PLAINVIEW-ELGIN SANITARY DISTRICT, MINNESOTA

Transcription

1 FINAL OFFICIAL STATEMENT DATED JUNE 20, 2006 NEW ISSUE BANK-QUALIFIED MOODY S INVESTORS SERVICE RATING: Baa1 BOOK-ENTRY ONLY MOODY S INVESTORS SERVICE INSURED RATING: Aaa [XL CAPITAL ASSURANCE INSURED] With respect to the $5,770,000 General Obligation Sewer Revenue Bonds, Series 2006A, dated July 1, 2006, (the Bonds ), in the opinion of Dorsey & Whitney LLP, Bond Counsel, based on present federal and Minnesota laws, regulations, rulings and decisions, at the time of their issuance and delivery to the original purchaser, interest on the Bonds is excluded from gross income for purposes of United States income tax and is excluded, to the same extent, in computing both gross and taxable net income for purposes of State of Minnesota income tax (other than Minnesota franchise taxes measured by income and imposed on corporations and financial institutions). Interest on the Bonds is not an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account for the purpose of determining adjusted current earnings for purposes of computing the federal alternative minimum tax imposed on corporations. No opinion will be expressed by Bond Counsel regarding other state or federal tax consequences caused by the receipt or accrual of interest on the Bonds or arising with respect to ownership of the Bonds. See Tax Exemption herein for additional information. The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an insurance policy to be insured concurrently with the delivery of the Bonds by XL Capital Assurance Inc. PLAINVIEW-ELGIN SANITARY DISTRICT, MINNESOTA $5,770,000 General Obligation Sewer Revenue Bonds, Series 2006A Dated Date: July 1, 2006 Interest Due: Each March 1 and September 1 Commencing March 1, 2007 Amount Rate Maturity Yield Price Amount Rate Maturity Yield Price $200, % 03/01/ % $275, % 03/01/ % , /01/ , /01/ , /01/ , /01/ , /01/ , /01/ , /01/ , /01/ , /01/ , /01/ , /01/ , /01/ , /01/ , /01/26 * , /01/ , /01/ Bonds of this issue maturing on March 1, 2016 and thereafter are subject to redemption, in whole or in part, on March 1, 2015, or any date thereafter, at a price of par plus accrued interest. The Bonds are being issued pursuant to Minnesota Statutes, Chapters 115 and 475, as amended. Proceeds will be used to increase the wastewater treatment facility s capacity from 1.52 million gallons per day to an average wet weather flow of 2.67 million gallons per day to meet demand from population and industrial growth in the area. See Authority and Purpose herein for additional information. Bonds are valid and binding general obligations of the Plainview-Elgin Sanitary District and are payable entirely from sewer revenues and additionally secured by ad valorem property taxes. The full faith and credit of the District is pledged to their payment. In the event of a deficiency in the debt service account established for this issue, the District has validly obligated itself to levy unlimited ad valorem taxes upon all of the taxable property within the District to pay principal of and interest on the Bonds. See Security and Estimated Sources and Uses of Funds herein for additional information. Principal due with respect to the Bonds is payable annually on March 1 commencing March 1, 2008 and interest due with respect to the Bonds is payable semiannually on March 1 and September 1 of each year commencing March 1, Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York. Individual purchases will be made in book-entry form only, in the principal amount of $5,000 or any whole multiple thereof. Purchasers will not receive physical delivery of Bonds. See Book-Entry System in Description of Bonds herein for additional information. Paying Agent/Registrar will be Northland Trust Services, Inc., Minneapolis, Minnesota. Refer to the schedule of Mandatory Sinking Fund redemptions of termed maturities on page 5 of this Official Statement Bonds priced to par call.

2 FINAL $5,770, Plainview - Elgin Sanitary Sewer District General Obligation Sewer Revenue Bonds, Series 2006A Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 07/06/ /01/ , , /01/ , , , /01/ , % 118, , /01/ , , , /01/ , % 114, , /01/ , , , /01/ , % 110, , /01/ , , , /01/ , % 106, , /01/ , , , /01/ , % 102, , /01/ , , , /01/ , % 97, , /01/ , , , /01/ , % 93, , /01/ , , , /01/ , % 88, , /01/ , , , /01/ , % 83, , /01/ , , , /01/ , % 77, , /01/ , , , /01/ , % 72, , /01/ , , ,08 03/01/ , % 66, , /01/ , , , /01/ , % 60, , /01/ , , , /01/ , % 54, , /01/ , , , /01/ , % 47, , /01/ , , , /01/ , % 40, , /01/ , , , /01/ , % 33, , /01/ , , ,71 03/01/ , % 25, , /01/ , , , /01/ , % 17, , /01/ , , , /01/ , % 8, , /01/ , Total $5,770, $2,997, $8,767, G.O. Sewer Revenue Bonds 6/15/ :43 AM

