HomeMy WebLinkAbout20050322.tiff RESOLUTION
RE: SETTING FORTH THE INTENTION OF WELD COUNTY, COLORADO, TO ISSUE
ADJUSTABLE RATE REVENUE BONDS TO FINANCE A MANUFACTURING FACILITY
- CUSTOM MICROWAVE, INC.
WHEREAS, the Board of County Commissioners of Weld County, Colorado, pursuant to
Colorado statute and the Weld County Home Rule Charter, is vested with the authority of
administering the affairs of Weld County, Colorado, and
WHEREAS,Weld County,Colorado(the"County")is authorized and empowered under the
provisions of the County and Municipality Development Revenue Bond Act, Article 3 of Title 29,
Colorado Revised Statutes, as amended (the"Act"), to issue revenue bonds to pay the costs of a
project(as defined in the Act)and to loan the proceeds of said revenue bonds to others to provide
for the financing, acquiring, equipping, and improving of such a project, and
WHEREAS, Custom Microwave, Inc. (together with its successors or assigns, the
"Borrower")has requested the County to issue revenue bonds, in one or more series in a combined
aggregate principal amount not to exceed$2,580,000,with the interest on the bonds of one series
to be excluded from gross income for federal income tax purposes(the"Bonds"), and to apply the
proceeds of the issuance and sale of the Bonds to fund a loan to the Borrower for purposes of
financing costs of the acquisition, construction, equipping and improving of real and personal
property in connection with an approximately 22,000 square-foot manufacturing facility(the"Project)
to be located on Skyway Drive at Vista Commercial Center, Lot 5 and Lot 12 Block 2 within the
boundaries of the County, and
WHEREAS, the Borrower has represented to the County that the Project will qualify as a
project within the meaning of the Act, and
WHEREAS, the County desires to indicate its intention to finance the costs of financing,
acquiring,constructing,equipping,and improving the Project by the issuance of tax-exempt revenue
bonds under the Act in a principal amount not to exceed$2,580,000,said Bonds to be payable solely
out of revenues derived from the repayment by the Borrower of the loan from the County, and
WHEREAS, the Borrower intends to commence the Project prior to the issuance of the
Bonds and has furnished to the County a preliminary bond counsel opinion of Brownstein Hyatt&
Farber, P.C., attorneys of Denver, Colorado, to such effect, and
WHEREAS,the Borrower desires that such financing,acquiring,constructing,equipping and
improving of the Project commence immediately, and
WHEREAS, the County's ability to issue tax-exempt revenue bonds to finance such
improvements is subject to the limitations set forth in the Colorado Private Activity Bond Ceiling
Allocation Act, Part 17 of Article 32 of Title 24, Colorado Revised Statutes (the "Bond Allocation
Act"), and
2005-0322
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INTENT TO ISSUE BONDS - CUSTOM MICROWAVE, INC.
PAGE 2
WHEREAS,the Internal Revenue Service has issued 1.150-2 of the Income Tax Regulations
(the"Regulations")dealing with the issuance of bonds,all or a portion of the proceeds of which are
to be used to reimburse project expenditures incurred prior to the date of issuance;the Regulations
generally require that a prior declaration of official intent be made by the County as issuer if the
Borrower intends to reimburse itself for such prior expenditures out of the proceeds of a
subsequently issued borrowing, that the borrowing occur, and the reimbursement allocation be
made from the proceeds of such borrowing within 18 months of the payment of the expenditure or,
if later, within 18 months of the date the project is placed in service, and that the expenditure be a
capital expenditure or payment of costs of issuance; and the County as issuer and the Borrower
desire to comply with the requirements of the Regulations with respect to the Project.
NOW,THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Weld
County, Colorado, as follows:
1. The Board of County Commissioners, having considered the application of the
Borrower for assistance to finance the Project to be located within the boundaries
of the County, has determined and hereby determines that the financing of the
Project will promote the public health,welfare, safety, convenience and prosperity
and promote and develop trade or other economic activity by inducing manufacturing
facilities to locate, expand, or remain in the County and the State of Colorado.
2. In order to induce the Borrower to construct the Project within the County, subject
to the provisions hereof, the County shall take all necessary or advisable steps to
effect the issuance of the Bonds pursuant to the Act in a combined aggregate
principal amount not to exceed $2,580,000, or such lesser amount as shall be
determined and agreed upon between the Borrower and the County,to fund a loan
to the Borrower for the purpose of financing costs of the acquisition, construction
and equipping of the Project. The Bonds will not be general obligations of the
County. Neither shall the Bonds, including interest thereon, constitute the debt or
indebtedness of the County within the meaning of any limitation of the Constitution
or Statutes of the State of Colorado,nor give rise to a pecuniary liability of the County
or a charge against its general credit or taxing powers. The Bonds shall be payable
solely from and secured by a pledge of revenues derived from and payable by the
Borrower pursuant to financing agreements with the County.
3. No costs or expenses, whether incurred by the County or any other party in
connection with the issuance of the Bonds or the preparation of any documents by
any legal or financial consultants retained in connection therewith,shall be borne by
the County. All such costs or expenses shall be paid from the proceeds of the
Bonds or otherwise borne by the Borrower.
4. Prior to the execution of a loan agreement, indenture of trust, bond purchase
agreement, or any other necessary documents and agreements in connection with
such Bonds,documents,and/or agreements shall be submitted for approval to the
County, and, if satisfactory to the County, their execution shall be authorized by
resolution of the County pursuant to law. Prior to any further action by the Board of
2005-0322
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INTENT TO ISSUE BONDS - CUSTOM MICROWAVE, INC.
PAGE 3
County Commissioners,the Borrower shall provide the County with all information
concerning the utilization of Bond proceeds for said Project,construction plans,and
all financial information requested by the County.
5. The County presently intends and reasonably expects to participate in a tax-exempt
borrowing for the benefit of the Borrower within 18 months of the date of the
expenditures of moneys on the Project or the date upon which the Project is placed
in service, but in no event more than three years after the expenditure is made,
whichever is later.
6. The County has received information which it considers to be reliable (a) that the
Borrower proposes to undertake the Project, (b) that except for (i) expenditures
aggregating no more than the lesser of $100,000 or 5% of the proceeds of the
bonds, (H)preliminary expenditures(as described in the Regulations)in an amount
not to exceed 20%of the issue price of the Bonds,and(iii)other expenditures made
not earlier than 60 days before the date of this Resolution, no expenditures for the
Project have been made by the Borrower that will be reimbursed from the proceeds
of the Bonds, and (c) the Borrower reasonably expects to reimburse the
expenditures made for costs of the Project out of the proceeds of the Bonds; and
that this Resolution is a declaration of official intent adopted pursuant to Section
1.150-2 of the Regulations.
7. The Board of County Commissioners hereby awards to the Project$2,500,000 of
the County's portion of the State's private activity bond volume cap (the"County's
Volume Cap"). The appropriate officers of the County are hereby authorized to take
all action that may be necessary to preserve the County's Volume Cap.
8. All commitments of the County contained herein are subject to the following
conditions and any other requirements deemed necessary by the County:
A. The property on which the Project is proposed to be constructed be located
within the County; and
B. The Bonds shall be issued and sold not later than one year from the date
hereof, and in the event the Bonds are not issued by such date, the County
shall be under no obligation to perform any of the terms and conditions
contained in this Resolution.
9. Nothing herein requires the County to proceed with the issuance of the Bonds, it
being in the sole discretion of the Board of County Commissioners as to whether the
Bonds will be issued or not. The approval of this Resolution does not limit or restrict
the County in the exercise of any of its legal powers with respect to the Project or the
property on which it is to be located.
2005-0322
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INTENT TO ISSUE BONDS - CUSTOM MICROWAVE, INC.
PAGE 4
10. If any section,paragraph,clause or provision of this Resolution shall be adjudged to
be invalid or unenforceable, the invalidity or unenforceability of such section,
paragraph, clause or provision shall not affect any of the remaining sections,
paragraphs, clauses or provisions of this Resolution.
11. This Resolution shall take effect immediately upon its passage.
The above and foregoing Resolution was,on motion duly made and seconded,adopted by
the following vote on the 26th day of January, A.D., 2005.
aS
,, I / • BOARD OF COUNTY COMMISSIONERS
\ WELD COUNTY, COLORADO
tit4 - �� William H. Jerke, Chair
, =r• <u FClerk to the Board
"`3/4, .01 i .01, EXCUSED
/12//(cam M. J. ile, Pro-Tem
BY: d01_,eal
Deputy Clerk o the Board 1
David E. Long
APPROVED AS TO FO .
