limited by and are subject to the provisions of federal
bankruptcy laws, to other laws, or equitable principles that may affect the enforcement of creditors' rights, to the
exercise of judicial discretion in appropriate cases and to limitations on legal remedies against local governments.
The opinion of Bond Counsel to be delivered with respect to the Bonds will be similarly qualified.
7
VALUATIONS
OVERVIEW
All non-exempt property is subject to taxation by local taxing districts. Exempt real property includes Indian lands, public property, and
educational, religious and charitable institutions. Most personal property is exempt from taxation (except investor -owned utility mains,
generating plants, etc.).
The valuation of property in Minnesota consists of three elements. (1) The estimated market value is set by city or county assessors. Not less
than 20% of all real properties are to be appraised by local assessors each year. (2) The taxable market value is the estimated market value
adjusted by all legislative exclusions. (3) The tax capacity (taxable) value of property is determined by class rates set by the State Legislature.
The tax capacity rate varies according to the classification of the property. Tax capacity represents a percent of taxable market value.
The property tax rate for a local taxing jurisdiction is determined by dividing the total tax capacity or market value of property within the
jurisdiction into the dollars to be raised from the levy. State law determines whether a levy is spread on tax capacity or market value. Major
classifications and the percentages by which tax capacity is determined are:
Type of Property
Residential homestead'
Agricultural homestead'
Agricultural non -homestead
Seasonal recreational residential
Residential non -homestead:
Industrial/Commercial/Utilitys
2015/16
First $500,000 - 1.00%
Over $500,000 - 1.25%
First $500,000 HGA - 1.00%
Over $500,000 HGA - 1.25%
First $2,140,000 - 0.50% z
Over $2,140,000 - 1.00% a
Land - 1.00% 2
First $500,600 - 1.009i6 3
0%cr $500,000 - 1.25%s
1 unit - Ist $500,000 - 1.00%..
Over $500,000 - 1.25%
2-3 units - 1.25%
4 or more - 1.25%
Small City" - 1.25%
Affordable Rental:
First $106,000 - .75%
Over $106,000 - .25%
First $150,000 - 1.50%
Over $150,000 - 2.00%
2016/17 2017/18
First $500,000 - 1.00% First $500,000 - 1.00%
Over $500,000 - 1.25% 0 Over $500,000 - 1.25%
First $500,0001IGA - 1.00% First $500,000 HGA - 1.00%
Over $500,000 IIGA - 1.259 Over $500,000 HGA - 1.25%
First $2,050,000 - 0.50% 2 First $1,940,000 - 0.50% 2
'Over $2,050,00,j.00%2 Over $1,940,000 - 1.00%2
Land - 1.00% Land - 1.00% z
First S500.000.- 1.00%'
Over $500',000 - 1.25%3
1 unit - 1 st $500,000 - I.00%
Over $500,000 - 1.25%
2-3 units - 1.25%
4 or more - 1.25%
Small City' - 1.25%
Affordable Rental:
First $115,000 - .75%
Over $115,000 - .25%
First $150,000 - 1.50%
Over $150,000 - 2.00%
First $500,000 - LOW
Over $500,000 - 1.25%'
1 unit- 1st $500,000 - 1.00%
Over $500,000 - 1.25%
2-3 units - 1.25%
4 or more - 1.25%
Small City' - 1.25%
Affordable Rental:
First $121,000 - .75%
Over $121,000 - .25%
First $150,000 - 1.50%
Over $150,000 - 2.00%
A residential property qualifies as "homestead" if it is occupied by the owner or a relative of the owner on the
assessment date.
2 Applies to land and buildings. Exempt from referendum market value tax.
3 Exempt from referendum market value tax.
4 Cities of 5,000 population or less and located entirely outside the seven -county metropolitan area and the adjacent
nine -county area and whose boundaries are 15 miles or more from the boundaries of a Minnesota city with a
population of over 5,000.
5 The estimated market value of utility property is determined by the Minnesota Department of Revenue.
CURRENT PROPERTY VALUATIONS
2016/17 Economic Market Value
$110 1
2017/18
2017/18
Assessor's Estimated
Net Tax
Market Value
Capacity
Real Estate
$109,242,300
$1,251,565
Personal Property
766,300
15,326
Total Valuation
$110,008,600
$1,266,891
Less: Fiscal Disparities Contribution2
(139,622)
Taxable Net Tax Capacity
$1,127,269
Plus: Fiscal Disparities Distribution'
24,207
Adjusted Taxable Net Tax Capacity
$1,151,476
J'
1
According to the Minnesota Department of Revenue, the Assessor's Estimated Market Value (the "AEMV") for
the City of Gem Lake is about 94.09% of the actual selling prices of property most recently sold in the City. The
sales ratio was calculated by comparing the selling prices with the AEMV. Dividing the AEMV of real estate
by the sales ratio and adding the AEMV of personal property and utility, railroads and minerals, if any, results
in an Economic Market Value ("EMV") for the City of $110,431,535.
Z Each community in the seven -county metropolitan area contributes 40% of the growth in its commercial -
industrial property tax base since 1972 to an area pool which is then distributed among the municipalities on the
basis of population, special needs, etc. Each governmental unit makes a contribution and receives a distribution --
sometimes gaining and sometimes contributing net tax capacity for tax purposes.
2017/18 NET TAX CAPACITY BY CLASSIFICATION
2017/18
Net Tax Capacity
Residential homestead
$ 666,627
Agricultural
2,200
Commercial/industrial
407,463
Non -homestead residential
149,695
Commercial & residential seasonal/rec.
25,580
Personal property
15,326
Total
$1,266,891
TREND OF VALUATIONS
Assessor's
Levy
Estimated
Year
Market Value
2013/14
$87,053,000
2014/15
91,031,000
2015/16
97,941,400
2016/17
101.949.600
2017/18
110,008,600
Percent of Total
Net Tax Capacity
52.62%
0.17%
32.16%
11.82%
2.02%
1.21%
100.00%
Assessor's
Adjusted
Taxable
Taxable
Percent +/- in
Market
Net Tax
Net Tax
Estimated
Value
Capacity`
Capacity2
Market Value
$76,988,900
S 972,912
866,470
-5.99%
81,794,200
Lo21,1 I �
917,463
+4.57%
89.366,700
1,101,815
1,000,272
+7.59%
94.614,300
1,177,923
1,074,813
+6.13%
100,418,900
1,266,891
1,151,476
+5.83%
Net Tax Capacity is before fiscal disparities adjustments.