3 TABLE OF CONTENTS Summary of Offering...2 Principal District Officials...3 Issuer s Certificate...4 Underwriting...4 Continuing Disclosure...4 Description of Bonds...5 Authority and Purpose...7 Security and Estimated Sources and Uses of Funds...7 Future Financing...8 Explanation of Rating...8 Bond Rating/Insurance...8 Litigation...8 Certification...8 Legality...8 Tax Exemption...9 Plainview-Elgin Sanitary District General Information...10 City of Plainview General Information...13 City of Elgin General Information...17 Minnesota Valuations; Property Tax Classifications...21 Economic and Financial Information...24 Summary of Debt and Debt Statistics...29 Appendix A Proposed Form of Legal Opinion Appendix B Form of Continuing Disclosure Undertaking Appendix C District s Financial Report Appendix D XL Assurance Inc. Page THE BONDS ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY THE UNDERWRITER(S) NAMED ON THE FRONT COVER OF THIS OFFICIAL STATEMENT AND SUBJECT TO AN OPINION AS TO VALIDITY OF THE BONDS BY BOND COUNSEL. SUBJECT TO APPLICABLE SECURITIES LAWS AND PREVAILING MARKET CONDITIONS, THE UNDERWRITER(S) INTENDS BUT IS NOT OBLIGATED, TO AFFECT SECONDARY MARKET TRADING FOR THE BONDS. CLOSING DATE IS JULY 6, NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERS MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE DISTRICT OR THE UNDERWRITER(S). NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE DISTRICT SINCE THE DATE HEREOF. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. THE INFORMATION SET FORTH HEREIN HAS BEEN OBTAINED FROM THE DISTRICT AND OTHER SOURCES WHICH ARE BELIEVED TO BE RELIABLE, BUT IT IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS BY, AND IS NOT TO BE CONSTRUED AS A REPRESENTATION BY, THE UNDERWRITER(S). OTHER THAN WITH RESPECT TO INFORMATION CONCERNING XL CAPITAL ASSURANCE ( XLCA ) CONTAINED UNDER THE CAPTION BOND INSURANCE AND APPENDIX D XL CAPITAL ASSURANCE HEREIN, NONE OF THE INFORMATION IN THIS OFFICIAL STATEMENT HAS BEEN SUPPLIED OR VERIFIED BY XLCA AND XLCA MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (I) THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION; (II) THE VALIDITY OF THE BONDS; OR (III) THE TAX EXEMPT STATUS OF THE INTEREST ON THE BONDS.

4 AMOUNT - $5,770,000. SUMMARY OF OFFERING $5,770,000 GENERAL OBLIGATION SEWER REVENUE BONDS, SERIES 2006A (Book-Entry Only) ISSUER - Plainview-Elgin Sanitary District, Minnesota (the District ). PURCHASE DATE - Wednesday, June 14, UNDERWRITER - Northland Securities, Inc., 45 South 7 th Street, Suite 2500, Minneapolis, Minnesota 55402, telephone: (612) or (800) TYPE OF ISSUE - AUTHORITY, PURPOSE & SECURITY - General Obligation Sewer Revenue Bonds, Series 2006A (the Bonds ). See Authority and Purpose as well as Security and Estimated Sources and Uses of Funds herein for additional information. The Bonds are being issued pursuant to Minnesota Statutes, Chapters 115 and 475, as amended. Proceeds will be used to increase the wastewater treatment facility s capacity from 1.52 million gallons per day to an average wet weather flow of 2.67 million gallons per day to meet demand from population and industrial growth in the area. Bonds are payable entirely from sewer revenues and additionally secured by ad valorem property taxes. The full faith and credit of the District is pledged to their payment. In the event of a deficiency in the debt service account established for this issue, the District has validly obligated itself to levy unlimited ad valorem taxes upon all of the taxable property within the District to pay principal of and interest on the Bonds. See Authority and Purpose as well Security and Estimated Sources and Uses of Funds herein for additional information. DATE OF ISSUE - July 1, INTEREST PAID - Semiannually on March 1 and September 1, commencing on March 1, 2007 to registered owners of the Bonds appearing of record in the bond register as of the close of business on the fifteenth (15 th ) day (whether or not a business day) of the immediately preceding month. MATURITIES 03/01/08 $200,000 03/01/12 $225,000 03/01/16 $265,000 03/01/20 $310,000 03/01/24 $365,000 03/01/09 200,000 03/01/13 235,000 03/01/17 275,000 03/01/22 655,000 03/01/26 775,000 * 03/01/10 210,000 03/01/14 245,000 03/01/18 285,000 03/01/23 350,000 03/01/27 410,000 03/01/11 215,000 03/01/15 255,000 03/01/19 295,000 REDEMPTION - BOOK-ENTRY - At the option of the Issuer, Bonds maturing on March 1, 2016 and thereafter shall be subject to prior redemption on March 1, 2015 and 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 maturity and the principal amounts within each maturity to be redeemed shall be determined by the Issuer and if only part of the Bonds having a common maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar. Bonds will be issued as fully registered and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York, to which principal and interest payments will be made. Individual purchases will be made in book-entry form only, in the principal amount of $5,000 or any whole multiple thereof. Purchasers will not receive physical delivery of Bonds. PAYING AGENT/REGISTRAR - Northland Trust Services, Inc., Minneapolis, Minnesota. TAX DESIGNATIONS - NOT Private Activity Bonds - Bonds are not private activity bonds as defined in Section 141 of the Internal Revenue Code of 1986, as amended (the Code). Qualified Tax-Exempt Obligations - The Issuer will designate these Bonds qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Code. LEGAL OPINION - RATING - Dorsey & Whitney LLP, Minneapolis, Minnesota (the Bond Counsel ). Moody s Investors Service has assigned a rating of Baa1 to this issue. In addition, the issuer has purchased insurance through XL Capital Assurance Inc. Moody s Investors Service assigns a rating of Aaa to bonds secured by an insurance policy issued by XL Capital Assurance Inc. CLOSING - July 6, PRIMARY CONTACTS - Rick Turri, Plant Manager, Plainview-Elgin Sanitary District, (507) Paul Donna, Senior Vice President, Northland Securities, Inc., (612) or (800) Refer to the schedule of Mandatory Sinking Fund redemptions of termed maturities on page 5 of this Official Statement - 2 -

