CITY OF COON RAPIDS, MINNESOTA (Anoka County) $11,275,000* GENERAL OBLIGATION IMPROVEMENT, UTILITY AND PARK BONDS, SERIES 2018A

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1 This Preliminary Official Statement and the information contained herein are subject to completion and amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy these securities nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This Preliminary Official Statement is in a form deemed final as of its date for purposes of SEC Rule 15c2-12(b) (1), but is subject to revision, amendment and completion in a Final Official Statement. PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 8, 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 may have 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, from 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 1, 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 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. The City will NOT designate the Bonds as "qualified tax-exempt obligations" pursuant to Section 265 of the Internal Revenue Code of 1986, as amended, which permits financial institutions to deduct interest expenses allocable to the Bonds to the extent permitted under prior law. New Issue CITY OF COON RAPIDS, MINNESOTA (Anoka County) Rating Application Made: Moody's Investors Service $11,275,000* GENERAL OBLIGATION IMPROVEMENT, UTILITY AND PARK BONDS, SERIES 2018A PROPOSAL OPENING: November 20, 2018, 10:00 A.M., C.T. CONSIDERATION: November 20, 2018, 7:00 P.M., C.T. PURPOSE/AUTHORITY/SECURITY: The $11,275,000* General Obligation Improvement, Utility and Park Bonds, Series 2018A (the "Bonds") are being issued pursuant to Minnesota Statutes, Chapters 429, 444, and 475, by the City of Coon Rapids, Minnesota (the "City") for the purposes of (i) financing various public improvements within the City; (ii) financing water system improvements; and (iii) financing the renovation, acquisition, betterment, and improvement of parks, open space and trail system infrastructure 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: December 13, 2018 MATURITY: February 1 as follows: Year Amount* Year Amount* Year Amount* 2020 $805, $960, $330, , , , , ,015, , , ,045, , , ,085, ,000 MATURITY ADJUSTMENTS: * 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 BONDS: See Term Bond Option herein. INTEREST: August 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: $11,139,700. GOOD FAITH DEPOSIT: A good faith deposit in the amount of $225,500 shall be made by the winning bidder by wire transfer of funds. PAYING AGENT: Finance Director of the City 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).

2 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 and 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 and Associates, Inc., payable entirely by the City, is contingent upon the sale of the Bonds. 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 and 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 before 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 Final 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 Rule 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 City is 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 of the 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 of the 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. ii

3 TABLE OF CONTENTS INTRODUCTORY STATEMENT THE BONDS GENERAL OPTIONAL REDEMPTION AUTHORITY; PURPOSE ESTIMATED SOURCES AND USES SECURITY RATING CONTINUING DISCLOSURE LEGAL OPINION TAX EXEMPTION NON-QUALIFIED TAX-EXEMPT OBLIGATIONS MUNICIPAL ADVISOR MUNICIPAL ADVISOR AFFILIATED COMPANIES INDEPENDENT AUDITORS RISK FACTORS FINANCIAL STATEMENTS A-1 FORM OF LEGAL OPINION B-1 BOOK-ENTRY-ONLY SYSTEM C-1 FORM OF CONTINUING DISCLOSURE CERTIFICATE... D-1 TERMS OF PROPOSAL E-1 VALUATIONS OVERVIEW CURRENT PROPERTY VALUATIONS /18 NET TAX CAPACITY BY CLASSIFICATION TREND OF VALUATIONS LARGER TAXPAYERS DEBT DIRECT DEBT SCHEDULES OF BONDED INDEBTEDNESS DEBT LIMIT OVERLAPPING DEBT DEBT RATIOS DEBT PAYMENT HISTORY FUTURE FINANCING TAX RATES, LEVIES AND COLLECTIONS TAX LEVIES AND COLLECTIONS TAX CAPACITY RATES LEVY LIMITS THE ISSUER CITY GOVERNMENT EMPLOYEES; PENSIONS; UNIONS POST EMPLOYMENT BENEFITS LITIGATION MUNICIPAL BANKRUPTCY FUNDS ON HAND ENTERPRISE FUNDS SUMMARY GENERAL FUND INFORMATION GENERAL INFORMATION LOCATION LARGER EMPLOYERS BUILDING PERMITS U.S. CENSUS DATA EMPLOYMENT/UNEMPLOYMENT DATA iii

4 CITY OF COON RAPIDS CITY COUNCIL Term Expires Jerry Koch Mayor December 2022 Brad Greskowiak Council Member December 2020 Bill Kiecker Council Member December 2020 Wade Demmer Council Member December 2022 Jennifer Geisler Council Member December 2020 Brad Johnson Council Member December 2022 Steve Wells Council Member December 2020 ADMINISTRATION Matt Stemwedel, City Administrator Sharon Legg, Finance Director Joan Lenzmeier, City Clerk PROFESSIONAL SERVICES Kennedy & Graven, Chartered, Bond Counsel, Minneapolis, Minnesota Ehlers and Associates, Inc., Municipal Advisors, Roseville, Minnesota (Other offices located in Waukesha, Wisconsin; Chicago, Illinois; and Denver, Colorado) iv