Adjusted Taxable Net Tax Capacity is after fiscal disparities adjustments.
10
LARGER TAXPAYERS
Percent of
2017/18
City's Total
Net Tax
Net Tax
Taxpayer
Type of Property
Capacity
Capacity
Tousley Ford, Inca
Commercial
$ 65,206
5.15%
Hansen Investments LLC
Apartments
45,580
3.60%
Barnett Properties
Commercial
42,050
3.32%
AMC Jeep Renault of White Bear, Inc.
Commercial
33,594
2.65%
Individuals
Residential
29,405
2.32%
DLW Properties LLC &
C/O Waldoch Crafts
Commercial
23,254
1.84%
Individuals
Residential
21,250
1.68%
Individuals
Residential
19,696
1.55%
Gary Nelson Properties
Commercial
60,200
1.52%
Individuals
Residential
19,043
1.50%
Total
$ 318.278
25.12%
City's Total 2017/18 Net Tax Capacity $1,266,891
ire
Source: Current Property Valuations, Net Tax Capacity by Classification, Trend of Valuations and Larger
Taxpayers have been furnished by Ramsey County.
Formerly listed as Tousley Ford.
11
DEBT
DIRECT DEBT'
General Obligation Debt (see schedules following)
Total g.o. debt being paid from taxes $ 655,000
Total g.o. debt being paid from special assessments and taxes (includes the Bonds)* 665,000
Total General Obligation Debt* $1,320,000
*Preliminary, subject to change.
Outstanding debt is as of the dated date of the Bonds.
12
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14
DEBT LIMIT
The statutory limit on debt of Minnesota municipalities other than school districts or cities ofthe first class (Minnesota
Statutes, Section 475.53, subd. 1) is 3% of the Assessor's Estimated Market Value of all taxable property within its
boundaries. "Net debt" (Minnesota Statutes, Section 475.51, subd. 4) is the amount remaining after deducting from
gross debt: (1) obligations payable wholly or partly from special assessments levied against benefitted property
(includes the Bonds); (2) warrants or orders having no definite or fixed maturity; (3) obligations issued to finance any
public revenue producing convenience; (4) obligations issued to create or maintain a permanent improvement
revolving fund; (5) funds held as sinking funds for payment of principal and interest on debt other than those
deductible under 1-4 above; and (6) other obligations which are not to be included in computing the net debt of a
municipality under the provisions of the law authorizing their issuance.
2017/18 Assessor's Estimated Market Value $110,008,600
Multiply by 3% 0.03
Statutory Debt Limit $ 3,300,258
Less: Long -Term Debt Outstanding Being Paid Solely from Taxes (655,000)
Unused Debt Limit $ 2,645,258
OVERLAPPING DEBT'
Taxing District
Ramsey County
I.S.D. No. 624 (White Bear Lake)
2017/18'
Adjusted
T4able letr1nTazCapaci
586,968,191 0.1962%
84,528,102 1.3622%
Metropolitan Council , 3,971,779,581
City's Share of Total Overlapping Debt
tCity's
Total Proportionate
G.O. Debt' Share
$162,035,000
85,805,000
$ 317,913
1,168,836
0,0290% 148,045,000 42,933
$1,529,681
' Overlapping debt is as of the dated date of the Bonds. Only those taxing jurisdictions with general obligation debt
outstanding are included in this section. Does not include non -general obligation debt, self-supporting general
obligation revenue debt, short-term general obligation debt, or general obligation tax/aid anticipation certificates
of indebtedness.
2 Outstanding debt is based on information in Official Statements obtained on EMMA and the Municipal Advisor's
records.
3 The above debt includes all outstanding general obligation debt supported by taxes of the Metropolitan Council.
The Council also has general obligation sewer revenue, wastewater revenue, and radio revenue bonds and lease
obligations outstanding all of which are supported entirely by revenues and have not been included in the
Overlapping Debt or Debt Ratios sections.
15
DEBT RATIOS
Debt/
Current
Debt/Economic Population
Market Value Estimate
G.O. Debt ($110,431,535) (463)
Direct G.O. Debt Being Paid From:
Taxes $ 655,000
Special Assessments & Taxes* 665,000
Total General Obligation Debt (includes the Bonds)* $1,320,000 1.20% $2,850.97
City's Share of Total Overlapping Debt 1,529,681 1.39% $3,303.85
Total* $2,849,681 2.58% $6,154.82
*Preliminary, subject to change
DEBT PAYMENT HISTORY
The City has no record of dofault in the payment of principal and interest on its debt.
FUTURE FINANCING
The City has no current plans f6r additional financing in the next 12 months.
WIG
TAX RATES, LEVIES AND COLLECTIONS
TAX LEVIES AND COLLECTIONS
Net Tax
Total Collected
Collected
Tax Year
Levy'
Following Year
to Date
% Collected
2013/14
$ 230,068
$ 224,520
$ 226,909
98.63%
2014/15
254,107
246,688
248,934
97.96%
2015/16
294,764
289,898
291,757
98.98%
2016/17
425,017
432,711
432,711
101.81%
2017/18
439,281
r--------- --------- --------------------------------
; In process of collection
L-----------------------------------------------
Property taxes are collected in two installments in Minnesota --the first by May 15 and the second by October 15.3
Mobile home taxes are collectible in full by August 31. Minnesota Statutes require that levies (taxes and special
assessments) for debt service be at least 105% of the actual debt service requirements to allow for delinquencies.
TAX CAPACITY RATES°
2013/14
2014/1 S too
2015/16
2016/17
2017/18
Ramsey County
59.105%
54.402%
54.012%
51.173%
49.473%
City of Gem Lake
27.728%)
29.536%
41.111%
39.361%
I.S.D. No. 624 (White Bear Lake)
2S.562° ,
20.66()`% `'
26.236%
23,476%
23.685%
Metropolitan Council
729°ro
V554%
2.524%
2.379%
2.243%
2.153%
qMetro Mos uito Control .