5 PLAINVIEW-ELGIN SANITARY DISTRICT PRINCIPAL DISTRICT OFFICIALS Elected Officials District Board Name Office Term Expires LaVerne W. Boyd Chairman 12/31/2007 John Sell Vice Chairman 12/31/2008 Duane A. Schulz Secretary-Treasurer 12/31/2008 David Marshik Board Member 12/31/2006 David Vail Board Member 12/31/2007 Primary Contacts Rick Turri Plant Manager Appointed Paulette Klees District Secretary Appointed Wayne L. Schauble, Attorney at Law District Attorney Appointed Dennis Zerke Plant Operator Appointed WHKS & Company District Engineer Appointed Bond Counsel Dorsey & Whitney LLP Minneapolis, Minnesota Underwriter Northland Securities, Inc. Minneapolis, Minnesota - 3 -

6 ISSUER S CERTIFICATE The District has retained the firm of Northland Securities, Inc., Minneapolis, Minnesota (the Underwriter ) to serve as Underwriter with respect to the securities being offered in this Official Statement. All statements contained herein, while not guaranteed, have been compiled from sources believed to be reliable in all material respects. Financial Reports of the District are audited annually by an independent firm of certified public accountants. Excerpts from the financial report for the year ended December 31, 2005, are included in this Official Statement. Complete financial reports for 2005 and the prior two years are available for inspection at the District office as well as at the office of Northland Securities, Inc. The District has always promptly met all payments of principal and interest on its indebtedness when due. UNDERWRITING The Bonds are being purchased from the Issuer by Northland Securities, Inc. The Underwriter will receive total compensation of $62, in connection with the purchase of the Bonds assuming all Bonds are sold at the rates and yields set forth on the cover page of this Official Statement, which compensation is 1.075% of the par value. The obligation to make such purchase is subject to certain terms and conditions, the approval of certain legal matters by counsel and certain other conditions. The initial public offering prices set forth on the cover page hereof may be changed from time to time by the Underwriter. CONTINUING DISCLOSURE In order to permit bidders for the Bonds and other participating underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the Rule ), the Issuer will covenant and agree, for the benefit of the registered holders or beneficial owners from time to time of the outstanding Bonds, in the Bond Resolution, to provide annual reports of specified information and notice of the occurrence of certain events, if material, as hereinafter described (the Disclosure Undertaking ). The information to be provided on an annual basis, the events as to which notice is to be given, if material, and a summary of other provisions of the Disclosure Covenants, including termination, amendment and remedies, are set forth in Appendix B Proposed Form of Limited Continuing Disclosure Certificate to this Official Statement. Breach of the Disclosure Covenants will not constitute a default or an Event of Default under the Bonds or the Resolution. A broker or dealer is to consider a known breach of the Disclosure Covenants, however, before recommending the purchase or sale of the Bonds in the secondary market. Thus, a failure on the part of the Issuer to observe the Disclosure Covenants may adversely affect the transferability and liquidity of the Bonds and their market price. The name, address and telephone number of the person from whom the information, data and notices described in the Certificate may be obtained is: Plainview-Elgin Sanitary District Rick Turri Plant Manager P.O. Box 416 Plainview, MN

