Ramsey County, Minnesota

Information Report Related to

Sales Tax Revenue Bonds

This report is being provided to summarize the information that is available to date regarding the County’s ability to
fund up to $350 million in costs related to redevelopment of the Twin Cities Army Ammunitions Plant site (TCAAP) in
Arden Hills, including the development of a professional football stadium. The report’s primary focus is on sales tax
revenues and their ability to support debt service at the level needed.

Sales, Use and Excise Taxes

A legislative request was issued to the Minnesota Department of Revenue (MnDOR) to provide a preliminary
estimate of potential sales tax revenue that would result from a 0.50% sales and use tax in Ramsey County (for
example, $0.05 cents on a $10 purchase). For this purpose, the MnDOR used detail available from historical, actual
filings of sales and use tax as reported for Ramsey County’s portion of the 0.25% local, five-county transit tax
collected for the Counties Transit Improvement Board (CTIB). The estimate, as provided by the MnDOR on May 16,
2011, resulted in the following estimates for sales and use tax collections generated by a 0.50% sales and use tax in
Ramsey County:

FY 2010................................................... $28.400 million

FY 2011..................................................... 30.100 million
FY 2012..................................................... 31.600 million
FY 2013..................................................... 32.600 million
FY 2014..................................................... 33.600 million
FY 2015..................................................... 34.800 million

The numbers above are for the State’s fiscal year (FY) which ends June 30, as opposed to the County’s fiscal year
which ends December 31. The MnDOR report states the following:
“Note: The amounts shown are for full fiscal years. The revenue yield would depend upon the effective
date of the tax and would need to be adjusted to account for the delay in when the tax is remitted.
“A 0.5% sales and use tax in Ramsey County would be imposed on the same base as the state 6.875%
sales and use tax.
• The estimate was based on fiscal year 2010 sales and use tax statistics produced by the Department of
Revenue for the 0.25% local 5-county transit tax.
• Total Ramsey County transit sales and use tax reported in fiscal year 2010 was approximately
$12,500,000 [author’s note: this number is based on 0.25%].
• The Ramsey County transit sales and use tax was adjusted (decreased) for sales by businesses in
Ramsey County that are delivered outside the county but within the other 4 counties.
• The Ramsey County transit sales and use tax was adjusted (increased) for sales made for businesses
within the other four metro counties and delivered into Ramsey County and also for businesses outside
Ramsey County, Minnesota

the metro counties and delivered into Ramsey County.

• With these adjustments, the fiscal year 2010 Ramsey County sales and use tax estimating base at the
0.25% rate is $14,200,000. The 0.5% estimate is $28,400,000.
• The estimate was increased annually by growth in state sales tax receipts based on the February 2011
May 27, 2011

Minnesota Management and Budget state forecast.”

The MnDOR report did not include an estimate for a $20 vehicle excise tax as is currently collected for CTIB.
Previous reporting for the five-county transit vehicle excise tax (which is also $20) details this tax by “the county of
the business filing the sales and use tax return.” Without access to information similar to that which the MnDOR
used to adjust the sales and use tax estimates, it is not possible to refine a Ramsey County estimate for this tax. The
only information available is the limited, unadjusted information available for the transit vehicle excise tax which lists
$875,840 for Ramsey County for the state fiscal year ending June 30, 2010. That number was up slightly from the
$836,160 reported for an approximate twelve-month period of returns processed through August 13, 2009. For
purposes of this report, $850,000 has been assumed as potential annual revenue from this source. Further
references in this report to sales and use tax should be read to include the vehicle excise tax as well as the 0.50%
sales and use tax.

If legislative approval is received, the County would be permitted to impose a sales and use tax and the State would
then administer and enforce its collection. A fee is charged by the MnDOR to cover its expense of doing this. At a
minimum, the fee reflects both the amount of tax collected and the number of businesses that collect and report the
tax. A preliminary estimate of what the cost of administration would be was requested and, based on information
available at this time, has been estimated at $300,000 to $325,000.

For purposes of this report, the following tax estimates have been assumed:

Sales & Use Tax (2011) .......................... $30.100 million

Vehicle Excise Tax ...................................... .850 million
Less State Admin ..................................... (.325 million)
Net Sales Tax Available .......................... $30.625 million

The sales and use tax is proposed to be levied under Minnesota Statutes 297A.99; there are additional constraints
within that statue related to when the County is able to first receive the tax. According to Minnesota Statutes
297A.99, the County must provide a 90-day notice of intent to impose the tax and the tax must be implemented at the
start of a calendar quarter, unless otherwise specified in law. As an example, if authority is received and the County
requests the imposition of the tax prior to July 1, it could be imposed October 1, 2011. If the request is received after
July 1 and prior to October 1, the tax would first be imposed January 1, 2012. Taxes collected by a filer in a given
month must be remitted to the State the following month and will be paid to the County the second month following
collection by the filer.