EXCUSED
Robe D. Masden
o n y Attorney
Glenn Vaad
Date of signature: S
2005-0322
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CONTENTS
Letter of Introduction 1
Custom Microwave 2
Wells Fargo Today 3
Wells Fargo Public Finance Overview
Your Investment Banking Team 4
Variable Rate Financing 5
Bond Sizing Spread Sheet 6
Interest Rate Risk Management 7
Remarketing Service Overview 8
VRDO Colorado Transactions 9
Letter of Credit Rating 10
Inducement Resolution for Weld County 11
Preliminary Legal Opinion for Project 12
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Wells Fargo Public Finance(WFPF) bankers are registered representatives of
Wells Fargo Brokerage Services, LLC, or Wells Fargo Institutional Securities, LLC, brokerage affiliates of
Wells Fargo& Company and members of the NASD and SIPC.
Investments: • NOT FDIC Insured • May Lose Value • No Bank Guarantee
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Wells Fargo Brokerage Services,LLC
John H. Self
Senior Vice President
MAC C7300-011
1740 Broadway
Denver. CO 80274
December 22, 2004
Mr. Don Warden
Administrator
Weld County
915 10th Street
Greeley,Colorado 80632
Re: Request for Inducement Resolution for Tax-Exempt Industrial Revenue
Bonds Custom Microwave,Inc.
Dear Don:
Thank you for the opportunity to submit the attached information for Weld County to review this
eligible project for the issuance of Industrial Development Revenue Bonds. We have attached an
example of an Inducement Resolution for the County to act upon so that when and if the County
receives its allocation for FY 2005, that Custom Microwave may be eligible and prepared to issue
tax-exempt Industrial Revenue Bonds. Per my conversation with you, we have enclosed a package
of information regarding Custom Microwave as well as an outline of the issuance of tax-exempt
rated economic development revenue bonds.
Over the past four years Wells Fargo's Public Finance Division has structured more 400
transactions in Colorado. These transactions have ranged from general obligation bonds, to
revenue bonds to lease purchase agreements. In addition Wells Fargo Public Finance has been
extremely active in the Weld County market during the past few years; having completed
refunding and improvement bonds for Central Weld County Water District, industrial
revenue bonds for MAK, revenue bonds for Greeley Center for Independence (with the
assistance of Weld County) as well as completing a number of lease purchase financings for a
number of political subdivisions within the County.
Wells Fargo Corporation is a $425 billion corporation and is considered as one of the largest
financial service corporations in the Country. Acting in conjunction with our corporate affiliate,
Wells Fargo Securities, our mandate is to structure, underwrite, market, and trade fixed income
securities. We serve a diverse group of clients,ranging from local and state governments to a variety
of non-profit organizations. The end results of our work are creative financing solutions at
competitive rates for our clients.
Wells Fargo Public Finance employs 38 people in twelve offices. Our professionals have over 250
years of combined public finance and governmental experience, often having served as public office
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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holders or non-profit board members themselves. Our municipal finance experience includes all
aspects of public finance. When you choose Wells Fargo Public Finance as your financing
specialist,you make a decision to commit the best and most expert financing team available for your
project.
The enclosed information provides the goals for this financing:
1) Structure a competitive issuance of Industrial Development Revenue Bonds
2) Obtain a Letter of Credit to enhance this financing
3) Issue Variable Rate Demand Obligations
4) Create a highly marketable yet flexible offering
5) Provide a timetable of events
6) Review the financial team members
Don, I will serve as the primary contact for Custom Microwave on this financing and we are ready to
begin work immediately. All of the costs associated with this financing are broken out in the cost of
issuance outline. If you have any other questions or wish to discuss this in greater detail please feel
free to call me at 303.863.6461. We look forward to hearing from you.
Sincer j
J H. Self
enior Vice Presi n
Wells Fargo Bro age Services,LLC
Cc: Betsy Gray, Wells Fargo Bank, N.A.
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Custom Microwave, Inc
<www.custommicrowave.com>
ABOUT CUSTOM MICROWAVE,
Custom Microwave Inc., CMI, a privately held company, located in Longmont, Colorado, was
founded in 1965 for the sole purpose of manufacturing precision microwave, millimeter wave, and
sub-millimeter wave communication hardware for space, military, and research applications.
Our 14,000 sq. ft facility houses all 30 personnel and equipment necessary to manufacture high
1 precision hardware from 3 GHz to 850 GHz. In-house capabilities include RF Design, Manufacturing
Engineering, CAD Design, CNC mills, CNC lathes, WIRE EDMs, CNC CMM, Electroforming, Plating,
Painting, and Soldering.
CMI complies with MIL-I-45208 and is committed to Total Quality Management and Continuous
Improvement. Since 1997, CMI has been a certified supplier to Boeing Satellite Systems. CMI is
also an approved vendor for most aerospace companies including Lockheed Martin, Raytheon,
Harris, NASA/JPL, and Ball Aerospace.
1 CMI has an unmatched reputation for excellent service, creativity, and the ability to produce high
quality precision hardware in a timely fashion.
Our hardware can be found on Calibration Standards, and well over 200 communication and space
exploration spacecrafts.
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Now Equipment
IAt the end of October 2001, CMI will receive delivery of a true five axis
CNC Mill running at 20,000 RPM. This latest addition will enhance CMI's
already impressive capability to machine complex hardware to extremely
tight tolerances.
RF Test: .
As part of its ongoing effort to provide more capabilities to its customers,
CMI purchased a WILTRON 360 Vector Network Analyzer. This
additional capability allows CMI to perform bench RF tests from 45 MHz
to 60 GHz
RF Design:
CMI has the capability to perform RF design of Filters, Polarizers,
• OrthoMode Transducers (OMTs), Diplexers, Scalar Feedhorns, Tees,
and other passive microwave components. CMI uses synthesis and
analysis CAD tools based on FDTD and Mode Matching
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Fad System far liA8Ar1.Rase iNrk
In september 2000, CMI was awarded a contract to build the X/X/Ka
Feeds for the 34 m Beam WaveGuide Antenna. CMI will also provide the
RF and Mechanical design for Uplink and Downlink Waveguide
Combining Network, and the Ka Band Combining Network
CYII%Built Precision Wayeguides on its wag to the u omit:
At the end of June 2001, CMI had the priviledge to attend the launch of
the MAP Spacecraft from the Kennedy Space Center. CMI supplied
the scalar throat sections, and the waveguide assemblies at 22, 30, 40,
60, and 90 GHz.
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Wells Fargo Today
Wells Fargo (NYSE: WFC) is a diversified financial services company, providing banking,
insurance, wealth management and estate planning, investments, mortgage and consumer finance
from more than 6,000+ stores, the world's leading Internet banking site (www.wellsfargo.com) and
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us weather downturns that inevitably affect any one segment of our industry.
We're headquartered in San Francisco,but we're decentralized so that every local Wells Fargo store is
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capitalization and fourth in assets, with more than$420 billion.
Our vision is to satisfy all our customers' financial needs, help them succeed financially, and
become known as one of America's great companies and the number one financial services
provider in each of our markets.
Financial Services Industry Recognition
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— Named second on a list of top full-service brokerage firms by Smart Money
Business Week also ranks Wells Fargo among their Web Smart 50, for "information-based
marketing" that offers the right product to the right customer at the right time at every point of
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Urn — Forbes ranks Wells Fargo among top 25 U.S. companies in all industries based on a composite
ranking of revenue(sales),profits, assets and market value
— Forbes also ranks Wells Fargo among 10 largest givers in corporate America
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— #1 "Cross-Channel"Customer Experience for Financial Services by Forrester
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— Wells Fargo ranks among 100 best companies for working moms by Working Moms Magazine
KEY FACTS (06/30/04) INDUSTRY RANKINGS
Assets $420 billion Retail banking cross-sell #1
Team Members 146,000 Small business lender #1
Customer households 23+million Agricultural lending #1
Stores 6,000 Cross-channel customer experience #1
IMIATMs 6,234 Insurance agency sales* #1
Market value of stock $ 97 billion Prime home equity lender #1
Common Shares Outstanding $ 1.7 billion
pill *Wells Fargo owns the largest bank-affiliated insurance agency.