7 DESCRIPTION OF BONDS Details of Certain Terms The Bonds will be dated, as originally issued, as of July 1, 2006, and will be issued as fully registered bonds in the denominations of $5,000 or any integral multiple thereof. Interest on the Bonds will be payable semiannually on each March 1 and September 1, commencing March 1, The Bonds when issued, will be registered in the name of Cede & Co. (the Registered Holder ), as nominee of The Depository Trust Company, New York, New York ( DTC ), the initial custodian for the Bonds, to which principal and interest payments on the Bonds will be made so long as Cede & Co. is the Registered Holder of the Bonds. See Book-Entry System in Description of Bonds herein for additional information. So long as the Book-Entry Only System is used, individual purchases of the Bonds will be made in book-entry form only, in the principal amount of $5,000 or any integral multiple thereof ( Authorized Denominations ). Individual purchasers ( Beneficial Owners ) of the Bonds will not receive physical delivery of bond certificates, and registration, exchange, transfer, tender and redemption of the Bonds with respect to Beneficial Owners shall be governed by the Book-Entry Only System. So long as the Book-Entry Only System is used, payments from Cede & Co., as the Record Holder, to the Beneficial Owners shall be governed by the Book-Entry Only System. If the Book-Entry Only System is discontinued, the principal of and premium, if any, on the Bonds will be payable upon presentation and surrender at the offices of the Paying Agent and Bond Registrar or a duly appointed successor. Interest on the Bonds will be paid by check or draft mailed by the Bond Registrar to the registered holders thereof as such appear on the registration books maintained by the Bond Registrar as of the close of business on the fifteenth day (whether or not a business day) of the calendar month preceding each interest payment date (the Record Date ). Registration, Transfer and Exchange So long as the Book-Entry Only System is used, payments from Cede & Co., as the Record Holder, to the Beneficial Owners shall be governed by the Book-Entry Only System. If the Book-Entry Only System is discontinued, the Bonds may be transferred upon surrender of the Bonds at the principal office of the Bond Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his or her attorney duly authorized in writing. The Bonds, upon surrender thereof at the principal office of the Bond Registrar may also be exchanged for other Bonds of the same series, of any authorized denominations having the same form, terms, interest rates and maturities as the Bonds being exchanged. The Bond Registrar will require the payment by the Bondholder requesting such exchange or transfer of any tax or governmental charge required to be paid with respect to such exchange or transfer. The Bond Registrar is not required to (i) issue, transfer or exchange any Bond during a period beginning at the opening of business fifteen days before any selection of Bonds of a particular stated maturity for redemption in accordance with the provisions of the Bond Indenture and ending on the day of the first mailing of the relevant notice of redemption or (ii) to transfer any Bond or portion thereof selected for redemption. Redemption Mandatory Redemption Bonds maturing in the years 2022 and 2026 shall be redeemed by lot on March 1 at their principal amount, without premium, plus accrued interest thereon to such redemption date in the following years and principal amounts or, if less than such amount is then outstanding, an amount equal to the aggregate principal amount of the Bonds then outstanding. Term Bond Maturing in 2022 Term Bond Maturing in 2026 Sinking Fund Payment Date Aggregate Principal Amount Sinking Fund Payment Date Aggregate Principal Amount 2021 $320, $380, (Maturity) 335, (Maturity) 395,

8 Optional Redemption The Bonds having stated maturities on or after March 1, 2016 are subject to optional redemption, in whole or in part, on March 1, 2015, and on any date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part. If redemption is in part, the maturity and the principal amounts within each maturity to be redeemed shall be determined by the Issuer and if only part of the Bonds having a common maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar. Book-Entry System The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Obligations. Upon issuance of the Obligations, one fully registered Obligation will be registered in the name of Cede & Co., as nominee for DTC, for each maturity of the Obligations as set forth on the cover page hereof, each in the aggregate principal amount of such maturity. So long as Cede & Co. is the registered owner of the Obligations, references herein to the holders of the Obligations or registered owners of the Obligations shall mean Cede & Co. and shall not mean the Beneficial Owners of the Obligations. DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold securities of its participants (the DTC Participants ) and to facilitate the clearance and settlement of securities transactions among DTC Participants in such securities through electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom (and/or their representatives) own DTC. Access to the DTC system is also available to others such as banks, brokers, dealers, and trust companies that clear through or maintain a custodial relationship with DTC Participants, either directly or indirectly (the Indirect Participants ). The Interest of each of the Beneficial Owners of the Obligations will be recorded through the records of a DTC Participant or Indirect Participant. Each DTC Participant will receive a credit balance on the records of DTC. Individual purchases will be made in the denomination of $5,000 or any whole multiple thereof. Beneficial owners of Obligations will receive a written confirmation of their purchases providing details of the Obligations acquired. Beneficial owners of Obligations will not receive certificates representing their ownership interest in the Obligations, except as specifically provided below. Transfers of beneficial ownership interest in the Obligations will be accomplished by book entries made by DTC and, in turn, by the DTC Participants who act on behalf of the Indirect Participants and the Beneficial Owners of Obligations. For every transfer and exchange of beneficial ownership of Obligations, the beneficial owner may be charged a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto. Payments of principal and interest on the Bonds will be made to DTC or its nominee, Cede & Co., as registered owner of the Bonds. Upon receipt of moneys, DTC s current practice is to immediately credit the accounts of the DTC Participants in accordance with their respective holdings shown on the records of DTC. Payments by DTC Participants and Indirect Participants to Beneficial Owners will be governed by standing instructions and customary practices such as those which are now the case for municipal securities held in bearer form or registered in street name for the accounts of customers and will be the responsibility of such DTC Participants or Indirect Participants and not the responsibility of DTC or the Issuer, subject to any statutory and regulatory requirements as may be in effect from time to time. The Depository Trust Company (the DTC ), New York, New York, will act as securities depository for the Bonds. Upon issuance of the Bonds, one fully registered Bond will be registered in the name of Cede & Co., as nominee for DTC, for each maturity of the Bonds as set forth on the cover page hereof, each in the aggregate principal amount of such maturity. So long as Cede & Co. is the registered owner of the Bonds, references herein to the Owners of the Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the Bonds