5 INTRODUCTORY STATEMENT This Preliminary Official Statement contains certain information regarding the City of Coon Rapids, Minnesota (the "City") and the issuance of its $11,275,000* General Obligation Improvement, Utility and Park 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 issuance and sale of the Bonds ("Award Resolution") to be adopted by the City Council on November 20, Inquiries may be directed to Ehlers and Associates, Inc. ("Ehlers" or the "Municipal Advisor"), Roseville, Minnesota, (651) , the City's Municipal Advisor. A copy of this Preliminary Official Statement may be downloaded from Ehlers web site at by connecting to the link to the Bond Sales 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 December 13, 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 August 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 rate must be expressed in an integral multiple of 5/100 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. *Preliminary, subject to change. 1

6 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 or 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 in accordance with the requirements of DTC 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, 444, and 475, by the City for the following purposes: (i) financing various public improvements within the City (the "Improvement Portion") (ii) financing water system improvements (the "Water Revenue Portion"); and (iii) financing the renovation, acquisition, betterment and improvement of parks, open space and rail system infrastructure within the City (the "Parks Portion");. ESTIMATED SOURCES AND USES* Sources Improvement Portion Water Revenue Portion Parks Portion Total Bond Issue Par Amount of Bonds $4,455,000 $2,225,000 $4,595,000 $11,275,000 Prepaid Assessments 598, ,153 Total Sources $5,053,153 $2,225,000 $4,595,000 $11,873,153 Uses Total Underwriter's Discount (1.200%) $53,460 $26,700 $55,140 $135,300 Costs of Issuance 36,351 18,155 37,494 92,000 Deposit to Project Construction Fund 4,963,478 2,180,000 4,500,000 11,643,478 Rounding Amount (136) 145 2,366 2,375 Total Uses $5,053,153 $2,225,000 $4,595,000 $11,873,153 2

7 Breakdown of Principal Payments: Payment Date Improvement Portion Water Revenue Portion Parks Portion Total Bond Issue 2/01/2020 $380,000 $190,000 $235,000 $805,000 2/01/ , , , ,000 2/01/ , , , ,000 2/01/ , , , ,000 2/01/ , , , ,000 2/01/ , , , ,000 2/01/ , , , ,000 2/01/ , , ,000 1,015,000 2/01/ , , ,000 1,045,000 2/01/ , , ,000 1,085,000 2/01/ , ,000 2/01/ , ,000 2/01/ , ,000 2/01/ , ,000 2/01/ , ,000 Total $4,455,000 $2,225,000 $4,595,000 $11,275,000 *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 for the Improvement Portion will be paid from ad valorem property taxes and special assessments levied against properties benefitted by improvements financed by the Bonds. The City anticipates that the debt Service for the Water Revenue Portion of the Bonds will be paid entirely from net revenues of the water system which is owned and operated by the City. The City anticipates that the debt service for the Parks Portion of the Bonds will be entirely paid from ad valorem property taxes. Receipt of special assessments and revenues 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, taxes and assessments 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. 3

8 RATING General obligation debt of the City, with the exception of any outstanding credit enhanced issues, is currently rated "Aa1" by Moody's Investors Service. The City has requested a rating on the Bonds from Moody's Investors Service, and bidders will be notified as to the assigned rating prior to the sale. Such rating reflects only the views of such organization and explanations of the significance of such rating may be obtained from Moody's Investors Service. 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 judgment 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. CONTINUING DISCLOSURE In order to assist the Underwriters in complying with SEC Rule 15c2-12 promulgated by the Securities and Exchange Commission, pursuant to the Securities Exchange Act of 1934 (hereinafter the "Rule"), the City shall covenant to take certain actions pursuant to the Award Resolution 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 of the 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. Except to the extent that the following are deemed to be material, the City believes it has not failed to comply in all material respects with its prior undertakings under the Rule. In the interest of full disclosure, the City has found the following: the City has on occasion filed Annual Financial Information timely, but failed to reference certain CUSIP numbers. Past filings have since been added to the respective CUSIP numbers. Prior continuing disclosure undertakings entered into by the City included language stating that an Annual Report including the City s audited financial statements and operating data would be filed as soon as available. Although the City did not always comply with this requirement, the Annual Reports were timely filed within the required twelve (12) month timeframe as provided for in each undertaking. The City has reviewed its continuing disclosure responsibilities to help ensure compliance in the future. 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 be able to access continuing disclosure information filed with the MSRB at Ehlers is currently engaged as disclosure dissemination agent for the City. 4

9 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 the applicable percentage 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. 5

10 Legislative proposals Bond Counsel s opinion is given as of its date and Bond Counsel assumes no obligation to update, revise, or supplement such opinion to reflect any changes in facts or circumstances or 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 of 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. NON-QUALIFIED TAX-EXEMPT OBLIGATIONS The City will NOT designate the Bonds as "qualified tax-exempt obligations" pursuant to Section 265 of the Internal Revenue Code of 1986, as amended, which permits financial institutions to deduct interest expenses allocable to the Bonds to the extent permitted 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, Colorado, 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, 2017 have been audited by Malloy, Montague, Karnowski, Radosevich & Co., P.A. ("MMKR"), 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. 6