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Wells Fargo Public Finance Overview
Wells Fargo Public Finance builds upon Wells Fargo's remarkable 150-year tradition of financial
' services leadership with a long history of providing financing solutions for the capital needs of our
clients. Public Finance specializes in structuring and underwriting financing for government entities,
non-profit organizations and corporations that seek access to the tax-exempt capital markets. Public
' Finance investment bankers apply their extensive experience, quality service and creativity to
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' Our Public Finance professionals have years of financing, government and non-profit experience,
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Wells Fargo Institutional Brokerage & Sales' and an affiliate of Wells Fargo & Company, Public
Finance serves clients from twelve regional offices across the United States:
Wells Fargo Institutional Brokerage & Sales
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— Boise, ID — La Crosse, WI — Sioux Falls, SD
— Denver, CO — Los Angeles, CA — Salt Lake City, UT
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Weld County Variable Rate Bond Information for Custom Microwave, Inc
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Public Finance Offers Borrowers Four Key Advantages
— The financial strength and resources of Wells Fargo, America's fourth largest financial services
company, is an important consideration when choosing Wells Fargo Public Finance to solve your
capital financing needs. With net capital exceeding $120 million, we have the resources to
purchase your debt and minimize your pricing risk. In addition, we have access to supplementary
capital through our parent company, Wells Fargo & Company, with more than $420 billion in
assets.
— Convenience and efficiency is the result of leveraging Wells Fargo resources for complete 4
financing solutions. From underwriting to credit enhancements to trust services, your Public
Finance Investment Banker can pull together a team of specialists from Wells Fargo affiliates to
facilitate a timely, simplified financing process. C
— Access to Wells Fargo's extensive institutional and retail sales network provides an exceptional 5
opportunity to place your newly issued debt and minimize your pricing risk. Wells Fargo
Institutional Brokerage & Sales offers one of the largest dedicated institutional sales groups in the
United States, with 150 registered representatives who serve investment customers across the 6
nation from 21 offices in 13 states. Wells Fargo's Private Client Services' group exceeds 1,500
financial consultants located in Wells Fargo's retail banking stores across the U.S.
— Highly qualified, knowledgeable investment banking advisors located in regional offices
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affiliates of Wells Fargo&Company and members of the NASD and SIPC. WFBS provides clearing services for WF/S,and WFIS
accounts are carried by WFBS.
'Private Client Services financial consultants are registered representatives of Wells Fargo Investments,LLC(member NYSE/SIPC),a
non-bank affiliate of Wells Fargo&Company.
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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• Your Investment Banking Team
Wells Fargo Public Finance employs people with a passion for their work, a commitment to quality
and dedication to the communities they serve. As a result of the diligence and creativity of our
bankers, we have a reputation for quality service and ingenuity in the tax-exempt and municipal
investment industry. The following licensed professionals will make up your investment banking
team:
John H. Self, Senior Vice President- Denver, CO
Bringing more than 17 years of public finance experience to the Wells Fargo team, John is
responsible for municipal investment banking activities for Wells Fargo Public Finance in Colorado
and throughout the Western United States. He served as the investment banker to issue certificates of
participation for the second largest transit agency in California, lease revenue bonds for not-for-
profit specialty hospitals and housing authorities, as well as variable rate demand obligations for not-
for-profits. During the past 10 years at Wells Fargo, he completed more than 700 municipal
transactions. His experience in originating and structuring a wide variety of municipal transactions
include general obligation bonds, revenue bonds and lease purchase transactions throughout
Colorado. Prior to joining Wells Fargo, John helped start a public finance office for a regional
investment-banking firm in Denver, Colorado.
He received his bachelor's in economics from Trinity College in Hartford, Connecticut and his MBA
with an emphasis in finance from the University of Colorado in Denver. He is the secretary of the
board for the Rocky Mountain Butterfly& Insect Pavilion, is actively involved with Denver's Public
Schools Steele Elementary British Primary Program and has served as a member of the Natural
History Museum's Corporate Giving Committee.
Bruce Allred, Vice President- Salt Lake City, UT
Bruce's responsibilities include managing the quantitative analysis group, which provides a wide
range of technical resources and financial analyses, including bond sizing, debt service impact
analysis, structuring option analysis, cash flow modeling, refunding analysis and other computer
i modeling services. He has seven years experience in structuring and implementing technically
complex bond financings on a wide variety of issues. Prior to joining Wells Fargo, he developed and
maintained financial models for the state and city agencies and utilities. His experience gives Wells
I; Fargo the ability to provide industry innovation and timely response to an ever changing
environment of regulations,market conditions and issuer needs.
Bruce is a graduate of Utah State University with a bachelor's in business administration with
emphasis in finance, economics and data processing. He holds a Master's of Business
Administration from Boise State University.
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Public Finance
Your Investment Banking Team — Cont...
William J. Gabler, Executive Vice President- Minneapolis, MN
Bill joined the former Norwest in 1986 with an extensive background in tax-exempt and taxable
financings as an issuer, a financial advisor and a lender. In 1989, he became manager of the Public
Finance division. Bill's experience includes working for the Minneapolis Housing and
Redevelopment Authority, the New York State Urban Development Corporation, the Greater
Minneapolis Metropolitan Housing Corporation and mortgage banking firms.
Bill holds a bachelor's degree from the University of Minnesota and has done graduate work at the
Hubert H. Humphrey Institute of Public Affairs. He has also spoken at national seminars on elderly 5
housing and has published articles on the subject. He has taught a course on lending to
municipalities. Active in civic affairs, Bill currently serves on the board of the National Housing
Conference, the Minneapolis Public Housing Authority, Saint Thomas Academy and Catholic
Eldercare. 6
Pam Huetson, Senior Vice President/ Manager Muni Trading- Denver, CO
Ms. Huetson joined Wells Fargo Brokerage Services, LLC in 1991 on the municipal trading desk in
Denver, Colorado. In addition to her management responsibilities, she actively trades the secondary 4
market for both retail and institutional customers. As an underwriter, she is responsible for pricing
and marketing negotiated issues, as well as syndication, bidding and marketing of municipal issues
sold at public sale. 1
Ms Huetson received her General Securities License in 1979 and her Municipal Principal License in
1989. In the past she has worked on the trading desk or in Public Finance for Kemper Securities,
Shearson Lehman Hutton and George K. Baum and Co. She currently serves on the Board of the
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Colorado Municipal Bond Dealers Association and is active in the Public Securities Association.
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Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Variable Rate Financing
In the early 80's, government and non-profit bond issuers began seeking the structure and flexibility
that private corporate issuers utilize. Variable Rate Demand Obligations (VRDOs) are a credit
enhanced bond issue that meets this need to provide a combination of flexibility and cost
effectiveness for local units of government and non-profit issuers.
The use of VRDOs—also known as "floaters," "lower floaters" or "put bonds" as a component of
total debt has grown dramatically by both issuers and investors. Wells Fargo Public Finance's
IIII experience includes remarketing and underwriting more than 300 issues of variable rate debt with a
par of more than $2 billion, including approximately $753 million of Industrial Development
Revenue Bonds in 182 issues.
Typically, VRDO structures offer:
— Flexibility -Renegotiate or change terms without calling the bonds.
— Attractive Interest Rates- Similar pricing to other quality issues at very low, short-term rates.
— Low Initial Costs -Variable rate issues have lower underwriting fees than fixed rate issues. Costs
of issuance are lower for legal fees, official statement preparation and other filing fees.
— Liberal Payment and Call Features - Variable rate issues usually have a final maturity date in
20 to 30 years. Since variable rate bonds are sold with a seven-day put feature, the bonds can be
called at almost any time after a notice period (usually 30 to 60 days). This allows the issuer to
pay down the bonds in almost any manner it desires without premium.
— Predetermined Intervals - Seven day "put" features allow the bond holder to demand purchase
by the issuer at par and resets the interest rate.
— Liquidity Agreement -Assures the buyer of repurchase.
— Conversion Features - Under specified conditions and procedures the issuer can convert the
VRDO into a fixed-rate bond.
This type of short-term financing is based on the idea that an institution still issues long-term bonds
but yields are set as short-term notes. The yields are like those of short-term notes because the
bondholders have the right to demand purchase of their bonds at par, on a regular basis.
From a bondholder's perspective, a bond with the demand purchase feature is similar to a bond that
matures on the date the bondholder is entitled to demand purchase. Therefore, a bond allowing the
holder to demand purchase every seven days carries the same yield as if it matured in seven days.
Although bonds with daily, weekly or monthly demand periods are the most common, some bonds
have quarterly, semiannual or annual demand periods.