9 AUTHORITY AND PURPOSE The Bonds are being issued pursuant to Minnesota Statutes, Chapters 115 and 475, as amended. The Plainview- Elgin Sanitary District is comprised of the cities of Plainview and Elgin, Minnesota. The District was established on March 26, 1985 and is a public corporation and political subdivision with tax levy powers created by an order of the Minnesota Pollution Control Agency pursuant to Minnesota Statutes, Sections through Proceeds will be used to increase the wastewater treatment facility s capacity from 1.52 million gallons per day to an average wet weather flow of 2.67 million gallons per day to meet demand from population and industrial growth in the area. Security SECURITY AND ESTIMATED SOURCES AND USES OF FUNDS At closing, Bond Counsel will render an opinion that the Bonds valid and binding general obligations of the Plainview-Elgin Sanitary District, Minnesota. Bonds will be payable primarily from sewer revenues and additionally secured ad valorem property taxes. The full faith and credit of the District is pledged to their payment. In the event of a deficiency in the debt service account established for this issue, the District has validly obligated itself to levy unlimited ad valorem taxes upon all of the taxable property within the District to pay principal of and interest on the Bonds. Estimated Sources and Uses of Funds Following are the expected sources and uses of funds in connection with the issuance of the Bonds. Sources of Funds Par Amount of Bonds $5,770,000 Reoffering Premium 4,957 Accrued Interest 3,281 Uses of Funds $5,778,238 Deposit to Project Fund $4,825,600 Payment of Temporary Bond Principal 430,000 Costs of Issuance and Underwriter s Discount 85,698 Bond Insurance Premium 82,410 Temporary Bond Interest 12,318 Engineering, Contingency & Miscellaneous 338,875 Deposit to Debt Service Fund 3,281 Rounding 56 Total Uses of Funds: $5,778,

10 FUTURE FINANCING The District does not anticipate the need to finance any capital improvements with the issuance of general obligation bonds within the next two months. EXPLANATION OF RATING Moody s Investors Service currently assigns a rating of Aaa to bonds insured by XL Capital Assurance Inc. (the Insurer ). Upon delivery of the Bonds, a policy insuring the payment when due the principal of and interest on the Bonds (the Policy ) will be issued by the Insurer. See Appendix D XL Capital Assurance Inc. herein for additional information. No application was made to any other rating agency for the purpose of obtaining an additional rating on the Bonds. The rating reflects the rating agency s current assessment of the creditworthiness of the Insurer and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above rating may be obtained only from the rating agency. The above rating is not a recommendation to buy, sell or hold the Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agency. Any downward revision or withdrawal of the bond rating may have an adverse effect on the market price of the Bonds. The Insurer does not guaranty the market price of the Bonds nor does it guaranty that the rating on the Bonds will not be reversed or withdrawn. BOND RATING/INSURANCE Moody s Investors Service has assigned a rating of Baa1 to this issue. This rating reflects only the opinion of Moody s Investors Service. Any explanation of the significance of the rating may be obtained only from Moody s. There is no assurance that a rating will continue for any given period of time, or that such rating will not be revised or withdrawn, if in the judgment of Moody s, circumstances so warrant. A revision or withdrawal of the rating may have an adverse affect on the market price of the Bonds. The City applied for and received insurance through XL Capital Assurance Inc. Moody s Investors Service assigns a rating of Aaa to bonds secured by an insurance policy issued by XL Capital Assurance Inc. LITIGATION As of May 17, 2006, the District Attorney, Wayne L. Schauble, Attorney at Law, has indicated that no litigation is pending or threatened that would jeopardize the creditworthiness of the District. Claims or other actions in which the District is a defendant are covered by insurance or of insignificant amounts. CERTIFICATION The District will furnish a statement to the effect that this Official Statement to the best of their knowledge and belief, as of the date of sale and the date of delivery, is true and correct in all material respects, and does not contain any untrue statements of a material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. LEGALITY Legal matters incident to the authorization and issuance of the Bonds are subject to the approving opinion of Bond Counsel as to validity and tax exemption. A copy of such opinion will be available at the time of the delivery of the Bonds. See Appendix A Proposed Form of Legal Opinion. Bond Counsel has not participated in the preparation of this Official Statement and is not passing upon its accuracy, completeness or sufficiency. Bond Counsel has not examined, nor attempted to examine, or verify, any of the financial or statistical statements or data contained in this Official Statement, and will express no opinion with respect thereto