11 RISK FACTORS 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 be other risks not now perceived or listed here. Taxes: The Bonds are general obligations of the City, the ultimate payment of which rests in the City's ability to levy and collect sufficient taxes to pay debt service should other revenue (special assessments and water revenues) be insufficient. In the event of delayed billing, collection or distribution of property taxes, sufficient funds may not be available to the City in time to pay debt service when due. 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. Economy: A combination of economic, climatic, political or civil disruptions or terrorist 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. 7

12 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. Cybersecurity: The City is dependent on electronic information technology systems to deliver services. These systems may contain sensitive information or support critical operational functions which may have value for unauthorized purposes. As a result, the electronic systems and networks may be targets of cyberattack. There can be no assurance that the City will not experience an information technology breach or attack with financial consequences that could have a material adverse impact. 8

13 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 2015/ / /18 Residential homestead 1 First $500, % Over $500, % Agricultural homestead 1 First $500,000 HGA % Over $500,000 HGA % First $2,140, % 2 Over $2,140, % 2 First $500, % Over $500, % First $500,000 HGA % Over $500,000 HGA % First $2,050, % 2 Over $2,050, % 2 First $500, % Over $500, % First $500,000 HGA % Over $500,000 HGA % First $1,940, % 2 Over $1,940, % 2 Agricultural non-homestead Land % 2 Land % 2 Land % 2 Seasonal recreational residential First $500, % 3 Over $500, % 3 First $500, % 3 Over $500, % 3 First $500, % 3 Over $500, % 3 Residential non-homestead: 1 unit - 1st $500, % Over $500, % 2-3 units % 4 or more % Small City % Affordable Rental: First $106, % Over $106, % Industrial/Commercial/Utility 5 First $150, % Over $150, % 1 unit - 1st $500, % Over $500, % 2-3 units % 4 or more % Small City % Affordable Rental: First $115, % Over $115, % First $150, % Over $150, % 1 unit - 1st $500, % Over $500, % 2-3 units % 4 or more % Small City % Affordable Rental: First $121, % Over $121, % First $150, % Over $150, % 1 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, The estimated market value of utility property is determined by the Minnesota Department of Revenue. 9

14 CURRENT PROPERTY VALUATIONS 2017/18 Economic Market Value $5,662,677, /18 Assessor's Estimated Market Value 2017/18 Net Tax Capacity Real Estate $5,221,360,800 $57,925,796 Personal Property 41,567, ,709 Total Valuation $5,262,928,300 $58,746,505 Less: Captured Tax Increment Tax Capacity 2 (328,617) Fiscal Disparities Contribution 3 (7,158,294) Taxable Net Tax Capacity $51,259,594 Plus: Fiscal Disparities Distribution 3 11,600,005 Adjusted Taxable Net Tax Capacity $62,859,599 1 According to the Minnesota Department of Revenue, the Assessor's Estimated Market Value (the "AEMV") for the City of Coon Rapids is about 92.96% 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 $5,662,677, The captured tax increment value shown above represents the captured net tax capacity of tax increment financing districts in the City of Coon Rapids. 3 Each community in the seven-county metropolitan area contributes 40% of the growth in its commercialindustrial property tax base since 1972 to an area pool which is then distributed among the municipalities on the basis of population, and fiscal capacity indicated market value as determined by the Minnesota Department of Revenue. Each governmental unit makes a contribution and receives a distribution--sometimes gaining and sometimes contributing net tax capacity for tax purposes. 10

15 2017/18 NET TAX CAPACITY BY CLASSIFICATION 2017/18 Net Tax Capacity Percent of Total Net Tax Capacity Residential homestead $31,469, % Agricultural 7, % Commercial/industrial 17,393, % Public utility 519, % Railroad operating property 247, % Non-homestead residential 8,283, % Commercial & residential seasonal/rec. 4, % Personal property 820, % Total $58,746, % TREND OF VALUATIONS Levy Year Assessor's Estimated Market Value Assessor's Taxable Market Value Net Tax Capacity 1 Adjusted Taxable Net Tax Capacity 2 Percent +/- in Estimated Market Value 2013/14 $3,975,781,800 $3,528,182,441 $43,670,617 $47,862, % 2014/15 4,433,189,300 4,013,516,348 49,038,831 53,544, % 2015/16 4,629,419,600 4,219,002,010 51,614,051 55,424, % 2016/17 4,820,952,200 4,415,563,121 54,020,606 57,762, % 2017/18 5,262,928,300 4,880,970,077 58,746,505 62,859, % 1 Net Tax Capacity is before fiscal disparities adjustments and includes tax increment values. 2 Adjusted Taxable Net Tax Capacity is after fiscal disparities adjustments and does not include tax increment values. 11

16 LARGER TAXPAYERS Taxpayer Type of Property 2017/18 Net Tax Capacity Percent of City's Total Net Tax Capacity BRE DDR Riverdale Village Outer Ring, LLC Commercial $ 1,165, % BRE DDR Riverdale Village Inner Ring, LLC Commercial 943, % Allina Health System Commercial 697, % Riverdale 2005, LLC Commercial 597, % Xcel Energy Utility 582, % Inland Village Ten, LLC Commercial 426, % Inland Riverdale Commons, LLC Commercial 411, % Target Corporation Commercial 326, % Medtronic, Inc. Industrial 310, % SCF Coon Rapids, LLC Industrial 298, % Total $ 5,759, % City's Total 2017/18 Net Tax Capacity $58,746,505 Source: Current Property Valuations, Net Tax Capacity by Classification, Trend of Valuations and Larger Taxpayers have been furnished by Anoka County. 12

