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cp10-10-2017CITY OF HUTCHINSON MCLEOD COUNTY HUTCHINSON, MINNESOTA Hutchinson City Center 1 11 Hassan Street SE Hutchinson, MN 55350-2522 Phone 320-587-5151, Fax 320-234-4240 NOTICE OF A SPECIAL CITY COUNCIL WORKSHOP Tuesday, October 10, 2417 4:00 p.m. Council Chambers — Hutchinson City Center Notice is hereby given that the Hutchinson City Council has called a special workshop meeting for Tuesday, October 10, 2017, at 4:00 p.m. in the Council Chambers at the Hutchinson City Center, 1 I 1 Hassan Street SE, Hutchinson, Minnesota for the following purpose: 0 Review Master Facilities Plan Matthew nick, City Ad trator DATED: October 4, 2017 POSTED: City Center HUTCHINSON CITY COUNCIL MEETING AGENDA TUESDAY, OCTOBER 10, 2017 CITY CENTER — COUNCIL CHAMBERS (The City Council is provided background information for agenda items in advance by city staff, committees and boards. Many decisions regarding agenda items are based upon this information as well as: City policy and practices, input from constituents, and other questions or information that has notyet been presented or discussed regarding an agenda item) 1. CALL MEETING TO ORDER — 5:30 P.M. (a) Approve the Council agenda and any agenda additions and/or corrections 2. INVOCATION — Peace Lutheran Church 3. PLEDGE OF ALLEGIANCE 4. RECOGNITION OF GIFTS, DONATIONS AND COMMUNITY SERVICE TO THE CITY (a) Resolution No. 14787 - Acceptance of Cash Donation from Riversong Music Festival for Music Stage Located in Masonic West River Park (b) Resolution No. 14788 — Acceptance of Cash Donation from Walter and Lynne Clay for Police Memorial Park Fund PUBLIC COMMENTS (This is an opportunity or members of the public to address the City Council on items not on the current agenda. Ifyou have a question, concern or comment, please ask to be recognized by the mayor — state your name and address for the record. Please keep comments under 5 minutes. Individuals wishing to speak for more than five minutes should ask to be included on the agenda in advance of the meeting. All comments are appreciated, butplease refrain from personal or derogatory attacks on individuals.) 5. CITIZENS ADDRESSING THE CITY COUNCIL 6. APPROVAL OF MINUTES (a) Regular Meeting of September 12, 2017 (b) Workshop Meeting of September 12, 2017 CONSENT AGENDA (The items listedJor consideration will be enacted by one motion unless the Mayor, a member of the City Council or a city staff member requests an item to be removed. Traditionally items are not discussed.) 7. APPROVAL OF CONSENT AGENDA (a) Consideration for Approval of Resolution No. 14780 — Resolution to Sell at Auction Surplus Property (b) Consideration for Approval of Change Order No. 2 — Letting No. 2, Project No. 17-02 (School Road and Roberts Road Reconstruction) (c) Consideration for Approval of Lease Agreement with Innovative Foam for Space in Hutchinson Enterprise Center (d) Consideration for Approval of Restatement of Flexible Benefit Plan (e) Appointment of Andy Nissen to Airport Commission to September 2022 CITY COUNCIL AGENDA OCTOBER 10, 2017 (f) Consideration for Approval of Purchasing and Installing Backstops and Fencing at Riverside and Tartan Parks (g) Claims, Appropriations and Contract Payments PUBLIC HEARINGS — 6:00 P.M. 8. CONSIDERATION FOR APPROVAL OF DECLARING THE PROPERTY AT 1415 TH AVENUE NE AS A PUBLIC NUISANCEMAZARDOUS BUILDING 9. CONSIDERATION FOR APPROVAL OF DECLARATION OF PRIVATE TREE AS A NUISANCE 10. ASSESSMENT HEARING AND PROJECT AWARD FOR CITY ALLEY 952 IMPROVEMENT PROJECT (LETTING NO. 14, PROJECT NO. 17-14) (a) Resolution No. 14790 — Resolution Adopting Assessment (b) Resolution No. 14791 — Resolution Accepting Bid and Awarding Contract NIlV"ICATIONS RE UESTS AND PETITIONS purpose o this portion o the agenda is to provide the Councilwith information necessary to craft wise policy. ides items like monthly or annual reports and communications from other entities.) 11. ANNUAL UPDATE ON THE HUTCHINSON LIBRARY AND PIONEERLAND LIBRARY SYSTEM 12. UPDATE ON HISTORIC GRAFFITI PRESERVATION PROJECT AT THE HISTORIC DEPOT AND REVIEW OF POTENTIAL NEXT STEPS — MCLEOD COUNTY HISTORIC PARTNERSHIP UNFINISHED BUSINESS 13. APPROVE/DENY ORDINANCE NO. 17-777 - AN ORDINANCE AMENDING CHAPTERS 93 AND 95 OF THE HUTCHINSON CITY CODE TO ACCOMMODATE THE ESTABLISHMENT OF A DOG PARK (SECOND READING AND ADOPTION) NEW BUSINESS 14. APPROVE/DENY RESOLUTION NO. 14789 - RESOLUTION AUTHORIZING ISSUANCE, PRESCRIBING THE FORM AND DETAILS AND PROVIDING FOR THE PAYMENT OF PUBLIC UTILITY REVENUE BONDS, SERIES 2017B 15. APPROVE/DENY RESOLUTION NO. 14786 — RESOLUTION AUTHORIZING ISSUANCE OF $2,535,000 GENERAL OBLIGATION BONDS, SERIES 2017A 16. APPROVE/DENY ORDINANCE NO. 17-779 — AN ORDINANCE AUTHORIZING THE SALE OF MUNICIPALLY -OWNED LAND TO TITANIUM PARTNERS, LLC 17. APPROVE/DENY ORDINANCE NO. 17-778 —AN ORDINANCE SUSPENDING HOURS OF LIQUOR SALES ON OCTOBER 29, 2017 (FIRST READING, SET SECOND READING AND ADOPTION FOR OCTOBER 24, 2017) GOVERNANCE (The purpose of this portion of the agenda is to deal with organizational development issues, including policies, 2 CITY COUNCIL AGENDA OCTOBER 10, 2017 performances, and other matters that manage the logistics of the organization. May include monitoring reports, policy development and governance process items.) 18. MINUTES FROM COMMITTEES, BOARDS OR COMMISSIONS (a) Library Board Minutes from August 28, 2017 (b) Liquor Hutch Quarterly Report MISCELLANEOUS 19. STAFF UPDATES 20. COUNCIL/MAYOR UPDATE ADJOURNMENT HUTCHINSON CITY COUNCIL c`=y-f 0' a_ � Request for Board Action 79 M-W Agenda Item: Approval of Donation from Riversong Music Festival Department: Administration LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: Matt Jaunich Agenda Item Type: Presenter: Matt Jaunich Reviewed by Staff ❑ Recognition of Gifts/Donations Time Requested (Minutes): 1 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: At our last council meeting, representatives from the Riversong Music Festival presented the City with a check for $2,000 to help offset the costs associated with the construction of the Stage at Masonic West River Park. The City Council needs to officially accept that donation and designate its use. A quick update on this project... The Stage was constructed in 2012/2013 for $76,734.45. At that time, the City worked with Riversong to cover all of the upfront costs of the work with Riversong committing to reimburse the City in the amount of $32,734.45. The donation we are looking to accept would be the third donation since 2013. Upon acceptance of this donation, the remaining balance being owed to the City would be at $15,734.45. BOARD ACTION REQUESTED: Approval of Resolution 14787 - Accepting a Donation from the Riversong Music Festival Fiscal Impact: $ 0.00 Funding Source: FTE Impact: Budget Change: No Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: Remaining Cost: $ 0.00 Funding Source: Resolution No. 14787 RESOLUTION ACCEPTING DONATION WHEREAS, The City of Hutchinson is generally authorized to accept donations of real and personal property pursuant to Minnesota Statutes Section 465.03 for the benefit of its citizens and is specifically authorized to accept gifts and bequests for the benefit of recreational service pursuant to Minnesota Statutes Section 471.17; and, WHEREAS, the following organization has offered to contribute the cash amount set forth below to the City of Hutchinson: Name of Donor Amount Riversong Music Festival $2,000.00 WHEREAS, the donation is being made to assist the City in the costs associated with the construction of the music stage at Masonic West River Park; and WHEREAS, The City Council hereby finds that it is appropriate to accept the donation offered and assign use to offset the costs associated with the construction of the stage at Masonic West River Park, NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUTCHINSON, NHNNESOTA: THAT, the donation described above is hereby accepted by the City of Hutchinson with the conditions as laid out in the resolution. Adopted by the City Council this 10th day of October 2017. Gary T. Forcier, Mayor Matthew Jaunich, City Administrator HUTCHINSON CITY COUNCIL c`=y-f 0, a_ � Request for Board Action 79 M-W Agenda Item: Resolution 14788 Approving Cash Donation Department: Finance LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: Andy Reid Agenda Item Type: Presenter: Reviewed by Staff ❑ Recognition of Gifts/Donations Time Requested (Minutes): 1 License Contingency N/A Attachments: No BACKGROUND/EXPLANATION OFAGENDA ITEM: The City received a $500 donation from Walter and Lynne Clay for the Police Memorial Park fund. BOARD ACTION REQUESTED: Approve Resolution No. 14788, accepting the donation. Fiscal Impact: Funding Source: FTE Impact: Budget Change: No Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: Remaining Cost: $ 0.00 Funding Source: CITY OF HUTCHINSON RESOLUTION NO. 14788 RESOLUTION ACCEPTING DONATION WHEREAS, the City of Hutchinson is generally authorized to accept donations of real and personal property pursuant to Minnesota Statutes Section 465.03 for the benefit of its citizens, and is specifically authorized to accept gifts and bequests for the benefit of recreational services pursuant to Minnesota Statutes Section 471.17; and WHEREAS, the following person has offered to contribute the cash amount set forth below to the city: Name of Donor Amount Donation Date Walter & Lynne Clay $500.00 9/19/2017 WHEREAS, such donation has been contributed to the Hutchinson Police department as a donation to the Law Enforcement Memorial Park fund. WHEREAS, the City Council finds that it is appropriate to accept the donation offered. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUTCHINSON, MINNESOTA, AS FOLLOWS: THAT, the donation described above is hereby accepted by the City of Hutchinson. Adopted by the City Council this 10th day of October 2017. ATTESTED: Matthew Jaunich City Administrator APPROVED: Gary T. Forcier Mayor HUTCHINSON CITY COUNCIL MEETING NHNUTES TUESDAY, SEPTEMBER 26, 2017 CITY CENTER — COUNCIL CHAMBERS (The City Council is provided background information for agenda items in advance by city staff, committees and boards. Many decisions regarding agenda items are based upon this information as well as: City policy and practices, input from constituents, and other questions or information that has notyet been presented or discussed regarding an agenda item) 1. CALL MEETING TO ORDER — 5:30 P.M. Mayor Gary Forcier called the meeting to order. Members present were John Lofdahl, Chad Czmowski, Mary Christensen and Steve Cook. Others present were Matt Jaunich, City Administrator, Kent Exner, City Engineer and Marc Sebora, City Attorney (a) Approve the Council agenda and any agenda additions and/or corrections Motion by Cook, second by Czmowski, to approve the agenda as presented. Motion carried unanimously. 2. INVOCATION — Christ the King Lutheran Church 3. PLEDGE OF ALLEGIANCE 4. RECOGNITION OF GIFTS, DONATIONS AND COMMUNITY SERVICE TO THE CITY (a) Resolution No. 14777 - Acceptance of Cash Donation from Hutchinson Elks Lodge for Inclusive Park Project Matt Jaunich, City Administrator, noted that this is the third donation received from Hutchinson Elks Lodge for their inclusive park project. The Elks Lodge has donated approximately $48,000 for this project. Motion by Cook, second by Christensen, to approve Resolution No. 14777. Motion carried unanimously. PUBLIC COMMENTS (This is an opportunity or members of the public to address the City Council on items not on the current agenda. Ifyou have a question, concern or comment, please ask to be recognized by the mayor — state your name and address for the record. Please keep comments under 5 minutes. Individuals wishing to speak for more than five minutes should ask to be included on the agenda in advance of the meeting. All comments are appreciated, butplease refrain from personal or derogatory attacks on individuals.) 5. CITIZENS ADDRESSING THE CITY COUNCIL 6. APPROVAL OF MINUTES (a) Regular Meeting of September 12, 2017 (b) Workshop Meeting of September 12, 2017 Motion by Czmowski, second by Cook, to approve minutes as presented. Motion carried unanimously. CONSENT AGENDA (The items listedfor consideration will be enacted by one motion unless the Mayor, a member of the City Council or a city staff member requests an item to be removed. Traditionally items are not discussed.) 7. APPROVAL OF CONSENT AGENDA (a) Consideration for Approval of Parking Stalls/Street Closure for Mural Mounting and CITY COUNCIL MINUTES SEPTEMBER 26, 2017 Unveiling on October 6 & 7, 2017 (b) Consideration for Approval of Spooky Sprint Event on October 28, 2017 (c) Consideration for Approval of Improvement Project Supplemental Agreement/Change Order 1. Supplemental Agreement No. 1 —Letting No. 2, Project No. 17-02 (School Road and Roberts Road Reconstruction) 2. Change Order No. 2 — Letting No. 6, Project No. 17-06 (Hotel Site Access Improvements) (d) Consideration for Approval of Declaration of Private Tree as a Nuisance and Setting Public Hearing for October 10, 2017 (e) Consideration for Approval of Purchase Order for Harmony Lane Lift Station Rehabilitation (f) Consideration for Approval of Items for City Alley 952 Improvement Project (Letting No. 14, Project No. 17-14) 1. Resolution No. 14778 - Resolution Declaring Cost to be Assessed and Ordering Preparation of Proposed Assessment 2. Resolution No. 14779 - Resolution for Hearing on Proposed Assessment (g) Consideration for Approval of Setting Public Hearing for Wellhead Protection Plan on October 24, 2017, at 6:00 p.m. (h) Consideration for Approval of Accepting Quote from Nu -Telecom for Phone Services (i) Consideration for Approval of Issuing Massage License to Hui Wang of Angel's Massage LLC 0) Consideration for Approval of Issuing Short -Term Gambling License to ISD 423 Foundation on September 30, 2017 (k) Consideration for Approval of Items Related to LJM Addition 1. Resolution No. 14771 — Resolution Adopting Findings of Fact and Reasons for Approval of a Preliminary and Final Plat for LJM Addition at 579 2nd Avenue SE, Larry Murphy, Applicant with Favorable Planning Commission Recommendation 2. Resolution No. 14770 — Resolution Adopting Findings of Fact and Reasons for Approval of a Conditional Use Permit to Allow a Post Frame Addition to an Existing Building and a New Post Frame Building for a Construction Company at 579 2nd Avenue SE in an I -C Zoning District, Larry Murphy, Applicant with Favorable Planning Commission Recommendation (1) Consideration for Approval of Resolution No. 14772 — Resolution Adopting Findings of Fact and Reasons for Approval of Conditional Use Permit for a Brewery and Tap Room in a C-4 Zoning District Located at 900 Hwy 15 South, Daniel Hart, Applicant, with Favorable Planning Commission Recommendation (m) Consideration for Approval of Resolution No. 14776 — Resolution Approving the Vacation of a Portion of City Right of Way on Lots 3, 4 and 5 Block 1 Bridgewater Estates 2nd Addition, Hutchinson with Favorable Planning Commission Recommendation (n) Claims, Appropriations and Contract Payments 2 CITY COUNCIL MINUTES SEPTEMBER 26, 2017 Items 7(a) and 7(1) were pulled for separate discussion Motion by Czmowski, second by Christensen, to approve consent agenda with the exception of the items noted above. Motion carried unanimously. Item 7(a) had further discussion. Dave Wegscheid, mural artist, presented before the Council. Mr. Wegscheid explained that he is painting a reproduction of Les Kouba's "Country Store" as a mural on the west wall of Ace Hardware. The unveiling of the mural will be held on October 7, 2017, at 11:00 a.m. along with refreshments being served. Motion by Lofdahl, second by Cook, to approve Item 7(a). Motion carried unanimously. Item 7(1) had further discussion. Council Member Christensen noted that someone was in the audience that had had some concerns previously, however he noted they have been addressed. Dan Jochum, Planning Director, presented before the Council. Mr. Jochum explained that Daniel Hart has applied for a conditional use permit for a brewery and taproom to be located in the former WCI thrift store building at 900 Hwy 15 South. Mr. Jochum explained that the Planning Commission did approve the conditional use permit with conditions. Discussion held at the Planning Commission regarded site access (main access is only from Hwy 15 southbound) and lighting in the rear. Council Member Cook noted that he has spent a lot of time looking at this matter. Council Member Cook has concerns over traffic in the residential areas due to the access points. He also expressed concerns over lighting issues and feels that there needs to be more lighting in the rear of the building if there is going to be parking and recommended that that be added as a condition. Council Member Cook expressed that street lighting as a whole is limited with very little mid -block lighting in the area and perhaps more lighting will need to be placed in these neighborhoods in the future. He feels the site isn't ideal because of the access, but it wouldn't be ideal for any business that is located there. Council Member Christensen noted that the only comments she has received pertains to higher traffic in the residential areas and lighting issues. Mr. Jochum suggested that a condition be added to require lighting in the rear of the building. Neighborhood lighting will need to be addressed using standard procedure. Kent Exner, City Engineer, addressed how mid -block street lights are installed on non - collector streets and this area may need to be reviewed due to the unique use in the area. Motion by Cook, second by Christensen, with Forcier abstaining, to approve Resolution No. 14772 with an additional condition that lighting be installed in the rear of the building. Motion carried unanimously. Daniel Hart, applicant, presented before the Council. Mr. Hart explained that he has been working on this project for approximately four years and was thankful to the Council for their approval. PUBLIC HEARINGS — 6:00 P.M. 8. TIF DISTRICT ESTABLISHMENT AND MODIFICATION FOR HOTEL PROJECT (a) Resolution No. 14784 — Resolution Adopting a Modification to the Development Program for Development District No. 4 and Establishing Tax Increment Financing District No. 4-19 Therein and Adopting a Tax Increment Financing Plan Therefor CITY COUNCIL MINUTES SEPTEMBER 26, 2017 (b) Resolution No. 14785 — Resolution Authorizing an Interfund Loan for Advance of Certain Costs in Connection with Tax Increment Financing District No. 4-19 Miles Seppelt, EDA Director, presented before the Council. Mr. Seppelt explained that a Tax Increment Financing District is proposed to be established to facilitate the redevelopment of the corner of Highways 7 & 15 with a new hotel. A "Soils Condition" TIF District would reimburse the developer for any environmental remediation costs associated with the site. This would include removal of contaminated soils and installation of a vapor barrier under the hotel building itself. Once eligible costs are reimbursed by the TIF District, it would be decertified — probably in four or five years. Mr. Seppelt reviewed in detail the qualifications for the TIF District, the maximum duration and the use of the dollars. No public comments were received. Motion by Cook, second by Czmowski, to close public hearing. Motion carried unanimously. Motion by Lofdahl, second by Czmowski, to approve Resolution No. 14784. Motion carried unanimously. Council Member Cook clarified that the plan is to decertify the district after the costs are paid back. Mr. Seppelt explained that the Interfund Loan allows advance payment from the City's general fund or any other fund. The City would reimburse itself for the qualified costs from tax increments derived from the TIF district. Motion by Cook, second by Christensen, to approve Resolution No. 14785. Motion carried unanimously. Mr. Seppelt provided an update on the enterprise center. Mr. Seppelt explained that the exterior of the building is approximately 95% complete and framing is just about done. Two occupants are scheduled to begin leasing space when the center opens. The project should be complete by October 20 . NIlVIUNICATIONS RE UESTS AND PETITIONS purpose oJ this portion oJ the agenda is to provide the Council with information necessary to craft wise policy. ides items like monthly or annual reports and communications from other entities.) 9. REVIEW OF SCHOOL ROAD TOWNHOME ACCESS/DRIVEWAY CONFIGURATION Matt Jaunich, City Administrator, noted that this item is a follow up from this being brought up by School Road residents at two previous Council meetings. A couple of the residents on the north end of the townhomes had concerns with the closing of some access points to School Road. Kent Exner, City Engineer, presented before the Council. Mr. Exner provided drawings of the area. Mr. Exner noted that staff did speak with townhome leadership throughout development of the reconstruction and they were made aware of the reduction of access points and voiced no concerns. After reconfiguring the area during reconstruction, the three northerly access points nearest to the north curve were eliminated. This is in large part due to the implementation of a multi -use trail on the west side of School Road, on -street parking on the west side of School Road, and the S-curve near the north end of the townhomes. The distance from the garages to the driveway area bituminous edges are consistent and do not appear to be at shorter dimensions in comparison to other areas. Mayor Forcier noted that this item was addressed at public hearings and no comments were received. Mr. Exner did note that the northerly edge of the most northern garages can be extended to the north about five feet with an estimated cost of $8500. The City will plan to do this and a change order will come before the Council at a future meeting. .19 CITY COUNCIL MINUTES SEPTEMBER 26, 2017 10. DISCUSSION OF PLACING DYNAMIC SIGN IN LIBRARY SQUARE Dan Jochum, Planning Director, presented before the Council. Mr. Jochum noted that a group has contacted the City proposing to place a dynamic sign in Library Square. Betsy Price presented before the Council. Ms. Price represents RiverSong and Historic Hutchinson and she had Valerie Mackenthun and Kayla Alexander along with her. Ms. Price noted that RiverSong and Historic Hutchinson are now in charge of Music in the Park and would like to look at signage options for Music in the Park and other events that are held in the park. The group has proposed a permanent sign that the face could be changed to advertise different events. Discussion was held in ensuring the sign messages are up to date and aesthetically pleasing. It is proposed that the sign would be very tasteful and in the same design as the black downtown wayfinding signs that were installed in 2016. Staff does agree that a well-done electronic sign may be better than banner signs that are currently used. The understanding is that the sign would only be used to advertise events in Library Square and possibly other community events that the Council would approve of. Currently electronic signs for businesses are prohibited downtown for businesses. However, staff does feel that a community sign that is electronic could be installed because it isn't advertising one particular business, but rather Library Square events and other possible community events as directed by the City Council. Council Member Czmowski asked if the sign would be advertising Library Square events only or community -wide events. Ms. Mackenthun noted that the thought is to advertise community -wide events. Council Member Cook noted that city ordinance currently does not allow electronic signs in the downtown area and specifically does not allow private businesses to use electronic signs. Council Member Christensen expressed she feels that perhaps if a sign is placed in Library Square it should only advertise Library Square events. The Chamber of Commerce electronic sign on the north end of Main Street already advertises community -wide events. Kent Exner raised some concerns of an electronic sign related to public safety issues. Mr. Jaunich noted that the ordinance would have to be changed to allow such a sign. In addition, issues related to maintenance and damages would have to be addressed since the sign would be privately -owned and situated on city property. Also, questions would need to be addressed on who will regulate the content of the sign. Council Member Cook asked that other options be researched. Council Member Czmowski suggested that this might be a workshop discussion. The Council concurred. Mr. Jaunich noted that staff will pull together some information and a workshop will be scheduled at a future Council meeting. 11. REVIEW OF CITY RESIDENTIAL LEAF VACUUM SERVICE John Olson, Public Works Manager, noted that the leaf vacuum service is scheduled from October 10 — November 20, 2017. On average about 270 loads or 650 tons of leaves are picked up during the season. These leaves are processed at Creekside and represent a significant portion of their compost material. Leaves are picked up the day following regular garbage service. Residents are asked to put leaves in the gutter the day before the vacuums come by and not to include sticks or vines in the leaf piles. More information is on the City's web site and Facebook page. 12. DISCUSSION ON COUNCIL CHAMBER DECOR AND THE PRESERVATION OF CITY PLATS Council Member Christensen noted that the plat maps hanging in the Council Chambers are of Harmony and Hutchinson. Council Member Christensen would like to discuss having them preserved. Council Member Christensen explained that the historical museum could preserve them for the city or staff could research the best way to have them preserved and mounted or a digital copy made of them. Discussion was also held about the commemorative flags that are hanging in the Council Chambers. There were suggestions of donating them 5 CITY COUNCIL MINUTES SEPTEMBER 26, 2017 and perhaps replacing them or placing art or other works in the Council Chambers. Perhaps this item can be discussed as part of the workshop on October 10th when the Facilities Master Plan is reviewed. UNFINISHED BUSINESS NEW BUSINESS 13. APPROVE/DENY RESOLUTION NO. 14773 — RESOLUTION SETTING HUTCHINSON REDEVELOPMENT AUTHORITY 2018 PRELIMINARY TAX LEVY Andy Reid, Finance Director, presented before the Council. Mr. Reid explained that this preliminary levy must be set by September 30, 2017, in accordance with state law. The HRA board is requesting a 2018 tax levy in the amount of $171,364 which is a 3% increase over the 2017 levy and is lower than the HRA's 2018 statutory levy limit. Motion by Lofdahl, second by Christensen, to approve Resolution No. 14773 with the levy amount of $171,364. Motion carried unanimously. 14. APPROVE/DENY RESOLUTION NO. 14774 — RESOLUTION SETTING HUTCHINSON ECONOMIC DEVELOPMENT AUTHORITY 2018 PRELIMINARY TAX LEVY Andy Reid, Finance Director, presented before the Council. Mr. Reid explained that this preliminary levy must be set by September 30, 2017, in accordance with state law. The EDA board is requesting a 2018 tax levy in the amount of $169,200 which is the 2018 statutory limit. Motion by Cook, second by Lofdahl, to approve Resolution No. 14774 with the levy amount of $169,200. Motion carried unanimously. 15. APPPROVE/DENY RESOLUTION NO. 14775 — RESOLUTION APPROVING THE GENERAL FUND AND DEBT SERVICE FUND PRELIMINARY 2017 TAX LEVIES Andy Reid, Finance Director, presented before the Council. Mr. Reid explained that this preliminary levy must be set by September 30, 2017, in accordance with state law. Two versions of Resolution No. 14775 are before the Council. The first Resolution contains a 3% general fund levy increase and a 0% debt levy increase consistent with information from the budget workshop. The second Resolution contains a 4.93% general fund levy increase and 0% debt levy increase in order to balance the budget. Since the workshop, staff has received news related to health insurance costs. Staff had budgeted for a 15% health insurance increase, however received a bid of only a 13% increase in health insurance premiums. If the City changes the plan design, the premium increase could be much less than 13%. Council Member Lofdahl proposed setting the levy at a 4.93% general fund levy increase at this point knowing that the Council has the ability to lower it. Motion by Lofdahl, second by Forcier, to approve Resolution No. 14775 with a 4.93% general fund levy increase and a 0% debt service levy increase for a total levy increase of 3.4% or $7,186,424. Motion carried unanimously. 16. APPROVE/DENY SETTING TRUTH -IN -TAXATION HEARING FOR DECEMBER 5, 2017, AT 6:00 P.M. Matt Jaunich explained that the City must set their annual Truth in Taxation hearing. He is proposing to set it for December 5, 2017, at 6:00 p.m. to consider public comments prior to adopting the final tax levy. rel CITY COUNCIL MINUTES SEPTEMBER 26, 2017 Motion by Cook, second by Czmowski, to set Truth -in -Taxation hearing for December 5, 2017, at 6:00 p.m. Motion carried unanimously. 17. APPROVE/DENY RESOLUTION NO. 14781 — DECLARING INTENT ON BONDING REIMBURSEMENT Andy Reid, Finance Director, explained that on an annual basis the City administers street and capital improvement projects that are financed by General Obligation Improvement Bonds. The city's current business practice is to issue bonds in the Fall after the projects have been bid and awarded to contractors and the contract costs are determined. This allows for the City bonding amount to be more accurate than if the City bonded earlier in the year based on engineering estimates. IRS regulations require the City Council to approve a Resolution declaring the City's intent to reimburse itself with the bond proceeds. Motion by Cook, second by Christensen, to approve Resolution No. 14781. Motion carried unanimously. 18. APPROVE/DENY REPLACEMENT OF FIRE DEPARTMENT SELF CONTAINED BREATHING APPARATUS Fire Chief Mike Schumann presented before the Council. Chief Schumann explained thatthe Hutchinson Fire Department is currently using self contained breathing apparatus from January 2003. This type of equipment endures extreme use in harsh environments with a typical service life of 12-15 years. The equipment was upgraded in 2011-2013 to extend its service life and the upgrade has served its purpose. An internal committee researched all market options and heavily tested and evaluated three different manufacturers. Thetesting results have led to a written specification that the fire department is asking to be released for open bid. The project has been put on the CIP Plan as a split budget item with half of the total cost falling into the 2017 budget year and the other half falling into the 2018 budget year. A portion of the project cost will be paid by contributions from the annual rural fire assessments over the course of several years. The total project cost is $135,000. Motion by Czmowski, second by Forcier, to approve replacement of fire department self contained breathing apparatus. Motion carried unanimously. 