11 TAX EXEMPTION General In the opinion of Bond Counsel, under federal and Minnesota laws, regulations, rulings and decisions in effect on the date of issuance of the Bonds, interest on the Bonds is not includable in gross income for federal income tax purposes or in taxable net income of individuals, estates and trusts for Minnesota income tax purposes. Interest on the Bonds is includable in taxable income of corporations and financial institutions for purposes of the Minnesota franchise tax. Certain provisions of the Internal Revenue Code of 1986, as amended (the Code ), however, impose continuing requirements that must be met after the issuance of the Bonds in order for interest thereon to be and remain not includable in federal gross income and in Minnesota taxable net income. Noncompliance with such requirements by the Issuer may cause the interest on the Bonds to be includable in gross income for purposes of federal income taxation and in taxable net income for purposes of Minnesota income taxation, retroactive to the date of issuance of the Bonds, irrespective in some cases of the date on which such noncompliance is ascertained. No provision has been made for redemption of or for an increase in the interest rate on the Bonds in the event that interest on the Bonds becomes includable in federal gross income or Minnesota taxable income. Interest on the Bonds is not an item of tax preference includable in alternative minimum taxable income for purposes of the federal alternative minimum tax applicable to all taxpayers or the Minnesota alternative minimum tax applicable to individuals, estates and trusts, but is includable in adjusted current earnings in determining the federal alternative minimum taxable income of corporations for purposes of the federal alternative minimum tax. Interest on the Bonds may be includable in the income of a foreign corporation for purposes of the branch profits tax imposed by Section 884 of the Code and is includable in the net investment income of foreign insurance companies for purposes of Section 842(b) of the Code. 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) of the Code must be reduced by an amount equal to fifteen percent of the interest on the Bonds that is received or accrued during the taxable year. Section 86 of the Code requires recipients of certain Social Security and railroad retirement benefits to take into account, in determining the taxability of such benefits, receipts or accruals of interest on the Bonds. Passive Investment Income of S Corporations Passive investment income, including interest on the Bonds, may be subject to federal income taxation under Section 1375 of the Code for a Subchapter S corporation that has Subchapter C earnings and profits at the close of the taxable year if greater than twenty-five percent of the gross receipts of such Subchapter S corporation is passive investment income. Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds or, in the case of a financial institution, that portion of the holder s interest expense allocated to interest on the Bonds, except with respect to certain financial institutions (within the meaning of Section 265(b) of the Code). The above is not a comprehensive list of all federal tax consequences that may arise from the receipt of interest on the Bonds. The receipt of interest on the Bonds may otherwise affect the federal or State of Minnesota 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. Qualified Tax-Exempt Obligations The Issuer 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, Interest allocable to such obligations remains subject to the 20% disallowance under prior law

12 Location/Boundaries PLAINVIEW-ELGIN SANITARY DISTRICT GENERAL INFORMATION The Plainview-Elgin Sanitary District is comprised of the cities of Plainview and Elgin, Minnesota. The District was established on March 26, 1985 and is a public corporation and political subdivision with tax levy powers created by an order of the Minnesota Pollution Control Agency pursuant to Minnesota Statutes, Sections through The District is in Wabasha County in the southeastern part of the state. Dodge County, Olmsted County and Wabasha County comprise the Rochester Metropolitan Statistical Area. The City of Elgin lies approximately 15 miles northeast of Rochester and the City of Plainview lies approximately 25 miles northeast of Rochester. Access to the District is provided via State Highway 42. Tax Base For taxes collectable in 2006, the tax breakdown is 70.50% residential homestead (non-agriculture), 1.10% agricultural, 18.23% commercial and industrial,.06% public utility, 8.01% non-homestead residential,.40% other, and 1.70% personal property. Area 1 1,820 acres (2.8 square miles) Population 1980 Census 3, Census 4, Census 3, Estimate * 4,142 District Government The District was established on March 26, It has a Chairman elected by precinct for a three-year term, a Vice Chairman, Secretary-Treasurer and two Board Members also elected by precinct for three-year terms. The professional staff is appointed and consists of a District Secretary, Plant Manager, Plant Operator, District Attorney and District Engineer. Employee Pension Programs The District employs three people full-time. The pension plan currently covers all three of the District's employees. The District participates in a contributory pension plan through the Public Employees Retirement Association (PERA) under Minnesota Statutes, Chapters, 353 and 356, which covers all full-time employees. PERA administers the Public Employees Retirement Fund (PERF), which is a cost sharing retirement plan. The District makes contributions to the Coordinated Plan. Employees are vested after three years of credited service. State statute requires the District to fund current service pension cost as it accrues. Prior service cost is being amortized over a period of 40 years and is being funded by payment determined as a percentage of gross wages paid by all employers participating in the State Association. * Source: Plainview-Elgin Sanitary District