17 DEBT DIRECT DEBT 1 General Obligation Debt (see schedules following) Total g.o. debt being paid from revenues $ 1,300,000 Total g.o. debt being paid from revenues, special assessments, and taxes (includes the Bonds)* 42,125,000 Total g.o. debt being paid from revenues, state aid, and taxes 8,660,000 Total General Obligation Debt* $ 52,085,000 Lease Purchase Obligations (see schedule following) 2 Total lease purchase obligations paid by annual appropriations 3 $ 11,675,000 *Preliminary, subject to change. 1 Outstanding debt is as of the dated date of the Bonds. 2 Computers and copiers have not been included, however, information related to these leases can be reviewed in the audit. 3 Non-general obligation debt has not been included in the debt ratios. 13

18 CITY OF COON RAPIDS, MINNESOTA Schedule of Bonded Indebtedness General Obligation Debt Being Paid From Revenues (As of 12/13/18) Refunding 1) Series 2007A Dated Amount 11/01/07 $4,120,000 Maturity 2/01 Fiscal Year Total Total Total Principal Fiscal Year Ending Principal Interest Principal Interest P & I Outstanding % Paid Ending ,000 43, ,000 43, , , % ,000 26, ,000 26, , , % ,000 9, ,000 9, , % ,300,000 79,200 1,300,000 79,200 1,379,200 1) This issue refunded the 2011 through 2021 maturities of the City's $6,100,000 General Obligation Water Revenue Bonds, Series 2000D, dated December 1, Prepared by Ehlers GO Revenue 14

19 CITY OF COON RAPIDS, MINNESOTA Schedule of Bonded Indebtedness General Obligation Debt Being Paid From Revenues, Special Assessments and Taxes (As of 12/13/18) GO Bonds 1) GO Bonds 2) Series 2013A Series 2013B GO Bonds 3) Series 2014A GO Bonds 4) Series 2015A GO Bonds 5) Series 2017A GO Bonds 6) Series 2018A Dated Amount 2/14/13 12/30/13 $6,615,000 $5,640,000 11/18/14 $9,720,000 4/15/15 $9,995,000 7/18/17 $9,705,000 12/13/2018 $11,275,000* Maturity 2/01 2/01 2/01 2/01 2/01 2/01 Fiscal Year Estimated Total Total Total Principal Fiscal Year Ending Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest P & I Outstanding % Paid Ending ,000 46, ,000 92, , , , , , , ,475 3,410, ,447 4,369,447 38,715, % ,000 38, ,000 74, , , , , , , , ,431 4,305, ,353 5,287,353 34,410, % ,000 29, ,000 56, ,000 93, , , , , , ,055 4,395, ,451 5,266,451 30,015, % ,000 20, ,000 40, ,000 74, , , , , , ,673 4,545, ,644 5,302,644 25,470, % ,000 12, ,000 25, ,000 53, , , , , , ,553 4,575, ,968 5,215,968 20,895, % ,000 7, ,000 8,731 1,015,000 32, ,000 89, , , , ,639 4,400, ,457 4,922,457 16,495, % ,000 6,365 1,030,000 10, ,000 67, , , , ,103 3,860, ,436 4,275,436 12,635, % ,000 4, ,000 49, ,000 96, , ,573 2,635, ,045 2,968,045 10,000, % ,000 2, ,000 35, ,000 80,113 1,015, ,990 2,160, ,738 2,430,738 7,840, % , ,000 26, ,000 65,756 1,045, ,015 2,215, ,191 2,427,191 5,625, % ,000 16, ,000 55,200 1,085,000 83,328 1,680, ,003 1,835,003 3,945, % ,000 5, ,000 49, ,000 59, , ,239 1,054,239 3,005, % ,000 43, ,000 47, ,000 90, ,709 2,460, % ,000 37, ,000 34, ,000 72, ,031 1,900, % ,000 31, ,000 21, ,000 52, ,408 1,315, % ,000 24, ,000 7, ,000 31, , , % ,000 18, ,000 18, , , % ,000 10, ,000 10, , , % ,000 3, ,000 3, , % ,515, ,608 3,575, ,931 6,910, ,016 8,245,000 1,106,481 9,605,000 1,881,344 11,275,000 2,549,257 42,125,000 6,514,636 48,639,636 *Preliminary, subject to change. 1) A portion of this issue current refunded the 2014 through 2018 maturities of the City's $6,150,000 General Obligation Water Revenue Bonds, Series 2003A, dated September 1, The golf course portion of the Bonds is payable entirely from revenues ($745,000 principal remaining). The water revenue portion has been retired. 2) The water revenue portion of the Bonds is payable entirely from revenues ($1,650,000 principal remaining) 3) The street portion of the Bonds is subject to the debt limit ($1,830,000 outstanding principal amount). The water and storm sewer revenue portions of the Bonds is payable entrely from revenues ($3,465,000 and $600,000 principal remaining). 4) The parks and open space portion of the Bonds are subject to the debt limit ($4,380,000 outstanding principal amount) The water revenue portions of the Bonds is payable entrely from revenues ($1,310,000 principal remaining). 5) A portion of this issue refunded the 2017 through 2037 maturities of the City's $4,225,000 Taxable General Obligation Golf Course Revenue Bonds, Series 2010A (Build America Bonds - Direct Payment), dated June 16, 2010 The parks portion of this issue is subject to the debt limit ($1,710,000 oustanding principal amount). The water revenue portion and current refunding portions of the Bonds are payable entrely from revenues ($1,500,000 and $3,480,000 principal remaining, respectively). 5) The parks portion of the Bonds is subject to the debt limit ($4,595,000 estimated outstanding principal amount) The water revenue portions of the Bonds is payable entrely from revenues ($2,225,000 estimated principal remaining). Prepared by Ehlers GO Revenue, SA & Tax 15