0.511%
0.475%
0.455%
0.440%
Regional Rail Authority -
4.196%
3.938%
4.091%
3.875%
3.830%
Referendum Market Value Rates:
I.S.D. No. 624 (White Bear Lake) 0.27299% 0.23976% 0.23536% 0.22996% 0.22280%
Source: Tax Levies and Collections and Tax Capacity Rates have been furnished by Ramsey County.
' This reflects the Final Levy Certification of the City after all adjustments have been made.
2 Collections are through December 31, 2017.
3 Second half tax payments on agricultural property are due on November 15th of each year.
' After reduction for state aids. Does not include the statewide general property tax against commercial/industrial,
non -homestead resorts and seasonal recreational residential property.
17
LEVY LIMITS
The State Legislature has periodically imposed limitations on the ability of municipalities to levy property taxes. For
taxes levied in 2013, payable in 2014, only, the Legislature imposed a one year levy limit on all counties with a
population greater than 5,000, and all cities with a population greater than 2,500. While these limitations have
expired, the potential exists for future legislation to limit the ability of local governments to levy property taxes. All
previous limitations have not limited the ability to levy for the payment of debt service on bonded indebtedness. For
more detailed information about Minnesota levy limits, contact the Minnesota Department of Revenue or Ehlers &
Associates.
18
THE ISSUER
CITY GOVERNMENT
The City of Gem Lake was organized as a municipality in 1959. The City operates under a statutory form of
government consisting of a five -member City Council of which the Mayor is a voting member. The City
Administrator -Clerk and City Treasurer are responsible for administrative details and financial records.
EMPLOYEES; PENSIONS; UNIONS
The City currently has one full-time employee and no part-time or seasonal employees. All full-time employees of
the City are covered by defined benefit pension plans administered by the Public Employee Retirement Association
of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public
Employees Police and Fire Fund (PEPFF) which are cost -sharing multiple -employer retirement plans. PERA
members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social
Security. See the Notes to Financial Statements in Appendix A for a detailed description of the Plans.
Recognized and Certified Bargaining Units
d—
The City does not have any certified bargaining units.
POST EMPLOYMENT BENEFITS
The City does not pay directly for retirees' post -employment benefits.
LITIGATION
There is no litigation threatened or pending questioning the organization or boundaries of the City or the right of any
of its officers to their respective offices or in any manner questioning their rights and power to execute and deliver
the Bonds or otherwise questioning the validity of the Bonds.
MUNICIPAL BANKRUPTCY
Municipalities are prohibited from filing for bankruptcy under Chapter 11 (reorganization) or Chapter 7 (liquidation)
of the U.S. Bankruptcy Code (11 U.S.C. §§ 101-1532) (the "Bankruptcy Code"). Instead, the Bankruptcy Code
permits municipalities to file a petition under Chapter 9 of the Bankruptcy Code, but only if certain requirements are
met. These requirements include that the municipality must be "specifically authorized" under State law to file for
relief under Chapter 9. For these purposes, "State law" may include, without limitation, statutes of general
applicability enacted by the State legislature, special legislation applicable to a particular municipality, and/or
executive orders issued by an appropriate officer of the State's executive branch.
As of the date hereof, Minnesota Statutes, 471.831, authorizes municipalities to file for bankruptcy relief under
Chapter 9 of the Bankruptcy Code. A municipality is defined in United States Code, title 11, section 101, as amended
through December 31, 1996, but limited to a county, statutory or home rule charter city, or town; or a housing and
redevelopment authority, economic development authority, or rural development financing authority established under
Chapter 469, a home rule charter or special law.
19
FUNDS ON HAND (As of April 30, 2018)
Total Cash
Fund
and Investments
General
$ 253,400
Special Revenue
40,173
Debt Service
101,155
Capital Projects
i
(248,059)
Enterprise Funds
426,022
Total Funds on Hand
$ 572,692
ENTERPRISE FUNDS
Revenues available for debt service on the City's enterprise funds have been as follows as of December 31 each year:
2014 2015 2016
Sewer Utility
Total Operating Revenues $ 49,582 ti 65,286 $ 45,117
Less: Operating Expenses (48.559) (50,205) (42,720)
Operating Income w 1,023 $ 15,081 $ 2,397
Plus: Depreciation I2J- 6 12,457 12,457
Revenues Available r Debt Servicc `~ 13.479 $ 27,538 5 14.854
To be reimbursed from the proceeds of the Bonds.
20
SUMMARY GENERAL FUND INFORMATION
Following are summaries of the revenues and expenditures and fund balances for the City's General Fund. These summaries are
not purported to be the complete audited financial statements of the City, and potential purchasers should read the included
financial statements in their entirety for more complete information concerning the City. Copies of the complete statements are
available upon request. Appendix A includes the City's 2016 audited financial statements.
FISCAL YEAR ENDING DECEMBER 31
COMBINED STATEMENT 2018
2014 2015 2016 2017 Adopted
Audited Audited Audited Unaudited Budget'
Revenues
Property taxes
Special assessments
Intergovernmental
Fees, licenses and permits
Fines and forfeitures
Charges for services
Investment earnings
Other miscellaneous revenues
Total Revenues
Expenditures
Current:
General government
Public safety
Public works
Conservation and Development
Capital outlay
Total Expenditures
Excess of revenues over (under) expenditures
Other Financing Sources (I�ses)
Operating transfers in
Operating transfers out
Total Other Financing Sources (Uses)
Net Changes in Fund Balances
General Fund Balance January 1
Prior Period Adjustment
Residual Equity Transfer in (out)
General Fund Balance December 31
$ 186,063 $ 202,511 $ 223,118 $ 359,657 $ 369,252
0
0
799
0
0
3,393
13,348
9,796
16,618
8,500
57,674
39,222
34,108
45,672
31,200
3,048
2,182
3,210
3,152
3,000
7,616
12,927
5,705
36,949
3,800
2,877
1,677
1,701
869
1,195
21,252
53,969
17.084
5.891
6.500
$ 281,923
$ 325,836
$ 295.521
$ 468.798
$ 423.447
$ 107,590 $ 124,999 $ 134,037 $ 216,275 $ 270,197
109,973 115.115 119,79? 133,361 96,750
79,801 102.228 + 37,508 18,837 36,300
50,892 44,647 51,122 0 0
0 1 0 0 0 U
$ 348,256' $ 386,089 $ 342,460 - $ 368.473 S 403.2•17
5 (66.3331 $ (61,153) $ (46,939) $ 100,325 $ 20,200
$ 0
$ 0
$ 0
$ 0
0
0
0
0
$ 0
$ 0
$ 0
$ 0
$ (66,333)
$ (61,153)
$ (46,939)
$ 100.325
388,010
321,677
260,524
213.585
0
0
0
0
0
0
0
0
$ 321,677 $ 260,524 $ 213,585 $ 313,910
DETAILS OF DECEMBER 31 FUND BALANCE
Nonspendable $ 931 $ 633 $ 926 $ 666
Unassigned 320,746 259,891 212,659 313244
Total $ 321,677 $ 260,524 $ 213,585 $ 313,910
The 2018 budget was adopted on November 21, 2017.