19. APPROVE/DENY ORDINANCE NO. 17-777 - AN ORDINANCE AMENDING CHAPTERS 93 AND 95 OF THE HUTCHINSON CITY CODE TO ACCOMMODATE THE ESTABLISHMENT OF A DOG PARK (FIRST READING, SET SECOND READING AND ADOPTION FOR OCTOBER 10, 2017) Matt Jaunich noted that with the recent discussion of the establishment of a dog park, staff has amended current ordinance to allow for proper usage at the dog park. The proposed ordinance amendments allow for dogs to be off -leash within a public dog park. Motion by Cook, second by Christensen, to approve first reading and set second reading and adoption of Ordinance No. 17-777 for October 10, 2017. Motion carried unanimously. 20. ITEMS RELATED TO THE ESTABLISHMENT OF A DOG PARK (a) Approve/Deny Dog Park Rules and Conditions Policy 7 CITY COUNCIL MINUTES SEPTEMBER 26, 2017 (b) Approve/Deny Dog Park Layout Matt Jaunich suggested that the Council adopt rules and a policy for use of the dog park. The proposed policy is similar to what can be found at most municipally -owned dog parks. The establishment of a set of rules for the dog park is recommended by the League of Minnesota Cities and the City's Insurance Trust. A sign will then be installed in the park with adopted rules and portions of the policy. Council Member Cook suggested adding language to the policy noting that the City has the right to remove any items from the dog park, such as play features that are left there. Motion by Czmowski, second by Lofdahl, to approve dog park rules and conditions policy with the addition of the play feature removal language. Motion carried unanimously. Matt Jaunich reviewed the proposed dog park layout. The fence will be five feet in height as compared to the original four foot height that was proposed. This is actually a reduction in price of $8000. There would be an area for small dogs and an area for large dogs. This proposed layout allows for the fence to be moved back to allow some parking spaces along the south side of the fence in the future. This layout may require the elimination of 4-5 trees. The current expected cost for the fencing is at $30,500. A second layout option was distributed this evening that would allow for the accommodation of 10 parking stalls in the future by moving the fence back and the need to not have to remove any trees. The cost to pave a parking lot is estimated at $44,000. Some Council Members suggested monitoring the volume of usage of the dog park prior to paving aparking lot. It was noted that perhaps there is ample off-street parking at this time and the usage can be evaluated to see if a parking lot will be necessary. Motion by Czmowski, second by Forcier, to approve dog park layout with no parking area at this time but with future parking capabilities based on use. Motion carried unanimously. 21. APPROVE/DENY RESOLUTION NO. 14783 — RESOLUTION DECLARING ADEQUACY OF PETITION FOR POTENTIAL IMPROVEMENT TO CITY ALLEY 917 Kent Exner, City Engineer, noted that a petition was received for alley improvements to Alley 917 which runs between Glen Street SW and Franklin Street SW between Milwaukee Avenue SW and Miller Avenue SW. In July, the City received a petition wherein 4 of 10 abutting property owners or 40% signed a petition to make improvement to Alley # 17. At this point, the petition needs to be validated and the City Council needs to declare thepetition adequate under state law. The next steps would be to order preparation of a feasibility report regarding the improvement project's necessity, cost-effectiveness and feasibility and then to schedule a public hearing to receive the report. Affected property owners would be invitedto that hearing. The scope of the project is to remove existing base, install geotextile fabric, place new base material, and pave concrete with an inverted "vee" to address drainage. Staff will be structuring this project like all other improvement projects and will hold a neighborhood meeting prior to any public hearings. Motion by Czmowski, second by Cook, to approve Resolution No. 14783. Discussion was held on how to handle alley improvements. Motion carried unanimously. CITY COUNCIL MINUTES SEPTEMBER 26, 2017 22. APPROVE/DENY COUNCIL APPOINTMENTS TO TRUNK HWY 15/MAIN STREET PROJECT ENGAGEMENT GROUP Council Members Cook and Czmowski expressed interest in serving on this group. Mayor Forcier and other Council Members have not been able to recruit any members from Historic Hutchinson or the Public Arts Commission but will keep searching. Motion by Christensen, second by Lofdahl, to approve appointing Steve Cook and Chad Czmowski to Trunk Hwy 15/Main Street Project Engagement Group. Motion carried unanimously. GOVERNANCE (T e purpose o t is portion of the agenda is to deal with organizational development issues, including policies, performances, and other matters that manage the logistics of the organization. May include monitoring reports, policy development and governance process items.) 23. MINUTES FROM COMMITTEES, BOARDS OR COMMISSIONS (a) City of Hutchinson Financial Report and Investment Report for August 2017 �b) Hutchinson Housing & Redevelopment Authority Board Minutes from August 15, 2017 c) City of Hutchinson Tall Grass/Noxious Weed Report for August 2017 MISCELLANEOUS 24. STAFF UPDATES Kent Exner — Mr. Exner noted that paving on School Road and Roberts Road is scheduled for October 7, 2017, with an additional paving on School Road being done on October 9, 2017. The School Road trail should be paved by the end of next week. Hotel access roadway is probably two weeks out with the completion date scheduled for October 6, 2017. Parking Lot I should be completed the second week of October. Matt Jaunich — Mr. Jaunich reminded everyone that September 30th is the hard good pickup for the entire city. He reminded the Council Members of the regional meeting being held in New Ulm on October 12th. 25. COUNCIL/MAYOR UPDATE Mary Christensen — Council Member Christensen noted that Jim Fahey texted her and said he would be happy to serve on the Hwy 15/Main Street Engagement Group as a representative from Historic Hutchinson. She also asked that driver be careful on School Road due to construction and school being in session. Council Member Christensen also mentioned that the cemetery statue was dedicated this past weekend and is a lovely addition to the section where babies and children are laid to rest. Steve Cook — Council Member Cook noted that some of his ideas for a parking lot for the dog park are related to alleviate any parking challenges for Two Way Communications which is right across the street. Council Member Cook also commented that he saw that an invoice had been paid for testing of sediment in the lake and asked Mr. Exner for more information. Mr. Exner noted that a consultant has done the testing of the sediment with a final draft report due in early October. Lake/river basin association representatives will review the report and then it will go to Resource Allocation with a public meeting being held after and going before Council before the end of the year. Council Member Cook also asked about the development of the apartment complexes on Denver Avenue by Ridgewater College. Mr. Jaunich noted that the developer's goal is to have them up and 80% Z CITY COUNCIL MINUTES SEPTEMBER 26, 2017 operational by November. Mr. Jaunich also noted that the Century Court development is still waiting to hear back from the Corp of Engineers so that they can proceed. John Lofdahl — Council Member Lofdahl noted that on November 19th the State Theatre will be having a second showing of "Little Crow and the Dakota War". Gary Forcier — Mayor Forcier noted that he and Mr. Jaunich were invited to attend a session with the President of Finland last week who was here as part of FinFest. Mayor Forcier noted that he will be bringing forth names of people interested in serving on Commissions prior to making an appointment. Mayor Forcier noted that Andy Nissen has shown interest in serving on the Airport Commission and will be appointed at a future meeting. ADJOURNMENT Motion by Christensen, second by Czmowski, to adjourn at 8:25 p.m. Motion carried unanimously. 10 HUTCHINSON CITY COUNCIL SPECIAL WORKSHOP MEETING MINUTES TUESDAY, SEPTEMBER 26, 2017, AT 4:30 PM CITY CENTER — COUNCIL CHAMBERS 1. Call to Order -4:30 p.m. Mayor Gary Forcier called the meeting to order. Members present were Chad Czmowski, Mary Christensen, Steve Cook and John Lofdahl. Others present were Matt Jaunich, City Administrator, Marc Sebora, City Attorney, Kent Exner, City Engineer and other City staff. DISCUSSION/REVIEW ITEMS 2. Review of Solar Array Items John Paulson, Environmental Manager, introduced John Neville from Ameresco who will be leading the workshop. Mr. Neville will be providing an update and status on the solar pv project. Mr. Neville noted that he will be providing an overview of City projects along with an M&V report and O&E report. He will also review information surrounding the TenKSolar restructuring and reviewing new opportunities for the City. Mr. Neville provided a history of the projects completed between City of Hutchinson and Ameresco including a City facilities upgrade for energy efficiency in 2010. This included a $375,114 project with a $219,720 rebate. The City received positive energy saving results in $60,000. The projected 6.7 year payback was delivered in 3.6 years. The City and Ameresco also conducted a solar pv project on the closed landfill which was the first in Minnesota. They collaborated to apply for an Xcel RDF grant in the amount of $1 million. This 400kw solar pv project was $1.4 million with a cost to the City of only approximately $350,000. In addition the City has received several awards for their projects. Mr. Neville reviewed an M&V report for 2017. There were inverter failures mainly due to a utility ground fault that occurred on 7/12/16. Approximately 70 inverters were replaced in December/January by Ameresco at a cost of $18,000. The manufacturer determined it was an overload condition and did not honor their warranty. To address future failures, Ameresco has purchased approximately 20 inverters and Lead Solar will honor their warranty for "routine" failures. In addition, another manufacturer is interested in providing inverters. Mr. Neville then reviewed a project status Operations & Maintenance report. The synopsis of the report noted that six modules are non-performing out of 975. This is only 0.6% of the panels. The company that manufactured the panels are now out of business so Ameresco is exploring replacement options. 12 inverters are non-performing out of 450 which is 2.5% of the inverters. These inverters are out of warranty and Ameresco has replacements available. Some other issues include tree growth under the array which is being remedied, harmonic noise which has been identified and corrected between Ameresco and the wastewater treatment facility staff and a few cracked conductor cable jackets that were identified have been sealed and secured. Overall the system is in good shape and is performing well and on track for over -achieving for 2017 in its current condition. Future operations and maintenance issues for the project will be performed by Hunt Electric. Replacement panels can be integrated into the system for solar panel performance/conditions. Inverter status will continue to be monitored and replaced. The goal is to maintain the system in good shape and it will continue to perform well and overachieve for future years. Mr. Neville reviewed the harmonic noise issue. Mr. Neville explained it as the micro -inverters being sensitive to harmonic noise which amplify to a point that resets the inverter causing loss of production. Mr. Neville reviewed options for the solar pv project. The warranty of the solar panels are out of warranty and the manufacturer is out of business. Other replacement panels can be used from other manufacturers. The inverters can be supplied by Lead Solar and has a limited warranty of 20 years. Other manufacturers are being pursued for the inverters. Ameresco has a project guarantee that adjustments will be made to the production via manufacturers' failure to honor warranties per contract and will continue to work with the City to achieve savings. Mr. Neville provided information on TenKSolar who was the manufacturer of the panels. They are out of business as of August 2017. Ameresco obtained extra inverters for the City as well as for other entities. Lastly, Mr. Neville reviewed new opportunities available to the City. These opportunities include high -efficiency LED street lighting upgrades, wastewater treatment plant energy upgrades, energy/equipment upgrade audits and community solar gardens. Mr. Neville reviewed how projects are selected and the phases of implementation. Motion by Christensen, second by Lofdahl, to adjourn at 5:20 p.m. Motion carried unanimously. ATTEST: Gary T. Forcier Mayor Matthew Jaunich City Administrator HUTCHINSON CITY COUNCIL c`=y-f 0, a_ � Request for Board Action 79 M-W Agenda Item: Resolution to sell City Property Department: Police LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: Daniel T. Hatten Agenda Item Type: Presenter: Daniel T. Hatten Reviewed by Staff ✓❑ Consent Agenda Time Requested (Minutes): 2 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: RESOLUTION TO SELL AT AUCTION A 2011 Chevrolet Suburban Vin #1 GNWK5EG9BR253542 Vehicle to be sold at State Auction in Arden Hills. BOARD ACTION REQUESTED: The Hutchinson Police Department recommends approval of resolution to sell at auction Fiscal Impact: $ 10,000.00 Funding Source: 0 FTE Impact: 0.00 Budget Change: No Included in current budget: No PROJECT SECTION: Total Project Cost: $ 0.00 Total City Cost: $ 0.00 Funding Source: 0 Remaining Cost: $ 0.00 Funding Source: 0 RESOLUTION TO SELL AT AUCTION SURPLUS POLICE DEPARTMENT PROPERTY Resolution No. 14780 WHEREAS, the Hutchinson Police Department has accumulated surplus property. AND WHEREAS, the Hutchinson City Code provides pursuant to Section 91, Subdivision 3, Paragraph C for the sale at auction of surplus property. AND WHEREAS, the police department has determined that it is in possession of surplus property. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUTCHINSON, MINNESOTA. That the Hutchinson City Council hereby approves the sale at auction of the following vehicle to be sold at auction at Arden Hills on October 28th, 2017; 2011 Chevrolet Suburban Vin #1GNWK5EG9BR253542 Adopted by the City Council this 10th day of October 2017 Mayor City Administrator HUTCHINSON CITY COUNCIL c`=y-f 0' a_ � Request for Board Action 79 M-W Agenda Item: Approval of Improvement Project Change Order & Supplemental Agreement Department: PW/Eng LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: Kent Exner Agenda Item Type: Presenter: Kent Exner Reviewed by Staff ❑ Consent Agenda Time Requested (Minutes): 0 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: As construction has proceeded on the below listed projects there has been additional work, project scope revisions, and/or construction completion date changes. The items specified below have been identified and deemed necessary to satisfactorily complete the projects per the intent of the original construction contract. The following Change Orders and/or Supplemental Agreements are proposed as noted: - Change Order No. 2 — Letting No. 2/Project No. 17-02 — School Road & Roberts Road Reconstruction This Change Order addresses the need for additional bituminous parking area adjacent to the most northerly unit of School Road Townhomes (320 School Rd SW) due to elimination of driveway access. This change results in an increase to the Contract in the amount of $8,427.03. This agreement does not affect the original Final Completion Date. BOARD ACTION REQUESTED: Approval of Change Order & Supplemental Agreement Fiscal Impact: Funding Source: FTE Impact: Budget Change: No Included in current budget: Yes PROJECT SECTION: Total Project Cost: $ 0.00 Total City Cost: $ 0.00 Funding Source: Remaining Cost: $ 0.00 Funding Source: STATE AID FOR LOCAL TRANSPORTATION CHANGE ORDER CityiGatimty of City of Hutchinson Change Order No. 2 Page 1 of 1 FEDERAL PROJECT NO. STATE PROJECT NO. LOCAL PROJECT NO. CONTRACT NO. NA SAP 133-117-014 & SAP 133-116-003 L2P17-02 L2P17-02 CONTRACTOR NAME AND ADDRESS LOCATION OF WORK R & R Excavating School Rd SW & Roberts Rd SW 1149 Hwy 22 South TOTAL CHANGE ORDER AMOUNT Hutchinson, MN 55350 $8,427.03 In accordance with the terms of this Contract, you are hereby authorized and instructed to perform the work as altered by the following provisions. This Change Order addresses the need for additional bituminous parking area adjacent to the most northerly unit of School Road Townhomes (320 School Rd SW) due to elimination of driveway access. COST BREAKDOWN Item No. Item Unit Unit Price Quantity Amount Funding Category No. 001 2021.501 MOBILIZATION LUMP SUM $1,336.04 1 $1,336.04 2104.505 REMOVE BITUMINOUS PAVEMENT SQ YD $12.75 27 $344.25 2104.513 SAWING BITUMINOUS PAVEMENT (FULL DEPTH) LIN FT $4.08 32 $130.56 2105.501 COMMON EXCAVATION CU YD $52.19 8 $417.52 2574.525 COMMON TOPSOIL BORROW (LV) CU YD $79.66 5 $398.30 2112.604 SUBGRADE PREPARATION SQ YD $6.25 55 $343.75 2211.503 AGGREGATE BASE (CV) CLASS 5 CU YD $57.63 8 $461.04 2360.503 TYPE SPWEA240B WEARING COURSE MIXTURE (3") SY $85.44 47 $4,015.68 2575.501 SEEDING, HYDROSEED SWYD $10.69 20 $213.80 3882.100 CONTRACTOR 10% ALLOWANCE I LUMP SUM 1 $766.09 1 $766.09 Funding Category No. 001 Total: $8,427.03 F_ Change Order No. 2 Total: $8,427.03 - runaing category is requlrea Tor Teaerai projects. CHANGE IN CONTRACT TIME (check one) Due to this change the Contract Time: a. [ ] Is Increased by Working Days b. [ X ] Is Not Changed [ ] Is Decreased by Working Days [ ] Is Increased by Calendar Days c. [ ] May be revised if work affected the controlling operation [ ] Is Decreased by Calendar Days Approved By Project Engineer: Kent Exner Approved By Contractor: R & R Excavating Approved by the Hutchinson City Council on 10/10/2017. Signed Signed Date: 10/10/2017 Phone: (320) 234-4212 Date: Phone: (320) 587-5918 Original to Project Engineer; Copy to Contractor Once contract has been fully executed, forward a copy to DSAE for funding review: The State of Minnesota is not a participant in this contract; signing by the District State Aid Engineer is for FUNDING PURPOSES ONLY. Reviewed for compliance with State and Federal Aid Rules/Policy. Eligibility does not guarantee funds will be available. This project is eligible for: Federal Funding State Aid Funding Local funds District State Aid Engineer: Date: Orig. Contract $2,049,044.53 Prev. CO's $48,668.52 /This CO $8,427.03 Total Contract Amount with Change Orders $2,106,140.08 HUTCHINSON CITY COUNCIL city of Request for Board Action 47Wz=* Agenda Item: APPROVE/DENY LEASE AGREEMENT FOR HUTCHINSON ENTERPRISE CE& Department: EDA LICENSE SECTION Meeting Date: 10/1012017 Application Complete NIA Contact: Miles R. Seppelt Agenda Item Type: Presenter: Miles R. Seppelt Reviewed by Staff ❑ Consent Agenda Time Requested (Minutes): 0 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: The second tenant for the Hutchinson Enterprise Center small business incubator has been recruited and staff is seeking permission to sign the prospect to a lease. Innovative Foam will take 5,000 sf in the new building once its completed. Rent will he $3.$4 per square foot, or $1,600 per month and the lease will have an initial term of 3 years with the option for two 1-year extensions. A copy is attached for your review. If you have any questions or need additional information, please give me a call anytime at 234-4223. BOARD ACTION REQUESTED: Approval of lease agreement and authority to sign documents. Fiscal Impact: $ 0.00 Funding Source: NIA FTE Impact: 0.00 Budget Change: No Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: Remaining Cost: $ 0.00 Funding Source: -11�TCA-IINSOI`y9 CLIENT LEASE AGREEMENT Client Innovative Foam Client Contact Dean Bertram Address 1164 Benjamin Avenue SE City / State / Zip Hutchinson, MN 55358 Rental Space Bay 5 Square Feet 5,880 Dates of Lease Rent $3.84 psf annually $1,600 per month This Lease Agreement ("Lease"), made this the City of Hutchinson, 111 Hassan Street day of 2017 by and between SE, Hutchinson, MN 55350 ("City") and _ ("Client"). City and Client agree as follows: 1. CLIENT SPACE City agrees to lease to Client and Client agrees to lease from City square feet (the "Client Space") of the Hutchinson Enterprise Center (the "Facility") located at 1.164 Benjamin Avenue SE., Hutchinson, Minnesota, 55350. The Client Space is shown on the attachment hereto, marked Exhibit A and made a part hereof. 2. TERM Client agrees to lease Client Space from the City for an initial term (the "initial Term") of thirty-six (36) months, commencing September 15, 2017 ("Commencement Date") and ending September 14. 2020 ("Expiration Date"). Upon lapse of the initial term, Client shall have the option for two (2) 1 -year lease extentions. In order to exercise said option, Client shall give written notice of its intent to renew the term not less than ninety (90) days before the Expiration Date. Additional terms may be negotiated between the City and the Client. 3. RENT Client agrees to pay without further demand to City at its offices in Hutchinson, MN, or at such other place as City may from time to time in writing designate, Base Rent and Additional Rent in the amounts shown in this section on the first day of each month during the term hereof. All rent payments received shall first be applied to past due rents. A. BASE RENT Client shall pay to the City a rental rate of $2 per square foot annually for the Initial Term in monthly installments equalling 1/12 of the annual rent (the "Base Rent"). Such monthly Base Rent payments are payable in advance and shall be made on or before the first day of each month. B. ADDITIONAL RENT Client shall pay to the City, at the same time and in the same manner as the Base Rent, $1.84 per square foot annually for the Initial Term, in monthly installments equalling 1/12 of the annual amount, an additional amount for the client's proportional property taxes and basic garbage service (the "Additional Rent"). The Additional Rent is subject to annual adjustment effective January V of each year by the City to reflect changes in the property taxes due and the cost of providing basic garbage service. City shall provide documentation supporting the need for changes to the Additional Rent to the Client thirty (30) days prior to such changes being made. C. LATE PAYMENT If Client fails to pay the Base Rent and Additional Rent by the tenth (10") day of the month for which such Base Rent and Additional Rent is due, Client shall pay a late payment fee of ten (10%) of the total amount due. 4. SECURITY DEPOSIT The Client is further required to deposit with the City a Security Deposit in the amount of one month's rent. The Security Deposit shall be held by City, without liability for interest, as security for the faithful performances by Client of all of the terms, covenants, and conditions of this Lease by said Client to be kept and performed during the term hereof, it being expressly agreed that such deposit is not an advance rental deposit or a measure of City's damages. If, at any time during the term of this Lease, any of the Rent herein reserved shall be overdue and unpaid, or any other sum payable by Client to City hereunder shall be overdue and unpaid, then City may, at the option of City, appropriate and apply any portion of the Security Deposit to the payment of any such overdue Rent or another sum. In the event of the failure of Client to keep and perform any of the terms, covenants and conditions of this Lease to be kept and performed by Client, then City at its option may appropriate and apply the entire Security Deposit, or so much thereof as may be necessary, to compensate City for loss or damage sustained or suffered by City due to such breach on the part of Client. Should Client comply with all of said terms, covenants and conditions and promptly pay all of the Rent herein provided for as it falls due, and all other sums payable by Client at the end of the term of this Lease, the Security Deposit shall be returned in full to Client at the end of the term of this Lease, or upon the earlier termination of this Lease. 5. ADDITIONAL SERVICES The City shall provide the following services to the client: A. CENTRALIZED OFFICE FACILITIES The City shall provide access to common areas, ("Offices") including scheduled access to conference rooms, access to shared restrooms and kitchen facilities, a centralized mailbox, including a mailbox for the Client, access to an office work room and access to centralized copying and faxing facilities and equipment. B. BUILDING SERVICES The City shall provide the Client Space and Facility with snow removal, lawn care, grounds maintenance and basic garbage service. In addition, the City will provide janitorial services, supply and maintenance for the Offices. G. CITY PERSONAL PROPERTY City is providing personal property and/or equipment in the Leased Premises ('City Assets") for use by Clients. Client hereby understands and agrees that City may, in its sole discretion, add, modify, remove, repair, and/or alter City Assets at any time and without any liability for loss of use or potential damages to Client's business operations. City Assets shall remain the property of City and Client shall not alter, damage, remove, modify, encumber or repair any of City Assets without the express written consent of the City. Client shall have the right to use City Assets during the Term; however said use is subject to City's right to revoke Client's ability to access City Assets, at its sole discretion. All City Assets in the Leased Premises are available on a first-come, first -serve basis with other co - lessees. 7. UTILITIES AND MAINTENANCE FEES Client shall be solely responsible for and promptly pay for electricity, heat, telephone, internet, water and sewer charges and all other utilities serving the Client Space. S. POLICIES, PROCEDURES, RULES AND REGULATIONS Hutchinson Enterprise Center policies, procedures, rules, and regulations, contained in the City's Client Handbook and Building Manual are hereby made a part of this Lease and are incorporated herein by reference. Client agrees to abide with and observe all policies, procedures, rules and regulations, amendments thereto and supplements thereof. Client's failure to keep and observe said policies, procedures, rules, and regulations shall constitute a breach of the terms of this Lease. City reserves the right from time to time to amend or supplement said polities, procedures, rules, regulations and to adopt and promulgate additional policies, procedures, rules, regulations applicable to the Hutchinson Enterprise Center. City shall provide to Client written notice of any amendments or modifications to policies, procedures, rules, and regulations which shall be effective with respect to Client thirty (30) days after such notice has been given. 9. USE OF CLIENT SPACE The Client Space shall be used by the Client solely as office and manufacturing production space and for such additional uses as may be customary and incidental to the business of Client. All uses of the Client Space shall be in accordance with all applicable municipal and zoning ordinances and any and all other applicable rules and regulations of any duly constituted authority governing such uses. Client will have full access to and use of the Client Space, and the right to use and access all common areas within the Hutchinson Entperprise Center on an "as available" basis, subject to the City's Client Handbook and Building Manual. Client will not have access to any other areas within the Hutchinson Enterprie Center, including but not limited to the space of other Clients and the City's executive offices. Client shall not use or occupy the Client Space for any unlawful purpose, and will conform to and obey all present and future laws, ordinances and all rules, regulations, requirements and orders of all governmental authorities or agencies, respecting the use and occupation of the Client Space including, without limitation, all environmental laws regarding underground storage tanks, pollution and hazardous wastes. Client agrees, upon reasonable notice and during normal business hours, to permit City to enter the Client Space from time to time for the purposes of inspection, protection, preservation, repair or restoration of the Client Space. The officers or agents of City may so enter the Client Space upon reasonable notice without being liable to any prosecution, claim or cause of action for damages by reason of such entry and without in any way affecting the obligations of this Lease; provided only that City use reasonable care in making such entry. City reserves the right to market and exhibit the Client Space to prospective Clients during the last 180 days of the Lease Term. 10. QUIET POSSESSION City represents and warrants that it has full right and authority to enter into this Lease. City covenants that if and so long as Client pays the rent required by this Lease and performs and observes all of the covenants, conditions, rules and regulations hereof, Client shall peaceable and quietly enjoy the Client Space for the Lease Term, subject, however, to the terms, covenants, and provisions of this Lease. 11. SURRENDER OF CLIENT SPACE Client will, at the termination of this Lease by lapse of time or otherwise, yield up immediate possession of the Client Space with all improvements located thereon (except as may otherwise be provided in this Lease) and surrender the Client Space to City in good condition and repair, reasonable wear and tear excepted, clean and with all debris removed. 12. IMPROVEMENTS, ALTERATIONS AND SIGNS Client shall not make alterations or improvements in, or erect exterior signage upon or to the Client Space or Building without the prior written approval of the City and the City's Planning, Building and Zoning Department, if applicable. Upon termination of the Lease, at the sole discrection of the City, all improvements made by the Client in the Client Space shall become the property of the City. Provided, however, that the term "improvements" shall not include signs, trade fixtures, machinery nor equipment, nor structures or installations, tanks or containers, ancillary to said trade fixtures, machinery and equipment and are owned or leased by Client. Further provided, that notwithstanding any contradictory provisions herein, Client may remove its trade fixtures, machinery, equipment, and such structures or installations, tanks or containers, ancillary to said trade fixtures, machinery and equipment, provided that such removal shall be made prior to the end of the Lease Term and any damage resulting from removal shall be repaired by Tenant. If the City elects to not retain improvements made by the Client in the Client Space, Client shall be responsible to return the Client Space to its original state prior to Lease Expiration and vacating the Client Space. 