20 CITY OF COON RAPIDS, MINNESOTA Schedule of Bonded Indebtedness General Obligation Debt Being Paid From Revenues, State Aid & Taxes (As of 12/13/18) GO Bonds 1) Series 2016A Dated Amount 11/22/16 $9,520,000 Maturity 4/01 Fiscal Year Total Total Total Principal Fiscal Year Ending Principal Interest Principal Interest P & I Outstanding % Paid Ending , , , ,250 1,205,250 7,680, % ,015, ,325 1,015, ,325 1,210,325 6,665, % ,040, ,500 1,040, ,500 1,204,500 5,625, % , , , ,850 1,005,850 4,755, % , , , ,375 1,004,375 3,860, % ,000 82, ,000 82,075 1,007,075 2,935, % ,000 53, ,000 53,950 1,003,950 1,985, % ,000 29, ,000 29,850 1,014,850 1,000, % ,000,000 10,000 1,000,000 10,000 1,010, % ,660,000 1,006,175 8,660,000 1,006,175 9,666,175 1) The parks and open space portion of the Bonds is subject to the Debt Limit ($565,000 principal amount). The water revenue portion of the Bonds is payable entirely from revenues ($3,535,000 principal remaining) Prepared by Ehlers GO Revenue, State Aid & Tax 16

21 ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF COON RAPIDS, MINNESOTA Schedule of Bonded Indebtedness Non-General Obligation Debt Being Paid From Annual Appropriations (As of 12/13/18) Lease Revenue Series 2010B Dated Amount 8/11/10 $13,500,000 Maturity 2/01 Fiscal Year Total Total Total Principal Fiscal Year Ending Principal Interest Principal Interest P & I Outstanding % Paid Ending , , , , ,956 11,210, % , , , , ,781 10,730, % , , , , ,681 10,235, % , , , , ,769 9,720, % , , , , ,481 9,190, % , , , , ,238 8,640, % , , , , ,869 8,070, % , , , , ,569 7,475, % , , , , ,369 6,860, % , , , , ,869 6,220, % , , , , ,953 5,555, % , , , , ,469 4,860, % , , , , ,388 4,135, % , , , , ,088 3,380, % , , , , ,325 2,590, % ,000 97, ,000 97, ,988 1,765, % ,000 59, ,000 59, , , % ,000 20, ,000 20, , % ,675,000 5,057,003 11,675,000 5,057,003 16,732,003 Prepared by Ehlers Non-GO Annl App 17

22 DEBT LIMIT The statutory limit on debt of Minnesota municipalities other than school districts or cities of the first class (Minnesota Statutes, Section , subd. 1) is 3% of the Assessor's Estimated Market Value of all taxable property within its boundaries. "Net debt" (Minnesota Statutes, Section , subd. 4) is the amount remaining after deducting from gross debt the amount of current revenues which are applicable within the current fiscal year to the payment of any debt and the aggregate principal of the following: (1) obligations payable wholly or partly from special assessments levied against benefitted property (includes the Improvement Portion of the Bonds); (2) warrants or orders having no definite or fixed maturity; (3) obligations payable wholly from the income of revenue producing conveniences; (4) obligations issued to create or maintain a permanent improvement revolving fund; (5) obligations issued to finance any public revenue producing convenience (includes the Water Revenue Portion of the Bonds); (6) funds held as sinking funds for payment of principal and interest on debt other than those deductible under Minnesota Statutes, Section , subd. 4; (7) obligations issued to pay judgments against the City; and (8) 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 $ 5,262,928,300 Multiply by 3% 0.03 Statutory Debt Limit $ 157,887,849 Less: Long-Term Debt Outstanding Being Paid Solely from Taxes 1 (includes the Bonds)* (13,080,000) Less: Long-Term Debt Outstanding Being Paid Solely from Annual Appropriations (11,675,000) Unused Debt Limit* $ 133,132,849 *Preliminary, subject to change. 1 Includes the street portion of the City s $9,720,000 General Obligation Bonds, Series 2014A ($1,830,000 principal remaining); the parks and open space portion of the City s $9,995,000 General Obligation Bonds, Series 2015A ($4,380,000 principal remaining); the parks and open space portion of the City s $9,520,000 General Obligation Bonds, Series 2016A ($565,000 principal remaining), the parks portion of the City's $9,705,000 General Obligation Bonds, Series 2017A ($1,710,000 principal remaining); and the parks potion of the Bonds of this offering ($4,595,000 estimated outstanding principal remaining),which are payable entirely from taxes. 18