21
GENERAL INFORMATION
LOCATION
The City of Gem Lake, with a 2010 U.S. Census population of 393 and a current population estimate of 463, and
comprising an area of 721 acres, is located approximately 8.6 miles northeast ofthe Minneapolis -St. Paul metropolitan
area, and 2.4 miles west of the City of White Bear Lake.
LARGER EMPLOYERS'
Larger employers in the City of Gem Lake include the following:
Estimated No.
Firm Type of Business/Product of Employees
Auto Nation Automobile dealer 250
Universal Forest Products, Inc. Lumber products 80
Barnett KIA Automobile dealership
► 65
Tundra Companies Electronic parts assemtt'isrs 65
NewTrax Trans portaiion for a isabiliti 60
The Trike Shop •Motorcycle & • or oter dealer 25
PAI ility services 22
Gem Lake Golf Course Go r & country club 20
Nelson Marine Boat dealer sales & service 15
White Bear Floral Florist 10
Source: Reference USA, written and telephone survey (May 2018), and the Minnesota Department of Employment
and Economic Development.
This does not purport to be a comprehensive list and is based on available data obtained through a survey of
individual employers, as well as the sources identified above. Some employers do not respond to inquiries for
employment data.
22
BUILDING PERMITS
New Single Family Homes
No. of building permits
Valuation
All Building Permits
(including additions and remodelings)
No. of building permits
Valuation
Source: The City.
As of May 14, 2018.
2014 2015 2016 2017 2018'
5 1 1 2 2
$2,705,000 $500,000 $800,000 $940,000 $558,000
23 21 28 24 8
$3,056,815 $1,414,851 $1,085,721 $1,191,854 $623,500
23
U.S. CENSUS DATA
Population Trend: City of Gem Lake, Minnesota
2000 U.S. Census population 419
2010 U.S. Census population 393
2016 State Demographer's Estimate 463
Percent of Change 2000 - 2010 -6.21 %
Income and Age Statistics
City of
Ramsey
State of
United
Gem Lake
County
Minnesota
States
2016 per capita income
$56,371
$31,256
$33,225
$29,826
2016 median household income
$118,750
$57,717
$63,217
$55,322
2016 median family income
$130,000
$75,578
$79,595
$67,871
2016 median gross rent
$1,146
$892
$873
$928
2016 median value owner occupied units
$295,500
$199,200
$191,500
$184,700
2016 median age
41.2 yrs.
34.6 yrs.
37.8 yrs.
37.7 yrs.
State of Minnesota United States
City % of 2016 per capita income 169.66 , 189.00%
City % of 2016 median family income 63.33% 191.54%
Housing Statistics
City of Gem Lake
2000 2016 Percent of Change
All Housing Units 145 181 24.83%
Source: 2000 and 2010 Census of Population and Housing, and 2016 American Community Survey (Based on a
five-year estimate), U.S. Census Bureau (Ivw►v.actfinder2.census. gov).
EMPLOYMENT/UNEMPLOYMENT DATA
Rates are not compiled for individual communities within counties.
Average Employment
Year
Ramsey County
2014
265,141
2015
267,618
2016
270,438
2017
276,945
2018, April
282,427
Average Unemplovment
Ramsey County State of Minnesota
4.0% 4.2%
3.6% 3.7%
3.6% 3.8%
3.3% 3.5%
2.7% 3.1 %
Source: Minnesota Department of Employment and Economic Development.
24
APPENDIX A
FINANCIAL STATEMENTS
Potential purchasers should read the included financial statements in their entirety for more complete information
concerning the City's financial position. Such financial statements have been audited by the Auditor, to the extent
and for the periods indicated thereon. The City has not requested the Auditor to perform any additional examination,
assessments or evaluation with respect to such financial statements since the date thereof, nor has the City requested
that the Auditor consent to the use of such financial statements in this Official Statement. Although the inclusion of
the financial statements in this Official Statement is not intended to demonstrate the fiscal condition of the City since
the date of the financial statements, in connection with the issuance of the Bonds, the City represents that there have
been no material adverse change in the financial position or results of operations of the City, nor has the City incurred
any material liabilities, which would make such financial statements misleading.
Copies of the complete audited financial statements for the past three years and the current budget are available upon
request from Ehlers.
A-1
APPENDIX B
FORM OF LEGAL OPINION
(See following page)
APPENDIX C
BOOK -ENTRY -ONLY SYSTEM
The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the securities
(the "Securities"). The Securities will be issued as fully -registered securities registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC.
One fully -registered Security certificate will be issued for [each issue of] the Securities, [each] in the aggregate
principal amount of such issue, and will be deposited with DTC. [If, however, the aggregate principal amount of
[any] issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal
amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.]
2. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning ofthe New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's
participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct
Participants of sales and other securities transactions in deposited securities, through electronic computerized
book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical
movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned
subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC ��the holding company for DTC,
National Securities Clearing Corporation -and Fixed Income Clearing Corporation, all of which are registered
clearing agencies. DTCC is owned by the users of its regulatedtsubsidiaries. Access to the DTC system is also
available to others such as both U.S. and pion-U.S. securities, brokers and dealers, banks, trust companies, and
clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participaills "). DTC has a Standard & Poor's rating of AA+. The DTC Rules
applicable to its Participants are on file with the Securities and Exchange Commission. More information about
DTC can be found at www:dtcc.com.
V,
3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive
a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to
receive written confirmations providing details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers
of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is
discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the
name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized
representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or
such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose
accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect
Participants will remain responsible for keeping account of their holdings on behalf of their customers.
C-1
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to
time. [Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of
notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed
amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that
the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners.
In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request
that copies of notices be provided directly to them.]
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed,
DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be
redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless
authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC
mails an Omnibus Proxy to City as soon as possible after the record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities wi I l be made to Cede & Co., or such
other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct
Participants' accounts upon DTC's receipt of funds and corresponding defaiI information from the City or Agent,
on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants
to Beneficial Owners will be governed by standing instructions. and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not Qf DTC, Agent, or the City, subject to any statutory or regulatory
requirements as may be in effect from time to time. payment of iVAemption proceeds, distributions, and dividend
payments to Cede& Co. (or such other nominee as may be ret Vested by an authorized representative of DTC) is
the responsibility of the City or Agent, disbursement of such payments to Direct Participants will be the
responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of
Direct and Indirect Participants..
9. A Beneficial Owner sha l give notice to elect to have its Securities purchased or tendered, through its Participant,
to [Tender/Remarketing] Agent, and shall effect delivery of such Securities by causing the Direct Participant to
transfer the Participant's interest in the Securities, on DTC's records, to [Tender/Remarketing] Agent. The
requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will
be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's
records and followed by a book -entry credit oftendered Securities to [Tender/Remarketing] Agent's DTC account.
10. DTC may discontinue providing its services as depository with respect to the Securities at any tune by giving
reasonable notice to the City or Agent. Under such circumstances, in the event that a successor depository is not
obtained, Security certificates are required to be printed and delivered.
II. The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor
securities depository). In that event, Security certificates will be printed and delivered to DTC.
12. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources
that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.
C-2
APPENDIX D
FORM OF CONTINUING DISCLOSURE CERTIFICATE
(See following page)
D-1
APPENDIX E
TERMS OF PROPOSAL
$666,000* GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2018A
CITY OF GEM LAKE, MINNESOTA
Proposals for the purchase of $665,000* General Obligation Improvement Bonds, Series 2018A (the "Bonds") of the
City of Gem Lake, Minnesota (the "City") will be received at the offices of Ehlers & Associates, Inc. ("Ehlers"), 3060
Centre Pointe Drive, Roseville, Minnesota 55113-1105, Municipal Advisors to the City, until 10:00 A.M., Central
Time, and ELECTRONIC PROPOSALS will be received via PARITY, in the manner described below, until 10:00
A.M. Central Time, on June 19, 2018, at which time they will be opened, read and tabulated. The proposals will be
presented to the City Council for consideration for award by resolution at a meeting to be held at 7:00 P.M., Central
Time, on the same date. The proposal offering to purchase the Bonds upon the terms specified herein and most
favorable to the City will be accepted unless all proposals are rejected.
PURPOSE
The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475 by the City for the purpose of
financing various public improvements within the City. The Bonds will be general obligations of the City for which
its full faith, credit and taxing powers are pledged.
DATES AND MATURITIES
The Bonds will be dated July 12, 2018, will be issued as fully registered Bonds in the denomination of $5,000 each,
or any integral multiple thereof, and will mature on February 1 as follows:
Year
'Amount* #
Year
Amount*
Year
Amount*
2020
$35,000 '
2025
$40,000
2030
$45,000
2021
40.000
2026
45,000
2031
50,000
2022
40,000
2027
45,000
2032
50,000
2023
40,000
2028
45,000
2033
50,000
2024
40,000
2029
45,000
2034
55,000
ADJUSTMENT OPTION
* The City reserves the right to increase or decrease the principal amount of the Bonds on the day of sale, in
increments of $5,000 each. Increases or decreases may be made in any maturity. If any principal amounts are
adjusted, the purchase price proposed will be adjusted to maintain the same gross spread per $1,000.
TERM BOND OPTION
Proposals for the Bonds may contain a maturity schedule providing for any combination of serial bonds and term
bonds, subject to mandatory redemption, so long as the amount of principal maturing or subject to mandatory
redemption in each year conforms to the maturity schedule set forth above. All dates are inclusive.
E-1
INTEREST PAYMENT DATES AND RATES
Interest will be payable on February 1 and August 1 of each year, commencing February 1, 2019, to the registered
owners of the Bonds appearing of record in the bond register as of the close of business on the 15th day (whether or
not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360-day year
of twelve 30-day months and will be rounded pursuant to rules of the Municipal Securities Rulemaking Board. The
rate for any maturity may not be more than 1.00% less than the rate for any preceding maturity. (For
example, if a rate of 4.50% is proposed for the 2020 maturity, then the lowest rate that may be proposed for
any later maturity is 3.50%.) All Bonds of the same maturity must bear interest from date of issue until paid at a
single, uniform rate. Each rate must be expressed in an integral multiple of 51100 or 1/8 of 1 %.
BOOK -ENTRY -ONLY FORMAT
Unless otherwise specified by the purchaser, the Bonds will be designated in the name of Cede & Co., as nominee
for The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the
Bonds, and will be responsible for maintaining a book -entry system for recording the interests of its participants and
the transfers of interests between its participants. The participants will be responsible for maintaining records
regarding the beneficial interests of the individual purchasers of the Bonds. So long as Cede & Co. is the registered
owner of the Bonds, all payments of principal and interest will be made to the depository which, in turn, will be
obligated to remit such payments to its participants for subsequent disbursement to the tLenefieial owners ofthe Bonds.
PAYING AGENT
The City has selected Bond Trust Services Corporation. Ro,e% tile, N. 1innesota, to act as paying agent (the "Paying
Agent"). Bond Trust Services Corporation.and Ehlers are affiliate companies. The City will pay the charges for
Paying Agent services. The City reserves the right to remo\ e the Pad ing Agent and to appoint a successor.