13. MAINTENANCE AND REPAIRS A. CLIENT'S MAINTENANCE RESPONSIBILITIES. Client shall, at its expense, maintain the Client Space (including the interior walls, ceilings, doors, floor coverings, and fixtures) in good repair and condition the same as existed as of the Commencement Date, reasonable wear and tear and damage from fire and other insured casualty excepted. Client agrees not to and shall not overload the electrical, water and/or plumbing facilities and keep the Client Space free from waste or nuisance. Client shall be responsible for maintenance of entrances to, and electrical and plumbing systems within the Client Space. Client shall repair, at its own expense, any damage to the Client Space caused by the wilfull acts or negligence of Client, its officers, contractors, licensees, agents, employees, guests, invitees or visitors. Client agrees to furnish, at its expense, all lamps, bulbs, tubes, starters and ballasts in connection with the lighting of the Client Space. B. CITY'S MAINTENANCE RESPONSIBILITIES. Except for those maintenance responsibilities of Client, City shall, at its expense maintain the entire f=acility including, but not limited to, the foundations, outer walls, roof, gutters and down spouts, exterior windows and doors. 14. INSURANCE Client agrees to keep and maintain during the entire term of this Lease and any extension thereof or holding over thereunder comprehensive liability insurance on the Client Space covered hereunder, including the parking and other common areas, insuring City and Client against liability for personal and bodily injury, death and property damage (including water) with limits not less than $2,000,000 in aggregate and $1,500,000 per occurrence. Client is responsible for procuring and maintaining casualty insurance on Client's personal property, business assets, equipment and leasehold improvements. Client shall not carry any stock of goods or do anything on or about the Client Space which will in any way impair or invalidate the obligation of any policy of insurance on or in reference to the Client Space or the Building. A copy of these policies must be provided to the City prior to occupancy. 15. TERMINATION City and Client may terminate the Lease at any time by mutual agreement. 16. REPORTING REQUIREMENTS Subject to the terms following this sentence, Client agrees to provide such profit & loss statements, balance sheets, tax and payroll information as may reasonably be requested by City, to ensure compliance with the terms of this Lease and such governmental programs as provide subsidies hereunder. Client shall redact any and all personal indentifiers to protect the identity of individual employees; and, Client may further edit such information to preclude disclosure of proprietary infromation and sensitive financial data. After the City inspects said documents they will be returned to the Client. The City will not keep said Client documents on file. This information shall be used solely for the purpose of pooling program economic impact data in an anonyomous fashion; or to assist Client through the delivery of business incubation program technical assistance services. This provision shall remain in effect for a period of five years beyond the date of lease expiration. City agrees to keep all such information confidential to the maximum extent allowed by law. During the term of the Lease, and subject tot eh protection above, Client agrees to report job creation information to include number of permemenent jobs created, job title per job, hourly wage, hourly value of benefits, date employee(s) are hired and list of benefits provided. 17. EDUCATION REQUIREMENT Client is required to complete 12 hours of business coaching / mentoring / continuing education per calendar year with an advisor from the Small Business Development Center, Southwest Initiative Foundation or other source chosen by the Client and approved by the City. Failure to complete the requirement constitutes an event of Default. The City shall have the right to waive this requirement. 18. LOW TO MODERATE INCOME REQUIREMENT Client agrees that, during the term of the Lease and subject to bona fide occupational qualifications, 51% of new jobs created by the company in the Facility shall be "taken by" or +'available to" persons of law -to -moderate income per Section S guidelines. To meet this requirement the Client agrees that it will have each new employee complete a Job Information Form (provided by the City) to self - certify family income. 19. INDEMNIFICATION Client shall defend, indemnify and hold harmless City from and against any and all liability, losses, damages, costs or expenses, including attorney's fees, arising from any act, omission or negligence of Client or its affiliate companies, officers, contractors, licensees, agents, servants, employees, guests, invitees or visitors in or about the Client Space. City shall defend, indemnify and hold harmless Client, its , directors, officers and employees from and against any and all liability, losses, damages, costs or expenses, including attorneys fees, arising from any act, omission or negligence of City or its contractors, licensees, agents, servants, employees, guests, invitees or visitors in or about the Client Space. 20. ASSIGNMENT AND SUBLETTING Client shall not assign this Lease or sublet the Client Space, or any part thereof, or in any other manner transfer this Lease, leasehold or the Client Space, without the prior written consent of City, which consent may be witheld for any reason or no reason. No lease assignment shall relieve Client of primary liability to City hereunder, unless City so agrees in writing. Client shall continue to make all payments due under the Lease directly to City, even if the Client Space is sublet or assigned. All Subleases or assignments must be approved by City and its attorney and Client shall promptly provide City with a conformed copy of such approved sublease or assignment. Consent by City to any subletting or assignment shall not constitute a consent by City to any subsequent assignment or subletting. 21. CLIENT DEFAULT A. Definition of Default Each of the following events, ("Event of Default"), shall be a default hereunder by Client and a breach of this Lease: 1) If Client shall materially violate any covenant or agreement providing for the payment of rent or other amounts due under the terms of this Lease, and such violation shall continue for ten (10) days after the due date. 2) If Client shall assign, transfer, encumber, sublet or permit the use of the Client Space by others except in a manner permitted in herein. 3) If Client shall be adjudicated as bankrupt whether voluntarily or involuntarily, or makes any general assignment for the benefit of creditors under any Insolvency, Receivership or Bankruptcy Act. 4) If a Receiver or trustee shall be appointed for, or to take possession of, all or a substantial part of the property of Client or any part of Client's leasehold interest. 5) If the Client Space is abandoned by Client. Client's failure to occupy and operate its business on the Client Space for thirty (30) consecutive calendar days may, at the option of the City, be deemed an abandonment, unless the rent has been paid in full during the period of absence. 6) If there be any attachment, execution or other judicial seizure of all or a substantial part of the assets or Client or Client's leasehold, where such an attachment, execution or seizure is not discharged within thirty (30) days. 7) If the estate of Client be transferred or passed to, or devolve upon, any other person or corporation by operation of law or by assignment of Client other than allowed herein. 8) If Client shall be in default of fulfilling any of other covenants, conditions and requirements of this Lease and such default shall continue for thirty (30) days after written notice thereof from City to Client and Client has not commenced to cure such default within such thirty (30) days and is diligently pursuing the remedies or steps necessary to cure or correct such default, but in no event more than ninety (90) days. B. In the Event of Such Default: 1) City has the right to enter upon the Client Space and again have, repossess, and enjoy the same as if this Lease has not been made, and thereupon this Lease shall terminate without prejudice, however, to the right of City to recover from Client all rent and other sums unpaid up to the time of such re-entry. In the event of any such default and re-entry, City shall have the right to re -let the Client Space for the remainder of the then existing term for the highest rent then obtainable, and to recover from Client the difference between the rent provided by this Lease and the amount obtained by such re -letting, less the costs and expenses reasonably incurred by City in such re -letting. 2) Any equipment, tools, supplies or products left in the Client Space by the Client for thirty (30) consecutive calendar days following lease termination, may, at the option of the City, be deemed abandoned property and liquidated in any manner deemed appropriate by the City, unless the rent has been paid in full during the period of absence. 3) Exercise any other remedy allowed by law or equity, including acceleration of rental payments remaining for the balance of the term of this Lease. 4) In the event of a breach of this Lease by Client, whether abated or not, City shall recover from Client reasonable and necessary attorney's fees and costs incurred by City in enforcing its rights under this Lease. 5) All rights and remedies of City under this Lease shall be cumulative and none shall exclude any other right to remedy at law. Such right and remedies may be exercised and enforced concurrently and whenever and as often as occasion thereof arises. No waiver by City of performance by Client shall be considered a continuing waiver or shall preclude City from exercising its rights in the event of a subsequent default. 22. CITY DEFAULT If City shall fail to perform any of its obligations under this Lease and such default shall continue for more than thirty (30) days after receipt by City of written notice from Client specifying the default (or) if such default cannot be cured or corrected within that time, then such additional time as may be necessary if City has commenced to cure such default within such thirty (30) days and is diligently pursuing the remedies or steps necessary to cure or correct such default, but in no event more than ninety (90) days), then Client may, at its option, but shall not be obligated to, cure such default; or, Client may terminate the lease with no further liability. City shall reimburse Client the reasonable costs incurred by Client in curing City's default as aforesaid within thirty (30) days after receipt of Client's statement itemizing such costs, including, if any, reasonable attorney fees, in reasonable detail and evidence of payment thereof. Any rights under this Section shall be cumulative and shall not limit Client's rights at law or in equity. 23. NOTICES Any notice permitted or required to be given under the terms of this Lease shall be in writing, signed by or on behalf of the party giving the same, and shall be deemed to have been duly given if delivered by hand or if mailed by registered or certified mail, postage prepaid, return receipt requested, or by a nationally recognized overnight delivery service to the following address: If to the City: If to the Client: Economic Development Director City of Hutchinson 1154 Benjamin Avenue SE Hutchinson, MN 55350 Ph. (320) 234-4223 Ph: Either party may designate a different address or recipient for purposes hereof by notice to the other party in the manner provided in this Section. Client shall designate a contact person in Client's organization whom City may contact regarding the Lease. Client may designate a new contact person or persons at any time by giving notice to City in writing. 24. CASUALTY 1) if the Client Space is destroyed or damaged by fire or other casualty covered by insurance as required to be maintained by City, then (unless this Lease is terminated as hereinafter provided) City shall proceed to repair or restore the Client Space to the condition which City furnished improvements to Client upon the commencement of the Term. if City repairs or restores the Client Space as provided herein, then Client shall repair and restore its leasehold improvements, furnishings, furniture and equipment to at least a condition equal to that prior to their damage. Notwithstanding any provision in this section to the contrary, neither City nor Client shall be required to spend more than the amount of insurance proceeds either or both parties receive for such damage or destruction. 2) If the Client Space or any part thereof shall be rendered unClientable by any destruction or damage, except where such damage is caused by Client, then a pro rata portion of the rent based upon the number of square feet of area in the Client Space which are unClientable shall be abated or if the unClientable portion effectively prevents Client from using the Client Space for its stated purpose then all of the rent shall be abated until the Client Space or such part thereof shall have been put in Clientable condition. if, however, any destruction or damage to the Client Space is so extensive that City is unable to render complete restoration within 120 days, or is not covered by City's all- risk policy, City or Client may terminate this Lease (effective as of the date of destruction or damage) by written notice to the other party given within 120 days from the date of casualty. 25. PARKING Client and Client's employees, customers, agents and invitees shall have the nonexclusive right to use any parking areas located, adjacent to Client's leased space. 26. SEVERABILITY If any term or provision of this Lease or the application thereof to any person or circumstance shall, to any extent be invalid or unenforceable, the remainder of this Lease or the application of such term or provision to persons or circumstances other than those to which it is held invalid or unenforceable shall be valid and enforced to the full extent permitted by law. 27. GOVERNING LAW This Lease shall be governed by, enforced and construed under the laws and regulations of the State of Minnesota. 28. INTERPRETATION The invalidity or unenforceability of any provision of this Lease shall not affect or impair any other provision. Whenever the singular number is used, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders. Any captions appearing in this Lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of such sections or paragraphs of this Lease nor in any way affect this Lease. 29. SUCCESSORS AND ASSIGNS Each of the covenants, provisions, terms and agreements of this Lease shall inure to the benefit of and be binding upon the respective heirs, executors, and administrators, successors and assigns of City and Client. 30. ENTIRE AGREEMENT This Lease constitutes the entire agreement between City and Client and shall supersede all previous communications, understandings and representations, whether oral or written. Amendments hereto shall not be valid unless in writing and signed by both parties. IN WITNESS WHEREOF, the parties have executed this agreement as of the day and year first written above. Dated: City of Hutchinson (City) By: Gary T. Forcier Title: Mayor By: Matt Jaunich Title: City Administrator Dated: Innovative Foam (Client) By: Dean Bertrum Title: Owner HUTCHINSON CITY COUNCIL c`=y-f 0, a_ � Request for Board Action 79 M-W Agenda Item: Consideration & Approval - City Flexible Benefit Plan Restatement Documents Department: Administration LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: Brenda Ewing Agenda Item Type: Presenter: Matt Jaunich Reviewed by Staff ❑ Consent Agenda Time Requested (Minutes): 0 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: Attached is the restatement of the City of Hutchinson flexible benefit plan and the accompanying related documents. The plan is updated as needed to retain compliance with relevant laws and requirements as they relate to our employee benefit programs. This restatement is utilizing the plan templates provided by the League of Minnesota Cities. It is requested that the Council approve the following documents: 1) City of Hutchinson Flexible Benefit Plan Basic Plan Document 2) City of Hutchinson Flexible Benefit Plan Adoption Agreement 3) Summary Description of the City of Hutchinson Flexible Benefits Plan The restatement of the documents reflects the benefits program effective in 2017. BOARD ACTION REQUESTED: Consideration and approval of the City of Hutchinson Flexible Benefit Pan Restatement and Associated Documents Fiscal Impact: Funding Source: FTE Impact: Budget Change: No Included in current budget: Yes PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: Remaining Cost: $ 0.00 Funding Source: CITY OF HUTCHINSON FLEXIBLE BENEFIT PLAN BASIC PLAN DOCUMENT 2017 TABLE OF CONTENTS ARTICLE I. INTRODUCTION.............................................................................................................. 1 ARTICLE II. DEFINITIONS................................................................................................................ 2 ARTICLE III. ELIGIBILITY AND PARTICIPATION................................................................................. 7 ARTICLE IV. CONTRIBUTIONS.......................................................................................................... 9 ARTICLE V. ELECTION OF AVAILABLE BENEFITS.............................................................................. 11 ARTICLE VI. ADMINISTRATION....................................................................................................... 19 ARTICLE VII. PLAN AMENDMENT AND TERMINATION....................................................................... 26 ARTICLE VIII. GENERAL PROVISIONS............................................................................................. 27 ARTICLE IX. GROUP MEDICAL BENEFITS......................................................................................... 29 ARTICLE X. DEPENDENT CARE EXPENSE REIMBURSEMENT PLAN ...................................................... 31 ARTICLE XI. MEDICAL EXPENSE REIMBURSEMENT PLAN.................................................................. 36 ARTICLE XII. GROUP DENTAL BENEFITS......................................................................................... 41 ARTICLE XIII. GROUP TERM LIFE BENEFITS AND/OR GROUP ACCIDENTAL DEATH & DISMEMBERMENT (-AD&D') BENEFITS............................................................................................... 43 ARTICLE XIV. LONG TERM DISABILITY BENEFITS............................................................................ 45 ARTICLE XV. HSA CONTRIBUTION FEATURE.................................................................................... 47 ARTICLE XVI. LIMITED SCOPE MEDICAL EXPENSE REIMBURSEMENT PLAN ........................................ 50 ARTICLE XVII. HIPAA PROVISIONS................................................................................................. 55 ARTICLE XVIII. CONTINUATION COVERAGE ........................................ Error! Bookmark not defined. Flexible Benefits Plan — Basic Plan Document ©12015 Hitesman and Wold, P.A. ARTICLE I. INTRODUCTION 1.1 Availability. In recognition of its members' need to have plan documentation available on a cost effective basis, the League of Minnesota Cities makes this Flexible Benefits Plan Basic Plan Document (and the related Flexible Benefits Plan Adoption Agreement) available for use by its members. This action by the League of Minnesota Cities should not be construed as the provision of legal or tax advice. Each member that chooses to use this documentation is responsible for evaluating whether it needs such advice and, if so, of securing such advice. 1.2 Establishment. The establishment and Effective Date of the Plan are as set forth in the Adoption Agreement. 1.3 Purpose. The purpose of the Plan is to provide Participants with a choice between cash and certain "qualified benefits" as defined in Section 125 of the Code. The Plan is intended to qualify as a "cafeteria plan" under Section 125 of the Code so that Available Benefits a Participant elects to receive under the Plan will be eligible for exclusion from the Participant's gross income to the fullest extent possible under the Code. 1.4 HIPAA Privacy and Security Rules. Portions of this Plan are "covered entities" for purposes of the Privacy Rules and the Security Rules. 1.5 Gender and Number. Pronoun references in this Plan shall be deemed to be of any gender relevant to the context, and words used in the singular may also include the plural. Flexible Benefits Plan — Basic Plan Document ©12015 Hitesman and Wold, P.A. ARTICLE II. DEFINITIONS The following words and phrases are used in this Plan and shall have the meanings set forth in this Article unless a different meaning is clearly required by the context or is defined within an Article. 2.1 Adoption Agreement means the separate Adoption Agreement that shall be executed by the Employer adopting the Plan. The Adoption Agreement contains Employer -specific information and the Employer's selections of options under the Plan. 2.2 Available Benefits means the benefits made available through this Plan as indicated in the Adoption Agreement. 2.3 Cafeteria Plan Regulations means any final regulations, or proposed regulations on which employers may rely, issued by the Department of Treasury under Section 125 of the Code. 2.4 Cash Payment means the amount received by a Participant described in Article XX, if applicable. 2.5 Change in Status means the situations that permit an Eligible Employee or Participant to make a change in his or her Election mid -Plan Year and include events that: (a) change an Eligible Employee's or Participant's legal (under applicable state and federal law) marital status; (b) change the number of an Eligible Employee's or Participant's dependents (as defined in Section 5.4); (c) change an Eligible Employee's or Participant's employment status, or the employment status of the Participant's Spouse or dependents (as defined in Section 5.4); (d) cause an Eligible Employee's or Participant's dependent (as defined in Section 5.4) to satisfy or cease to satisfy the eligibility requirements for an Available Benefit; and (e) change the place of residence of an Eligible Employee or Participant, or his or her Spouse or dependents (as defined in Section 5.4). 2.6 Claims Administrator means the entity that is responsible for processing claims for benefits under the Plan, including a third party appointed under Section 6.1(c). The Claims Administrator shall be identified in the Adoption Agreement. 2.7 Claims Grace Period means (a) Grace Period. An eligible expense incurred prior to the fifteenth day of the third calendar month following the close of the Plan Year shall be deemed to have been incurred for purposes of both the preceding Plan Year and the current Plan Year. Such period of time shall be referred to as the "Grace Period." For example, if the Plan Year is the calendar year, a claim incurred on March 1, 2015 shall be deemed to have been incurred for purposes of both the Plan Year running from January 1 through December 31, 2014, and the Plan Year running from January 1 through December 31, 2015, and shall be reimbursed from contributions made during either Plan Year in accordance with part (c) hereof. (b) Processing of Claims. Claims incurred0 during the Grace Period, and submitted prior to the close of the Claims Run -Out Period, shall be first allocated to and reimbursed from the Participant's respective reimbursement -type account for the Flexible Benefits Plan — Basic Plan Document ©22015 Hitesman and Wold, P.A. preceding Plan Year until such reimbursement -type account is exhausted. Thereafter, any such claims shall be allocated to and reimbursed from the Participant's reimbursement -type account for the current Plan Year. Claims incurred during the Grace Period will be allocated based upon the date the claim is received. Once a claim is allocated, there shall be no changes, modifications, or adjustments to the allocation of the account. In accordance with this part (b), a claim incurred during the preceding Plan Year and submitted during the Claims Run -Out Period will be processed subsequent to a previously submitted claim incurred during the Grace Period, even if the account from the preceding Plan Year is exhausted by reimbursement of the claim incurred during the Grace Period. (c) Elections. No adjustment to a Participant's election for the current Plan Year shall be made or allowed based upon the amount of claims reimbursed from the prior Plan Year's account in accordance with part (b) hereof. 2.8 Claims Run -Out Period means the period of time following the end of the Plan Year during which claims incurred during such Plan Year (and applicable Grace Period) may be submitted as provided in the Available Benefit, as defined in each Available Benefit provision in which such term is used. 2.9 Code means the Internal Revenue Code of 1986, as amended from time to time. 2.10 Compensation means the total salary, wages, bonuses, pay for overtime, vacation pay, sick pay, pay for shift differentials, and other cash compensation paid by the Employer to a Participant (without regard to any salary reduction under this Plan or any pre-tax program recognized under the Code), but excluding reimbursed expenses, car expense allowances, credits for benefits under any plan of deferred compensation to which the Employer contributes, and any additional compensation payable in a form other than cash. 2.11 Covered Individual means a person, including a Participant, a Dependent of a Participant, a Spouse of a Participant, and any other person, appropriately covered under an Available Benefit subject to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), and, as reflected in the Public Health Services Act, as amended ("PHSA"). 2.12 Dependent means "Dependent" as defined in each Available Benefit provision in which such term is used. Dependent is not necessarily the same as a dependent for tax purposes. See the definition of Tax Dependent in Section 2.38. 2.13 Effective Date means the date specified in the Adoption Agreement on which the Plan, or Plan restatement, is effective and applicable to the Eligible Employees and Participants. 2.14 Election means the choice of Available Benefits and means of payment made by the Participant, as described in Article V. 2.15 ePHI means PHI maintained or transmitted in electronic media including, but not limited to, electronic storage media (i.e., hard drives, digital memory medium) and transmission media used to exchange information in electronic storage media (i.e., internet, extranet, and other networks). PHI transmitted via facsimile and telephone is not considered to be transmissions via electronic media. Flexible Benefits Plan — Basic Plan Document ©32015 Hitesman and Wold, P.A. 2.16 Election Period means the period of time identified by the Plan Administrator prior to the start of a Plan Year during which a Participant may change his or her Election. For a Participant who enters the Plan other than at the start of a Plan Year, Election Period means the period of time identified by the Plan Administrator prior to the date on which the Eligible Employee begins participation during which an Eligible Employee may make an Election or change a deemed Election. 2.17 Eligible Employee means each Employee who has met the eligibility requirements of Section 3.1. 2.18 Employee means any person (including elected officials) employed by the Employer and on the Employer's W-2 payroll on or after the Effective Date, except that it shall not include: (a) any self-employed individual as described in Section 401(c) of the Code; (b) any employee included within a unit of employees covered by a collective bargaining unit unless such agreement expressly provides for coverage of the employee under this Plan; (c) any employee who is a nonresident alien and receives no earned income from the Employer from sources within the United States; (d) any employee who is a leased employee as defined in Section 414(n)(2) of the Code; (e) an individual classified by the Employer as a contract worker, independent contractor, temporary employee, or casual employee, whether or not any such persons are on the Employer's W-2 payroll or are determined by the IRS or others to be common-law employees of the Employer; or (f) any individual who performs services for the Employer but who is paid by a temporary or other employment or staffing agency such as "Kelly," "Manpower," etc., whether or not such individuals are determined by the IRS or others to be common-law employees of the Employer. 2.19 Employer means the Employer named in the Adoption Agreement, any affiliate that, with the consent of the Employer, becomes an Employer by adopting the Plan, and any successor employer that assumes the obligations of the Employer. 2.20 Employer Contribution means amounts, if any, described in the Adoption Agreement that have not been actually or constructively received by the Participant that are made available to the Participant by the Employer for the purpose of electing Available Benefits under the Plan. 2.21 Entry Date means the date(s) specified by the Employer in the Adoption Agreement as of which Eligible Employees may become Participants in this Plan, provided all necessary forms have been completed. 2.22 ERISA means the Employee Retirement Income Security Act of 1974, as amended. Governmental entities, public schools, and some church -related entities and some Indian Tribe operations are not subject to ERISA. 2.23 Highly Compensated Individual means individuals who are highly compensated as defined in Section 125(e)(2) of the Code. Flexible Benefits Plan — Basic Plan Document 942015 Hitesman and Wold, P.A. 2.24 Highly Compensated Participant means Participants who are highly compensated as defined in Section 125(e)(1) of the Code. 2.25 HIPAA means Health Insurance Portability and Accountability Act of 1996, and regulations thereunder, as amended from time to time. 2.26 HSA means a health savings account within the meaning of Section 223 of the Code. 2.27 Insurer means any insurance company that has issued a policy through which benefits are made available under this Plan. 2.28 IRS means the Internal Revenue Service. 2.29 PHI means health information that: (a) is created or received by a health care provider, health plan, or health care clearinghouse; (b) relates to the past, present and future physical or mental health or condition of an individual (including "genetic information" as that term is defined in the Genetic Information Nondiscrimination Act of 2008); the provision of health care to an individual; or the past, present or future payment for the provision of health care to an individual; and (c) either identifies the individual or reasonably could be used to identify the individual. PHI includes ePHI. 2.30 Participant means an Eligible Employee who participates in the Plan in accordance with Article III and has not ceased to be a Participant under Section 3.4. 2.31 Plan means the cafeteria plan established by and reflected in the completed Adoption Agreement and Basic Plan Document, as each may be amended from time to time. This Plan shall be known by the name indicated in the Adoption Agreement. 2.32 Plan Administrator means the entity determined under Section 6.1. 