23 OVERLAPPING DEBT 1 Taxing District 2017/18 Adjusted Taxable Net Tax Capacity % In City Total G.O. Debt 2 City's Proportionate Share Anoka County $ 366,666, % $ 82,715,000 $ 14,180,246 I.S.D. No. 11 (Anoka-Hennepin) 245,108, % 185,275, ,514,885 Metropolitan Council 3,971,779, % 185,340, ,933,376 City's Share of Total Overlapping Debt $ 64,628,508 1 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 Based upon the long term facilities maintenance revenue formula and current statistics, the District anticipates a portion of this debt will be paid by the State of Minnesota. 4 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. 19

24 DEBT RATIOS Direct G.O. Debt Being Paid From: G.O. Debt Revenues $ 1,300,000 Revenues, Special Assessments & Taxes 42,125,000 Revenues, State Aid & Taxes 8,660,000 Total General Obligation Debt (includes the Bonds)* $52,085,000 Less: G.O. Debt Paid Entirely from Revenues 1 (18,510,000) Debt/Economic Market Value ($5,662,677,907) Debt/ Current Population Estimate (63,272) Tax Supported General Obligation Debt* $33,575, % $ City's Share of Total Overlapping Debt $64,628, % $1, Total* $98,203, % $1, *Preliminary, subject to change. DEBT PAYMENT HISTORY The City has no record of default in the payment of principal and interest on its debt. FUTURE FINANCING The City plans to issue approximately $10,000,000 General Obligation Bonds in the next 12 months. 1 Debt service on the City's general obligation revenue debt is being paid entirely from revenues and therefore is considered self-supporting debt. This includes the golf course portion of the General Obligation Bonds, Series 2013A, which are payable entirely from revenues ($745,000 principal remaining), the water revenue portion of the General Obligation Improvement and Water Revenue Bonds, Series 2013B ($1,650,000 principal remaining), the water and storm sewer revenue portions of the General Obligation Bonds, Series 2014A ($3,465,000 and $600,000 principal remaining), the water revenue portion of the General Obligation Bonds, Series 2015A ($1,310,000 principal remaining), the water revenue portion of the General Obligation Bonds, Series 2016A ($3,535,000 principal remaining), the water revenue portion and current refunding of the General Obligation Bonds, Series 2017A ($1,500,000 and $3,480,000 principal remaining, respectively), and the Water Revenue Portion of the Bonds of this offering ($2,225,000 estimated principal remaining). 20

25 TAX RATES, LEVIES AND COLLECTIONS TAX LEVIES AND COLLECTIONS Tax Year Net Tax Levy 1 Total Collected Following Year Collected to Date 2 % Collected 2013/14 $ 22,645,595 $22,462,141 $22,625, % 2014/15 24,046,987 23,893,929 24,016, % 2015/16 24,675,366 24,512,111 24,639, % 2016/17 25,421,799 25,310,931 25,310, % 2017/18 26,845,980 In process of collection Property taxes are collected in two installments in Minnesota--the first by May 15 and the second by October 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. 1 This reflects the Final Levy Certification of the City after all adjustments have been made. 2 Collections are through December 31, Second half tax payments on agricultural property are due on November 15th of each year. 21

26 TAX CAPACITY RATES / / / / /18 Anoka County w/ Library % % % % % Anoka County/City Radio 0.374% 0.320% 0.504% 0.432% 0.486% City of Coon Rapids % % % % % I.S.D. No. 11 (Anoka-Hennepin) % % % % % Anoka County Railroad Authority 0.882% 0.941% 0.851% 0.802% 0.738% Coon Creek Watershed 1.482% 1.425% 2.135% 1.385% 1.388% Coon Rapids HRA 1.450% 1.330% 1.304% 1.244% 1.133% Metropolitan Council 1.061% 0.933% 0.958% 0.866% 0.841% Metropolitan Mosquito 0.555% 0.485% 0.501% 0.467% 0.453% Metro Transit District 1.621% 1.429% 1.522% 1.416% 1.362% Referendum Market Value Rates: I.S.D. No. 11 (Anoka-Hennepin) % % % % % Source: Tax Levies and Collections and Tax Capacity Rates have been furnished by Anoka County. 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. 1 After reduction for state aids. Does not include the statewide general property tax against commercial/industrial, non-homestead resorts and seasonal recreational residential property. 22

27 THE ISSUER CITY GOVERNMENT The City of Coon Rapids was organized as a municipality in The City operates under a home rule charter form of government consisting of a seven-member City Council of which the Mayor is a voting member. The City Administrator, City Clerk, City Treasurer and Finance Director are responsible for administrative details and financial records. EMPLOYEES; PENSIONS; UNIONS The City currently has 236 full-time and 62 part-time or seasonal employees. All full-time and certain part-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 Bargaining Unit Expiration Date of Current Contract LELS December 31, 2018 International Association of Firefighters December 31, 2018 Police Sergeants December 31, 2018 Minnesota Teamsters Public Works December 31, 2018 POST EMPLOYMENT BENEFITS The City has obligations for some post-employment benefits (some mandated by State Statute and others that cover a portion of the cost of health insurance during retirement) for the majority of its employees. Accounting for these obligations is dictated by Governmental Accounting Standards Board Statement No. 45 (GASB 45). The City has completed an actuarial study of its obligations. The study shows an actuarial accrued liability of $7,497,276 with a discount rate of 4.5% as of January 1, The City is currently funding these obligations on a pay-as-you-go basis. Source: The City's most recent actuarial study. 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. 23