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Debt Cost Flexibility Continuum
Debt should be structured to maximize flexibility&rid minimize total cost,resulting in an increased
capacity for debt management.
18,000
Term
16,000 Bond
14,000
12,000
10,000
8,000
6,000 6
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Benefits of Variable Rate Debt
Variable Rate Debt Obligations can have a positive budget impact through lower total debt expense, 1 I
including:
— Lower yield premium
— Aligns with the project's cash flow needs, while diminishing negative arbitrage, capitalized 1
interest and other associated cost
VRDOs allow borrowers greater flexibility to manage the debt side of their balance sheets:
— Convert or swap to a long term, fixed rate when the environment or other conditions warrant 1 do
— Adjust principal payments
Effective utilization of VRDOs increase total debt capacity:
— Lower debt service allows for more total debt
— Flexible debt service schedules maximize total debt management capacity
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Risk Mitigation Facilities
The ability to manage Variable Rate Debt Obligations is enhanced with new features:
— Conversion or SWAP agreements allow issuer to lock in long term rates when conditions warrant
— Rising levels of interest rates can be protected through the use of interest rate CAPS while still
offering down-side savings and prepayment capability
— VRDO issuers can assure liquidity for bond holders through the use of a liquidity facility
IIRate Comparisons
—J. J. Kenny
—BBI25 Bond Revenue Index
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Lower Floaters
The market available for Lower Floaters is one of the broadest and deepest in the tax-exempt bond
markets. Tax-exempt money market mutual funds are the principal purchasers of variable rate tax-
exempt bonds. Lower Floaters achieve the high level of liquidity and low interest cost common to
VRDOs because they must be backed by a direct-pay letter of credit from an investment grade rated
bank, such as Wells Fargo Bank,National Association. In addition to providing liquidity support for
the bonds, the letter of credit is also the primary credit risk being undertaken by the bondholders and
as such, the credit quality of the letter of credit bank will impact both the marketability of and rate on
the bonds.
A letter of credit from Wells Fargo,which carries the highest possible short term ratings of A-1+(Standard
&Poor's)/P-1 (Moody's)and long term ratings of AA-(Standard&Poor's)and Aal (Moody's),will result
in the Company's issue receiving the most favorable possible reception in the market.
Historically, lower floaters have the most economical source of tax-exempt financing available in
today's capital markets with the five-year average rate ranging between 45 and 55 percent of the
Prime Rate. At no time in their history have the rates on a floating rate tax-exempt bond exceeded
that of fixed rate instruments.
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Variable Rate Financing — Term Sheet
Weld County,Colorado
Custom Microwave,Inc.Project
Proposed Summary of Terms for Floating Rate Demand Obligation Issue
Borrower: Custom Microwave
Issuer: Weld County, Colorado
Issue: $2,700,000 of Variable Rate Demand Obligations
Form of Financing: Tax-exempt Adjustable Economic Development Revenue Bonds
(the "VRDOs")
Dated Date: Delivery date of the VRDOs E
Maturity: Thirty(30) Year Maturity(Bonds)
Denomination: • $100,000 or any integral multiple thereof. A
Use of Proceeds: Proceeds will be used to finance the construction of a new facility
and equipment
Security: The VRDOs will be backed by a letter of credit from a commercial
bank or insurance such that the VRDOs achieve a minimum short-
term rating of A-1/P-1.
Interest: Prior to conversion to a fixed interest rate, interest rates will float 1
and be reset every seven days. Interest will be paid monthly,
calculated on a 365 or 366-day basis. Other interest rate modes are
also available at the option of the Borrower.
Fixed Rate The interest rate on the VRDOs can be converted to a fixed rate at
Conversion: the option of the Borrower at any time upon 60 days notice.
Option Tender The VRDOs can be "put" to the Borrower by the investor at any 1
Feature: time prior to a fixed rate conversion on seven days notice.
Option The VRDOs can be redeemed at par at any time on 45 days notice
Redemption: while in a variable rate mode. 1
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Weld County,Colorado
Custom Microwave,Inc. Project
Proposed Summary of Terms for Floating Rate Demand Obligation Issue
Mandatory The VRDOs will be subject to mandatory redemption upon an
Redemption: event of default,upon expiration of the letter of credit and upon
conversion of the VRDOs to a fixed rate. Other mandatory
redemption features may be added depending upon the structure of
the VRDOs.
Amortization: Based upon Custom Microwave's requirements set forth by the
enhancement provider the amortization for this issuance will be 20
years.
Liquidity and The VRDOs will be backed by a direct pay letter of credit or
Credit Facility: insurer such that the Bonds achieve a minimum short-term rating
of A-1/P-1. The enhancement(letter of credit/insurance) 6
should extend for at least 1 -3 years and should include V
coverage of 45 days (monthly payments)or 105 days
(quarterly payments) of interest at 10%. In addition the letter
of credit will be a liquidity provider for this issuance.
Ratidtg: A rating would be reviewed to determine the cost-effectiveness of
the one-time fee of$8,000 for a Standard and Poor's rating. e
Underwriter and Wells Fargo Brokerage Services, LLC (WFBS)
Remarketing Agent:
Underwriting Fee: $7.50/$1,000 based on the principal amount of the issuance.
Remarketing Fee: 12.5 basis points the outstanding principal balance of the VRDO's
per annum. This fee will be paid annually in advance.
Expenses: Custom Microwave will pay all costs relating to the financing. All
of the costs of issuance that are attached to the numbers have been 1 '
previously negotiated. A change in the participant might change
these numbers. Wells Fargo is willing to work with the Action
Bindery to develop the best financing team available for this and
other projects. 1
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Weld County,Colorado
Custom Microwave,Inc.Project
Proposed Summary of Terms for Floating Rate Demand Obligation Issue
Underwriter's Counsel: Underwriter's counsel will not be required for the VRDOs as long
as disclosure counsel provides a 10-B-5 opinion to Wells Fargo
Brokerage Services, LLC at the time of closing.
Trustee: Wells Fargo Bank,N.A.
Letter of Credit Fee: The letter of credit is anticipated to cost approximately one (1)
percent per year in advance on the outstanding par value of the
bonds. There also might be an administrative fee that would be
paid at closing.
Bond Counsel: TBD
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Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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I Bond Sizing Spread Sheet
'� W$2,580,000CCounty,nty, Colorado
Adjustable Economic Development Revenue Bonds
(Custom Microwave Project), Series 2005 id Sources & Uses
Dated 02/15/20051 Delivered 02/15/2005
PSources Of Funds
Par Amount of Bonds $2,580,000.00
ii Additional required Equity contribution 31.475.00.
Total Sources $2,611,475.00
Uses Of Funds
Total Underwriter's Discount (0.750%) 19,350.00
N Costs of Issuance 63,]25.00
Total Letter of Credit Fee Fee Paid at Closing 26,542.20
Deposit to Project Construction Fund 2,500,000.00
Rounding Amount 1,85].80
PiTotal Uses $2,611,475.00
• Debt Service Schedule
il Date Principal Coupon Interest LOC Total PH
02/15/2005 - - - -
02/15/2006 95,000.00 2.950% 76,110.00 25,564.87 196,674.87
II 02/15/200] 100.000.00 2.950% ]3.30].50 24,536.10 19] 843.60
02/15/2008 00,000.00 2.950% 70,357.50 23,505.54 197 863.04
02/15/2009 05,000.00 2.950% 6],40].50 22,42].13 194,834.63
_..
02/15/2010 10,000.00 2.950% 64,]10.00 21,295.48 195,605.48
02/15/2011 10,000.00 2.950% 61,065.00 20,163.84 191,228.84
li 02/15/2012 15.000.00 2.950% 5].820.00 18,9]9.]1 191,]99.31
02/15/2013 20,000.00 2.950% 54,427.50 17,]46.26 192,1]3.]4
__02/15/2014 20,000.00 2.950% 50,887.50 16,511.72 187,399.22
02/15/2015 25,000.00 2.950% 47,74'1.50 15,225.76 187,573.26
02/15/2016 30,000.00 2.950% 43,660.00 13,887.30 187,547.30
ill 02/15/2017 35,000.00 2.950% _._. 39,825.00 12,499.53 18].324.53
02/15/2018 35,000.00 2.956% ]5,842.50 11,110.69 181,953.19
02/15/2019 40,000.00 2.950% 31,860.00 9,670.42 181,530.42
02/15/2020 45,000.00 2.950% 27,730.00 8,178.08 180,908.08
02/15/2021 50,000.00 2.950% 23,452.50 6,635.55 180,088.05
Il�I 02/15/2022 55,000.00 2.956% _.. 19 027.50 5,040.96 179,068.46
02/15/2023 60,000.00 2.950% 14 455.00 3,394.94 177,849.94
02/15/2024 65,000.00 2.950% 9,735.00 1.697.34 176,432.34
02/15/2025 65,000.00 2.950% 4,86].50 - 169,867.50
Total $2,580,000.00 - $873,495.00 $278,070.80 $3,731,565.80
III Yield Statistics
Bond Year Dollars $29,610.00
Average Life 11.47] Years
N Average Coupon 2.9500000%
Net Interest Cool(N IC) 3.0153495%
True Interest Cost(TIC) }.030800fi%
Bond Yield for Arb itr�e Purposes 4.009]916%
�II All Inclusive Cost(AIC) 4.3914539%.