The sales and use tax under the proposed legislation can be used to fund project costs directly or to fund debt
service of bonds issued to fund project costs. The most efficient use of sales and use tax will be to impose the tax as
soon as possible so that capitalized interest can be avoided and the amount of borrowing can be minimized.

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Sales Tax Revenue Bonds
During the course of negotiations between Ramsey County and the Vikings, Springsted consulted with RBC Capital
Markets which is serving as financial advisor to the team. The result of our conversations was to agree to an
underwriting standard for the bonds that included a debt service reserve fund and a minimum 1.25x coverage ratio
(the revenue to debt service ratio). Based upon cash flow needs, the County may phase in the financing of its portion
of the project; however, the attached schedules have been developed to illustrate the estimated debt service if all the
bonds are sold at one time and under current market conditions. The first schedule is a sources and uses of funds.
The second schedule is debt service.

The sales tax will need to be in place to effectively market the bonds and, for that reason, a January 1, 2012
issuance date has been assumed. The example illustrates a 30-year revenue debt service structure without credit
enhancement, such as a general obligation pledge or bond insurance. Multiple options exist for the issuance of the
bonds. When the timing of both expenditures and the County’s commitment to provide funds is better defined, other
alternative structures may offer better options. At this time, however, lacking more detailed information on when
funds will be needed, a simplistic approach has been adopted.

The County’s contribution to the capital cost of the project is $350 million. Any bonds issued will need to provide for
the County’s contribution, a funded debt service reserve fund, and both costs of issuance and underwriter’s discount
for the bonds. The attached schedules incorporate these costs and the resultant average annual debt service cost
using estimated interest rates for today’s market conditions is approximately $22.5 million. Net sales tax revenues
will need to exceed $28.2 million to provide for the minimum coverage needed to market the bonds. (See also the
“first” bullet point below for a discussion of the effect of changing market conditions on these numbers.)

Although the basic coverage requirement for the bonds has been met, there are several qualifiers that must be taken
into consideration in assessing this outcome.
• First, interest rates are currently at very attractive levels for municipal borrowers with a strong credit structure.
The markets change and can change rapidly. Since the illustration provides estimates under current market
conditions, if interest rates at the time of issuance are higher, a lower coverage ratio will result, potentially
reducing the amount of proceeds that can be raised. In general terms, a 0.25% movement in rates will result
in a corresponding movement in annual debt service of about $700,000. If interest rates rise 0.25%, the
additional net sales tax revenue needed to provide for coverage would be approximately $875,000.
• Second, although there is a strong history of collection of sales tax over a comparable base through the five-
county transit tax, the County has not imposed its own sales tax before and has no collection history to
provide when seeking investors. The base for the estimates is very good but still results in an estimate and
will be subject to scrutiny, and perhaps some discounting, by investors.
• Third, the timing of imposition of the tax will determine whether capitalized interest is needed. The attached
schedule assumes that the tax was first implemented October 1, 2011 and that a flow of revenue is available
to fund early interest costs. A delay in the imposition of the tax could cause the need to capitalize interest,
resulting in a larger bond size and higher annual debt service.

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Bond Ratings, Flow of Funds
Sale tax revenue bonds will be rated differently than the County’s general obligation bonds, although many of the
same socio-economic factors will be considered when determining the strength of the sales tax base. Though a
strong rating can be achieved, the County should expect that the rating for the transaction will be in the Aa/AA
categories, as opposed to its Aaa/AAA general obligation bond ratings. Part of the rating or ratings will also depend
on the covenants (or promises) that the County makes to bondholders. Some of these covenants will address how
sales tax is used. Typically in this type of transaction, revenue is collected and flows through what is referred to as a
“waterfall,” with priority claims on the revenue receiving funding first. Only after the priority claims are met will funds
be released for other purposes. For example, sales tax revenue will be received and first applied to debt service on
the bonds and related costs (paying agent or trustee fees, refilling any deficient reserves, etc.). Once debt related
obligations for a defined period have been met, revenue over and above those obligations may be released from the
pledge and will be available for other authorized purposes. Generally, this will happen within a 12-month debt
service period, with funds releasing when the debt service for the full period has been met and any unfunded
reserves have been provided for.