� w
OPTIONAL REDEMPTION
At the option of the City, �thBondsmtu
aring on or after February 1, 2028 shall be subject to optional redemption
p h',
prior to maturity on February 1, 2027 and on any date thereafter, at a price of par plus accrued interest.
Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the selection
of the amounts and maturities of the Bonds to be redeemed shall be at the discretion of the City. If only part of the
Bonds having a common maturity date are called for redemption, then the City or Paying Agent, if any, will notify
DTC of the particular amount of such maturity to be redeemed. DTC will determine by lot the amount of each
participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial
ownership interest in such maturity to be redeemed.
Notice of redemption shall be sent by mail not more than 60 days and not less than 30 days prior to the date fixed for
redemption to the registered owner of each Bond to be redeemed at the address shown on the registration books.
DELIVERY
On or about July 12, 2018, the Bonds will be delivered without cost to the winning bidder at DTC. On the day of
closing, the City will furnish to the winning bidder the opinion of bond counsel hereinafter described, an arbitrage
certification, and certificates verifying that no litigation in any manner questioning the validity of the Bonds is then
pending or, to the best knowledge of officers of the City, threatened. Payment for the Bonds must be received by the
City at its designated depository on the date of closing in immediately available funds.
E-2
LEGAL OPINION
An opinion as to the validity of the Bonds and the exemption from taxation of the interest thereon will be furnished
by Kennedy & Graven, Chartered, Minneapolis, Minnesota, Bond Counsel to the City, and will be available at the
time of delivery of the Bonds. The legal opinion will state that the Bonds are valid and binding general obligations
of the City; provided that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited
by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights and by
equitable principles (which may be applied in either a legal or equitable proceeding). See "FORM OF LEGAL
OPINION" found in Appendix B.
SUBMISSION OF PROPOSALS
Proposals must not be for less than $655,025 plus accrued interest on the principal sum of $665,000 from date of
original issue of the Bonds to date of delivery. Prior to the time established above for the opening of proposals,
interested parties may submit a proposal as follows:
1) Electronically to bondsate(Dehlers-inc.com; or
2) Facsimile submission to Ehlers, Facsimile Number (651) 697-8555; or
3) Electronically via PARITY in accordance with this Terms of Proposal untii 10:00 A.M. Central Time, but
no proposal will be received after the time for receiving proposals specified above. To the extent any
instructions or directions set forth in PARITY conflict w(th this Terms of Proposal, the terms of this Terms
of Proposal shall control. For further informatiott;about PARITY; potential bidders may contact Ehlers or
i-Deal LLC at 1359 Broadway, 2" New YgorWew York 10018, Telephone (212) 849-5021.
Proposals must be submitted to Ehlers via one of the methods described above and must be received prior to the time
established above for the opening of proposals. Each proposal must be unconditional except as to legality. Neither
the City nor Ehlers shall be responsible for any failure to.receive a facsimile submission.
A good faith deposit ("Deposit") in the amount of $13,300 shall be made by the winning bidder by wire transfer of
funds to KleinBank, 1550 Addubon Road, Chaska, Minnesota, ABA No. 091915654 for credit: Ehlers &
Associates Good Faith Account No. 3208138. Such Deposit shall be received by Ehlers no later than two hours after
the proposal opening time. The City reserves the right to award the Bonds to a winning bidder whose wire transfer
is initiated but not received by such time provided that such winning bidder's federal wire reference number has been
received by such time. In the event the Deposit is not received as provided above, the City may award the Bonds to
the bidder submitting the next best proposal provided such bidder agrees to such award. The Deposit will be retained
by the City as liquidated damages if the proposal is accepted and the Purchaser fails to comply therewith.
The City and the winning bidder who chooses to so wire the Deposit hereby agree irrevocably that Ehlers shall be
the escrow holder of the Deposit wired to such account subject only to these conditions and duties: 1) All income
earned thereon shall be retained by the escrow holder as payment for its expenses; 2) If the proposal is not accepted,
Ehlers shall, at its expense, promptly return the Deposit amount to the winning bidder; 3) If the proposal is accepted,
the Deposit shall be returned to the winning bidder at the closing; 4) Ehlers shall bear all costs of maintaining the
escrow account and returning the funds to the winning bidder; 5) Ehlers shall not be an insurer of the Deposit amount
and shall have no liability hereunder except if it willfully fails to perform or recklessly disregards, its duties specified
herein; and 6) FDIC insurance on deposits within the escrow account shall be limited to $250,000 per bidder.
No proposal can be withdrawn after the time set for receiving proposals unless the meeting of the City scheduled for
award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been
made.
E-3
AWARD
The Bonds will be awarded to the bidder offering the lowest interest rate to be determined on a True Interest Cost
(TIC) basis. The City's computation of the interest rate of each proposal, in accordance with customary practice, will
be controlling. In the event of a tie, the sale of the Bonds will be awarded by lot. The City reserves the right to reject
any and all proposals and to waive any informality in any proposal.
BOND INSURANCE
If the Bonds are qualified for any bond insurance policy, the purchase of such policy shall be at the sole option and
expense of the winning bidder. Any cost for such insurance policy is to be paid by the winning bidder, except that,
if the City requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any
rating agency fees not requested by the City are the responsibility of the winning bidder.
Failure of the municipal bond insurer to issue the policy after the Bonds are awarded to the winning bidder shall not
constitute cause for failure or refusal by the winning bidder to accept delivery of the Bonds.
CUSIP NUMBERS
The City will assume no obligation for the assignment or printing of CUSIP nuJoers on the Bonds or for the
correctness of any numbers printed thereon, but will permit such numbers to b�: printed at the expense of the winning
bidder, if the winning bidder waives any delay in delivery occasioned therehN .
