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Basis for Recommendation: <br />Method of Sale/Placement: <br />Presale Report <br />City of Ramsey, Minnesota <br />The City will request a new rating for the Bonds. <br />If the winning bidder on the Bonds elects to purchase bond insurance, the <br />rating for the issue may be higher than the City's bond rating in the event that <br />the bond rating of the insurer is higher than that of the City. <br />Based on our knowledge of your situation, your objectives communicated to <br />us, our advisory relationship as well as characteristics of various municipal <br />financing options, we are recommending the issuance of General Obligation <br />Street Reconstruction Bonds as a suitable financing option because <br />- This is a viable option available to finance this type of project under <br />State law <br />- This is the most overall cost effective option that still maintains future <br />flexibility for the repayment of debt <br />- These projects were anticipated when the City completed their street <br />reconstruction plan last year and held the required public hearing to <br />finance these projects under this authority <br />This coincides with the City's past practices to finance these types of projects <br />with this type of debt issue. <br />In order to obtain the lowest interest cost to the City, we will competitively bid <br />the purchase of the Bonds from local and national underwriters/banks. <br />We have included an allowance for discount bidding equal to 1.20000% of the <br />principal amount of the issue. The discount is treated as an interest item and <br />provides the underwriter with all or a portion of their compensation in the <br />transaction. <br />If the Bonds are purchased at a price greater than the minimum bid amount <br />(maximum discount), the unused allowance may be used to lower your <br />borrowing amount. <br />Premium Bids: Under current market conditions, most investors in municipal <br />bonds prefer "premium" pricing structures. A premium is achieved when the <br />coupon for any maturity (the interest rate paid by the issuer) exceeds the yield <br />to the investor, resulting in a price paid that is greater than the face value of <br />the bonds. The sum of the amounts paid in excess of face value is considered <br />"reoffering premium." <br />The amount of the premium varies, but it is not uncommon to see premiums <br />for new issues in the range of 2.00% to 10.00% of the face amount of the <br />issue. This means that an issuer with a $2,000,000 offering may receive bids <br />that result in proceeds of $2,040,000 to $2,200,000. <br />For this issue of Bonds we have been directed to use the premium to reduce <br />the size of the issue. The adjustments may slightly change the true interest <br />cost of the original bid, either up or down. <br />You have the choice to limit the amount of premium in the bid <br />specifications. This may result in fewer bids, but it may also eliminate large <br />adjustments on the day of sale and other uncertainties. <br />May 24, 2016 <br />Page 2 <br />