The illustration below offers an example of how the waterfall for a revenue transaction might look.

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During rating interviews related to the recent issue of general obligation bonds in May 2011, the County discussed
the potential for both the imposition of the sales tax and the issuance of bonds to support $350 million of stadium
costs. Both rating agencies used (Moody’s Investors Service and Standard & Poor’s) affirmed the County’s top
quality general obligation bond ratings of “Aaa” and “AAA” respectively. Neither agency expressed concerns that the
proposed transaction would negatively impact the County’s general obligation credit rating. Standard & Poor’s
specifically referenced the transaction. In discussing the stable outlook assigned to the County’s “AAA” rating, the
Standard and Poor’s rating review dated May 20, 2011 says, “Although the construction of a $1 billion sports stadium
in the county is uncertain, we believe that if the county followed the current proposal and issue(d) sales tax revenue
bonds to fund the project, its credit quality would remain strong.”

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 $373,550,000
Ramsey County, Minnesota
Revenue Bonds, Series 2012
30 Year Term

Sources & Uses

Dated 01/01/2012 | Delivered 01/01/2012

Sources Of Funds
Par Amount of Bonds.......................................................................................................................................... $373,550,000

Total Sources.................................................................................................................................................... $373,550,000

Uses Of Funds
Available for Project Costs.................................................................................................................................. $350,000,000
Deposit to Debt Service Reserve Fund (DSRF)................................................................................................... 22,499,329
Estimated Costs of Issuance and Underw riting……………………………………………………………………… 1,050,671

Total Uses.......................................................................................................................................................... $373,550,000

NOTE: The schedule above relies on estimates of current market conditions and a presumed bond structure all of
which are subject to change. The effect of any such change(s) could be significant.

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 $373,550,000
Ramsey County, Minnesota
Sales Tax Revenue Bonds
30-Year Term

NET DEBT SERVICE SCHEDULE

Date Principal Interest Total P+I

01/01/2012 - - -
01/01/2013 7,760,000 14,734,529 22,494,529
01/01/2014 7,825,000 14,673,225 22,498,225
01/01/2015 7,910,000 14,587,150 22,497,150
01/01/2016 8,025,000 14,473,246 22,498,246
01/01/2017 8,155,000 14,343,241 22,498,241
01/01/2018 8,320,000 14,179,325 22,499,325
01/01/2019 8,515,000 13,982,141 22,497,141
01/01/2020 8,740,000 13,754,791 22,494,791
01/01/2021 8,995,000 13,500,457 22,495,457
01/01/2022 9,275,000 13,220,712 22,495,712
01/01/2023 9,580,000 12,914,637 22,494,637
01/01/2024 9,915,000 12,584,127 22,499,127
01/01/2025 10,270,000 12,225,204 22,495,204
01/01/2026 10,660,000 11,836,998 22,496,998
01/01/2027 11,075,000 11,420,192 22,495,192
01/01/2028 11,520,000 10,976,085 22,496,085
01/01/2029 11,995,000 10,503,765 22,498,765
01/01/2030 12,495,000 10,001,174 22,496,174
01/01/2031 13,030,000 9,466,388 22,496,388
01/01/2032 13,600,000 8,896,977 22,496,977
01/01/2033 14,205,000 8,291,777 22,496,777
01/01/2034 14,850,000 7,648,291 22,498,291
01/01/2035 15,530,000 6,965,191 22,495,191
01/01/2036 16,255,000 6,239,940 22,494,940
01/01/2037 17,025,000 5,474,329 22,499,329
01/01/2038 17,830,000 4,669,047 22,499,047
01/01/2039 18,675,000 3,823,905 22,498,905
01/01/2040 19,560,000 2,936,842 22,496,842
01/01/2041 20,490,000 2,005,786 22,495,786
01/01/2042 21,470,000 1,028,413 22,498,413
Total 373,550,000 301,357,878 674,907,878

SIGNIFICANT DATES

Dated Date...................................................................................... 1/01/2012

Delivery Date................................................................................... 1/01/2012
First Coupon Date........................................................................... 7/01/2012

Yield Statistics

Bond Year Dollars........................................................................... $6,830,850.00

Average Life................................................................................... 18.286 Years
Average Coupon............................................................................. 4.4117186%

NOTE: The schedule above relies on estimates of current market conditions and a presumed bond structure all
of which are subject to change. The effect of any such change(s) could be significant.

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