13 District contributions to PERA for the past five years have been as follows: Year Amount Year Amount 2005 $6, $5, , , ,810 Labor Force Data Comparative average labor force and unemployment rate figures for 2006 (through April) and year-end 2005 from the Minnesota Department of Economic Security, Research and Statistics Office are listed below. Figures are not seasonally adjusted and numbers of people are estimated by place of residence Civilian Labor Force Unemployment Rate Civilian Labor Force Unemployment Rate Wabasha County 12, , Rochester MSA 1 103, , Minnesota 2,927, ,947, The Sanitary Sewer System The Sewer System consists of a 1,521,000 gallon per day mechanical wastewater treatment facility. The City of Plainview has approximately 1,173 connections to the system and the City of Elgin has approximately 340 connections to it. Average demand is 1,200,000 gallons per day while peak demand reaches 4,000,000 gallons per day. The proceeds of this bond issue will be used to increase the wastewater treatment facility s capacity to an average wet weather flow of 2.67 million gallons per day. The purpose of the project is to meet new discharge requirements and future hydraulic and organic loading projections from population and industrial growth in the area. An annual average phosphorus limit of 1 mg/l will be imposed on the expanded discharge. The District issues permits to the two industrial users to impose limits on the amount and composition of wastewater discharged into the System. If the industries exceed their permitted limits, the District fines them. Total fines in 2005 were $14,303. The 2005 audited operating revenues were $514,030 with the average sewer charge per year per household and commercial connection at approximately $340 (2). The cities of Plainview and Elgin bill their respective residents. The District charges the cities based on flows and loadings. Cost sharing is determined using the rate structure the District currently uses weighing percentages 30% on Flow, 40% on BOD and 30% on TSS based on actual flows and loadings as measured from each contributor. All flows and loadings from industries are included in the City of Plainview's portion. Note that the District was the recipient of the U.S. Environmental Protection Agency s Clean Water Act Recognition Award in Metropolitan Statistical Area. 2 Based on 1,173 connections in Plainview and 340 in Elgin

14 Major System Users The City of Plainview has two major industrial customers for which wastewater flows are metered. One other industrial user is monitored only for metal content in its wastewater. The top two industrial users make up about 46% of the total flow from the City of Plainview and account for approximately 50% of total revenues collected by the City of Plainview. All other users of the system besides the two industrial users are combined in the table below. Population Trends Flow from Plainview Users % of Plainview Flow Plainview Revenues % of Plainview Revenues Residential/Commercial 193,881, % $299, % Lakeside Foods 123,574, % 194, % Plainview Milk Products 44,760, % 108, % TOTAL 362,216, ,567 Population projections for Plainview and Elgin were reviewed and analyzed in the 2003 Wastewater Treatment Evaluation for the Plainview-Elgin Sanitary District. A summary of previous census population data from the U.S. Census Bureau, along with population growth rate from 1960 to 2000 is below. Census Data City of Plainview City of Elgin Year Population % Change Year Population % Change , , % % Annualized Average 1.53% Annualized Average 1.26% Based on population forecasts and previous growth trends, an annual average growth rate of 1.4% was assumed for the City of Plainview, and an annual average growth rate of 1.2% was assumed for the City of Elgin. Based on this information, Plainview's projected population for design year 2025 would be 4,527, while Elgin's would be 1,115. The following table shows the population projections for the cities through design year Population Projections City of Plainview City of Elgin Year Population Year Population , , , , , , , ,