IRS Form 8038
Net Interest Cost _...._._.. - -. _ _. 2.9500000%
Weighted Average Maturity 11.477 Years
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Weld County Variable Rate Bond Information for Custom Microwave, Inc
December 2004
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Net Debt Service Schedule
iiiDate Principal Coupon Interest LOC Total P+I Net New D/S
02/15/2005 -
02/15/2006 95,000.00 2.950% 76,110.00 25,564.87 196,674.87 196,674.87
I 02/15/200] 100,000.00 2.950% 73,307.50 24,536.10 197,843.60 197,843.60
193,863.04
02/15/2008 100,000.00 2.950% 70,357.50 23,505.54 193,863.04
02/15/2009 _ 105,000.00 2.950% 67,407.50 22,427.13 194,834.63 194,834.63
02/15/2010 110,000.00 2.950% 64,310.00 21,295.48 195,605.48 195,605.48
02/15/2011 110,000.00 2.950% 61,065.00 20,163.84 191,228.84 191,228.84
I 02/15/2012 115,000.00 2.950% 57,820.00 18,979.31 191,]99.31 191,799.31
192,173.74
02/15/2013 120,000.00 2.950% 54,427.50 17,746.24 192,1]3.74
02/15/2014 120,000.00 2.950% 50,887.50 16,511.72 187,399.22 187,399.22
02/15/2015 125,000.00 2.950% 47,347.50 15,225.76 187,573.26 187,573.26
02/15/2016 130.000.00 2.950% 43,660.00 13.887.30 187,547.30 187,547.30
P 02/15/2017 135,000.00 2.950% 39,825.00 12,499.53 18],324.53 18],324.53
181,953 19
02/15/2018 135,000.00 2.950% 35,842.50 11,110.69 181,953.19
02/15/2019 140,000.00 2.950% 31,860.00__ 9,670.42_ _ 181,530.42 _ 181,530.42
02/15/2020 145,000.00 2.950% 27.730.00 8,178.08 180,908.08 180,908.08
02/15/2021 150,000.00 2.950% 23,452.50 6,635.55 180,088.05 180,088.05
II 02/15/2022 155,000.00 2.950% 19,027.50 5,040.96 179,068.46 179,068.46
'77,849.94
02/15/2023 160,000.00 2.950% 14,455.00 ],394.94 177,849.94
02/15/2024 165,000.00 _ 2.950% 9,735.00 _ 1,697.34 176,432.34176.432.34
02/15/2025 165,000.00 2.950% 4,867.50 169,867.50 169,867.50
Total $2,580,000.00 - $873,495.00 $278,070.80 $3,731,565.80 $3,731,565.80
Pricing Summary
•
Type of Maturity
Maturity Bond Coupon Yield Value Price Dollar Price
02/15/2006 Serial Coupon 2.950% 2.950% 95,000.00 100.000% 95,000.00
02/15/2007 Serial Coupon 2.950% 2.950% 100,000.00 100.000% 100,000.00
02/15/2008 Serial Coupon 2.950% 2.950% 100,000.00 100.000% 100,000.00
P 02/15/2009 Serial Coupon 2.950% 2.950% 105,000.00 100.000% 105,000.00
110,000.00
_ 02/1 5/2010 Serial Coupon 2.950% 2.950% _110,000.00 100.000%
02/15/2011 Serial Coupon 2.950% 2.950% 110,000.00 100.000% 110,000.00
02/15/2012 Serial Coupon 2.950% 2.950% 115,000.00 100.000% 115,000.00
02/15/2013 Serial Coupon 2.950/ 2.950% 120,000.00 100.000% 120,000.00
I 02/15/2014 Serial Coupon 2.950% 2.950% 120,000.00 100.000% 120,000.00
02/15/2015 Serial Coupon_ 2.950% 2.950% 125,000.00 100.000% 125,000.00
02/15/2016 Serial Coupon 2.950% 2.950% 130,000.00 100.000% 130,000.00 02/15/2017 Serial Coupon 2.950% 2.950% 135,000.00 100.000% 135,000.00
02/15/2018 Serial Coupon 2.950% 2.950% 135,000.00 100.000% 135,000.00
II02/15/2019 Serial Coupon 2.950/ 2.950% 140,000.00 100000% 140,000.00
02/15/2020 Serial Coupon 2.9500 2.950% 145,000.00 100.000% 145,000.00
02/15/2021 Serial Coupon 2.950% 2.950% 150,000.00 100.000% 150,000.00
02/15/2022 Serial Coupon 2.950% 2.950% 155,000.00 100.000% 155,000.00
02/15/2023 Serial Coupon 2.950% 2.950% 160,000.00 100.000% 160,000.00
I 02/15/2024 Serial Coupon 2.950% 2.950% 165,000.00 100.000% 165,000.00
02/15/2025 Serial Coupon 2.9500 2.950% 165,000.00 100.000% 165,000.00
Total - - - $2,580,000.00 - $2,580,000.00
Bid Information
Par Amount of Bonds __
Gross Production $2,580,000.00--- -- -- - - -- -- -
_. . _. _.. $2.580.000.00
Total Underwriter's Discount (0.750%) $(19,350.00)
II Bid(99.250%) _ 2,560,650.00_
Total Purchase Price
$2,560,650.00
Bond Year Dollars _ $29,610.00
Average Life 11 477 Years
Average Cou pon _ -- _-- -- -
2.9500000%_
Net Interest Cost(NIC)
True Interest Cost(TIC) _-- -- 3.0153495%
3.0308006%
I
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Public Finance
Detail Costs Of Issuance
Dated 02/15/2005 I Delivered 02/15/2005
COSTS OF ISSUANCE DETAIL
Issuer's Costs $2,500.00
Remarketing Fee - - -
Bond Counsel - - - -_- $25,225.00
--- -- - $2255,000.00_
Local Counsel $15,000,00
Trustee& Counsel Fees $2,500.00
Trustee Origination _ §],500.00_
Rating AgencLFee $8,000.00
Travel
Miscellaneous - - $1,500.00
$2,500.00
TOTAL
$63,725.00
DERIVATION FOR BANK LOC
Bond Days Of
Date Period Balance Int. Basis Rate Paym ant
02/15/2005 360 Days 2,580,000.00 74,219 18 2,654,219 18 0.0100000x 26,542.20
02/15/2006 360Days 2.485,000 00 71.48631 2,556,486 31 0.0100000x 25,564.87
02/15/2007 360 Days 2,385,000.00 68,609.59 2,453,609.59 0 0100000 24,536 10
02/15/2008 360 Days 2,285,000.00 65,553.28 2,350,553.28 0.0100000x 23,505.54
02/15/2009 360Days 2,180.00000 62,712.33 2,242,712.33 0.0100000x 22,427.13
02/15/2010 360 Days 2,0]0,000 00 59,54].95 2,129,54].95 0.01000003 21,295.48 I
02/15/2011 360 Days 1,960,000.00 56,383.57 2,016,383.57 0.0100000x 20,163.84
02/15/2012 360 Days 1,845,000.00 52,930.33 1,897,930.33 0.0100000x 18,979.31
02/15/2013 360 Days 1.725,000 00 49,623.29 1,774,623.29 0 0100000 17,746.24
02/15/2014 360 Days 1,605,00000 46,171 24 1,651.171 24 0 0100000 16,511 72 8
02/15/2015 360 Days 1,480.00000 42,5]5.35 1,522,5]5 JS 0 0100000 15,225]6
02'15/2016 360 Days 1,350,000.00 38,729.51 1,388,729.51 0.0100000x 13,887.30
02/15/2017 360 Days 1,215,000 00 34,952 06 1,249,952.06 0.0100000x 12,499.53
02/15/2018 360 Days 1,080,000.00 31,068.50 1,111,068 50 0.0100000x 11,110.69
02/15/2019 360 Days 940,000.00 27,041.10 967,041.10 0.0100000x 9,670 42
02/15/2020 360 Days 795,000.00 22,807.38 817,807.38 0 0100000 8,178.08
02/15 2021 360 Days 645,000.00 18,554.80 663,554 80 0.0100000x 6,635.55
02/15/2022 360 Days 490,000.00 14,095.90 504,095.90 0.0100000x 5,040.96
02/15/2023 360 Days 330,000 00 9,493.16 339,493.16 0.0100000x 3,394.94
02/15/2024 360 Days 165,000.00 4,733.61 169,733 61 0.0100000x 1,697.34
Total . - - 5304,613.00
Expense Basis 1 0
Pius Days of Interest 105
PIus PPlus Percent of Bond Balance _ 100 000%
Commitment Fee
- 11Ongoing Payment Assum plions
User Defined Discount Rate
Daycount Method - - -- - — - -
30/360
Default ongoing payment as percent of basis
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Weld County Variable Rate Bond Information for Custom Microwave, Inc
December 2004
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LOC Summary
DATE BANK LOC TOTAL
02/15/2005
02/15/2006 25,564.87 25,564.87
02/I 5,2007 24,536.10 24,536-10
02/I 5/2008 23,505.54 23,505.54
02/I 5/2009 22,427.13 22,427.1 3
02/I 5/2010 21,295.48 21.295.48
02/15/2011 20,163.84 20,163.84
02/15/2012 18,979.31 18.979.31
02/15/2013 17,746.24 17,746.24
02/15/2014 16,511.72 16,511.72
02,15/2015 15,225.76 15,225.76
02/15/2016 13,887.30 13,887.30
02/15/2017 12,499.53 12,499.53
02/15/2018 11,110.69
9,670.42
02/15/2019 9,690.42 9,670 A2
02/15/2020 8,178.08 8,178 08
02/15/2021 6,635.55 6,635.55
02/15/2022 5.040.96 5,040.96
02/I 5/2023 3,394.94 3,394.94
02/I 5'2024 1,697.34 -_. 1,697.34
Total $278,070.80 $278,070.80
Proof of Compliance with 2% COI Cap
COSTS OF ISSUANCE
Total Underwriter's Discount (0.750%) 19,350.00