2.33 Plan Year means the twelve-month period commencing on the first day of the month elected in the Adoption Agreement and ending on the last day of the twelfth month following. A "short" Plan Year consists of less than a twelve-month period and must be indicated in the Adoption Agreement. 2.34 Privacy Rules means the Standards and Privacy of Individually Identifiable Health Information at 45 C.F.R. Part 160 and Part 164 at subparts A and E. 2.35 Security Rules means the Security Standards and Implementation Specifications at 45 C.F.R. Part 160 and Part 164, subpart C. 2.36 Spouse means an individual who is (a) legally married to a Participant (under applicable state law), and (b) who is treated as a "spouse" under the Code. Flexible Benefits Plan — Basic Plan Document 952015 Hitesman and Wold, P.A. 2.37 Summary of Health Information means "summary health information" as defined in 45 C.F.R. Section 164.504, which generally defines "summary health information" to include information, which may be PHI, that summarizes claims history, claims expenses, or the type of claims experienced by individuals receiving benefits under the Plan from which certain identifiers have been deleted. 2.38 Tax Dependent means an individual (other than the Participant and the Participant's Spouse) with respect to whom amounts expended for medical care are excluded from the Participant's gross income under Section 105(b) of the Code, as amended. Flexible Benefits Plan — Basic Plan Document ©62015 Hitesman and Wold, P.A. ARTICLE III. ELIGIBILITY AND PARTICIPATION 3.1 Eligibility Requirements. Each Employee shall be eligible to participate in this Plan upon meeting the eligibility requirements as set forth in the Adoption Agreement. Notwithstanding the foregoing, if specifically provided in Adoption Agreement, all Employees who are elected officials shall be eligible to participate in this Plan without meeting the eligibility requirements set forth in the Adoption Agreement. 3.2 Notification to Participants. The Plan Administrator shall provide each Eligible Employee written notice of the Employee's eligibility to participate in the Plan in sufficient time to enable such Eligible Employee to submit an application for participation in the Plan on or before the applicable Entry Date. 3.3 Application for Participation. (a) Generally. In general, unless an Eligible Employee is deemed to have made an Election as provided in Section 5. 1, to become a Participant, an Eligible Employee shall execute and deliver to the Plan Administrator, prior to the applicable Entry Date, an application signed by the Eligible Employee in which the Eligible Employee: (i) applies to participate in the Plan; (ii) designates the required portion of Compensation for the pre-tax and after- tax (if any) contributions; (iii) makes a benefit Election; and (iv) supplies any other pertinent information that the Plan Administrator may reasonably require. By signing such application or agreement, the Eligible Employee shall be deemed for all purposes to have agreed to participate and to conform to the requirements of the Plan. Such application or agreement may be the same as, or separate from, the application or agreement required to participate in any Available Benefit under this Plan. Alternatively, or in addition to the foregoing application process, the Plan Administrator may require or permit application of same scope by electronic means. Except as provided in paragraph (b) below, participation shall begin on a Participant's Entry Date or, if later, the first payroll following submission of the application (to the extent such an application is required for a particular Available Benefit). (b) Newly Hired. Unless specifically provided otherwise in the Adoption Agreement, for new hires, an Eligible Employee shall execute and deliver to the Plan Administrator within thirty (30) days of employment, such written application. In this situation, participation in this Plan is retroactive to the date of hire pursuant to Cafeteria Plan Regulations. However, salary reduction contributions to pay for coverage during the period preceding the submission of the application shall be taken prospectively from compensation paid following submission of the application. 3.4 Termination of Participation. A Participant automatically ceases to be a Participant at midnight of the earliest of the following dates: (a) the date of the death of the Participant; (b) the date of termination of the Participant's employment with the Employer; Flexible Benefits Plan — Basic Plan Document ©72015 Hitesman and Wold, P.A. (c) the date on which the Participant's coverage under the last Available Benefit terminates (determined without regard to any continuation coverage provided to the Participant under such Available Benefit in accordance with applicable law or any coverage provided in lieu thereof); (d) the date of the Participant's failure to meet the eligibility requirements of Section 3. 1, as may be amended from time to time; or (e) the date of termination of the Plan in accordance with Article VII. Note: This provision applies to participation in this Plan. With respect to the Available Benefits that involve premium payments for other plans sponsored by the Employer, coverage under the underlying plan may extend beyond the date a Participant ceases to be a Participant in this Plan. In the event the Plan does not learn that a Participant has automatically ceased to be a Participant until a date after the date participation ceased, participation will be terminated retroactively and the Plan shall be entitled to recover any benefits paid after the date participation is terminated. Termination of participation in this Plan shall not prevent a former Participant from continuation coverage, conversion coverage or benefits under the respective Available Benefit plans if and to the extent provided by such plans. 3.5 Conditions of Participation. As a condition of participation and receipt of benefits under this Plan, the Participant agrees to: (a) observe all Plan rules and regulations; (b) consent to inquiries by the Plan Administrator with respect to any provider of services involved in a claim under this Plan; (c) submit to the Plan Administrator all notifications, reports, bills, and other information required by the Plan or which the Plan Administrator may reasonably require; and (d) repay any overpayments or incorrect payments received under the Plan. Failure to do so relieves the Plan, Plan Administrator, and Claims Administrator from any and all obligations under this Plan. 3.6 Participation in Available Benefit Plans. In order to elect a specific Available Benefit provided under this Plan, a Participant must elect that Available Benefit on such forms as the Plan Administrator may require (unless the benefit is provided to all Participants) and, if the cost of that Available Benefit is not fully paid by the Employer, shall be required to share the cost of the Available Benefit as provided in Article IV. Further, the Participant must meet any eligibility, participation, etc., requirements applicable to that Available Benefit in accordance with the terms of the underlying plan through which the Available Benefit is provided. Flexible Benefits Plan — Basic Plan Document ©$2015 Hitesman and Wold, P.A. ARTICLE IV. CONTRIBUTIONS 4.1 Salary Reduction Contributions. To the extent the cost of an Available Benefit exceeds the Employer Contribution (if any), a Participant may elect in accordance with the Election procedures described in Article V to receive his or her full Compensation in cash, or to have a portion of such Compensation applied by the Employer toward the Participant's share of the cost of Available Benefits. If so elected, the Participant's Compensation will be reduced, and an amount equal to the reduction shall be allocated by the Employer to the Available Benefits designated by the Participant. A Participant's Compensation shall be reduced by pro -rata amounts of the Participant's total salary reduction Election. Salary reduction is done on a pre-tax basis before any withholdings have been made. The frequency of salary reduction contributions shall be as specified in the Adoption Agreement. Notwithstanding the foregoing, if participation in an Available Benefit extends to the last day of the month in which a Participant's employment terminates, if necessary, additional salary reduction contributions shall be taken from the Participant's final pay check to pay for the coverage provided during the period of time following the date on which the Participant's employment terminates. 4.2 Imputation of Income. To the extent a Participant participates in an Available Benefit that covers a Dependent who is not the Participant's Spouse or Tax Dependent, one of the following provisions will apply as specified in the Adoption Agreement: (a) The entire cost of coverage for which the Participant is responsible shall be paid pre-tax through this Plan and the fair market value of the coverage for that Dependent shall be imputed as income to the Participant as the coverage is provided (pursuant to Cafeteria Plan Regulations). This provision applies regardless of whether the cost of coverage is paid by salary reduction or allocation of available Employer Contributions, if any. (b) The cost of coverage for which the Participant is responsible shall be paid on an after-tax basis up to the amount of the fair market value of the coverage provided to that Dependent. To the extent the cost of coverage for which the Participant is responsible exceeds that fair market value, the remaining cost of coverage may be paid pre-tax through this Plan. To the extent the cost of coverage for which the Participant is responsible is less than that fair market value, the excess of the fair market value over the after-tax payments shall be imputed as income to the Participant as coverage is provided. 4.3 Salary Deduction Contributions. The Employer may require that amounts for which the Participant is responsible, but which cannot be paid with pre-tax dollars through salary reduction described above, be funded with after-tax dollars pursuant to a salary deduction agreement. Such salary deductions shall be made on a periodic basis and relate to a Participant's Compensation after taxes and withholdings have been made. 4.4 Employer Contribution. The Employer may make a fixed dollar contribution per Plan Year, or portion of the Plan Year (e.g., month, pay period), per Participant. The amount of the Employer Contribution and any additional restrictions on the use thereof shall be identified in the Adoption Agreement and communicated to the Participants prior to the start of each Plan Year so that they may consider it in making their Elections. The amount of the Employer Contribution may change from year to year as announced by the Employer Flexible Benefits Plan — Basic Plan Document ©92015 Hitesman and Wold, P.A. prior to the Plan Year start and reflected in the Adoption Agreement. Unless specifically provided otherwise in the Adoption Agreement, no Employer Contribution shall be credited to any Employee during an unpaid leave of absence, whether authorized or unauthorized, unless required by the Family Medical Leave Act ("FMLA"), if applicable. Unless specifically provided otherwise in the Adoption Agreement, Employees who are not eligible for participation on the first day of the Plan Year shall have their annual Employer Contribution pro -rated by multiplying the annual available Employer Contribution by a fraction, the numerator of which is the number of months the Employee is eligible for participation for the Plan Year, the denominator which is twelve. 4.5 Maximum Under the Plan. Under no circumstances may a Participant's total salary reduction exceed the sum of (a) the cost of benefits paid on a pre-tax basis provided through insurance or insurance -type Available Benefits plus (b) the maximum Election amounts permitted under the other Available Benefits minus (c) the Employer Contribution, if any. 4.6 No Trust. Nothing in this Plan is intended to require the establishment of a trust. The portion of benefits paid under this Plan attributable to Employer Contributions, if any, is paid from the Employer's general assets. The portion of benefits paid under this Plan attributable to Participant contributions including, but not limited to, salary reduction amounts, is paid from the Employer's general assets. Flexible Benefits Plan — Basic Plan Document ©102015 Hitesman and Wold, P.A. ARTICLE V. ELECTION OF AVAILABLE BENEFITS 5.1 Initial Elections. Unless otherwise specified in the Adoption Agreement, upon initial eligibility, an affirmative Election to participate is required as part of the application to participate described in 3.3. If the Election Period ends and an Election has not been received by the Plan Administrator, the Eligible Employee will be deemed to have elected not to participate in the Flexible Benefit Plan. 5.2 Subsequent Annual Elections. During the Election Period prior to each subsequent Plan Year, each Participant shall be given the opportunity to make a new Election. Such new Election may include the following: (a) an Eligible Employee who is not participating may elect to begin participating by electing Available Benefits during the Election Period; (b) a Participant may terminate participation in the Plan; or (c) a Participant may elect different Available Benefits or different levels of Available Benefits. An Election must have been made, or deemed to have been made, prior to the start of the Plan Year to which it relates. 5.3 Failure to Elect. A Participant who does not make a new Election during the Election Period prior to each Plan Year: (a) Automatic Election. With respect to Available Benefits providing for the payment of premiums for group insurance and insurance -type coverages, unless otherwise specified in the Adoption Agreement, an Eligible Employee shall be deemed, unless prohibited by law, to have elected to pay any portion of the cost for which the Eligible Employee is responsible through salary reduction unless (1) the Eligible Employee specifically elects not to participate with respect to such Available Benefit(s) and notifies the Plan Administrator in writing on or before the close of the Election Period, or (2) such deemed Election is otherwise prohibited by law. (b) Affirmative Elections. With respect to other Available Benefits, shall be deemed to have elected not to participate in such Available Benefits for the upcoming Plan Year. 5.4 Elections Irrevocable. For purposes of this Section 5.4, the term "dependent" shall mean (1) a Tax Dependent if the Election relates to am Available Benefit providing health benefits, or (2) a Qualifying Individual (as defined in Article X) if the Election relates to the Dependent Care Expense Reimbursement Plan. Unless modified in the Adoption Agreement, an Election becomes effective and shall be irrevocable for the Plan Year or the remainder of the Plan Year except under the following circumstances: (a) Change in Status. A Participant may change or terminate his or her actual or deemed Election under the Plan upon the occurrence of a Change in Status, but only if such change or termination is made on account of and corresponds with a Change Flexible Benefits Plan — Basic Plan Document ©112015 Hitesman and Wold, P.A. in Status that affects coverage eligibility of a Participant, a Participant's Spouse, or a Participant's dependent (referred to as the general consistency requirement). The Plan Administrator (in its sole discretion) shall determine, based on prevailing IRS guidance, whether a requested change is on account of and corresponds with a Change in Status. Assuming that the general consistency requirement is satisfied, a requested change must also satisfy the following specific consistency requirements in order for a Participant to be able to alter his or her Election based on that change. (1) Loss of Dependent Eligibility. For a Change in Status involving a Participant's divorce, annulment or legal separation from a Spouse, the death of a Spouse or a dependent, or a dependent ceasing to satisfy the eligibility requirements for coverage, a Participant may only elect to cancel accident or health insurance, or insurance -type, coverage for the Spouse involved in the divorce, annulment, or legal separation, the deceased Spouse or dependent, or the dependent that ceased to satisfy the eligibility requirements. Canceling coverage for any other individual under these circumstances fails to correspond with that Change in Status. (2) Gain of Coverage Eligibility Under Another Employer's Plan. For a Change in Status in which a Participant, a Participant's Spouse, or a Participant's dependent gains eligibility for coverage under another employer's cafeteria plan (or another employer's qualified benefit plan) as a result of a change in marital status or a change in employment status, a Participant may elect to cease or decrease coverage only if that coverage becomes actually effective or is increased under the other employer's plan. (3) Dependent Care Expense Reimbursement Plan. With respect to the Dependent Care Expense Reimbursement Plan, a Participant may change or terminate his or her Election only if (i) such a change or termination is made on account of and corresponds with a Change in Status that affects eligibility for coverage under the Plan; or (ii) the Election change is on account of and corresponds with a Change in Status that affects eligibility of dependent care expenses for the tax exclusion available under the Code. (4) Group Term Life Insurance and Disability Income Coverage. For a Change of Status involving a Participant's legal marital status or the employment status of a Participant's Spouse or dependent (disregarding the requirement that the event cause a loss or gain of eligibility), a Participant may elect either to increase or to decrease group term life insurance or disability income coverage offered under the Plan. (5) COBRA Coverage. If the Participant becomes eligible for COBRA (or similar health plan continuation coverage under state law) under a group health plan sponsored by the Employer, the Participant may increase the Election for that Available Benefit to pay for such coverage provided the Participant is still eligible under the Plan and still receiving Compensation. (b) HIPAA Special Enrollment Rights. If a Participant, a Participant's Spouse, and/or a Participant's dependent enrolls in a group health plan that is an Available Benefit of this Plan and subject to the HIPAA special enrollment rights provided by Code § 9801(f), the Participant may make a new election that corresponds with the special enrollment. For purposes of this provision (1) an Election to add previously eligible dependents as a result of the acquisition of a new Spouse or dependent child (a/k/a the Tag -along Rule), shall be considered consistent with the special enrollment right; and (2) a HIPAA special enrollment Election attributable to the Flexible Benefits Plan — Basic Plan Document ©122015 Hitesman and Wold, P.A. birth or adoption of a new dependent child may be effective retroactive (up to thirty (30) days), provided it applies to Compensation not yet currently available. (c) Certain Judgments, Decrees and Orders. If a judgment, decree, or order (an "Order") resulting from a divorce, legal separation, annulment or change in legal custody (including a qualified medical child support order) requires accident or health coverage for a Participant's dependent child (including a foster child who is a dependent of the Participant), a Participant may: (1) change his or her Election to provide coverage for the dependent child (provided that the Order requires the Participant to provide coverage and subject to the provisions of the underlying group health plan); or (2) change his or her Election to revoke coverage for the dependent child if the Order requires that another individual (including the Participant's Spouse or former Spouse) provide coverage under that individual's plan. (d) Medicare and Medicaid. If a Participant, a Participant's Spouse, or a Participant's dependent who is enrolled in a health or accident benefit under this Plan (including the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan) becomes entitled to Medicare or Medicaid (other than coverage consisting solely of benefits under Section 1928 of the Social Security Act providing for pediatric vaccines), the Participant may prospectively reduce or cancel the health or accident coverage of the person becoming entitled to Medicare or Medicaid. Further, if a Participant, a Participant's Spouse, or a Participant's dependent who has been entitled to Medicare or Medicaid loses eligibility for such coverage, then the Participant may prospectively elect to commence or increase the health or accident coverage provided under this Plan (including the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan) of the person losing entitlement to Medicare or Medicaid. NOTE: Certain changes to Medicaid coverage also create a HIPAA special enrollment right. Election changes based upon HIPAA special enrollment rights are described above. (e) Change in Cost. (1) Automatic Increase or Decrease for Insignificant Cost Changes. If the cost of an Available Benefit (other than Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan) increases or decreases during a Plan Year by an insignificant amount, then the pre-tax contributions or after-tax contributions (as applicable) under each affected Participant Election shall be prospectively increased or decreased to reflect such change. The Plan Administrator, on a reasonable and consistent basis, will automatically effectuate this prospective increase or decrease in Participant contributions in accordance with such cost changes. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether increases or decreases in costs are "insignificant" based upon all the surrounding facts and circumstances (including, but not limited to, the dollar amount or percentage of the cost change). (2) Significant Cost Increases. If the Plan Administrator determines that the cost of an Available Benefit (other than Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan) Flexible Benefits Plan — Basic Plan Document ©132015 Hitesman and Wold, P.A. (f) significantly increases during a Plan Year, the Participant may, on a prospective basis, either: (i) make a corresponding increase in his or her Election, (ii) enroll in another benefit package option providing similar coverage and make a corresponding Election change, or (iii) revoke his or her Election if no other benefit package option providing similar coverage is available. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a cost increase is significant and what constitutes "similar coverage" based upon all the surrounding facts and circumstances. (3) Significant Cost Decrease. If the Plan Administrator determines that the cost of an Available Benefit (other than Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan) significantly decreases during a Plan Year: (i) an Eligible Employee or Participant may commence participation in such Available Benefit; and (ii) the Plan Administrator shall automatically effectuate a prospective decrease in a Participant's Election with respect to such Available Benefit in accordance with the cost decrease. Change in Coverage. (1) Significant Curtailment. If the Plan Administrator determines that coverage under an Available Benefit (other than Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan) is significantly curtailed during a Plan Year, the Participant may prospectively enroll in another benefit package option providing similar coverage and make a corresponding Election change. Coverage under an accident or health plan is deemed "significantly curtailed" only if there is an overall reduction in coverage provided to Participants under the Plan so as to constitute reduced coverage to Participants in general. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a curtailment is "significant," and whether a benefit package option constitutes "similar coverage" based upon all the surrounding facts and circumstances. (2) Loss of Coverage. If the Plan Administrator determines that coverage under an Available Benefit (other than Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan) is lost during a Plan Year, the Participant may, on a prospective basis: (i) enroll in another benefit package option providing similar coverage and make a corresponding Election change, or (ii) revoke his or her Election if no other benefit package option providing similar coverage is available. Coverage under an accident or health plan is deemed "lost" only if there is a complete loss of coverage under the benefit package option (e.g., due to elimination of the benefit package option or application of an annual or lifetime maximum) or other fundamental loss of coverage. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a "loss" has occurred, and whether a benefit package option constitutes "similar coverage" based upon all the surrounding facts and circumstances. (3) Addition or Improvement of an Available Benefit. If during a Plan Year, the Plan adds a new Available Benefit or a new benefit package option under the Available Benefit (other than the Medical Expense Flexible Benefits Plan — Basic Plan Document ©142015 Hitesman and Wold, P.A. Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan), or if coverage under an existing Available Benefit (other than the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan) is significantly improved: (i) an affected Participant may prospectively change his/her Election with respect to the newly -added or improved Available Benefit; and (ii) an Eligible Employee may commence participation in such Available Benefit. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether an Available Benefit has been "significantly improved" based upon all the surrounding facts and circumstances. (4) Change Under Another Employer -Sponsored Plan. A Participant may make a prospective Election change (other than with respect to the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan) that is on account of and corresponds with a change made under another employer-sponsored plan (including a plan of the Employer or a plan of another employer), provided (i) the other cafeteria plan or qualified benefits plan permits its participants to make an Election change that would be permitted under the Cafeteria Plan Regulations, or (ii) this Plan permits Participants to make an Election for a Plan Year period of coverage which is different from the plan year period of coverage under the other cafeteria plan or Available Benefit. The Plan Administrator shall determine, based on prevailing IRS guidance, whether a requested change is on account of and corresponds with a change made under another employer-sponsored plan. (5) Loss of Governmental or Educational Coverage. A Participant may prospectively change his or her Election to add group health coverage for the Participant or his or her Spouse or dependent, if such individual(s) loses coverage under any group health coverage sponsored by a governmental or educational institution including, but not limited to, the following: a state children's health insurance program ("SCHIP") under Title XXI of the Social Security Act; a medical care program of an Indian Tribal government (as defined in Code § 7701(a)(40)), the Indian Health Service, or a tribal organization; a state health benefits risk pool; or a foreign government group health plan, subject to the terms and limitations of the applicable benefit package option(s). (6) Enrollment in Marketplace Coverage. (i) A Participant who has made an Election to pay for Group Medical Benefits may revoke that Election if the following conditions are satisfied: (A) The Participant either (I) is eligible to enroll in a qualified health plan through a public insurance exchange (the "Marketplace") via a special enrollment period (as provided in any guidance issued by the Department of Health and Human Services or any other applicable guidance), or (II) seeks to enroll in a qualified health plan through the Marketplace during the Marketplace's annual open enrollment period; (B) The Participant cancels coverage under the Group Medical Benefits in accordance with the requirements of that plan; and Flexible Benefits Plan — Basic Plan Document ©152015 Hitesman and Wold, P.A. (C) The Participant, and any related individuals who were also enrolled in the Group Medical Benefits, have enrolled in or intend to enroll in a qualified health plan through the Marketplace that will be effective no later than the day immediately following the last day for which coverage under the Group Medical Benefits was effective (i.e., there is no break in coverage). The Employer may rely on the reasonable representation of the Participant that the requirements of this paragraph (C) are met. (ii) Unless determined by the IRS not to be available, a Participant who has made an Election to pay for Group Medical Benefits may reduce that Election if the following conditions are satisfied: (A) The Participant's Spouse and/or dependents either (I) are eligible to enroll in a qualified health plan through the Marketplace via a special enrollment period (as provided in any guidance issued by the Department of Health and Human Services or any other applicable guidance), or (II) seek to enroll in a qualified health plan through the Marketplace during the Marketplace's annual open enrollment period; (B) The Participant cancels coverage under the Group Medical Benefits for such Spouse and/or dependents in accordance with the requirements of that plan; and (C) Such Spouse and/or dependents have enrolled in or intend to enroll in a qualified health plan through the Marketplace that will be effective no later than the day immediately following the last day for which the coverage under the Group Medical Benefits was effective (i.e., there is no break in coverage). The Employer may rely on the reasonable representation of the Participant that the requirements of this paragraph (C) are met. (g) Reduction in Hours Without Loss of Eligibility. A Participant who has made an Election to pay for Group Medical Benefits may revoke that Election if the following conditions are satisfied: (1) The Participant has been in an employment status under which the Participant was reasonably expected to average at least thirty (30) hours of service per week; (2) The Participant has experienced a change in employment status such that the Participant will reasonably be expected to average less than thirty (30) hours of service per week after the change but nevertheless will remain eligible for Group Medical Benefits; (3) The Participant cancels coverage under the Group Medical Benefits in accordance with the requirements of that plan; and (4) The Participant, and any related individuals who were also enrolled in the Group Medical Benefits, have enrolled or intend to enroll in other medical coverage that provides minimum essential coverage and that will be effective no later than the first day of the second month following the month in which coverage under the Group Medical Benefits ends. The Employer may rely on the reasonable representation of the Participant that the requirements of this paragraph (4) are met. Flexible Benefits Plan — Basic Plan Document ©162015 Hitesman and Wold, P.A. (h) Family and Medical Leave Act. A Participant taking a leave governed by the Family and Medical Leave Act of 1993 ("FMLA") may revoke or change an Election as may be provided for under the FMLA and the Employer's FMLA policy required thereunder, provided the Employer is subject to FMLA. (i) Special Rule for HSA Contribution Feature. A Participant may change his or her Election with respect to the HSA Contribution Feature prospectively at least on a monthly basis. A Participant may also revoke his or her Election with respect to the HSA Contribution Feature prospectively if the Participant becomes ineligible to make or have made HSA contributions under the HSA Contribution Feature. (j) Other. The Plan Administrator shall have the discretion to allow a change to or termination of an Election to the extent such change or termination is the result of any other situation informally recognized by the IRS as providing an exception to the general rule that Elections are irrevocable (e.g., corrections of mistakes, changes to meet nondiscrimination requirements, failure to satisfy underwriting). A Participant entitled to make a new Election under this Section must do so within thirty (30) days of the event. An Employee who is eligible to elect benefits but declined to do so during the initial Election period, or during a subsequent Election period, may file a new Election within thirty (30) days of the occurrence of an event described above, but only if the new Election is made on account of and corresponds with the event. Subject to the provisions of the underlying group health plan, Elections made to add medical coverage for a newborn or newly adopted dependent child pursuant to a HIPAA special enrollment right may be retroactive for up to thirty (30) days. All other new Elections shall be effective prospectively immediately following the date the Participant files the new Election with the Plan Administrator. Elections made pursuant to this Section shall be effective for the balance of the Plan Year in which the Election is made unless a subsequent event (described above) allows a further Election change. 