15 Location/Access/Transportation CITY OF PLAINVIEW GENERAL INFORMATION The City of Plainview, situated in Wabasha County, is located in the southeastern portion of Minnesota. The City lies approximately 19 miles southwest of Wabasha, 25 miles northeast of Rochester, 35 miles northwest of Winona, and 75 miles southeast of the Twin Cities Metropolitan Area. Access is provided via State Highways 42 and 247 as well as County Roads 4 and 8. In addition, Interstate Highway 90 lies 15 miles south of the City. Zabel Trucking is the principal truck line serving the City. There are approximately 18 miles of paved streets within the City's corporate limits. Tax Base For taxes collectable in 2006, the tax breakdown is 68.40% residential homestead (non-agriculture), 1.05% agricultural, 20.51% commercial & industrial, 7.86% non-homestead residential,.42% other and 1.76% personal property. Area 1,370 Acres (2.1 Square Miles) Population 1980 Census 2, Census 3, Census 2, Estimate * 3,290 Municipal Enterprise Services The Waterworks System has approximately 1,188 municipal connections served by a 500,000 gallon elevated water storage facility along with two wells that have the capacity to pump 2,550 gallons per minute or 3,672,000 gallons per day. Average demand is 774,000 gallons per day while peak demand reaches 1,463,000 gallons per day. The 2005 audited operating revenues were $335,805 with the average water charge per year per household and commercial connection at approximately $283. The industrial water base rate is variable based upon usage (based on 5,000 gallons per quarter). The Sewer Utility System has approximately 1,173 municipal connections served by a 1,521,000 gallon per day wastewater treatment facility operated by the Plainview-Elgin Sanitary District, along with one sanitary sewer lift station. Average demand is 924,000 gallons per day while peak demand reaches 4,000,000 gallons per day. The 2005 audited operating revenues were $670,307 with the average sewer charge per year per household and commercial at approximately $571. The sewer usage base charge is variable based upon usage (based on 5,000 gallons per quarter). Municipal Liquor Store. The City operates one on/off-sale municipal liquor store with 2005 audited operating income of $(17,425). * Source: City of Plainview

16 City Government The City of Plainview, organized in 1872, is a Minnesota Statutory City with an Optional Plan A form of government. It has a mayor elected at large for a two-year term, and four council members also elected at large for four-year terms. The professional staff is appointed and consists of a city administrator, city finance director/clerk, city attorney and city engineer. Employee Pension Programs The City employs 41 people, 19 full-time and 22 part-time. The pension plan currently covers 26 of the City's employees. The City participates in contributory pension plans through the Public Employees Retirement Association (PERA) under Minnesota Statutes, Chapters, 353 and 356, which covers all full-time and certain part-time employees. PERA administers the Public Employees Retirement Fund (PERF) and the Public Employees Police and Fire Fund (PEPFF), which are cost sharing, multiple-employer retirement plans. This plan is state administered and is coordinated with the Federal Social Security Retirement Plan (FICA) and employees are vested after three years of credited service. State statute requires the City to fund current service pension cost as it accrues. Prior service cost is being amortized over a period of 40 years and is being funded by payment determined as a percentage of gross wages paid by all employers participating in the State Association. City contributions to PERA for the past five years have been as follows: Year Amount Year Amount 2005 $51, $33, , , ,406 Volunteer fire fighters of the City are eligible for pension benefits through membership in the Fire Relief Association organized under Minnesota Statutes, Chapter 69, and administered by a separate Board elected by the membership. State aids, investment earnings and City contributions fund the plan. State aids, investment earnings and City contributions fund the plan. Residential Development There are approximately 1,009 single-family homes and 211 multifamily units located in the City. In addition, there have been 19 single-family homes constructed within the past twelve months. The status of residential subdivisions constructed or planned within the past three years is as follows: Subdivision Name Total Number of Lots/Units Number of Lots/Units Completed Remaining Lots/Units Available Orchard Hills SW Orchard Hills 5 E LeVan Phase Anastacia Estates Orchard Hills North Commercial/Industrial Development Building construction and commercial/industrial growth completed within the past three years have been as follows: Name Product/Service Description of Construction Plainview Animal Clinic Vet Clinic Small building

17 Building Permits Building permits issued for the past five years and a portion of the current year have been as follows: Year Commercial/ Industrial Number of of Permits Residential Number of Permits Total Number of Permits Total Permit Valuation 2006 (as of 5/30/06) $ 848, ,086, ,010, ,312, ,468, ,483,356 Industrial Park(s) The City of Plainview has a 185-acre industrial park with a capacity of eight enterprises. Currently there are eight enterprises occupying the park, the larger of which includes Lakeside Foods, Kreofsky Building Systems, and W.A.K. Construction. The city also has another business park consisting primarily of a Dairy Queen. Education Independent School District No. 810, Plainview, operates an elementary school, grades kindergarten through six as well as a secondary school, grades seven through twelve. Combined enrollment at the two schools for the 2005/2006 school year was approximately 1,100. Post secondary education is available at the following schools: School Type Location Distance from Plainview Rochester Technical College Technical College Rochester, Minnesota 25 Miles Rochester Community College Community College Rochester, Minnesota 25 Miles Winona State University Public University Winona, Minnesota 35 Miles Financial Institutions The First National Bank of Plainview, and Peoples State Bank of Plainview provide financial services. Reported deposits as of June 30, 2005, were $90,114,000 and $63,357,000, respectively. Reported deposit information was obtained from the Federal Deposit Insurance Corporation (FDIC) website. (Remainder of page left blank intentionally.)