Costs of Issuance 03,725.00
Total Costs of Issuance 83,075.00
BOND PROCEEDS
Par Amount of Bonds $2,580,000.00
SUMMARY
Maximum percent of bond proceeds to COI& Spread _ 2.000%
2% of Bond Proceeds= 51,600.00
Amount of COI in Excess of Cap $31,475.00
Additional required Equity contribution 31,475.00
COI Funded with Bond Proceeds is within 2%'? Yes
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Public Finance
Interest Rate Risk Management
Every institution faces a wide variety of risks. Some risks are easier to manage than others.
Fortunately, when it comes to interest rate risk, the Wells Fargo team has access to a variety of
products and services to provide customized solutions to meet your needs and preferences. Our team
of experienced investment bankers can help you:
— Identify and quantify your interest rate risk
— Decide what is an acceptable amount of risk
— Choose an appropriate strategy to limit risk
Wells Fargo Public Finance's ability to offer interest rate risk management tools through our affiliate
Wells Fargo Bank, N.A. provides our customers with the tools needed to manage the liability side of
the balance sheet with a level of creativity and attention often reserved for asset management.
The Variable Rate Demand Obligation borrower can use interest rate management tools to assist in
locking in a low interest rate, without going through the process of converting the debt to a fixed rate
as outlined in the documents. Other tools can help manage exposure to dynamic or unexpected
market fluctuations. The Wells Fargo team provides specialized solutions for individual borrowers.
Contact your Wells Fargo Public Finance representative to plan your risk management strategy.
Rate Protection for Variable Rate Debt
If you borrow on a floating rate basis, changes in short-term interest rates can shrink your cash flow.
The graph below shows that short-term, tax-exempt rates have historically been quite volatile.
History of BMA Index
7.00%
as
6.00%
cc
y 5.00%
ai 4.00%
e
s
P
1.00%
Jul-89 Jul-90 Jul-91 Jul-92 Jul-93 Jul-94 Jul-95 Jul-96 Jul-97 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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Wells Fargo Bank, N.A., offers a variety offers of products that can reduce or eliminate your
exposure to changes in short-term, tax-exemptinterest rates.
I Variable Rate Caps
— Caps allow you to fully benefit from any decline in short-term rates, while providing
protection against any significant increases in short-term rates.
I Caps set an upper limit on the interest rate, payable on either an existing or a prospective variable
rate loan. If interest rates decline, the customer with a variable rate loan takes advantage of the
decline but if interest rates rise, the cap protects the customer because the bank pays the excess
interest over the cap.I Obtaining a cap is similar to obtaining an insurance policy. Caps can be attached directly to a loan
or obtained on a "stand-alone" basis. For example, when the cap rate is exceeded, the customer
Ireceives cap settlements on a notional amount that is not loan specific. If the cap fee is paid up-
front, no credit approval is necessary. If it is paid over time (for instance, quarterly), credit
approval is required.
IVariable Rate Collars
— Collars ensure your variable rate will stay within an acceptable range.
A collar provides both a ceiling and a floor on a customer's interest rate, thus creating a range or
"collar" in which the borrower's interest rate may move. If rates move above the ceiling, the Bank
pays the increase. If rates move below the floor, the customer pays the Bank. A collar is less
expensive than a cap because the customer gives up the benefit of interest rates below the value of
the floor. Collars can be attached directly to a loan or obtained on a "stand-alone" basis. Fees are
paid up-front or over time. Credit approval is always required with a collar because a customer
Iwould owe the bank money if the interest rate goes below the floor.
Variable Rate Swaps
1 - Swaps synthetically transform floating rate debt into fixed rate debt.
Swaps enable the customer to change or "swap" a floating rate loan into a synthetic fixed rate loan
or a fixed rate loan into a synthetic floating rate loan. In this way, the customer can take better
advantage of either rising or falling interest rates, shifting from fixed rate to floating rate loans, or
floating to fixed, as the situation dictates. Wells Fargo and the customer agree to exchange interest
rate payments on a notional principal balance, meaning no principal exchanges hands. Swaps can
remain in place even if a particular loan pays in full prematurely, so the standard prepayment fee
of a fixed rate loan can be avoided. There is no up-front fee. Credit approval is required with any
swap.
i •
k 'Information provided by Wells Fargo Interest Rate Risk Management Group
I1
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' Weld County Variable Rate Bond Information for Custom Microwave, Inc
' December 2004
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FARGO
Public Finance
Remarketing Service Overview
Wells Fargo Public Finance serves as remarketing agent programs for nearly 400 tax-exempt floating
rate bond issues totaling more than $2 billion dollars.
Rates on Variable Rate Paper
Wells Fargo Public Finance sets rates on all variable rate securities, including the weekly Variable
Rate Demand Obligation (VRDO) portfolio. As a remarketing agent, our primary objective is to
obtain attractive rates for our issuers. As a result, we constantly test the market, which occasionally
results in portions of our VRDO portfolio being put back to us by some of the investors because the
rates are lower than other comparable debt instruments. hi the rare occasions that this has occurred,
we have successfully remarketed the securities to other investors without interruption.
Although bond documents generally require seven days notice for an investor to put the bonds back
to the remarketing agent, we have historically allowed an investor to sell bonds back to Wells Fargo
Institutional Brokerage & Sales*, our brokerage affiliate, on one day's notice. Although we cannot
' commit to always do so, this practice of providing one-day liquidity increases the investor's
confidence in holding the issue, which helps to keep interest rates low.
Institutional Brokerage & Sales has never allowed an issue to be put back to the issuer or the
liquidity provider. In some situations, we will purchase issues for our own portfolio to accommodate
clients or to bridge gaps during periods of market instability. While we cannot guarantee to do this in
the future, our historical performance is indicative of our commitment to our issuer clients.
Services and Processes
Every Wednesday morning, as soon as Public Finance sets the rate effective for the following
Thursday, we automatically fax a copy of the new rate,along with a year-to-date rate history,to each
person on the bond issue's remarketing distribution list.