5.5 Rehire and Eligibility Loss. Termination of employment shall automatically revoke any Election. Former Participants who are rehired: (a) After thirty (30) days following a termination of employment, shall have two "periods of coverage;" that period prior to the termination of employment and that period following the re-employment of the terminated Employee. Expenses incurred prior to the termination of employment shall be subject to the Election in effect upon termination; while the Employee shall have an opportunity to make a new Election and expenses incurred after re-employment shall be subject to the Election made upon re-employment. (b) Within thirty (30) days following a termination of employment, shall have the Election in effect prior to the termination of employment reinstated upon re- employment. 5.6 Benefit Descriptions. While an Election to receive one or more of the Available Benefits may be made under this Plan, the benefits themselves may be provided in accordance with Plan documents or contracts which describe the types and amounts of benefits available, the requirements for participation, procedures for submitting claims, and the other terms and conditions of coverage. Such underlying Plan documents or contracts, if any, are incorporated into this Plan by reference. Flexible Benefits Plan — Basic Plan Document ©172015 Hitesman and Wold, P.A. 5.7 Forfeiture. Any amounts, whether obtained through salary reduction, salary deduction, Employer Contributions, or otherwise, under this Plan which cannot be distributed by the Plan Administrator to cover the cost of Available Benefits for the applicable Plan Year, shall be forfeited by the Participant. Forfeited amounts, in accordance with the Cafeteria Plan Regulations, may be: (a) retained by the Employer, (b) used to defray the reasonable administrative costs of the Plan, (c) used to reduce required salary reduction amounts for the immediately following Plan Year on a reasonable and uniform basis, and/or (d) returned to the Participants on a reasonable and uniform basis. Under no circumstances shall the Plan Administrator establish an outside formal or informal arrangement under which the forfeited amounts are allocated among Participants based (directly or indirectly) on their individual claims experience under the Plan. 5.8 Limitations on Benefits. Benefits shall be limited as determined by the Plan Administrator in accordance with Section 6.15 for the purpose of ensuring compliance with any nondiscrimination requirement applicable to the Plan or an Available Benefit. Flexible Benefits Plan — Basic Plan Document ©182015 Hitesman and Wold, P.A. ARTICLE VI. ADNHNISTRATION 6.1 Plan Administrator. (a) The Plan Administrator shall be responsible for the general supervision of the Plan. The Plan Administrator shall have the discretionary authority to control and manage the operation and administration of the Plan, including but not limited to, the interpretation and application of the terms of the Plan. The Plan Administrator shall perform any and all acts necessary or appropriate for the proper management and administration of the Plan. (b) The Employer shall be the Plan Administrator unless provided otherwise in the Adoption Agreement. The Employer shall also be the Plan Administrator if the person or persons so designated cease to be the Plan Administrator. (c) The Plan Administrator may designate an individual or entity to act on its behalf with respect to certain powers, duties, responsibilities, etc. with respect to the operation and administration of this Plan. Where benefits under this Plan are provided through an insurance company, Health Maintenance Organization ("HMO"), or Dental Maintenance Organization ("DMO"), or similar entity, that entity shall be the Claims Administrator with respect to those benefits. In all other situations, the Plan Administrator shall be the Claims Administrator unless the Plan Administrator contracts with a third party to act on its behalf and that other entity is identified in the Adoption Agreement. 6.2 Agent for Service of Legal Process. The agent for service of legal process for the Plan is the Plan Administrator. 6.3 Allocation of Responsibility for Administration. The Plan Administrator shall have the sole responsibility for the administration of this Plan as is specifically described in this Plan. The designated representatives of the Plan Administrator shall have only those specific powers, duties, responsibilities, and obligations as are specifically given to them under this Plan. The Plan Administrator warrants that any directions given, information furnished, or action taken by it shall be in accordance with the provisions of the Plan authorizing or providing for such direction, information or action. It is intended under this Plan that the Plan Administrator shall be responsible for the proper exercise of its own powers, duties, responsibilities, and obligations under this Plan and shall not be responsible for any act or failure to act of another Employee of the Employer. Neither the Plan Administrator (including any designee) nor the Employer makes any guarantee to any Participant in any manner for any loss or other event because of the Participant's participation in this Plan. 6.4 Rules and Decisions. Except as otherwise specifically provided in the Plan, the Plan Administrator may adopt such rules and procedures as it deems necessary, desirable, or appropriate to fulfill the purposes of the Plan. All rules and decisions of the Plan Administrator shall be uniformly and consistently applied to all Participants in similar circumstances. When making a determination or calculation, the Plan Administrator shall be entitled to rely upon information furnished by a Participant, the Employer, or legal counsel. Flexible Benefits Plan — Basic Plan Document ©192015 Hitesman and Wold, P.A. 6.5 Procedures. The Plan Administrator may act at a meeting or in writing. The Plan Administrator may adopt by-laws and regulations as it deems desirable for the conduct of the Plan's affairs and as are consistent with the terms of the Plan. 6.6 Records and Reports. The Plan Administrator shall be responsible for complying with all reporting, filing and disclosure requirements for the Plan. 6.7 Claim for Benefits. This Section addresses the requirements for claims for reimbursement - type Available Benefits chosen in the Adoption Agreement and the provisions of general applicability. Claims requirements for other Available Benefits shall be handled in accordance with the governing documents for those Available Benefits. A Participant may apply to the Claims Administrator for reimbursement of eligible expenses incurred during such Plan Year (and applicable Grace Period) by submitting a paper claim, or, if provided in the Adoption Agreement, through electronic payment as described below: (a) Paper Claims. A Participant may make a claim by completing a claim form and submitting such form to the Claims Administrator (or its designee) setting forth at least the following: (1) the amount, date and nature of the expense, including the identity of the individual who incurred the expense; (2) the name of the person or entity to which the expense was paid; (3) the Participant's statement that the expense has not been reimbursed and the Participant will not seek reimbursement for the expense; and (4) such other information as the Claims Administrator may require. Such claim form shall be accompanied by bills, invoices, receipts, or other statements from an independent third party, or by an explanation of benefits ("EOB") issued by a health plan, stating the eligible expense has been incurred and the amount of the expense. The Claims Administrator is entitled to rely on the information provided on the claim form in processing claims under this Plan. Where circumstances beyond the Participant's control prevent submission within the described time frame, notice of a claim with an explanation of the circumstances may be accepted by the Claims Administrator as a timely filing. Claims shall be determined in accordance with Article VI. Reimbursement shall be made in accordance with the schedule identified in the Adoption Agreement. Claims (including all information substantiating the claim) must be submitted by the deadline established and communicated by the Claims Administrator. Reimbursements shall be made from the Participant's respective reimbursement -type account for eligible expenses incurred during the applicable Plan Year for which the Participant submits the required documentation. (b) Electronic Payment — Medical Expense Reimbursement Plan and Limited Scope Medical Expense Reimbursement Plan. If selected in the Adoption Agreement, a Participant may receive reimbursement of an eligible expense under the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan (if applicable) by use of an electronic payment card (to the extent made available by the Claims Administrator) at the time the eligible expense Flexible Benefits Plan — Basic Plan Document ©202015 Hitesman and Wold, P.A. is incurred. The use of the electronic payment care shall be subject following conditions: (1) The electronic payment card may be used only while a Participant is employed by the Employer. (2) The balance of the electronic payment card shall be limited to the amount in the applicable Participant's reimbursement -type account(s). (3) A Participant must certify in writing prior to issuance of the electronic payment card that: (i) the electronic payment card will be used only for eligible expenses that have not been reimbursed under any other plan covering similar benefits; and (ii) the Participant will not seek reimbursement for any expense paid with the electronic payment card under any other plan covering benefits. The electronic payment card shall include a statement providing that each use of the card shall constitute a reaffirmation of the certification. (4) The electronic payment card may be used only at merchants: (i) who have health care related merchant category codes other than the drug store or pharmacies merchant category code; (ii) who have the drug store or pharmacies merchant category code and with respect to whom 90% of the store's gross receipts during the prior taxable year consisted of items that qualify as expenses for medical care under Section 213(d) of the Code (a "90% pharmacy"); or (iii) who participate in an inventory information approval system developed by the card provider that verifies, at the time of purchase, that the goods being purchased constitute medical care. (5) Each time the electronic payment card is used, a Participant shall obtain and retain a third party statement from the health care provider containing the information necessary to substantiate that the expense paid by the card was an eligible expense. (6) Claims shall be substantiated in one of the following manners: (i) The Participant shall provide, upon request by the Claims Administrator (or its designee), the third party statement with respect to the claim. (ii) For eligible expenses, the payment was made to a merchant who is a health care provider and it matches a specific co -payment the Participant has under a group medical or group dental plan sponsored by the Employer or a multiple of that co -payment of not more than five (5) times the dollar amount of the co -payment. (iii) For eligible expenses, the payment was made to a merchant who is a health care provider and is for an expense with the same amount, duration, and health care provider as a previously approved expense under this Plan. (iv) For eligible expenses, the payment was made to a merchant who is a health care provider and the electronic claim file with respect to the expense is accompanied by an electronic or written confirmation from the health care provider that identifies the nature of the expense and verifies the amount and date of service and that the expense is an eligible expense. (v) For eligible expenses, the electronic payment card is used at a merchant (of any kind) that participates in an inventory information approval system developed by the card provider that verifies, at the time of purchase, that the goods being purchased constitute medical care. Flexible Benefits Plan — Basic Plan Document ©212015 Hitesman and Wold, P.A. (7) Special rules apply to the use of the electronic payment card to purchase over-the-counter drugs and medicines other than insulin. Notwithstanding the rules described above regarding the use of the card to purchase medical care, the card may be used to purchase such over-the-counter drugs and medicines only in the following circumstances: (i) At any 90% pharmacy if the expense is substantiated after the purchase in accordance with paragraph (6)(i) above. (ii) At drug stores, pharmacies, non -health care merchants that have pharmacies, and mail order or web -based merchants that sell prescription drugs if (a) the cardholder presents the prescription to the pharmacist; (b) the pharmacist assigns a prescription number and dispenses the over-the- counter drug or medicine in accordance with applicable law; (c) the pharmacy retains a record of the transaction, including the name on prescription, prescription number, date, and the amount of the purchase; (d) the pharmacy's records are accessible by the employer or its agent; (e) the debit card system does not allow over-the-counter drugs or medicines without a prescription number; and (f) the expense is substantiated in accordance with the standard rules described above in paragraph (6). (ii) At merchants having healthcare related merchant codes (other than merchants described in item ii above) if the expense is substantiated in accordance with the standard rules described above in paragraph (6). (8) A Participant shall repay the Plan for a payment with respect to any claim not substantiated (and therefore not eligible for reimbursement) as required above. The Plan shall handle collection of unsubstantiated claims as required under the Code and the Cafeteria Plan Regulations. (9) The use of an electronic payment card does not constitute a "claim" under the claims procedures. 6.8 Determination of Benefits. This Section addresses the claims determination and appeal procedures for reimbursement -type Available Benefits chosen in the Adoption Agreement, and the provisions of general applicability. The following procedures shall apply unless alternative procedures are specifically provided in the Adoption Agreement. Claims determination and appeal procedures for other Available Benefits shall be handled in accordance with the governing documents for those Available Benefits. (a) Initial Determination. The Plan Administrator, or Plan Administrator's designee, shall notify a person within thirty (30) days of receipt of a written claim for benefits of that person's eligibility or non -eligibility for benefits under the Plan. If it is determined that a person is not eligible for benefits or for full benefits, the notice shall set forth: (1) the specific reasons for the denial; (2) a specific reference to the provision of the Plan on which the denial is based; (3) a description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed; and (4) an explanation of the Plan's claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. Flexible Benefits Plan — Basic Plan Document ©222015 Hitesman and Wold, P.A. If the Plan Administrator, or Plan Administrator's designee, determines that there are special circumstances requiring additional time to make a decision, the Plan Administrator, or Plan Administrator's designee, shall notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional fifteen (15) days. (b) Appeals. If a Participant is determined by the Plan Administrator, or Plan Administrator's designee, not to be eligible for benefits, or if the Participant believes that he or she is entitled to greater or different benefits, the Participant shall have the opportunity to have the claim reviewed by the Plan Administrator, or Plan Administrator's designee, by filing a petition an appeal within one hundred eighty (180) days after receipt by the Participant of the notice issued by the Employer, or the Employer's designee. The appeal shall state the specific reasons the Participant believes he or she is entitled to benefits or greater or different benefits. Within sixty (60) days after receipt of the appeal, the Plan Administrator, or Plan Administrator's designee, shall afford the Participant (and the Participant's counsel, if any) an opportunity to present the Participant's position to the Plan Administrator, or Plan Administrator's designee, orally or in writing, and the Participant (or the Participant's counsel) shall have the right to review the pertinent documents. (c) Decision on Appeal. The Plan Administrator shall notify the Participant of its decision on appeal in writing within said sixty (60) day period of said decision. If it is determined that a person is not eligible for benefits or for full benefits the notice shall set forth: (i) the specific reasons for the denial; and (ii) a specific reference to the provision of the Plan on which the denial is based. In the event of the death of a Participant, the same procedure shall be applicable to the Participant's beneficiaries. 6.9 Authorization of Benefit Payments. The Plan Administrator shall issue directions to the Employer concerning all benefits which are to be paid from Employer's assets, pursuant to the provisions of the Plan, and shall warrant at the time the directions are provided that all such directions are in accordance with the Plan. 6.10 Overpayments. If a payment for benefits is made by the Plan in excess of the benefit to which a Covered Individual is entitled under the Plan, the Plan shall have the right to recover such overpayment from the payee. Repayment of an overpayment is a condition of participation in the Plan. 6.11 Inability to Locate Payee. If benefits are due under this Plan and the Plan Administrator is unable, after reasonable attempts to do so, to locate the Participant to whom such benefits are payable, such benefits shall be handled in accordance with applicable state law regarding unclaimed property or escheat. For purposes of the foregoing, the Plan Administrator shall be deemed to be unable to locate a Participant if a check issued for benefits payable under the Plan has been sent to the payee's last known address and has not been cashed within three (3) years of its date of issuance. 6.12 Facility of Payment. Whenever, in the Plan Administrator's opinion, a person entitled to receive any payment of a benefit or installment under the Plan is under a legal disability or Flexible Benefits Plan — Basic Plan Document ©232015 Hitesman and Wold, P.A. is incapacitated in any way so as to be unable to manage their financial affairs, the Plan Administrator may request the Employer to make payments to such person, or the Plan Administrator may request the Employer to apply the payment for the benefit of such person in such manner as the Plan Administrator considers advisable. Any payment of a benefit, or installment, in accordance with the provisions of this Section, shall be a complete discharge of any liability for the making of such payment under the provisions of the Plan. 6.13 Other Powers and Duties of the Administrator. The Plan Administrator shall also have such other duties and powers as may be necessary to discharge its duties under the Plan including, but not limited to, the following: (a) discretion to construe and interpret the Plan in a non-discriminatory manner, to decide all questions of eligibility, except to the extent the eligibility determinations are governed by an insurance contract, and to determine all questions arising in the administration and application of the Plan, except to the extent such eligibility determinations are governed by an insurance contract; (b) to receive from the Employer and from Participants such information as shall be necessary for the proper administration of the Plan; (c) to furnish the Employer, upon request, such annual reports with respect to the administration of the Plan as are reasonable and appropriate; and (d) to appoint individuals to assist in the administration of the Plan and any other agents the Plan Administrator deems advisable, including legal and actuarial counsel. The Plan Administrator shall not have the power to add to, subtract from, or modify any of the terms of the Plan, to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit under this Plan. 6.14 Indemnification. To the maximum extent allowed by, and in accordance with applicable law, the Employer shall indemnify and hold harmless any Employee that is deemed to be a fiduciary against any and all losses, claims, damages, expense (including court costs and attorneys' fees), and liability arising from the Employee's duties and responsibilities in connection with the Plan, unless the same is determined to be intentional or willful. 6.15 Changes by the Plan Administrator. If the Plan Administrator determines before or during any Plan Year, the Plan may fail to satisfy any nondiscrimination requirement imposed by the Code or other applicable law, the Plan Administrator may take such action as the Plan Administrator deems appropriate, under rules uniformly applicable to similarly situated Participants, to further compliance with such requirements or limitation. Such action may include, without limitation, a modification of Elections by Highly Compensated Participants with or without consent of such Employees and/or a re -characterization within the Plan Year of benefits provided under the Plan as taxable income with or without consent of such Employees. 6.16 Plan Interpretation. This Plan will be administered in accordance with its terms. The Plan Administrator and/or a fiduciary acting as a fiduciary with respect to this Plan, to the extent that such individual or entity is acting in its fiduciary capacity, shall have the complete and final authority, responsibility, and control, in its sole discretion, to manage, administer and operate this Plan, to make factual findings, to construe the terms of this Plan, and to determine all questions arising in connection with the administration, interpretation, and application of this Plan, including, but not limited to, the eligibility and coverage of Flexible Benefits Plan — Basic Plan Document ©242015 Hitesman and Wold, P.A. individuals and the authorization or denial of payment or reimbursement of benefits. All determinations and decisions will be binding on this Plan, Covered Individuals, claimants, and all interested parties. Flexible Benefits Plan — Basic Plan Document ©252015 Hitesman and Wold, P.A. ARTICLE VII. PLAN AMENDMENT AND TERMINATION 7.1 Employer Amendments. The Employer reserves the right to amend the Plan, or any portion of the Plan, at any time. The Employer expressly may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with the law. Such amendments shall not affect any right to benefits that accrued prior to such amendment. Such amendment shall be made in writing and in accordance with Section 8.4. 7.2 Employer's Right to Terminate. Although the Employer expects the Plan to be maintained for an indefinite time, the Employer reserves the right to terminate the Plan or any portion of the Plan at any time. In the event of the dissolution, merger, consolidation, or reorganization of the Employer, the Plan shall terminate unless the Plan is continued by a successor to the Employer in accordance with the resolution of such successor's managing body. Such termination shall not affect any right to benefits that accrued prior to any termination. Such action shall be taken in writing and in accordance with Section 8.4. Flexible Benefits Plan — Basic Plan Document ©262015 Hitesman and Wold, P.A. ARTICLE VIII. GENERAL PROVISIONS 8.1 Plan Not a Contract of Employment. The Plan is not an employment contract and does not assure the continued employment of any Employee or Participant for any period of time. Nothing contained in the Plan shall interfere with the Employer's right to discharge an Employee or Participant at any time, regardless of the effect such discharge may have upon the individual as a Participant in this Plan. 8.2 No Right to Employer's Assets. No Employee, Participant or beneficiary thereof shall have any right to, or interest in, any assets of the Employer upon termination of employment, or otherwise except as provided from time to time under this Plan, and then only to the extent of the benefits payable under the Plan to such Employee, Participant or beneficiary thereof. In addition, the Claims Administrator shall not be liable in any manner for such payments. 8.3 Non -Alienation of Benefits. Benefits payable under this Plan shall not be subject to anticipation, alienation, sale, transfer, execution, or levy of any kind either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a Spouse or former Spouse, or for any other relative of the Participant, prior to actually being received by the person entitled to the benefit under the terms of the Plan. Any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable under the Plan shall be void. The Employer, Plan Administrator and/or Claims Administrator shall not in any manner be made liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to benefits under the Plan. 8.4 Action by Employer. Whenever the Employer, under the terms of this Plan, is permitted or required to do or perform any act or matter or thing, it shall be done and performed by the managing body of the Employer or such representatives of the Employer as the managing body may designate. 8.5 No Guarantee of Tax Consequences. Notwithstanding any provision in this Plan to the contrary, neither this Plan nor the Employer make any commitment or guarantee that any amounts paid to or on behalf of a Participant under this Plan will be excludable from the Participant's gross income for federal or state income tax purposes. It shall be the obligation of each Participant to determine whether each payment is excludable from the Participant's gross income for federal and state income tax purposes, and to notify the Employer if the Participant has reason to believe that any such payment is not so excludable. 8.6 Indemnification of Employer by Participants. To the maximum extent allowed by, and in accordance with, applicable law, if any Participant receives one or more payments or reimbursements under this Plan that are not for eligible expenses, such Participant shall indemnify and reimburse the Employer for any liability it may incur for failure to withhold federal or state income tax or Social Security tax from such payment or reimbursements. However, such indemnification and reimbursement shall not exceed the amount of additional federal and state income tax that the Participant would have owed if the payments or reimbursements had been made to the Participant as regular cash compensation, plus the Participant's share of any Social Security tax that would have been Flexible Benefits Plan — Basic Plan Document ©272015 Hitesman and Wold, P.A. paid on such compensation, less any such additional income and Social Security tax actually paid by the Participant. 8.7 Benefits Provided Through Third Parties. In the case of any Available Benefit provided through a third party (e.g., an insurance company pursuant to a contract or policy with that third party), if there is any conflict or inconsistency between the description of benefits contained in this Plan and the contract or policy, the terms of the contract or policy shall control, unless prohibited by applicable law or specifically addressed in this Plan. 8.8 Mistakes and Errors. It is recognized that in the administration of the Plan, certain administrative and accounting errors may be made or situations may arise by reason of factual errors in information supplied to the Employer or the Plan Administrator. The Employer and/or the Plan Administrator shall have the power to take such equitable steps as may be necessary to correct the mathematical, accounting or factual errors, as they, in their sole discretion, determine(s) to be appropriate. 8.9 Limitation on Liability. The Employer does not guarantee benefits payable under any insurance policy or other similar contract described or referred to herein, and any benefits thereunder shall be the exclusive responsibility of the Insurer or other entity that is required to provide such benefits under such policy or contract. 8.10 Governing Law. This Plan shall be construed and enforced according to the laws of the State of Minnesota except to the extent preempted by federal law. 8.11 Family and Medical Leave Act of 1993. Notwithstanding any provision of this Plan to contrary, this Plan shall be operated and maintained in a manner consistent with the Family and Medical Leave Act of 1993 ("FMLA") and the Employer's FMLA policy required thereunder, provided the Employer is subject to FMLA. 8.12 Uniformed Services Employment and Reemployment Rights Act of 1994. Notwithstanding any provision of this Plan to the contrary, this Plan shall be operated and maintained in a manner consistent with the Uniformed Services Employment and Reemployment Act of 1994 ("USERRA"). The Plan Administrator may, within the parameters of the law, establish uniform policies by which to provide such continuation coverage required by USERRA, which shall be incorporated herein by reference. 