QUALIFIED TAX-EXEMPT OBLIGATIONS
The City will designate the Bonds as qual i Iied tax=eXemht ohI igations for purposes of Section 265(b)(3) ofthe Internal
Revenue Code of 1986, as e
CONTINUING DISCLOSURE
In order to assist the Underwriters incomplying with the provisions of Rule 15c2-12 promulgated by the Securities
and Exchange Commission un`t1i"r the Securities Exchange Act of 1934 the City will enter into an undertaking for the
benefit of the holders of the Bonds. A description of the details and terms of the undertaking is set forth in Appendix
D of the Preliminary Official Statement.
NEW ISSUE PRICING
The winning bidder will be required to provide, in a timely manner, certain information necessary to compute the
yield on the Bonds pursuant to the provisions of the Internal Revenue Code of 1986, as amended, and to provide a
certificate which will be provided by Bond Counsel upon request.
(a) The winning bidder shall assist the City in establishing the issue price of the Bonds and shall execute and
deliver to the City at closing an "issue price" or similar certificate satisfactory to Bond Counsel setting forth the
reasonably expected initial offering price to the public or the sales price or prices of the Bonds, together with the
supporting pricing wires or equivalent communications. All actions to be taken by the City under this Terms of
Proposal to establish the issue price of the Bonds may be taken on behalf of the City by the City's municipal advisor
identified herein and any notice or report to be provided to the City may be provided to the City's municipal advisor.
(b) The City intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(i) (defining "competitive
sale" for purposes of establishing the issue price of the Bonds) will apply to the initial sale of the Bonds (the
"competitive sale requirements") because:
E-4
(1) The City shall disseminate this Terms of Proposal to potential underwriters in a manner that is
reasonably designed to reach potential investors;
(2) all bidders shall have an equal opportunity to bid;
(3) the City may receive proposals from at least three underwriters of municipal bonds who have
established industry reputations for underwriting new issuances of municipal bonds; and
(4) the City anticipates awarding the sale of the Bonds to the bidder who submits a firm offer to purchase
the Bonds at the highest price (or lowest interest cost), as set forth in this Terms of Proposal.
Any proposal submitted pursuant to this Terms of Proposal shall be considered a firm offer for the purchase of the
Bonds, as specified in this proposal.
(c) If all of the requirements of a "competitive sale" are not satisfied, the City shall advise the winning bidder
of such fact prior to the time of award of the sale of the Bonds to the Underwriter. In such event, any proposal
submitted will not be subject to cancellation or withdrawal and the City agrees to use the rule selected by the
Underwriter on its proposal form to determine the issue price for the Bonds. On its proposal form, each Underwriter
must select one of the following two rules for determining the issue price of the Bonds: (1) the first price at which
10% of a maturity of the Bonds (the "10% test") is sold to the public as the issue price. that maturity or (2) the initial
offering price to the public as of the sale date as the issue price of each matur� -,.; onds (the "hold -the -offering -
price rule").
(d) If all of the requirements of a "competitive sale" are not satisfiedSnd the Underwriter selects the hold -the -
offering, price rule, the winning bidder shall (i) confirm that the underwriters have offered or will offer the Bonds to
the public on or before the date of award at the ,offering price or.,prices (the "initial offering price"), or at the
corresponding yield or yields, set forth in the proposal submittede winning bidder and (ii) agree, on behalf of
the underwriters participating in the purchase of the Boncls, that t e underwriters will neither offer nor sell unsold
Bonds of any maturity to which the hold -the -offering -price rule shall apply to any person at a price that is higher than
the initial offering price to the public..during the period starting on the sale date and ending on the earlier of the
following:
(1) the close of the fifth (5`h) business day after the sale date; or
(2) the date on which the underwriters have sold at least 10% of that maturity of the Bonds to the public at
a price that is no higher than the initial offering price to the public.
The winning bidder shall promptly advise the City when the underwriters have sold 10% of that maturity of the Bonds
to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of
the fifth (5ffi) business day after the sale date.
The City acknowledges that in making the representation set forth above, the winning bidder will rely on (i) the
agreement of each underwriter to comply with the hold -the -price rule, as set forth in an agreement among underwriters
and the related pricing wires, (ii) in the event a selling group has been created in connection with the initial sale of
the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold -
the -offering -price rule, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event
that an underwriter is a party to a retail distribution agreement that was employed in connection with the initial sale
of the Bonds to the public, the agreement of each broker -dealer that is party to such agreement to comply with the
hold -the -offering -price rule, as set forth in the retail distribution agreement and the related pricing wires. The City
further acknowledges that each underwriter shall be solely liable for its failure to comply with its agreement regarding
the hold -the -offering -price rule and that no underwriter shall be liable for the failure of any other underwriter, or of
any dealer who is a member of a selling group, or of any broker -dealer that is a party to a retail distribution agreement
to comply with its corresponding agreement regarding the hold -the -offering -price rule as applicable to the Bonds.
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(e) I f all of the requirements of a "competitive sale" are not satisfied and the Underwriter selects the 10% test,
the Underwriter agrees to promptly report to the City, Bond Counsel and Ehlers the prices at which the Bonds have
been sold to the public. That reporting obligation shall continue, whether or not the closing date has occurred, until
the 10% test has been satisfied as to each maturity of the Bonds or until all of the Bonds of a certain maturity have
been sold.
(f) By submitting a proposal, each bidder confirms that (i) any agreement among underwriters, any selling group
agreement and each retail distribution agreement (to which the bidder is a party) relating to the initial sale of the
Bonds to the public, together with the related pricing wires, contains or will contain language obligating each
underwriter, each dealer who is a member of the selling group, and each broker -dealer that is party to such retail
distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold Bonds of each
maturity allotted to it until it is notified by the winning bidder that either the 10% test has been satisfied as to the
Bonds of that maturity or all Bonds of that maturity have been sold to the public, and (B) comply with the hold -the -
offering -price rule, if applicable, in each case if and for so long as directed by the winning bidder and as set forth in
the related pricing wires, and (ii) any agreement among underwriters relating to the initial sale of the Bonds to the
public, together with the related pricing wires, contains or will contain language obligating each underwriter that is
a party to a retail distribution agreement to be employed in connection with the initial sale of the Bonds to the public
to require each broker -dealer that is a party to such retail distribution agreement to (A) report the prices at which it
sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the winning bidder or such
underwriter that either the 10% test has been satisfied as to the Bonds of that maturity; or all Bonds of that maturity
have been sold to the public, and (B) comply with the hold -the -offering -price rule, if applicable, in each case if an
for so long as directed by the winning bidder or such underwriter and as set forth in the related pricing wires.