Whenever an upward spike or a sudden downward draft in the market occurs, our team is available
by phone to respond to questions from if the issuer, borrower and/or financial advisor to discuss
market movements as well as new market trends. Such trends are often impacted by the effective
dates of new federal tax laws, the end of fiscal quarters, March 15th and April 15th (corporate and 1
individual income tax day)and other events that effect tax-exempt money market liquidity.
Municipal Market Data
1 At no cost to the issuer, Wells Fargo Public Finance will register your VRDO with Municipal
Market Data (MMD), a Boston firm that keeps track of approximately 10,000 variable rate issues.
Registration with MMD broadens market acceptance of your issue because it allows MMD's
investor clients to gain up-to-the-minute access to rates on the issue. Registration also enables
Public Finance to compare the rates on your bond issue with rates on similar bond issues
throughout the country. MMD provides comparative data at any time upon request.
J.J. Kenny High Index Grade
Wells Fargo Public Finance subscribes to the J.J. Kenny High-Grade index, which is an important
barometer in setting rates. Every Wednesday morning, we receive the latest J.J. Kenny Index rate,
which we provide to you at no charge. While the Kenny Index is one of the best indicators of
market rates for short-term tax-exempt notes, we do not to depend entirely on Kenny or any other
rate gauge because they can sometimes drift away from the market rate for 7-day VRDOs.
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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FARGO
Public Finance
Before Public Finance sets rates for the upcoming week, we examine all of the relevant available
data, including the Kenny Index, MMD queries, money market fund rates, taxable commercial
paper rates and the tone of the municipal market. We also talk with a variety of market players,
including our municipal traders, institutional sales force, taxable traders, mutual funds desk and
our customers. While Public Finance cannot guarantee we will always have the lowest rate in the
nation, you can rest assured that our rate setting process is thoughtful, deliberate and competitive
' due to the attention we pay to the market, our experience and capital strength.
Quarterly Interest Rate Forecast
Wells Fargo dedicates a hill-time,professional economics department to keep abreast of trends and expec-
tations about international, national and regional economies. Every quarter, Dr. Sung Won Sohn, Wells
Fargo Fargo's Chief Economist, publishes his interest rate forecasts. Wells Fargo Public Finance analyzes
this information and forwards these projections to you,so you can continue to make informed decisions.
In addition, you will receive a copy of the Economics Department's weekly comments to our
institutional fixed-income sales staff on market conditions and forecasts.
Recap of Remarketing Services
As the Remarketing Agent for the issuer, our service goes beyond the weekly effort to set a rate on your
bonds. Alertness is our hallmark we proactively communicate market movements, political activity and
I proposed changes in financing law. Wells Fargo's network of financial services allows us to offer you
services,products,information and advice to meet your financial needs on both sides of the balance sheet.
— While this is not a guarantee for future cases, we have never had an issue put back to an issuer.
— We send issuers weekly faxes of the current rate and year to date history.
— We're available to discuss any abnormal market activity or significant movements in rates on your bonds.
— We register the issue with Municipal Market Data.
I — Rates are based on a variety of sources including J.J. Kenny High Grade Index, BMA Index,
Wells Fargo's economic department and a variety of other market participants.
— We send issuers a quarterly report published by Wells Fargo's economics department,
summarizing our forecasts for the rate movement on your bonds.
- We offer weekly faxes of economic news published by Wells Fargo's Chief Economist,Dr.Sung Won Sohn.
— We believe in servicing the issuer through proactively communicating market movement, political
activity and proposed changes in financing law.
1
Institutional Brokerage&Sales includes Wells Fargo Brokerage Services,LLC,
and Wells Fargo Institutional Securities,LLC
brokerage affiliates of Wells Fargo&Company and members of the NASD and SIPC.
WEBS provides clearing services for WEIS,and WEIS accounts are carried by WFBS.
Investments: • NOT FDIC Insured • May Lose Value • No Bank Guarantee
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
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FARGO
Public Finance
Colorado VRDO Transactions
Montrose County, Colorado Colorado Housing&Finance Authority
Gordon Development Project C.A. Wright Asset Management,LLC Project
$2,350,000—Series 2004 A $2,740,000—Series 2004 A
Variable Rate Economic Development Bonds Variable Rate Economic Development Bonds
$2,250,000—Series 2004B $2,445,000—Series 2004B
Taxable Variable Rate Economic Development Taxable Variable Rate Economic Development
Bonds Bonds
Public Finance Division
Public Finance Division
WELLS
WELLS FARGO
FARGO
Wells Fargo Brokerage Services.LLC
Wells Fargo Brokerage Serra.LLC
Mesa County,Colorado City of Grand Junction, Colorado
Adjustable Rate Revenue Bonds Pyramid Printing,Inc.Project
Enstrom Candies, Inc.Project $1,600,000—Series 2002
Adjustable Rate Revenue Bonds
$2,780,000
$1,600,000—Series 2003
Public Finance Division Adjustable Rate Revenue Bonds
Public Finance Division
WELLS
FARGO
Wells Fargo Brokerage Services.LLC WELLS
FARGO
Series 2002 well,Fargo BrokerageServlces.LLC 10
City of Colorado Springs, CO City of Colorado Springs. CO
Variable Rate Demand Revenue Bonds Variable Rate Demand Revenue Bonds 11
Sinton Dairy Project National Strength&Conditioning Association
Project
$4,125,000 $3,095,000 12
Public Finance Division Public Finance Division
WELLS WELLS
FARGO FARGO
Wells Fargo Brokerage Services.LLC Walls Fargo Brokerage Services,LLC
Series 2001 Series 2002
Weld County Variable Rate Bond Information for Custom Microwave,Inc
December 2004
WELLS
FARGO
Public Finance
•
Letter of Credit Rating
We have one of the highest debt ratings of any bank.
(Last updated January,2004)
Fitch/ Moody's Standard&
Bankwatch Poor's
WELLS FARGO & CO.
Outlook Stable Stable Stable
Issuer Aal
Senior Debt AA Aal AA-
Commercial F1+ P-1 A-1+
Paper
Subordinate Debt AA- Aa2 A+
Preferred Stock AA- Aa3 A
WELLS FARGO BANK, NA
Issuer Aaa
Long Term AA+ Aaa AA
Deposits
Short Term F1+ P-1 A-1+
1
1
Weld County Variable Rate Bond Information for Custom Microwave, Inc
December 2004
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WELLS
FARGO
Public Finance
IInducement Resolution for Weld County
IRESOLUTION NO.
I A RESOLUTION SETTING FORTH THE INTENTION OF WELD COUNTY, COLORADO, TO
ISSUE ADJUSTABLE RATE REVENUE BONDS TO FINANCE A MANUFACTURING FACILITY
FOR THE BENEFIT OF CUSTOM MICROWAVE, INC., OR ITS SUCCESSORS OR ASSIGNS.
IWHEREAS, the Weld County, Colorado (the "County") is authorized and empowered under the
provisions of the County and Municipality Development Revenue Bond Act, Article 3 of Title 29,
Colorado Revised Statutes, as amended (the "Act"), to issue revenue bonds to pay the costs of a project
(as defined in the Act) and to loan the proceeds of said revenue bonds to others to provide for the
financing, acquiring, equipping, and improving of such a project; and
1 WHEREAS, Custom Microwave, Inc. (together with its successors or assigns, the "Borrower")
has requested the County to issue revenue bonds, in one or more series in a combined aggregate principal
amount not to exceed $2,700,000, with the interest on the bonds of one series to be excluded from gross
I income for federal income tax purposes (the "Bonds"), and to apply the proceeds of the issuance and sale
of the Bonds to fund a loan to the Borrower for purposes of financing costs of the acquisition,
construction, equipping and improving of real and personal property in connection with an approximately
square-foot manufacturing facility(the "Project) to be located at
1 within the boundaries of the County; and
WHEREAS, the Borrower has represented to the County that the Project will qualify as a project
within the meaning of the Act; and
WHEREAS, the County desires to indicate its intention to finance the costs of financing,
acquiring, constructing, equipping, and improving the Project by the issuance of tax-exempt revenue
bonds under the Act in a principal amount not to exceed $2,580,000, said Bonds to be payable solely out
of revenues derived from the repayment by the Borrower of the loan from the County; and
WHEREAS, the Borrower intends to commence the Project prior to the issuance of the Bonds
and has furnished to the County a preliminary bond counsel opinion of Brownstein Hyatt&Farber, P.C.,
Iattorneys of Denver, Colorado, to such effect; and1
WHEREAS, the Borrower desires that such financing, acquiring, constructing, equipping and
Iimproving of the Project commence immediately; and
WHEREAS, the County's ability to issue tax-exempt revenue bonds to finance such
improvements is subject to the limitations set forth in the Colorado Private Activity Bond Ceiling
Allocation Act, Part 17 of Article 32 of Title 24, Colorado Revised Statutes (the "Bond Allocation Act");
and
1001/14/Inducement and Reimbursement Resolution 7
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WELLS
FARGO
1 Public Finance `
IWHEREAS, the Internal Revenue Service has issued 1.150-2 of the Income Tax Regulations (the
"Regulations") dealing with the issuance of bonds, all or a portion of the proceeds of which are to be used
to reimburse project expenditures incurred prior to the date of issuance; the Regulations generally require
that a prior declaration of official intent be made by the County as issuer if the Borrower intends to
reimburse itself for such prior expenditures out of the proceeds of a subsequently issued borrowing, that
the borrowing occur, and the reimbursement allocation be made from the proceeds of such borrowing
I within 18 months of the payment of the expenditure or, if later, within 18 months of the date the project is
placed in service, and that the expenditure be a capital expenditure or payment of costs of issuance; and
the County as issuer and the Borrower desire to comply with the requirements of the Regulations with
Irespect to the Project.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS
OF WELD COUNTY, COLORADO, AS FOLLOWS:
1. The Board of County Commissioners, having considered the application of the Borrower
I for assistance to finance the Project to be located within the boundaries of the County,has determined and
hereby determines that the financing of the Project will promote the public health, welfare, safety,
convenience and prosperity and promote and develop trade or other economic activity by inducing
manufacturing facilities to locate, expand, or remain in the County and the State of Colorado.