8.13 Genetic Information Nondiscrimination Act of 2008. Notwithstanding any provision of this Plan to contrary, this Plan shall be operated and maintained in a manner consistent with the Genetic Information Nondiscrimination Act of 2008 ("GINA"). Flexible Benefits Plan — Basic Plan Document ©282015 Hitesman and Wold, P.A. ARTICLE IX. GROUP MEDICAL BENEFITS 9.1 Purpose. The purpose of this Article is to provide for the pre-tax payment opportunity for Group Medical Benefits under this Plan as an Available Benefit. The Employer provides Group Medical Benefits through one or more "plans" within the meaning of Sections 105 and 106 of the Code. 9.2 Separate Written Plan. For purposes of Sections 105 and 106 of the Code, this Article shall constitute a separate written plan providing for the reimbursement or direct payment of Insurance Premium expenses. To the extent necessary, other provisions of the Plan are incorporated by reference. 9.3 Definitions. (a) Dependent means an individual (e.g., Spouse, child, domestic partner, etc.) who qualifies as a "dependent" under the terms and conditions of the applicable plan document governing the Group Medical Benefits. (b) Group Medical Benefits means the medical coverage made available by the Employer through this Article to which the Insurance Premiums relate. It does not include individual Insurance Contracts. (c) HMO means a health maintenance organization authorized to do business in the state in which it operates with which an agreement has been entered for the purpose of providing benefits under the Plan. (d) Highly Compensated Individual means an individual who is highly compensated as defined in Section 105(h)(5) of the Code. (e) Insurance Contract means (1) any insurance contract secured from an insurance company or HMO authorized to do business in the state in which such contract is issued, which has been obtained for the purpose of providing benefits under this portion of the Plan; or (2) a self-insured plan administered by a third party. (f) Insurance Premiums means the amount that must be paid on a periodic basis in return for coverage under the Insurance Contract. 9.4 Terms, Conditions and Limitations. The Employer shall secure the necessary Insurance Contracts from third party providers regulated by the State in which they operate with respect to the provision of Group Medical Benefits, and/or establish the necessary self- insured program. Coverage shall begin, benefits shall be provided, and coverage shall terminate in accordance with the applicable Insurance Contracts Such Insurance Contracts are identified in Exhibit A (attached to the Adoption Agreement) and expressly incorporated into and made part of this Plan. 9.5 Payments. The Plan Administrator shall make Insurance Premium payments for the Group Medical Benefits on behalf of the Participant in an amount necessary to provide the benefit applicable to the Participant under this portion of the Plan for the applicable Plan Year. Such payments shall be made from Employer Contributions, if any, provided by the Employer under the Plan and, if necessary, contributions made in accordance with the salary reduction arrangement and other arrangements applicable to the Participant under the terms of the Plan. The appropriate portions shall depend on the coverage elected by the Participant. The Plan Administrator shall also make such payments on behalf of the Participant's Dependents who are enrolled in the Group Medical Benefits. To the extent a Flexible Benefits Plan — Basic Plan Document ©292015 Hitesman and Wold, P.A. Dependent is provided coverage under the Group Medical Benefits and that Dependent is not the Participant's Spouse or Tax Dependent, the tax consequence of such coverage shall be addressed as described in Section 4.2. 9.6 Nondiscrimination. To the extent the Group Medical Benefits are subject to Section 105(h) of the Code or Section 2716 of the Public Health Services Act, they shall not discriminate in favor of Highly Compensated Individuals with respect to eligibility to participate or benefits. If the Plan Administrator determines the Group Medical Benefits are or may be discriminatory, the Plan Administrator may take action permitted by law to avoid such a result as described in Section 6.15. 9.7 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, this Plan shall recognize child support orders regarding coverage under the Group Medical Benefits to the extent required by applicable law. 9.8 Continuation of Coverage. Continued coverage shall be provided under the Group Medical Benefits if and to the extent required under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended and as reflected in the Public Services Act, as amended ("PHSA"). To the extent not otherwise contained in the Plan, the Plan Administrator may, within the parameters of the law, establish uniform policies by which to provide such continuation coverage, which shall be incorporated herein by reference. There shall also be compliance with Minnesota law concerning continuation of coverage to the extent not preempted by federal law. 9.9 HIPAA. The Group Medical Benefits shall comply with the Privacy Rules and Security Rules under HIPAA (if applicable) as further provided in the Insurance Contract. In addition, the Group Medical Benefits shall comply with the portability requirements under HIPAA. Flexible Benefits Plan — Basic Plan Document ©302015 Hitesman and Wold, P.A. ARTICLE X. DEPENDENT CARE EXPENSE REIMBURSEMENT PLAN 10.1 Purpose. The purpose of this Article is to provide Participants with the opportunity to be reimbursed for eligible Dependent Care Expenses under this Plan as an Available Benefit under the Plan. This Article is intended to qualify as a "dependent care assistance program" under Section 129 of the Code so that payments received under this portion of the Plan are excludable from the gross income of the Participant under Section 129(a) of the Code. 10.2 Separate Written Plan. For purposes of Section 129 of the Code, this Article shall constitute a separate written plan providing reimbursement of certain Dependent Care Expenses. To the extent necessary, other provisions of the Plan are incorporated by reference. 10.3 Definitions. (a) Claims Run -Out Period means the period beginning on the first day following the close of the Plan Year and ending on the date specified in the Adoption Agreement. (b) Dependent Care Account ("DC Account") means the record keeping account established by the Plan Administrator for each Plan Year for each Participant from whom an Election to create such an account is received. (c) Dependent Care Center shall have the meaning given such term in Sections 21(b)(2)(C) and 21(b)(2)(D) of the Code: a facility that (1) complies with all applicable laws and regulations of the state and town, city or village in which it is located; (2) provides care for more than six individuals (other than individuals who reside at the facility); and (3) receives a fee, payment or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit). (d) Dependent Care Expenses means amounts paid by the Participant for services that would be considered employment-related expenses under Section 21(b)(2) of the Code, any applicable proposed or final regulations issued thereunder, or any guidance issued by the IRS interpreting or applying any of the foregoing. Employment-related expenses for purposes of this Plan include expenses incurred to enable a Participant to be Gainfully Employed during any period for which there are one or more Qualifying Individuals with respect to the Participant for (1) household services, and (2) care of a Qualifying Individual. However, employment- related expenses which are incurred for services outside the Participant's household shall be considered Dependent Care Expenses only if incurred for the care of a Qualifying Individual described in Section 10.3(i)(1)(i) below or a Qualifying Individual not described in Section 10.3(i)(1)(i) below who regularly spends at least eight (8) hours each day in the Participant's household. Dependent Care Expenses do not include expenses which are incurred for services provided by a Dependent Care Center if such center does not comply with all applicable laws and regulations of the applicable state or other unit of local government which regulates the center. In addition, Dependent Care Expenses shall not include any amounts paid to an individual who: (1) is a child of such Participant (within the meaning of Section 152(f)(1) of the Code) who is under the age of nineteen (19) at the close of such taxable year; Flexible Benefits Plan — Basic Plan Document ©312015 Hitesman and Wold, P.A. (2) with respect to whom, for such taxable year, a deduction is allowable under Section 151(c) of the Code (relating to personal exemptions for dependents) to such Participant or the Spouse of such Participant; (3) is the Spouse of the Participant at any time during the taxable year; or (4) is the parent of the Participant's child who is a Qualifying Individual. (e) Earned Income shall have the meaning given such term in Section 32(c)(2) of the Code (which refers to wages, salaries, tips and other Employee Compensation as well as net earnings from self-employment), but shall not include any amounts reimbursed by the Employer under this portion of the Plan. Further, if a Participant's Spouse is a Student or incapable of caring for himself or herself, the provisions of Section 21(d)(2) of the Code shall apply in determining the Earned Income of that Spouse. Generally, this Section provides that a Spouse of a Participant shall be deemed to have Earned Income of not less than $250 per month if there is one Qualifying Individual with respect to the Participant or $500 per month if there are two or more Qualifying Individuals with respect to the Participant. (f) Gainfully Employed means the earning of income for services performed or the period of active search for gainful employment. Nominal reimbursement for volunteer work is not considered gainful employment. (g) Highly Compensated Employees means Employees who are "highly compensated" as defined in Section 414(q) of the Code. (h) Non -Highly Compensated Participants means Employees who are not Highly Compensated Employees. (i) Qualifying Individual means a person for whom expenses can be submitted for reimbursement. (1) A Qualifying Individual is: i) the Participant's "qualifying child" under Section 152 of the Code who is under age thirteen (13); ii) the Participant's "qualifying child" under Section 152 of the Code (determined without regard to Sections 152(b)(1) and (b)(2) of the Code) who is mentally or physically unable to care for himself or herself, iii) the Participant's "qualifying relative" under Section 152 of the Code (determined without regard to Sections 152(b)(1), (b)(2), and (d)(1)(13) of the Code) who: (1) is mentally or physically unable to care for himself or herself, and (2) has the same principal place of abode as the Participant for at least one-half of the year; or iv) the Participant's Spouse who: (1) is mentally or physically unable to care for himself or herself, and (2) has the same principal place of abode as the Participant for at least one-half of the year (2) With the exception of two parents that file income taxes jointly, only one person is entitled to treat the child as a Qualifying Individual. Where multiple people are involved, there are two special rules to determine which person is entitled to treat the child as a Qualifying Individual. Flexible Benefits Plan — Basic Plan Document ©322015 Hitesman and Wold, P.A. i) Divorced or Separated Parents, or Parents Living Apart. If a child's parents are divorced, legally separated, separated pursuant to a written agreement, or live apart at all times during the last six (6) months of the calendar year, a special rule applies if. (i) the child is under age 13 or is mentally or physically unable to care for himself or herself, (ii) the child receives more than 50% of his or her support from the parents (in aggregate); and (iii) the child resides with the parents (in aggregate) for more than 50% of the year. In such situations, the child is the Qualifying Individual of the custodial parent even if the custodial parent has released the right to claim the child as a dependent. The custodial parent is the parent identified in Section 152(e) of the Code (i.e., generally the parent with whom the child resides for the greater number of nights during the calendar year or, if the child resides with both parents for an equal number of nights, the parent with the higher adjusted gross income for the year). ii) Two or More Persons Claiming a Child as a Qualifying Individual. If the special rule described above regarding divorce, etc. does not apply, the special tie-breaker rules of Section 152(c)(4) of the Code may apply. If an individual is a qualifying child (as defined in Section 152 of the Code) with respect to more than one person, then: a. If both persons are the individual's parents and they file a joint federal income tax return, the child is the Qualifying Individual of both parents. b. If both persons are the individual's parents and they file separate federal income tax returns, then the child is the Qualifying Individual of the parent with whom the child resided for the longest period of time during the calendar year (or, if child resides with both parents for the same amount of time during the year, the parent with the highest adjusted gross income for the year). However, if that parent (i.e., the custodial parent or the parent with the highest adjusted gross income) does not claim the child as a qualifying child (as defined in Section 152 of the Code) for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other parent (i.e., the non- custodial parent or the parent with the lowest adjusted gross income). This is the one person that is entitled to treat the child as a Qualifying Individual. C. If one person is the individual's parent and the other is not, the child is the Qualifying Individual of the parent. However, if the parent does not claim the child as a qualifying child (as defined in Section 152 of the Code) for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other person (i.e., the non -parent). This is the one person that is entitled to treat the child as a Qualifying Individual. d. If neither person is the individual's parent, the child is the Qualifying Individual of the person with the highest adjusted gross income for the year in question. However, if that person does not claim the child as a qualifying child (as defined in Section 152 of the Code) for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other person (i.e., the person with the lowest adjusted gross income). This is the one person that is entitled to treat the child as a Qualifying Individual. Flexible Benefits Plan — Basic Plan Document ©332015 Hitesman and Wold, P.A. (j) Student shall have the meaning provided in Section 21(e)(7) of the Code which means an individual who during each of five (5) calendar months during the taxable year is a full time student at an educational organization which normally maintains a regular facility and curriculum and normally has a regularly enrolled body of students in attendance at the place where its educational activities are regularly carried on as provided in Sections 21(e)(8) and 170(b)(1)(A)(ii) of the Code. 10.4 Dependent Care Account. The DC Account will be credited as of each date contributions are made pursuant to Article IV with a pro -rated portion of the Participant's Election for the Plan Year. A Participant's DC Account will be decreased from time to time in the amount of payments made to the Participant for eligible Dependent Care Expenses incurred during the Plan Year. 10.5 Claims Determination. Claim submission, determination, and appeals shall be handled in accordance with Article VI. 10.6 Incurred Expenses. To be reimbursable, an eligible Dependent Care Expense must have been incurred after participation in this portion of the Plan began and during the Plan Year for which reimbursement is claimed. An expense is "incurred" when the Participant is provided with the care which gives rise to the eligible Dependent Care Expense, not when the service is billed or paid. Reimbursement shall not be made for future or projected expenses. 10.7 Reimbursement of Expense. The Participant shall be reimbursed as specified in Section 6.7 from the Participant's DC Account for eligible Dependent Care Expenses incurred during the applicable Plan Year for which the Participant submits the documentation required under Article VI. In no case shall a payment be made which exceeds the balance in the Participant's DC Account at the time reimbursement is processed. Claims for reimbursement with respect to a Plan Year must be submitted prior to the close of the Claims Run -Out Period for such Plan Year. If a claim for reimbursement exceeds the available balance in the Participant's DC Account, the excess part of the claim will be carried over and paid as the Participant's DC Account becomes adequate. Under no circumstances (a) will any balance remaining in a Participant's DC Account at the end of the Plan Year be carried over to the next Plan Year, or (b) will an otherwise eligible Dependent Care Expense be carried over to the next Plan Year. 10.8 Maximum Reimbursement. The maximum reimbursement which a Participant may receive in a tax year under this portion of the Plan shall be the lesser of: (a) the Participant's Earned Income for the tax year; (b) the actual or deemed Earned Income of the Participant's Spouse for the tax year; or (c) $5,000 (or in the case of a Participant who is married and filing a separate income tax return from his or her Spouse, $2,500). This maximum includes the Employer Contribution, if any, DC Account forfeitures and the Participant's salary reduction. If a Participant is married and the Spouse of the Participant also participates in a dependent care program under Section 129 of the Code, Flexible Benefits Plan — Basic Plan Document ©342015 Hitesman and Wold, P.A. the combined reimbursements may not exceed the limits described above for the tax year. It shall be the Participant's responsibility to monitor the combined reimbursements. 10.9 Reimbursement Upon Termination of Participation. If an individual ceases to be a Participant in this portion of the Plan during a Plan Year, no further contributions will be credited to the DC Account. Reimbursements shall continue as specified in the Adoption Agreement. 10.10 Participant's Death. In the event a Participant dies having incurred an eligible Dependent Care Expense which (a) would have been reimbursable out of the Participant's DC Account had the Participant not died, and (b) for which a person or the Participant's estate has paid for or assumed liability, reimbursement may be made to that person or the estate for that payment or assumption. The remainder of the Participant's DC Account shall be forfeited in accordance with Section 5.7. 10.11 Nondiscrimination. This portion of the Plan shall not discriminate in favor of Highly Compensated Employees or their Dependents with respect to eligibility, contributions or benefits. The average eligible Dependent Care Expenses paid to Non -Highly Compensated Employees shall be at least fifty-five percent (55%) of the average eligible Dependent Care Expenses paid to Highly Compensated Employees. If benefits are provided through salary reduction agreements, Employees with annual compensation less than $25,000 may be excluded. If the Plan Administrator determines that the Plan is or will be discriminatory, the Plan Administrator may take any action permitted by law to avoid such result in accordance with Section 6.15. If this portion of the Plan fails any applicable nondiscrimination requirements, Highly Compensated Employees shall have taxable income imputed to the extent required by law. 10.12 Dependent Care Limitations. (a) Reimbursement or payment of eligible Dependent Care Expenses shall be made to the Participant only in the event and to the extent that such reimbursement or payment is: (1) not otherwise provided under any insurance policy, whether the premium on such policy is paid by the Employer or an individual, and (2) not provided for or reimbursable under any other plan or policy. (b) Other limitations, if any, shall be set forth in the Adoption Agreement. 10.13 Reporting and Disclosure. Each Participant must be furnished with a written statement showing the amounts paid under this portion of the Plan by an Employer on behalf of the Participant for a calendar year. The statement must be furnished before January 31 st of the following year. If the actual amount paid is not known by this deadline, the Employer may report a reasonable estimate of the amounts paid under this portion of the Plan. Flexible Benefits Plan — Basic Plan Document ©352015 Hitesman and Wold, P.A. ARTICLE XI. MEDICAL EXPENSE REIMBURSEMENT PLAN 11.1 Purpose. The purpose of this Article is to provide Participants with the opportunity to be reimbursed for certain eligible Medical Expenses as an Available Benefit under the Plan. This Article is intended to qualify as a self-insured medical reimbursement plan under Section 105 of the Code so that payments received under this portion of the Plan are excludable from the gross income of the Participant under Section 105(b) of the Code. 11.2 Separate Written Plan. For purposes of Section 105 of the Code, this Article shall constitute a separate written plan providing for the reimbursement of certain Medical Expenses. To the extent necessary, other provisions of the Plan are incorporated by reference. 11.3 Definitions. (a) Claims Run -Out Period means the period beginning on the first day following the close of the Plan Year or, if applicable, the Grace Period and ending on the date specified in the Adoption Agreement. (b) Dependent means, unless otherwise specified in the Adoption Agreement, Tax Dependent. (c) Highly Compensated Individual means an individual who is highly compensated as defined in Section 105(h)(5) of the Code. (d) Medical Expense means, unless otherwise limited in the Adoption Agreement, an expense incurred during the applicable Plan Year by a Participant, Spouse, or Dependent for medical care as defined in Section 213 of the Code, excluding premiums for health coverage and long-term care coverage. Medical care generally refers to the diagnosis, cure, treatment, or prevention of disease or for the purpose of affecting any structure or function of the body. Also included, are reasonable transportation expenses for and essential to medical care. If "Medical Expense" includes over-the-counter drugs and medicines, such expenses shall constitute Medical Expenses only to the extent allowed by Section 106(f) of the Code. (e) Medical Expense Account ("ME Account") means the record keeping account established by the Plan Administrator for each Plan Year for each Participant from whom an Election to create such an account is received. 11.4 Medical Expense Account. The ME Account will be credited with the amount elected by the Participant and the amount of the carryover, if any, at the beginning of the Plan Year. A Participant's ME Account will be decreased from time to time in the amount of payments made to the Participant for eligible Medical Expenses incurred during the Plan Year and the Grace Period, if applicable. 11.5 Claims Determination. Claim submission, determination, and appeals shall be handled in accordance with Article VI. 11.6 Incurred Expenses. To be reimbursable, an eligible Medical Expense must have been incurred after participation in this portion of the Plan began and during the Plan Year for which reimbursement is claimed or the Grace Period related to such Plan Year, if applicable. An expense is "incurred" when the Participant is provided with the care which gives rise to the eligible Medical Expense, not when the service is billed or paid. Reimbursement shall not be made for future projected expenses. Notwithstanding the Flexible Benefits Plan — Basic Plan Document ©362015 Hitesman and Wold, P.A. foregoing, pursuant to and in accordance with the Cafeteria Plan Regulations, if specifically provided in the Adoption Agreement, the Plan may reimburse Medical Expenses for orthodontia care in advance. 11.7 Reimbursement of Expense. The Participant shall be reimbursed as specified in Section 6.7 from the Participant's ME Account for eligible Medical Expenses incurred during the applicable Plan Year and the Grace Period, if applicable, for which the Participant submits the documentation required under Article VI. An amount up to the sum of the Participant's Election and the carryover, if any, and reduced as of any particular time for prior reimbursements for the same Plan Year, and the Grace Period, if applicable, shall be available for reimbursement at all times during the Plan Year, and the Grace Period, if applicable. Claims for reimbursement within a Plan Year, and Grace Period, if applicable, must be submitted prior to the close of the Claims Run -Out Period for such Plan Year and the Grace Period, if applicable. In no case shall a payment be made which exceeds the balance in the Participant's ME Account at the time reimbursement is processed. If a claim for reimbursement exceeds the balance in the Participant's ME Account, the excess part of the claim will be denied. Except as provided in Section 11.12(b), under no circumstances (a) will any balance remaining in a Participant's ME Account at the end of the Plan Year, and the Grace Period, if applicable, be carried over to the next Plan Year, or (b) will an otherwise eligible Medical Expense be carried over to the next Plan Year. 11.8 Maximum Election. The maximum election a Participant may make for a Plan Year under this portion of the Plan shall be the dollar amount indicated in the Adoption Agreement. The maximum election amount applies to the Participant, Spouse, and Dependent children on an aggregate basis, not an individual basis. For Plan Years that are less than 12 months, unless indicated otherwise in the Adoption Agreement, this maximum shall be pro -rated by multiplying the applicable maximum by a fraction with a numerator of the number of months in the short Plan Year and with a denominator of 12. For Participants beginning participation in the Plan mid -Plan Year, unless indicated otherwise in the Adoption Agreement, this maximum shall be pro -rated by multiplying the applicable maximum by a fraction with a numerator of the number of complete calendar months remaining in the Plan Year at the time the Participant begins participation and with a denominator of 12. Notwithstanding the foregoing, a Participant may not make salary reduction contributions to the Medical Expense Reimbursement Plan in excess of any maximum imposed under applicable law. 11.9 Reimbursement Upon Termination of Participation. If an individual ceases to be a Participant in this portion of the Plan, coverage shall cease (which means that reimbursements shall cease) unless benefits under the Plan are continued as provided in Section 11.14, if applicable. If coverage ceases, reimbursements for eligible Medical Expenses incurred before participation terminated will continue to be made as provided in the Adoption Agreement. 11.10 Participant's Death. In the event a Participant dies having incurred an eligible Medical Expense (a) which would have been reimbursable out of the Participant's ME Account had the Participant not died, and (b) for which a person or the Participant's estate has paid for or assumed liability for the expense, reimbursement may be made to that person or the Flexible Benefits Plan — Basic Plan Document ©372015 Hitesman and Wold, P.A. estate for that payment or assumption. The remainder of the Participant's ME Account shall be forfeited in accordance with Section 5.7. 11.11 Nondiscrimination. This portion of the Plan shall not discriminate in favor of Highly Compensated Individuals as to eligibility to participate or benefits. If the Plan Administrator determines that this portion of the Plan is or may be discriminatory, the Plan Administrator may take action permitted by law to avoid such result as provided in Section 6.15. If the Plan fails any applicable nondiscrimination requirements, Highly Compensated Individuals shall have taxable income imputed to the extent required by law. 11.12 ME Account Forfeitures. Forfeiture (a) ME Account Claims Grace Period. If selected in the Adoption Agreement, the Claims Grace Period shall apply to this Available Benefit. (b) Carryover. If selected in the Adoption Agreement, a limited carryover of ME Account balances from Plan Year to Plan Year will be provided in accordance with the following conditions and restrictions: (1) The amount that may be carried over is limited to the lesser of (i) $500, or (ii) the balance of the Participant's ME Account. (2) The balance of a Participant's ME Account available for the carryover shall be determined upon expiration of the Claims Run -out Period. Notwithstanding the foregoing, the balance of the Participant's ME Account as of midnight on the last day of the Plan Year, up to the amount specified in paragraph (1) above, shall be available to reimburse Medical Expenses incurred on and after the first day of the new Plan Year. The Claims Administrator will administer claims submitted during the Claim Run -out Period (including allocating claims between the Participant's carryover balance and the Participant's election for the new Plan Year (if any)) in a manner consistent with applicable law (including regulatory guidance). For purposes of this paragraph, the balance of a Participant's ME Account at any point in time shall be equal to the amount credited to the ME Account for the Plan Year minus claims paid to date with respect to that Plan Year. (3) In general, a carryover made in accordance herewith shall occur within the Medical Expense Reimbursement Plan. However, if the Plan includes a Limited Scope Medical Expense Reimbursement Plan, a Participant entitled to an ME Account carryover in accordance herewith shall receive the carryover to a Limited Scope ME Account if. (i) the Participant enrolls in the Limited Scope Medical Expense Reimbursement Plan for the following Plan Year, or (ii) the Participant directs the Plan Administrator, by no later than the last day of the Plan Year from which the carryover is to be made and in accordance with procedures adopted by the Plan Administrator, to make the carryover to the Limited Scope Medical Expense Reimbursement Plan. (4) In general, a carryover made in accordance herewith shall occur automatically. However, a Participant entitled to an ME Account carryover in accordance herewith may elect, by no later than the last day of the Plan Year from which the carryover is to be made and in accordance with procedures adopted by the Plan Administrator, to waive the carryover. Flexible Benefits Plan — Basic Plan Document ©382015 Hitesman and Wold, P.A. (5) Unless otherwise required under applicable law (including regulatory guidance), a carryover of an ME Account balance shall be available only to individuals who are eligible to make elections under the Medical Expense Reimbursement Plan as of the first day of the Plan Year to which the carryover will be made (regardless of whether the individual actually elects to participate). (6) A carryover shall not count against the maximum reimbursement a Participant may receive as specified in Section 11.8. (c) Claims Run -out Period. Except as otherwise provided in this Section 11.12, (1). amounts attributed to a Participant's ME Account for any Plan Year shall be used only to reimburse the Participant for eligible Medical Expenses incurred during such Plan Year and its Claims Grace Period (if applicable), and (2) any balance remaining in a Participant's ME Account for a Plan Year shall be forfeited following the end of Claims Run -Out Period in accordance with Section 5.7. The Plan Administrator may extend this period in the event the Participant cannot obtain proper documentation until after the expiration of the period. Such forfeited amount shall not be distributed in cash, carried over to the next Plan Year or used by the Participant for any other purpose. 