28 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 ) (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, , 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. FUNDS ON HAND (As of September 30, 2018) Fund Total Cash and Investments General $11,705,087 Special Revenue 7,154,751 Debt Service 3,957,473 Capital Projects 28,691,374 Enterprise Funds 7,532,079 Internal Service Funds 9,870,586 Agency Funds 1,457,326 Total Funds on Hand $70,368,676 24

29 ENTERPRISE FUNDS Revenues available for debt service on the City's enterprise funds have been as follows as of December 31 each year: Water Total Operating Revenues $ 5,452,474 $ 5,954,733 $ 5,942,165 Less: Operating Expenses (5,181,819) (5,041,775) (5,002,536) Operating Income $ 270,655 $ 912,958 $ 939,629 Plus: Depreciation 1,920,320 1,982,402 2,050,132 Revenues Available for Debt Service $ 2,190,975 $ 2,895,360 $ 2,989,761 Sewer Total Operating Revenues $ 6,200,626 $ 6,471,113 $ 6,687,100 Less: Operating Expenses (6,099,061) (6,663,638) (6,722,917) Operating Income $ 101,565 $ (192,525) $ (35,817) Plus: Depreciation 855, , ,982 Revenues Available for Debt Service $ 956,627 $ 733,903 $ 914,165 Storm Water Drainage Total Operating Revenues $ 1,378,973 $ 1,365,611 $ 1,367,236 Less: Operating Expenses (1,241,418) (1,340,153) (1,774,192) Operating Income $ 137,555 $ 25,458 $ (406,956) Plus: Depreciation 635, , ,308 Revenues Available for Debt Service $ 773,512 $ 669,673 $ 270,352 Golf Total Operating Revenues $ 5,270,541 $ 6,689,204 $ 7,025,762 Less: Operating Expenses (6,077,273) (7,030,125) (7,267,675) Operating Income $ (806,732) $ (340,921) $ (241,913) Plus: Depreciation 738, , ,880 Revenues Available for Debt Service $ (68,518) $ 388,865 $ 465,967 25

30 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 2017 audited financial statements. COMBINED STATEMENT 2015 Audited FISCAL YEAR ENDING DECEMBER Audited Audited 2018 Adopted Budget Proposed Budget 2 Revenues Property taxes $18,414,562 $19,067,945 $19,609,811 $20,357,640 $21,178,369 Fees, licenses and permits 1,471,009 1,718,043 2,726,688 1,707,900 1,681,027 Fines and forfeitures 310, , , , ,500 Investment earnings 226, , , , ,000 Intergovernmental 2,187,847 2,233,951 2,295,074 2,715,876 2,731,927 Charges for services 1,914,358 2,157,161 2,027,259 1,997,700 1,972,185 Utilities tax ,267,760 3,272,396 Other miscellaneous revenues 3,777,191 3,857,539 4,012, , ,800 Total Revenues $28,302,386 $29,422,032 $31,132,154 $31,225,521 $32,027,204 Expenditures Current: General government $ 3,581,443 $ 3,851,857 $ 3,973,652 $ 4,452,606 $ 4,439,733 Public safety 14,067,653 14,554,892 14,808,985 16,201,473 16,408,744 Community services 511, , , , ,878 Community development 1,788,399 1,951,224 1,992,464 2,089,470 2,009,702 Maintenance services 6,874,666 6,849,328 7,041,918 7,560,404 8,076,919 Capital outlay Debt Service Total Expenditures $26,823,356 $27,779,329 $28,417,593 $30,923,081 $31,592,976 Excess of revenues over (under) expenditures $ 1,479,030 $ 1,642,703 $ 2,714,561 $ 302,440 $ 434,228 Other Financing Sources (Uses) Sale of capital assets $ 0 $ 0 $ 3,152 Operating transfers in $ 56,677 $ 62,169 $ 61,582 Operating transfers out (1,020,148) (1,753,993) (1,920,000) Total Other Financing Sources (Uses) $ (963,471) $ (1,691,824) $ (1,855,266) Net Changes in Fund Balances $ 515,559 $ (49,121) $ 859,295 General Fund Balance January 1 13,907,221 14,422,780 14,373,659 Prior Period Adjustment Residual Equity Transfer in (out) General Fund Balance December 31 $14,422,780 $14,373,659 $15,232,954 DETAILS OF DECEMBER 31 FUND BALANCE Nonspendable $ 484,521 $ 705,810 $ 622,535 Restricted 27,989 25,995 44,088 Assigned 118,300 75,850 84,700 Unassigned 13,791,970 13,566,004 14,481,631 Total $14,422,780 $14,373,659 $15,232, The 2018 budget was adopted on December 5, The 2019 budget is scheduled to be adopted as of December 4,