(g) Sales of any Bonds to any person that is a related party to -an tinderwriter,sliall not constitute sales to the
public for purposes of this Terms of Proposal. Further, for purposes of this Terms of Proposal:
(i) "public" means any person other than an underwriter�or a related party,
(ii) "underwriter means (A) any personthat agrees pursuant to a written contract with the City (or with
the lead underwriter to form, an underwriting syndicate) to participate in the initial sale of the Bonds
to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with
a person described in clause (A) to participate in the initial sale of the Bonds to the public (including
a member of a selling group or a party to a retail distribution agreement participating in the initial
sale of the Bonds to the public),
(iii) a purchaser of any of the Bonds is a "related party" to an underwriter if the underwriter and the
purchaser are subject, directly or indirectly, to (i) at least 50% common ownership of the voting
power or the total value of their stock, if both entities are corporations (including direct ownership
by one corporation of another), (ii) more than 50% common ownership of their capital interests or
profits interests, if both entities are partnerships (including direct ownership by one partnership of
another), or (iii) more than 50% common ownership of the value of the outstanding stock of the
corporation or the capital interests or profit interests of the partnership, as applicable, if one entity
is a corporation and the other entity is a partnership (including direct ownership of the applicable
stock or interests by one entity of the other), and
(iv) "sale date" means the date that the Bonds are awarded by the City to the winning bidder.
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PRELIMINARY OFFICIAL STATEMENT
Bidders may obtain a copy of the Preliminary Official Statement relating to the Bonds prior to the proposal opening
by request from Ehlers at www.ehlers-inc.com by connecting to the Bond Sales link. The Syndicate Manager will
be provided with an electronic copy of the Final Official Statement within seven business days of the proposal
acceptance. Up to 10 printed copies of the Final Official Statement will be provided upon request. Additional copies
of the Final Official Statement will be available at a cost of $10.00 per copy.
Information for bidders and proposal forms may be obtained from Ehlers at 3060 Centre Pointe Drive, Roseville,
Minnesota 55113-1105, Telephone (651) 697-8500.
By Order of the City Council
City of Gem Lake, Minnesota
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PROPOSALFORM
The City Council
City of Gem Lake, Minnesota
RE: $665,000* General Obligation Improvement Bonds, Series 2018A
DATED: July 12, 2018
June 19, 2018
For all or none of the above Bonds, in accordance with the Terms of Proposal and terms of the Global Book -Entry System (unless otherwise specified by
the Purchaser) as stated in this Official Statement, we will pay you s (not less than $655,025) plus accrued interest to date of delivery
for fully registered Bonds bearing interest rates and maturing in the stated years as follows:
% due 2020 % due 2025 % due 2030
% due
2021
% due
2026
• due
2022
% due
2027
• due
2023
% due
2028
% due 2031
% due 2032
% due 2033
% due 2024 % due 2029 % due 2034
* The City reserves the right to increase or decrease the principal amount of the Bonds on the day of sale, in increments of $5,000 each. Increases or
decreases may be made in any maturity. If any principal amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross
spread per $1,000.
The rate for any maturity may not be more than 1.00% less than the rate for any preceding mattgly ( rexample, ifa rate of4.50% is proposed
for the 2020 maturity, then the lowest rate that may be proposed for any later maturity is 3:504.") Ali Bonds ofthe same maturity must bear interest
from date of issue until paid at a single, uniform rate. Each rate must be expressed in an integral multiple o'f 5'/.100 or 1/8 of I %.
We enclose our Deposit in the amount of $13,300, to be held by you pending delivery and payment. Alternatively, if we are the winning bidder, we will
wire our Deposit to KleinBank,1550 Audubon Road, Chaska, Minuesota, ABA No. 091915654 for credit: Ehlers & Associates Good Faith Account
No. 3208138. Such Deposit shall be received by Ehlers ,& Associates no later than two hours alter the proposal opening time. The City reserves the right
to award the Bonds to a winning bidder whose wire transfer is initiated but not received by such time provided that such winning bidder's federal wire
reference number has been received. In the event the Deposit is not received as provided above, the City may award the Bonds to the bidder submitting
the next best proposal provided such bidder agrees to such award. ll' our proposal is not accepted, said deposit shall be promptly returned to us. If the
Deposit is wired to such escrow acoprit, we agree to the conditions and duties of Ehlers & Associates, Inc., as escrow holder of the Deposit, pursuant to
the Terms of Proposal. This proposal.L4:for promptacceptatice and is conditional upon delivery of said Bonds to The Depository Trust Company, New York,
New York, in accordance with the T of Pro I. Delivery is anticipated to be on or about July 12, 2018.
This proposal is subject to the City's a ol,nt to enter into a written undertaking to provide continuing disclosure under Rule 15c2-12 promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of 1934 as described in the Preliminary Official Statement for this Issue.
We have received and reviewed the Official Statement and have submitted our requests for additional information or corrections to the Final Official
Statement, As Syndicate Manager, we agree to provide the City with the reoffering price of the Bonds within 24 hours of the proposal acceptance.
This proposal is a firm offer for the purchase of the Bonds identified in the Terms of Proposal, on the terns set forth in this proposal form and the Terms
of Proposal, and is not subject to any conditions, except as permitted by the Terms of Proposal.
By submitting this proposal, we confirm thatwe are an Underwriter and have an established industry reputation for underwriting new issuances of municipal
bonds. YES: _ NO:
If the competitive sale requirements are not met, we elect to use the (circle one): 10% test / hold -the -offering -price rule to determine the issue price of the
Bonds.
Account Manager: By'
Account Members:
Award will be on a true interest cost basis. According to our computations (the correct computation being controlling in the award), the total dollar
interest cost (including any discount or less any premium) computed from July 12, 2018 of the above proposal is $ and the true interest
cost (TIC) is %.
The foregoing offer is hereby accepted by and on behalf of the City Council of the City of Gem Lake, Minnesota, on June 19, 2018.
By:
Title:
By:
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