11.13 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, this Plan shall recognize child support orders regarding coverage under this Medical Expense Reimbursement Plan to the extent required by applicable law. 11.14 Qualified Reservist Distribution. If the Adoption Agreement provides that such distributions are available, a Participant may request, in writing on a form provided by the Plan Administrator, a "Qualified Reservist Distribution" from the Participant's ME Account if. (a) the Participant is a member of the Army National Guard, the Army Reserve, the Navy Reserve, the Marine Corps Reserve, the Air National Guard, the Air Force Reserve, the Coast Guard Reserve, or the Reserve Corps of the Public Health Service; and (b) the Participant has been ordered or called to active duty for either (1) at least one hundred eighty (180) days, or (2) an indefinite period of time. Such request must be made on or after the date of the order or call to active duty and before the last day of the Plan Year. A copy of the order or call to duty must accompany the form. The amount available to the Participant as a Qualified Reservist Distribution shall be the amount contributed to the ME Account as of the date of the request minus any reimbursements of Medical Expenses provided under the ME Account as of that date. Such distributions shall be included in the Participant's taxable income and shall be subject to normal wage withholding requirements to the extent required by law. If a balance remains in the Participant's ME Account following the Qualified Reservist Distribution, the Participant may continue to submit claims for reimbursement. 11.15 Continuation of Coverage. Continued coverage under the Medical Expense Reimbursement Plan shall be provided as required under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended and as reflected in the Public Health Services Act, as amended ("PHSA"). To the extent not contained in the Plan, the Plan Administrator may, within the parameters of the law, establish uniform policies by which to provide such continuation coverage, which shall be incorporated herein by reference. Flexible Benefits Plan — Basic Plan Document ©392015 Hitesman and Wold, P.A. 11.16 HIPAA. The Medical Expense Reimbursement Plan shall comply with the Privacy Rules and Security Rules under HIPAA (if applicable) as further provided in Article XXI. 11.17 Further Limitations on Benefits. (a) This Article does not cover expenses incurred for any loss caused by or resulting from injury or disease for which benefits are payable under any worker's compensation law or other employer, union, association or governmental sponsored group insurance plan. (b) This Article does not cover expenses incurred for any loss caused by or resulting from injury or disease for which benefits are received by the Participant, the Participant's Spouse or the Participant's Dependent under any health and accident insurance policy or program, whether or not premiums are paid by the Employer or the Participant, the Participant's Spouse or the Participant's Dependent child. (c) Amounts reimbursed under a dependent care assistance program described in Section 129 of the Code shall not be reimbursed under this Plan. (d) A Participant in the Plan may not participate under this Article and contribute to an HSA. (e) Other limitations, if any, shall be set forth in the Adoption Agreement. 11.18 Patient Protection and Affordable Care Act. The Medical Expense Reimbursement Plan is intended to be an excepted benefit under HIPAA because: (a) All Participants of this Available Benefit are eligible for Group Medical Benefits, and (b) The maximum reimbursement available does not exceed the greater of (1) two times the Participant's salary reduction election or (2) the Participant's salary reduction election plus $500. Accordingly, certain mandates of the Patient Protection and Affordable Care Act, as amended, including the preventative care mandate, do not apply to the Medical Expense Reimbursement Plan. Flexible Benefits Plan — Basic Plan Document ©402015 Hitesman and Wold, P.A. ARTICLE XII. GROUP DENTAL BENEFITS 12.1 Purpose. The purpose of this Article is to provide for the pre-tax payment opportunity for Group Dental Benefits under this Plan as an Available Benefit. The Employer provides Group Dental Benefits through one or more "plans" within the meaning of Sections 105 and 106 of the Code. 12.2 Separate Written Plan. For purposes of Sections 105 and 106 of the Code, this Article shall constitute a separate written plan providing for the reimbursement or direct payment of Insurance Premium expenses. To the extent necessary, other provisions of the Plan are incorporated by reference. 12.3 Definitions. (a) Dependent means an individual (e.g., Spouse, child, domestic partner, etc.) who qualifies as a "dependent" under the terms and conditions of the applicable plan document governing the Group Dental Benefits. (b) DMO means a dental maintenance organization authorized to do business in the state in which an agreement has been entered for the purpose of providing benefits under this portion of the Plan. (c) Group Dental Benefits means the dental coverage made available by the Employer through this Article to which the Insurance Premiums relate. It does not include individual Insurance Contracts. (d) Highly Compensated Individual means an individual who is highly compensated as defined in Section 105(h)(5) of the Code. (e) Insurance Contract means (1) any insurance contract secured from an insurance company or DMO authorized to do business in the state in which such contract is issued, which has been obtained for the purpose of providing benefits under this portion of the Plan; or (2) a self-insured plan administered by a third party. (f) Insurance Premiums means the amount that must be paid on a periodic basis in return for coverage under the Insurance Contract. 12.4 Terms, Conditions and Limitations. The Employer shall secure the necessary Insurance Contracts from third party providers with respect to the provision of Group Dental Benefits and/or establish the necessary self-insured program. Coverage shall begin, benefits shall be provided, and coverage shall terminate in accordance with the applicable Insurance Contracts Such Insurance Contracts are identified in Exhibit A (attached to the Adoption Agreement) and expressly incorporated into and made part of this Plan. 12.5 Payments. The Plan Administrator shall make Insurance Premium payments for the Group Dental Benefits on behalf of the Participant in an amount necessary to provide the benefit applicable to the Participant under this portion of the Plan for the applicable Plan Year. Such payments shall be made from Employer Contributions, if any, provided by the Employer under the Plan and, if necessary, contributions made in accordance with the salary reduction arrangement and other arrangements applicable to the Participant under the terms of the Plan. The appropriate portions shall depend on the coverage elected by the Participant. The Plan Administrator shall also make such payments on behalf of the Participant's Dependents who are enrolled in the Group Dental Benefits. To the extent a Dependent is provided coverage under the Group Dental Benefits and that Dependent is Flexible Benefits Plan — Basic Plan Document ©412015 Hitesman and Wold, P.A. not the Participant's Spouse or Tax Dependent, the tax consequence of such coverage shall be addressed as described in Section 4.2. 12.6 Nondiscrimination. To the extent the Group Dental Benefits are self-insured and, as a result, are subject to Section 105(h) of the Code, they shall not discriminate in favor of Highly Compensated Individuals with respect to eligibility to participate or benefits. If the Plan Administrator determines that the Group Dental Benefits may be discriminatory, the Plan Administrator may take action permitted by law to avoid such a result as described in Section 6.15. If the Group Dental Benefits fail any applicable nondiscrimination requirements, Highly Compensated Individuals shall have taxable income imputed to the extent required by law. 12.7 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, this Plan shall recognize child support orders regarding coverage under the Group Dental Benefits to the extent required by applicable law. 12.8 Continuation of Coverage. Continued coverage shall be provided under the Group Dental Benefits if and to the extent required under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended and as reflected in the Public Health Services Act, as amended ("PHSA"). To the extent not otherwise contained in the Plan, the Plan Administrator may, within the parameters of the law, establish uniform policies by which to provide such continuation coverage. There shall also be compliance with Minnesota law concerning continuation of coverage to the extent not preempted by federal law. 12.9 HIPAA. The Group Dental Benefits shall comply with the Privacy Rules and Security Rules under HIPAA (if applicable) as further provided in the Insurance Contract. Flexible Benefits Plan — Basic Plan Document ©422015 Hitesman and Wold, P.A. ARTICLE XIII. GROUP TERM LIFE BENEFITS AND/OR GROUP ACCIDENTAL DEATH & DISMEMBERMENT (-AD&D") BENEFITS 13.1 Purpose. The purpose of this Article is to provide for the pre-tax payment opportunity for Group Term Life Benefits and/or Group Accidental Death & Dismemberment ("AD&D") Benefits under this Plan as an Available Benefit. The Employer provides Group Term Life Benefits and/or Group AD&D Benefits through one or more "plans" within the meaning of Sections 79, 105, and 106 of the Code. Note: This Article does not permit pre-tax payment of Insurance Premiums for coverage other than Participant coverage (e.g., no spousal or dependent coverage). 13.2 Separate Written Plan. For purposes of Sections 79, 105 and 106 of the Code, this Article shall constitute a separate written plan providing for the reimbursement or direct payment of Insurance Premium expenses. To the extent necessary, other provisions of the Plan are incorporated by reference. 13.3 Definitions. (a) Group AD&D Benefits means the accidental death and dismemberment insurance coverage made available by the Employer through this Article to which the Insurance Premiums relate. It does not include individual Insurance Contracts. (b) Group Term Life Benefits means the group term life insurance coverage made available by the Employer through this Article to which the Insurance Premiums relate. It does not include individual Insurance Contracts. (c) Insurance Contract means any insurance contract secured from an insurance company authorized to do business in the state in which such contract is issued, which has been obtained for the purpose of providing benefits under this portion of the Plan. (d) Insurance Premiums means the amount that must be paid on a periodic basis in return for group coverage under the Insurance Contract(s). 13.4 Terms, Conditions and Limitations. The Employer shall secure the necessary Insurance Contracts or other benefit agreements from third party providers. Coverage shall begin, benefits shall be provided, and coverage shall terminate in accordance with the applicable Insurance Contracts or other benefit agreements. Such Insurance Contracts or agreements are identified in Exhibit A (attached to the Adoption Agreement) and expressly incorporated into and made part of this Plan. 13.5 Payments. The Plan Administrator shall make Insurance Premium payments for the Group Term Life Benefits and/or Group AD&D Benefits on behalf of the Participant in an amount necessary to provide the benefit applicable to the Participant under this portion of the Plan for the applicable Plan Year. Such payments shall be made from Employer Contributions, if any, provided by the Employer under the Plan and, if necessary, contributions made in accordance with the salary reduction arrangement and other arrangements applicable to the Participant under the terms of the Plan. The appropriate portions shall depend on the coverage elected by the Participant. 13.6 Limitation on Group Term Life Benefits. The cost of Group Term Life Benefits on the Participant's life paid by the Employer shall not be included in the Participant's gross Flexible Benefits Plan — Basic Plan Document ©432015 Hitesman and Wold, P.A. income to the extent the face amount of the Insurance Contract(s) does not exceed $50,000. If the face amount of the Insurance Contract(s) paid by the Employer exceeds $50,000, the cost of the coverage in excess of $50,000 shall be imputed to the Participant as income in accordance with Section 79 of the Code and the Cafeteria Plan Regulations. For purposes of this limitation, coverage paid by the Participant on a pre-tax basis is considered "paid by the Employer." Under no circumstances shall the coverage on the life of persons covered through the Participant be paid through this Plan. 13.7 Tax Consequences of AD&D Benefits. It is intended that the Insurance Premiums paid by the Employer (including pre-tax payments paid by the Participant through this portion of the Plan) for a Participant's Group AD&D Benefits shall be excluded in the Participant's gross income under Section 106 of the Code. Any benefits received as a result of the Insurance Contract under this portion of the Plan shall be included in the recipient's gross income to the extent required under the applicable provision(s) of the Code. 13.8 Continuation/Conversion of Coverage. There shall be compliance with applicable state law regarding continuation of coverage and conversion of coverage to the extent such state laws are not preempted by federal law. In addition, any continuation and conversion rights provided under the terms of the Insurance Contract(s) through which benefits are provided shall be available to the extent they are not prohibited or preempted by federal law. Flexible Benefits Plan — Basic Plan Document ©442015 Hitesman and Wold, P.A. ARTICLE XIV. LONG TERM DISABILITY BENEFITS 14.1 Purpose. The purpose of this Article is to provide for the payment opportunity for Long Term Disability Benefits under this Plan as an Available Benefit. The Employer provides Long Term Disability Benefits through one or more "plans" within the meaning of Sections 105 and 106 of the Code. Note: This Article does not permit pre-tax payment of Insurance Premiums for coverage other than Participant coverage (e.g., no spousal or dependent coverage). 14.2 Separate Written Plan. For purposes of Sections 105 and 106 of the Code, this Article shall constitute a separate written plan providing for the reimbursement or direct payment of Insurance Premium expenses. To the extent necessary, other provisions of the Plan are incorporated by reference. 14.3 Definitions. (a) Insurance Contract means (1) any insurance contract secured from an insurance company authorized to do business in the state in which such contract is issued, which has been obtained for the purpose of providing benefits under this Plan; or (2) a self-insured plan administered by a third party. (b) Insurance Premiums means the amount that must be paid on a periodic basis in return for group coverage under the Insurance Contract. (c) Long Term Disability Benefits means the long term disability coverage made available by the Employer to which the Insurance Premiums relate. It does not include individual long term disability Insurance Contracts. 14.4 Terms, Conditions and Limitations. The Employer shall secure the necessary Insurance Contracts or other long term disability benefit agreements from third party providers. Coverage shall begin, benefits shall be provided, and coverage shall terminate in accordance with the applicable Insurance Contracts or other agreements, and/or self- insured plan documents. Such Insurance Contracts, agreements, and plan documents are identified in Exhibit A (attached to the Adoption Agreement) and expressly incorporated into and made part of this Plan. 14.5 Payments. The Plan Administrator shall make Insurance Premium payments for the Long Term Disability Benefits on behalf of the Participant in an amount necessary to provide the benefit applicable to the Participant under this portion of the Plan for the applicable Plan Year. Such payments shall be made from Employer Contributions and, if necessary, contributions made in accordance with the salary reduction or other arrangements applicable to the Participant under the terms of the Plan. The appropriate portions shall depend on the coverage elected by the Participant. 14.6 Tax Consequences. As provided in the Adoption Agreement, the premiums paid by the Employer (including payments paid by the Participant through this portion of the Plan) for a Participant's Long Term Disability Benefits shall either be (a) included in the Participant's gross income, or (b) excluded from the Participant's gross income under Section 106 of the Code. If such premiums are included in the Participant's gross income, any benefits received as a result of the coverage purchased under this portion of the Plan Flexible Benefits Plan — Basic Plan Document ©452015 Hitesman and Wold, P.A. shall be excluded in the recipient's gross income to the extent allowed under applicable provision(s) of the Code. If such premiums are excluded from the Participant's gross income, any benefits received as a result of the coverage purchased under this portion of the Plan shall be included in the recipient's gross income to the extent required under applicable provision(s) of the Code. Flexible Benefits Plan — Basic Plan Document ©462015 Hitesman and Wold, P.A. ARTICLE XV. HSA CONTRIBUTION FEATURE 15.1 Purpose. The purpose of this Article is to provide for the pre-tax funding of an HSA under this Plan as an Available Benefit. 15.2 Separate Written Plan. For purposes of Section 223 of the Code, this Article shall constitute a separate written plan. To the extent necessary, other provisions of the Plan are incorporated by reference. 15.3 Definitions. (a) Certification of HSA Eligibility means the form (if any) provided by the Plan Administrator in which the Participant certifies he or she is eligible for HSA contributions. (b) HSA means a health savings accounts under Section 223 of the Code established and owned by a Participant to which contributions are made under this portion of the Plan. The Employer does not sponsor a Participant's HSA, and a Participant's HSA is not an employer-sponsored group health plan. If provided in the Adoption Agreement, to participate in this HSA Contribution Feature, the HSA must be established at a trustee/custodian selected by the Employer. (c) HSA Contribution Feature means the portion of the Plan described in this Article, which consists of contributions to a Participant's HSA through salary reduction and Employer Contributions, if any. (d) High Deductible Health Plan means, unless otherwise specified in the Adoption Agreement, a "qualifying high deductible health plan" under Section 223(c)(2) of the Code sponsored by the Employer. (e) Permitted Insurance or Permitted Coverage means: (1) insurance in which substantially all of the coverage relates to liabilities incurred under workers' compensation laws, tort liabilities, liabilities related to ownership or use of property, or similar liabilities as specified by the IRS; (2) insurance for specified disease or illness (e.g., cancer insurance); (3) insurance that pays a fixed amount per day (or other period) of hospitalization (e.g., hospital indemnity insurance); (4) coverage for accidents, disability, dental care, vision care, preventive care, or long-term care; (5) some medical reimbursement accounts and health reimbursement arrangements ("HRAs") (e.g., limited scope medical reimbursement accounts and HRAs, suspended HRAs, post -deductible medical reimbursement accounts and HRAs, and retirement HRAs); and (6) some wellness programs and employee assistance programs (e.g., those that do not provide significant benefits in the nature of non -preventive medical care or treatment). 15.4 Eligibility. To be eligible for HSA contributions, the Employee must: (a) be eligible to participate in this Plan under Section 3.1; (b) be covered by the High Deductible Health Plan; (c) not be claimed as another person's dependent for purposes of such person's federal income tax return; (d) not be actually covered by Medicare; and Flexible Benefits Plan — Basic Plan Document ©472015 Hitesman and Wold, P.A. (e) not have any health coverage other than Permitted Insurance, Permitted Coverage, or coverage under a high deductible health plan (as defined under Section 223(c)(2) of the Code), whether or not such coverage is sponsored by the Employer. 15.5 Certification of Eligibility. Notwithstanding anything in this Plan to the contrary if specifically indicated in the Adoption Agreement, in order to receive HSA contributions, at the time of enrollment, the Participant must provide to the Plan Administrator a Certification of HSA Eligibility. Thereafter, such certification may be requested periodically by the Plan Administrator. 15.6 Contributions. (a) Employer Contributions. Employer Contributions, if any, will be contributed to the Participant's HSA at the times established by the Employer. (b) Employee Contributions. Amounts withheld from a Participant's Compensation pursuant to an agreement authorizing salary reduction with respect to this Available Benefit shall be contributed to the Participant's HSA as soon as administratively feasible. 15.7 Limits on Contributions. Contributions made by a Participant and/or on a Participant's behalf (i.e., Employer Contributions) into the HSA under this Plan are limited in accordance with the following rules. (a) General Limit. During a taxable year, total contributions to all health savings account owned by a Participant cannot exceed a statutory indexed amount. (b) Catch Up Contributions. An additional "catch-up" amount (determined on a monthly basis) can be contributed for eligible individuals who attain age 55 before the close of the taxable year. (c) Pro -rated Limit if Not Eligible on December 1St. If a Participant is eligible for HSA contributions during a taxable year but ceases to be eligible prior to December 1St of that taxable year, the contribution limit for that taxable year shall be determined by multiplying 1/12 of the applicable limit by the number of months the first day of which the Participant was eligible for HSA contributions. This pro- rated limit shall apply to all contributions made during the applicable taxable year, including those contributions made prior to the date on which the Participant ceased to be eligible for HSA contributions. (d) Special Rule if Eligible on December 1St. If a Participant becomes eligible for HSA contributions during the taxable year and is eligible on December 1St of such year, the Participant shall be deemed to have been eligible for each month in such taxable year and may make or receive HSA contributions up to the full annual limit. This special rule applies to all contributions made during the applicable taxable year, including contributions made prior to or after December 1St Example: An Eligible Employee becomes eligible for HSA contributions on July 1St and remains eligible through December 1St. The Eligible Employee may begin making contributions to his or her HSA through this Plan on July 1St at a rate pursuant to which the full annual contribution will have been made by the end of the taxable year. If a Participant to whom this special rule applies ceases to be eligible for HSA contributions within the twelve (12) month period beginning with the last month of such taxable year other than by reason of death or disability (as described in Section Flexible Benefits Plan — Basic Plan Document ©482015 Hitesman and Wold, P.A. 72(m)(7) of the Code), then any contribution made in excess of the annual limit under the general rule described above will be included in the Participant's gross income and will be subject to an excise tax as provided in Section 223(b)(8)(B) of the Code. (e) Special Rule for Married Participants. If the Participant is married and both the Participant and Participant's Spouse have coverage under a high deductible health plan (as defined in Section 223 of the Code), the applicable limit is divided equally between them (unless they agree to a different allocation). (f) Rollover Contributions. Rollover contributions may also be made to the HSA from another health savings account or from an Archer MSA. Rollover contributions are not subject to the contribution limit described above. (g) Treatment of Excess Contributions. To the extent total contributions to a Participant's health savings accounts made during the taxable year exceed the applicable limit on such contributions, then the contributions in excess of the limit shall be included in the Participant's gross income and shall be subject to an excise tax as provided in Section 4973(g) of the Code, unless returned in accordance with Section 223(f)(3) of the Code. 15.8 Investment of HSA Funds. A Participant may invest his or her HSA funds as allowed by the HSA trustee/custodian. The Employer shall have no control or responsibility for how a Participant's HSA funds are invested 15.9 Tax Consequences. It is intended that the HSA contributions made under this Plan shall be excluded from the Participant's gross income under Section 223 of the Code. 15.10 Distribution of HSA Funds. The Employer shall have no responsibility or control over distributions made from a Participant's HSA. The Employer shall have no responsibility to substantiate expenses for which such distributions are made. Sections 6.7 and 6.8 of this Plan shall not apply to distributions from a Participant's HSA. A Participant need not be a Participant in this Plan, be covered by a High Deductible Health Plan of this Employer, nor be covered by any other high deductible health plan in order to receive a distribution from the Participant's HSA. 15.11 Reporting. The Employer shall be responsible for reporting contributions made to a Participant's HSA through this Plan on the Participant's Form W-2. Participants shall be responsible for reporting contributions to their HSAs and distributions from their HSAs on appropriate forms. Participants shall also be responsible for determining whether an HSA distribution is taxable. 15.12 Continuation of Coverage. This HSA Contribution Feature and the underlying HSAs are not group health plans for purposes of the Consolidated Omnibus Budget Reconciliation Act of 1985, ("COBRA"), as amended, and reflected in the Public Health Services Act ("PHSA"), as amended, the Family and Medical Leave Act ("FMLA"), and the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"). COBRA, FMLA, and USERRA do not apply to this HSA Contribution Feature and the underlying HSAs. Flexible Benefits Plan — Basic Plan Document ©492015 Hitesman and Wold, P.A. ARTICLE XVI. LIMITED SCOPE MEDICAL EXPENSE REIMBURSEMENT PLAN 16.1 Purpose. The purpose of this Article is to provide Participants with the opportunity to be reimbursed for certain eligible Limited Scope Medical Expenses as an Available Benefit under the Plan. This Article is intended to qualify as a medical reimbursement plan under Section 105 of the Code so that payments received under this portion of the Plan are excludable from the gross income of the Participant under Section 105(b) of the Code. This Article is also intended to be "permitted coverage" for purposes of determining eligibility for health savings account contributions under Section 223 of the Code. 16.2 Separate Written Plan. For purposes of Section 105 of the Code, this Article shall constitute a separate written plan providing for the reimbursement of Limited Scope Medical Expenses. This is a separate and distinct "plan" from the Medical Expense Reimbursement Plan described under Article XI. To the extent necessary, other provisions of the Plan are incorporated by reference. 16.3 Definitions. (a) Claims Run -Out Period means the period beginning on the first day following the close of the Plan Year and ending on the date specified in the Adoption Agreement. (b) Dependent means, unless otherwise specified in the Adoption Agreement, a Tax Dependent. (c) Highly Compensated Individual means an individual who is highly compensated as defined in Section 105(h)(5) of the Code. (d) Limited Scope Medical Expense Account ("Limited Scope ME Account") means the record keeping account established by the Plan Administrator for each Plan Year for each Participant from whom an Election to create such an account is received. (e) Limited Scope Medical Expense means, unless otherwise limited in the Adoption Agreement, an expense incurred during the applicable Plan Year by a Participant or by the Spouse or Dependent of a Participant for dental or vision care within the meaning of "medical care" as defined in Section 213(d) of the Code. However, a Participant may not be reimbursed for dental and vision care of the type covered under the "qualifying high deductible plan" under Section 223(c)(2) of the Code, and a Participant may not be reimbursed for the cost of other dental or vision coverage such as premiums paid under plans maintained by an employer of the Participant's Spouse or individual policies maintained by the Participant or his or her Spouse or Dependent. If "Limited Scope Medical Expense" includes over-the- counter drugs and medicines, such expenses shall constitute Limited Scope Medical Expenses only to the extent allowed by Section 106(f) of the Code. (f) Minimum Annual Deductible means the applicable minimum annual deductible for a high deductible health plan under Section 223(c)(2)(A)(i) of the Code. For Participants who have either a Spouse or Dependents during the Plan Year, the Minimum Annual Deductible shall be the minimum deductible for family coverage. For Participants who have no Spouse or Dependents during the Plan Year, the Minimum Annual Deductible shall be the minimum deductible for single coverage. (g) Post Deductible Expense means an expense incurred during the applicable Plan Year by a Participant, Spouse, or Dependent for medical care as defined in Section Flexible Benefits Plan — Basic Plan Document ©502015 Hitesman and Wold, P.A. 213 of the Code, excluding premiums for health coverage and long-term care coverage, that is incurred after satisfaction of the Minimum Annual Deductible. 