31 GENERAL INFORMATION LOCATION The City of Coon Rapids, with a 2010 U.S. Census population of 61,476, and a current population estimate of 63,272, and comprising an area of 23 square miles, is located approximately 14 miles north of the Minneapolis-St. Paul metropolitan area. LARGER EMPLOYERS 1 Larger employers in the City of Coon Rapids include the following: Estimated No. Firm Type of Business/Product of Employees Mercy Hospital (Allina Health System) Hospital and medical care 1,974 2 I.S.D. No. 11 (Anoka-Hennepin) Elementary and secondary education 1,303 RMS Company Medical and aerospace components Honeywell Aerospace Commercial aircraft flight systems & components 600 Anoka-Ramsey Community College Post-secondary education 390 City of Coon Rapids Municipal government and services 298 Hom Furniture Retail store 300 Target Retail and grocery store 300 Menards Retail store 220 Walmart Retail store 200 Source: ReferenceUSA, written and telephone survey (October 2018), and the Minnesota Department of Employment and Economic Development. 1 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. 2 Includes Allina Clinic. 3 Part of Cretex Medical. 27

32 BUILDING PERMITS New Single Family Homes No. of building permits Valuation $3,659,625 $6,924,337 $4,847,734 $10,242,259 $4,793,280 New Multiple Family Buildings No. of building permits Valuation $0 $598,225 $954,779 $1,257,508 $43,894,281 New Commercial/Industrial No. of building permits Valuation $8,052,899 $22,100,213 $4,596,365 $17,205,155 $29,316,508 All Building Permits (including additions and remodelings) No. of building permits 2,038 2,089 2,328 7,238 3,314 Valuation $146,627,483 $80,997,982 $177,312,553 $167,343,475 $176,516,311 Source: The City. 1 As of October 11,

33 U.S. CENSUS DATA Population Trend: City of Coon Rapids, Minnesota Income and Age Statistics 2000 U.S. Census population 61, U.S. Census population 61, State Demographer's Estimate 63,272 Percent of Change % City of Coon Rapids Anoka County State of Minnesota United States 2016 per capita income $30,664 $33,051 $33,225 $29, median household income $66,313 $73,579 $63,217 $55, median family income $76,964 $86,345 $79,595 $67, median gross rent $1,066 $1,000 $873 $ median value owner occupied units $171,200 $193,200 $191,500 $184, median age 37.9 yrs yrs yrs yrs. State of Minnesota United States City % of 2016 per capita income 92.29% % City % of 2016 median family income 96.69% % Housing Statistics City of Coon Rapids Percent of Change All Housing Units 22,828 24, % Source: 2000 and 2010 Census of Population and Housing, and 2016 American Community Survey (Based on a five-year estimate), U.S. Census Bureau ( EMPLOYMENT/UNEMPLOYMENT DATA Rates are not compiled for individual communities within counties. Average Employment Average Unemployment Year Anoka County Anoka County State of Minnesota , % 4.2% , % 3.7% , % 3.9% , % 3.5% 2018, September 192, % 2.2% Source: Minnesota Department of Employment and Economic Development. 29

34 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 Preliminary Official Statement. Although the inclusion of the financial statements in this Preliminary 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

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136 APPENDIX B FORM OF LEGAL OPINION (See following page) B-1

137 $11,275,000 General Obligation Improvement, Utility and Park Bonds, Series 2018A City of Coon Rapids Anoka County, Minnesota We have acted as bond counsel to the City of Coon Rapids, Anoka County, Minnesota (the Issuer ) in connection with the issuance by the Issuer of its General Obligation Improvement, Utility and Park Bonds, Series 2018A (the Bonds ), originally dated the date hereof, and issued in the original aggregate principal amount of $11,275,000. In such capacity and for the purpose of rendering this opinion we have examined certified copies of certain proceedings, certifications and other documents, and applicable laws as we have deemed necessary. Regarding questions of fact material to this opinion, we have relied on certified proceedings and other certifications of public officials and other documents furnished to us without undertaking to verify the same by independent investigation. Under existing laws, regulations, rulings and decisions in effect on the date hereof, and based on the foregoing we are of the opinion that: 1. The Bonds have been duly authorized and executed, and are valid and binding general obligations of the Issuer, enforceable in accordance with their terms. 2. The principal of and interest on the Bonds are payable from special assessments levied or to be levied on property specially benefited by local improvements and ad valorem taxes for the Issuer s share of the cost of the improvements, revenues of the water system of the Issuer and ad valorem taxes, but if necessary for the payment thereof additional ad valorem taxes are required by law to be levied on all taxable property of the Issuer, which taxes are not subject to any limitation as to rate or amount. 3. Interest on the Bonds is excludable from gross income of the recipient for federal income tax purposes and, to the same extent, is excludable from taxable net income of individuals, trusts, and estates for Minnesota income tax purposes, and is not a preference item for purposes of the computation of 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 1, 2018), or the computation of the Minnesota alternative minimum tax imposed on individuals, trusts and estates. However, such interest is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. The opinion set forth in this paragraph is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes and from taxable net income for Minnesota income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes and taxable net income for Minnesota income tax purposes retroactively to the date of issuance of the Bonds. We express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein v1 JSB CN B-2