I2. In order to induce the Borrower to construct the Project within the County, subject to the
provisions hereof, the County shall take all necessary or advisable steps to effect the issuance of the
} Bonds pursuant to the Act in a combined aggregate principal amount not to exceed $2,580,000, or such
lesser amount as shall be determined and agreed upon between the Borrower and the County, to fund a
loan to the Borrower for the purpose of financing costs of the acquisition, construction and equipping of
I the Project. The Bonds will not be general obligations of the County. Neither shall the Bonds, including
interest thereon, constitute the debt or indebtedness of the County within the meaning of any limitation of
the Constitution or Statutes of the State of Colorado,nor give rise to a pecuniary liability of the County or
I a charge against its general credit or taxing powers. The Bonds shall be payable solely from and secured
by a pledge of revenues derived from and payable by the Borrower pursuant to financing agreements with
the County.
I 3. No costs or expenses, whether incurred by the County or any other party in connection
with the issuance of the Bonds or the preparation of any documents by any legal or financial consultants
retained in connection therewith, shall be borne by the County. All such costs or expenses shall be paid
Ifrom the proceeds of the Bonds or otherwise borne by the Borrower.
4. Prior to the execution of a loan agreement, indenture of trust, bond purchase agreement,
or any other necessary documents and agreements in connection with such Bonds, documents, and/or
agreements shall be submitted for approval to the County, and, if satisfactory to the County, their
execution shall be authorized by resolution of the County pursuant to law. Prior to any further action by
the Board of County Commissioners, the Borrower shall provide the County with all information
1001/14/Inducement and Reimbursement Resolution 8
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WELLS
FARGO
Public Finance
concerning the utilization of Bond proceeds for said Project, construction plans, and all financial
information requested by the County.
5. The County presently intends and reasonably expects to participate in a tax-exempt
borrowing for the benefit of the Borrower within 18 months of the date of the expenditures of moneys on
the Project or the date upon which the Project is placed in service, but in no event more than three years
after the expenditure is made, whichever is later.
6. The County has received information which it considers to be reliable (a) that the
Borrower proposes to undertake the Project, (b)that except for(i)expenditures aggregating no more than
the lesser of$100,000 or 5% of the proceeds of the bonds, (ii)preliminary expenditures (as described in
the Regulations) in an amount not to exceed 20% of the issue price of the Bonds, and (iii) other
expenditures made not earlier than 60 days before the date of this Resolution, no expenditures for the
Project have been made by the Borrower that will be reimbursed from the proceeds of the Bonds, and
(c) the Borrower reasonably expects to reimburse the expenditures made for costs of the Project out of the
proceeds of the Bonds; and that this Resolution is a declaration of official intent adopted pursuant to
Section 1.150-2 of the Regulations.
7. The Board of County Commissioners hereby awards to the Project$ of the
County's portion of the State's private activity bond volume cap (the "County's Volume Cap").
The appropriate officers of the County are hereby authorized to take all action that may be necessary to
preserve the County's Volume Cap.
8. All commitments of the County contained herein are subject to the following conditions
and any other requirements deemed necessary by the County:
a. The property on which the Project is proposed to be constructed be located
within the County; and
b. The Bonds shall be issued and sold not later than one year from the date hereof,
and in the event the Bonds are not issued by such date, the County shall be under no obligation to
perform any of the terms and conditions contained in this Resolution.
9. Nothing herein requires the County to proceed with the issuance of the Bonds, it being in
the sole discretion of the Board of County Commissioners as to whether the Bonds will be issued or not.
The approval of this Resolution does not limit or restrict the County in the exercise of any of its legal
powers with respect to the Project or the property on which it is to be located.
10. If any section, paragraph, clause or provision of this Resolution shall be adjudged to be
invalid or unenforceable, the invalidity or unenforceability of such section,paragraph, clause or provision
shall not affect any of the remaining sections, paragraphs, clauses or provisions of this Resolution.
11. This Resolution shall take effect immediately upon its passage.
1001/14/Inducement and Reimbursement Resolution 9
WELLS
FARGO
Public Finance
PASSED AND ADOPTED at a regular meeting of the Board of County Commissioners of Weld
County, Colorado, this day of
WELD COUNTY, COLORADO
ATTEST:
County Clerk
[Signature page to Inducement Resolution]
1 '
1001/14/Inducement and Reimbursement Resolution 10
• WELLS
FARGO
Public Finance
Prelimiary Legal Opinion for Project
Brownstein Hyatt Farber
410 Seventeenth Street
TyT.;wenty-Second Roc:
'ado 80r2-14/37
December 22,2004
Weld County, Colorado
915 Tenth Street
Greeley, CO 80631
RE: Weld County, Colorado Revenue Bonds(Custom Microwave,Inc. Project), Series 2005
Ladies and Gentlemen:
This letter is written in connection with the proposed issuance by the County of Weld, Colorado (the
"County"), of its Revenue Bonds (Custom Microwave, Inc. Project) (the "Bonds"), for the purpose of
providing moneys to fund a loan to Custom Microwave, Inc. (the "Borrower"), for the purposes of
financing the acquisition, construction and equipping of a manufacturing facility to be located within the
boundaries of the County. (the "Project").
It is our opinion that:
1. The Bonds, if and when issued, would constitute private activity bonds within the
meaning of Section 141 of the Internal Revenue Code of 1986,as amended(the "Code").
2. The Project would qualify as a "project" within the meaning of Section 29-3-103,
Colorado Revised Statutes.
3. The issuance of the Bonds by the County would fall within the intent and meaning of the
County and Municipality Development Revenue Bond Act, Section 29-3-101 et seq.,
Colorado Revised Statutes, and the County is authorized under the laws and Constitution
of the State of Colorado to issue the Bonds.
4. The Bonds would not constitute a debt or indebtedness of the County within the meaning
of the Constitution or statutes of the State of Colorado, and would not give rise to a
pecuniary liability of the County or a charge against its general credit or taxing powers.
1001/14/Inducement and Reimbursement Resolution 11
7
WELLS
FARGO
Public Finance
In rendering the foregoing opinions, we have relied on, and have not made any independent investigation
as to the accuracy of, certain information and representations made to us by representatives of the
Borrower. In addition, we have assumed that (i) the issuance of the Bonds will be subject to final
authorization by the County, (ii) the Bonds will be duly issued under a trust indenture or bond resolution
approved by the County, (iii) the Bonds will be secured by a loan agreement, a deed of trust and other
security documents satisfactory to the County, (iv) no terms of any such trust indenture, bond resolution,
loan agreement, deed of trust or other security document will be contrary to the opinions herein stated and
(v) the issuance of the Bonds will be accompanied by an opinion by us that the interest on the Bonds is
excluded from gross income for federal income tax purposes.
Very truly yours,
1001/14/Inducement and Reimbursement Resolution 12
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