16.4 Limited Scope Medical Expense Account. The Limited Scope ME Account will be credited with the amount elected by the Participant and the amount of the carryover, if any, at the beginning of the Plan Year. A Participant's Limited Scope ME Account will be decreased from time to time in the amount of payments made to the Participant for eligible Limited Scope Medical Expenses incurred during the Plan Year and Grace Period, if applicable. 16.5 Claims Determination. Claim submission, determination, and appeals shall be handled in accordance with Article VI. 16.6 Incurred Expenses. To be reimbursable, an eligible Limited Scope Medical Expense must have been incurred after participation in this portion of the Plan began and during the Plan Year for which reimbursement is claimed or the Grace Period related to such Plan Year, if applicable. An expense is "incurred" when the Participant is provided with the care which gives rise to the eligible Limited Scope Medical Expense, not when the service is billed or paid. Reimbursement shall not be made for future projected expenses. Notwithstanding the foregoing, pursuant to and in accordance with the Cafeteria Plan Regulations, if specifically provided in the Adoption Agreement, the Plan may reimburse expenses for orthodontia care in advance. 16.7 Reimbursement of Expense. The Participant shall be reimbursed as specified in Section 6.7 from the Participant's Limited Scope ME Account for eligible Limited Scope Medical Expenses incurred during the applicable Plan Year, and the Grace Period, if applicable, for which the Participant submits the documentation required under Article VI. An amount up to the sum of the Participant's Election and the carryover, if any, and reduced as of any particular time for prior reimbursements for the same Plan Year, shall be available for reimbursement at all times during the Plan Year, and the Grace Period, if applicable. Claims for reimbursement within a Plan Year, and the Grace Period, if applicable, must be submitted prior to the close of the Claims Run -Out Period for such Plan Year. In no case shall a payment be made which exceeds the balance in the Participant's Limited Scope ME Account at the time reimbursement is processed. If a claim for reimbursement exceeds the balance in the Participant's Limited Scope ME Account, the excess part of the claim will be denied. Except as provided in Section 19.12(b), under no circumstances (a) will any balance remaining in a Participant's Limited Scope ME Account at the end of the Plan Year, and the Grace Period, if applicable, be carried over to the next Plan Year, or (b) will an otherwise eligible Limited Scope Medical Expense be carried over to the next Plan Year. 16.8 Maximum Election. The maximum Election a Participant may make for a Plan Year under this portion of the Plan shall be the dollar amount indicated in the Adoption Agreement. The maximum election amount applies to the Participant, Spouse, and Dependent children on an aggregate basis, not an individual basis. For Plan Years that are less than 12 months, unless indicated otherwise in the Adoption Agreement, this maximum shall be pro -rated by multiplying the applicable maximum by a fraction with a numerator of the number of months in the short Plan Year and with a denominator of 12. For Participants beginning Flexible Benefits Plan — Basic Plan Document ©512015 Hitesman and Wold, P.A. participation in the Plan mid -Plan Year, unless indicated otherwise in the Adoption Agreement, this maximum shall be pro -rated by multiplying the applicable maximum by a fraction with a numerator of the number of months remaining in the Plan Year at the time the Participant begins participation and with a denominator of 12. Notwithstanding the foregoing, a Participant may not make salary reduction contributions to the Limited Scope Medical Expense Reimbursement Plan in excess of any maximum imposed under applicable law. 16.9 Reimbursement Upon Termination of Participation. If an individual ceases to be a Participant in this portion of the Plan, coverage shall cease (which means that reimbursements shall cease) unless benefits under the Plan are continued as provided in Section 16.14. If coverage ceases, reimbursements for eligible Limited Scope Medical Expenses incurred before participation stopped will continue as provided in the Adoption Agreement. 16.10 Participant's Death. In the event a Participant dies having incurred an eligible Limited Scope Medical Expense (a) which would have been reimbursable out of the Participant's Limited Scope ME Account had the Participant not died, and (b) for which a person or the Participant's estate has paid for or assumed liability for the expense, reimbursement may be made to that person or the estate for that payment or assumption. The remainder of the Participant's Limited Scope ME Account shall be forfeited in accordance with Section 5.7. 16.11 Nondiscrimination. This portion of the Plan shall not discriminate in favor of Highly Compensated Individuals as to eligibility to participate or benefits. If the Plan Administrator determines that this portion of the Plan is or may be discriminatory, the Plan Administrator may take action permitted by law to avoid such result as provided in Section 6.15. If the Plan fails any applicable nondiscrimination requirements, Highly Compensated Individuals shall have taxable income imputed to the extent required by law. 16.12 Limited Scope ME Account Forfeiture. (a) Limited Scope ME Claims Grace Period. If selected in the Adoption Agreement, the Claims Grace Period shall apply to this Available Benefit. (b) Carryover. If selected in the Adoption Agreement, a limited carryover of Limited Scope ME Account balances from Plan Year to Plan Year will be provided in accordance with the following conditions and restrictions: (1) The amount that may be carried over is limited to the lesser of (i) $500, or (ii) the balance of the Participant's Limited Scope ME Account. (2) The balance of a Participant's Limited Scope ME Account available for the carryover shall be determined upon expiration of the Claims Run -out Period. Notwithstanding the foregoing, the balance of the Participant's Limited Scope ME Account as of midnight on the last day of the Plan Year, up to the amount specified in paragraph (1) above, shall be available to reimburse Limited Scope Medical Expenses incurred on and after the first day of the new Plan Year. The Claims Administrator will administer claims submitted during the Claim Run -out Period (including allocating claims between the Participant's carryover balance and the Participant's election for the new Plan Year (if any)) in a manner consistent with applicable law (including regulatory guidance). For purposes of this paragraph, the balance of a Participant's Limited Scope ME Account at any point in time shall be Flexible Benefits Plan — Basic Plan Document ©522015 Hitesman and Wold, P.A. equal to the amount credited to the Limited Scope ME Account for the Plan Year minus claims paid to date with respect to that Plan Year. (3) In general, a carryover made in accordance herewith shall occur automatically. However, a Participant entitled to a Limited Scope ME Account carryover in accordance herewith may elect, by no later than the last day of the Plan Year from which the carryover is to be made and in accordance with procedures adopted by the Plan Administrator, to waive the carryover. (4) Unless otherwise required under applicable law (including regulatory guidance), a carryover of a Limited Scope ME Account balance shall be available only to individuals who are eligible to make elections under the Limited Scope Medical Expense Reimbursement Plan as of the first day of the Plan Year to which the carryover will be made (regardless of whether the individual actually elects to participate). (5) A carryover shall not count against the maximum specified in Section 19.8. (c) Claims Run -out Period. Except as otherwise provided in this Section 19.12, (1) amounts attributed to a Participant's Limited Scope ME Account for any Plan Year shall be used only to reimburse the Participant for eligible Limited Scope Medical Expenses incurred during such Plan Year and its Claims Grace Period (if applicable), and (2) any balance remaining in a Participant's Limited Scope ME Account for a Plan Year shall be forfeited following the end of Claims Run -Out Period in accordance with Section 5.7. The Plan Administrator may extend this period in the event the Participant cannot obtain proper documentation until after the expiration of the period. Such forfeited amount shall not be distributed in cash, carried over to the next Plan Year or used by the Participant for any other purpose. 16.13 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, this Plan shall recognize child support orders regarding coverage under this Limited Scope Medical Expense Reimbursement Plan to the extent required by applicable law. 16.14 Qualified Reservist Distribution. If the Adoption Agreement provides that such distributions are available, a Participant may request, in writing on a form provided by the Plan Administrator, a "Qualified Reservist Distribution" from the Participant's ME Account if. (a) the Participant is a member of the Army National Guard, the Army Reserve, the Navy Reserve, the Marine Corps Reserve, the Air National Guard, the Air Force Reserve, the Coast Guard Reserve, or the Reserve Corps of the Public Health Service; and (b) the Participant has been ordered or called to active duty for either (1) at least one hundred eighty (180) days, or (2) an indefinite period of time. Such request must be made on or after the date of the order or call to active duty and before the last day of the Plan Year. A copy of the order or call to duty must accompany the form. The amount available to the Participant as a Qualified Reservist Distribution shall be the amount contributed to the ME Account as of the date of the request minus any reimbursements of Medical Expenses provided under the ME Account as of that date. Such distributions shall be included in the Participant's taxable income and shall be subject to normal wage withholding requirements to the extent required by law. If a balance remains in the Flexible Benefits Plan — Basic Plan Document ©532015 Hitesman and Wold, P.A. Participant's ME Account following the Qualified Reservist Distribution, the Participant may continue to submit claims for reimbursement. 16.15 Continuation of Coverage. Continued coverage shall be provided under this Limited Scope Medical Expense Reimbursement Plan if and to the extent required under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended and as reflected in the Public Health Services Act, as amended ("PHSA"). To the extent not contained in the Plan, the Plan Administrator may, within the parameters of the law, establish uniform policies by which to provide such continuation coverage, which shall be incorporated herein by reference. 16.16 HIPAA. The Limited Scope Medical Expense Reimbursement Plan shall comply with the Privacy Rules and Security Rules under HIPAA (if applicable) as further provided in Article XXI. 16.17 Further Limitations on Benefits. (a) This Article does not cover expenses incurred for any loss caused by or resulting from injury or disease for which benefits are payable under any worker's compensation law or other employer, union, association or governmental sponsored group insurance plan. (b) This Article does not cover expenses incurred for any loss caused by or resulting from injury or disease for which benefits are received by the Participant, the Participant's Spouse or the Participant's Dependent under any health and accident insurance policy or program, whether or not premiums are paid by the Employer or the Participant, the Participant's Spouse or the Participant's Dependent child. (c) Amounts reimbursed under a dependent care assistance program described in Section 129 of the Code shall not be reimbursed under this Plan. (d) Other limitations, if any, shall be set forth in the Adoption Agreement. 16.18 Patient Protection and Affordable Care Act. The Limited Scope Medical Expense Reimbursement Plan is intended to be an excepted benefit under HIPAA because: (a) All Participants of this Optional Benefit are eligible for Group Medical Benefits and the maximum reimbursement available does not exceed the greater of (1) two times the Participant's salary reduction election or (i2) the Participant's salary reduction election plus $500; or (b) It provides benefits solely for dental and vision care. Accordingly, certain mandates of the Patient Protection and Affordable Care Act, as amended, including the preventative care mandate do not apply to the Limited Scope Medical Expense Reimbursement Plan. Flexible Benefits Plan — Basic Plan Document ©542015 Hitesman and Wold, P.A. ARTICLE XVII. HIPAA PROVISIONS The Privacy Rules and Security Rules under HIPAA apply to the Medical Expense Reimbursement Plan and Limited Scope Medical Expense Reimbursement Plan (if available), unless such Available Benefits have less than fifty (50) Participants and the Employer is the Claims Administrator for such Available Benefits. 17.1 Use and Disclosure of PHI. The covered entity will use PHI to the extent of and in accordance with the uses and disclosures permitted by HIPAA. Specifically, the covered entity will use and disclose PHI for purposes related to health care treatment, payment for health care and health care operations. The covered entity will also use and disclose PHI as required by law and as permitted by authorization of the subject of PHI. If the covered entity discloses PHI to the Employer in accordance with this Article XXI, the Employer may use and further disclosure PHI for the same purposes and in the same situations as the covered entity may use and disclose PHI, provided that such use or disclosure is for covered entity administration functions performed by the Employer for the covered entity or is required by law or permitted by authorization. All uses and disclosures of PHI, whether by the covered entity or by Employer, shall be limited to the minimum PHI necessary to accomplish the intended purpose of the use or disclosure in accordance with HIPAA. Notwithstanding the foregoing, neither the covered entity nor the Employer shall use PHI that is genetic information in a manner that is prohibited by the Genetic Information Nondiscrimination Act of 2008. (a) Payment includes activities undertaken by the covered entity to obtain premiums or determine or fulfill its responsibility for coverage and provision of benefits that relate to an individual to whom health care is provided. These activities include, but are not limited to, the following: (1) determination of eligibility, coverage and cost sharing amounts (for example, cost of a benefit, plan maximums and co -payments as determined for an individual's claim); (2) coordination of benefits; (3) adjudication of health benefits claims (including appeals and other payment disputes); (4) subrogation of health benefit claims; (5) establishing employee contributions; (6) risk adjusting amounts due based on enrollee health status and demographic characteristics; (7) billing, collection activities, and related health care data processing; (8) claims management and related health care data processing, including auditing payments, investigating and resolving payment disputes and responding to participant inquiries about payments; (9) obtaining payment under a contract for reinsurance (including stop -loss and excess of loss insurance); (10) medical necessity reviews or reviews of appropriateness of care or justification of charges; (11) utilization review, including pre -certification, preauthorization, concurrent review and retrospective review; (12) disclosure to consumer reporting agencies related to the collection of premiums or reimbursement (the following PHI may be disclosed for Flexible Benefits Plan — Basic Plan Document ©552015 Hitesman and Wold, P.A. payment purposes: name and address, date of birth, Social Security number, payment history, account number and name and address of provider and/or health plan); and (13) reimbursement to the covered entity. (b) Health care operations include, but are not limited to, the following activities: (1) quality assessment; (2) population -based activities relating to improving health or reducing health care costs, protocol development, case management and care coordination, disease management, contacting health care providers and patients with information about treatment alternatives and related functions; (3) rating provider and plan performance, including accreditation, certification, licensing or credentialing activities; (4) underwriting, premium rating and other activities relating to the creation, renewal or replacement of a contract of health insurance or health benefits, and ceding, securing or placing a contract for reinsurance of risk relating to health care claims (including stop -loss insurance and excess of loss insurance); (5) conducting or arranging for medical review, legal services and auditing function, including fraud and abuse detection and compliance programs; (6) business planning and development, such as conducting cost -management and planning -related analyses related to managing and operating the covered entity, including formulary development and administration, development or improvement of payment methods or coverage policies; (7) business management and general administration activities of the covered entity, including, but not limited to: (i) management activities relating to the implementation of and compliance with HIPAA's administrative simplification requirements; (ii) customer service, including data analyses for policyholders. (8) resolution of internal grievances; and (9) due diligence in connection with the sale or transfer of assets to a potential successor in interest, if the potential successor in interest is a covered entity under HIPAA or following completion of the sale or transfer, will become a covered entity. 17.2 Employer's Obligations under the Privacy Rules. Under the Privacy Rules, the covered entity may not disclose PHI to the Employer unless the Employer certifies that the Plan document has been amended to provide that the Plan will make such disclosures only upon receipt of a certification from the Employer that the Plan has been amended to include certain conditions to the Employer's receipt of PHI and that Employer agrees to those conditions. By adopting this Plan document, the Employer certifies that the Plan has been amended as required by the Privacy Rules and that it agrees to the following conditions, thereby allowing the Plan to disclose PHI to the Employer. The Employer agrees to: (a) not use or further disclose PHI other than as permitted or required by the plan document or as required by law; (b) ensure that any agents, including a subcontractor, to whom the Employer provides PHI received from the covered entity agree to the same restrictions and conditions that apply to the Employer with respect to such PHI; Flexible Benefits Plan — Basic Plan Document ©562015 Hitesman and Wold, P.A. (c) not use or disclose PHI for employment related actions and decision unless authorized by an individual; (d) not use or disclose PHI in connection with any other benefit or employee benefit plan of the Employer unless authorized by an individual; (e) report to the Plan any PHI use or disclosure of which it becomes aware that is inconsistent with the uses or disclosures permitted hereunder and/or may constitute a "breach" as that term is defined in HIPAA; (f) make PHI available for access by the individual who is the subject of the PHI in accordance with HIPAA; (g) make PHI available for amendment and incorporate any amendments to PHI in accordance with HIPAA; (h) make available the information required to provide an accounting of disclosures in accordance with HIPAA; (i) make internal practices, books and records relating to the use and disclosure of PHI received from the plan available to the HHS Secretary for the purposes of determining the covered entity's compliance with HIPAA; and (j) if feasible, return or destroy all PHI received for the covered entity that the Employer still maintains in any form, and retain no copies of such PHI when no longer needed for the purpose for which disclosure was made (or if return or destruction is not feasible, limit further uses and disclosures to those purposes that make the return or destruction infeasible). 17.3 Employer's Obligations under Security Rules. If the Employer creates, receives, maintains, or transmits ePHI (other than enrollment and disenrollment information and Summary Health Information, which are not subject to these restrictions), the Employer will: (a) implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of ePHI; (b) ensure that any agents, including subcontractors, who create, receive, maintain, or transmit ePHI on behalf of the covered entity implement reasonable and appropriate security measures to protect the ePHI; (c) report to the covered entity any Security Incident of which it becomes aware; and (d) implement reasonable and appropriate security measures to ensure that only those persons identified below have access to ePHI and that such access is limited to the purposes identified below. 17.4 Adequate separation between the covered entity and the Employer must be maintained. In accordance with HIPAA, only the following employees or classes of employees may be given access to PHI: (a) the person employed in the position that is given primary responsibility for performing the Employer's duties as the covered entity Administrator of the Available Benefits; and (b) staff designated by the person described in (a) above. 17.5 Limitation of PHI Access and Disclosure. The person(s) described above may only have access to and use and disclose PHI for administration functions that the Employer performs for the covered entity. Flexible Benefits Plan — Basic Plan Document ©572015 Hitesman and Wold, P.A. 17.6 Noncompliance Issues. If the person(s) described above does not comply with this plan document, the Employer shall provide a mechanism for resolving issues of noncompliance including, but not limited to, disciplinary sanctions. Flexible Benefits Plan — Basic Plan Document ©582015 Hitesman and Wold, P.A. ARTICLE XVIII. CONTINUATION COVERAGE 18.1 Compliance with COBRA. Continuation coverage under the group health plans sponsored by the Employer shall be provided if and to the extent required under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") as amended, and as reflected in the Public health Service Act, as amended ("PHSA"). The Plan Administrator may, within the parameters of the law, establish procedures for administration of the COBRA continuation requirements (if applicable). Note: Employers with less than twenty (20) employees are generally not subject to COBRA. 18.2 Compliance with Minnesota Health Continuation Law. Continuation coverage under the Group Medical Benefits, Group Dental Benefits, and Group Vision (if available) shall be provided as required under applicable Minnesota law. 18.3 Compliance with Minnesota Group Term Life Continuation Law. Continuation coverage under the Group Term Life Benefits (if available) shall be provided as required under applicable Minnesota law. Flexible Benefits Plan — Basic Plan Document ©592015 Hitesman and Wold, P.A. CITY OF HUTCHINSON Flexible Benefit Plan Adoption Agreement This is the Adoption Agreement referred to in the Flexible Benefit Plan Basic Plan Document ("Basic Plan Document"). The Adoption Agreement plus the Basic Plan Document constitute the "Plan." The Employer hereby makes the following selections: Employer and Affiliated Employer Information Employer Name: City of Hutchinson Address: 111 Hassan St SE City, State, Zip: Hutchinson, MN 55350 Phone/Fax Number: 320-587-5151 320-234-4240 Employer and Affiliated Employer Information Employer Name: Hutchinson Housing & Redevelopment Authority Address: 111 Hassan St SE City, State, Zip: Hutchinson, MN 55350 Phone/Fax Number: 320-234-4251 320-234-4240 Section Number References: The section numbers below correlate to the section numbers found in the Basic Plan Document. Article II: Definitions 2.2 Available Benefit(s) means (check all that apple): Very Important Note: The Basic Plan Document describes all of the Available Benefits that can be provided through the Plan. However, it is through the Adoption Agreement that the specific portions of the Basic Plan Document are activated. An Available Benefit must both (1) be checked below, and (2) have the corresponding Article of the Adoption Agreement (if any) completed, in order for the provision regarding that Available Benefit in the Basic Plan Document to be activated and part of the Plan. Premium Contributions: Expense Reimbursement: Other: ❑X Group Medical Benefits ❑X Group Dental Benefits El Group Vision Benefits ❑X Group Term Life Benefits and/or AD&D Benefits ❑X Long Term Disability Benefits ❑ Short Term Disability Benefits Flexible Benefit Plan Adoption Agreement ❑X Dependent Care Expense Reimbursement Plan ❑X Medical Expense Reimbursement Plan ❑X Limited Scope Medical Expense Reimbursement Plan ❑X HSA Contribution Feature ❑ Cash Payment ❑ Individual Premium Feature Page I 1 © 2010 Hitesman & Associates, P.A. 2.6 Claims Administrator means: ❑X Plan Administrator — forwards premiums to the carriers and applicable contributions to the plan administrators (reimbursement programs, HSA accounts, etc.) ❑X Other (please provide additional information below): Name: TASC — HSA and Reimbursement Plan 3rd party administrator Address: 2303 International Lane City, State, Zip: Madison, WI 53704-3140 Phone/Fax Number: 1-800-422-4661 2.13 Effective Date Means: January 1, 2017 (Month, day, year) Is this a restatement: ❑X Yes ❑No If yes, original effective Date: January 1, 1991 2.19 Employer means: City of Hutchinson Affiliated Employers participating in this Hutchinson Housing & Redevelopment Authority Plan are: 2.20 See 4.4 below regarding Employer Contribution 2.21 Entry Date means: El The date on which the Employee becomes eligible to participate in the Plan. ❑X The first day of the month coinciding with or following the date on which the Employee becomes eligible to participate in the Plan ❑ Other: 2.31 Plan Name: Citv of Hutchinson Flexible Benefit Plan 2.33 A Plan Year commences on the first day of: January (insert month) And ends on the last day of: December (insert month) Page 12 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. Article III: Eligibility and Participation 3.1 General eligibility requirements are as follows (check and complete only those that apply): 0 Minimum number of hours (describe, including whether Employee must actually work, or be scheduled to work, the hours and the period over which the required hours must be worked (e.g., per week, per month, etc.)): Eligible regular full time employees are regularly scheduled to work an average of at least 30 hours per week. Eligible regular part time employees are regularly scheduled to work an average of 20 hours per week. ❑ Length of Service (describe): 0 Employment Classification (e.g., union, part-time, Regular full time and regular part time full-time) (describe):. employees meeting the minimum scheduled work hours requirements ❑ Other (describe, including any Available Benefits(s) with different eligibility and participation requirements): 3.1 Eligibility requirements for elected officials: ❑ Elected officials are subject to the general eligibility requirements identified above ❑ Elected officials are eligible to participate without satisfying the general eligibility requirements identified above. 0 Elected officials are not eligible to participate. 3.3(b) Special rule for new hires described in the Basic Plan Document: ❑Applies. ODoes not apply. Article IV: Contributions 4.1 Salary reduction contributions shall occur: ❑ Every payroll period. OOnly two payroll periods per month (bi-weekly). ❑ Monthly. 4.2 Imputation of income (please choose one): 0 Pre-tax contributions with imputation of income of "fair market value" (see 4.2(a) in the Basic Plan Document). El After-tax payments of the "fair market value" (see 4.2(b) in the Basic Plan Document). Page 13 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. 4.4 Employer Contribution • Amount of the Employer Contribution towards Available Benefits for the Plan Year is as follows: 0 None ❑ Amount of the Employer Contribution is: • Frequency of the Employer Contribution: ❑ Per pay period. ❑ Per month. ❑ Per year on the first day of the Plan Year. • Restrictions, if any, on the Employer Contribution (Describe): Continuation of Employer Contribution during an unpaid leave (except as required by applicable law): ❑ Employer Contributions do not continue. ❑ Employer Contributions continue. • For Participants joining the Plan mid -Plan Year, the Employer Contribution is: ❑ Pro -rated. LJ uncnangea (i.e., the entire rmployer Uontribution for the Flan Y ear is available.) FMLA Leave. FMLA requires maintenance of the status quo for group health benefits. To the extent any portion of the Employer Contribution has been allocated to pay for the cost of Available Benefits that are group health benefits (e.g., Group Medical Benefits, Group Dental Benefits, Group Vision Benefits, Medical Expense Reimbursement Plan, Limited Scope Expense Reimbursement Plan), the Employer Contribution must continue to be made during the leave. Article V: Elections 5.1 Initial Election of Premium Contributions (e.g. toward Group Medical Benefits, Group Dental Benefits, etc.): ❑X As provided in the Basic Plan Document (i.e., affirmative election required to pay premiums pre-tax). ❑ An Eligible Employee is deemed to have elected to participate and to pay the Participant's share of the cost of such Available Benefits through pre-tax salary reduction unless (1) the Eligible Employee specifically elects not to participate with respect to such Available Benefit(s) and notifies the Plan Administrator in writing on or before the close of the Election Period, or (2) such deemed Election is otherwise prohibited by law. 5.3(b) Ongoing Annual Election of Premium Contributions (e.g., Group Medical Benefits, Group Dental Benefits, etc.): ❑X As provided in the Basic Plan Document (i.e., automatic election to pay premiums pre-tax). ❑ Affirmative election required to pay cost of benefits on a pre-tax basis through the Plan each year. 5.4 Irrevocable election rules are modified as follows: None Page 14 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. Article VI: Plan Administration 6.1(b) Plan Administrator means: ❑ As provided in the Basic Plan Document (i.e., the Employer). ® Other (Describe): The City of Hutchinson is the plan administrator. The Hutchinson Housing & Redevelopment Authority is an affiliated employer. 6.7(a) For paper claims, reimbursement of eligible expenses shall be made at least: ❑ Weekly ❑X Monthly ❑ Other (Describe): 6.7(b) Electronic payment for Medical Expense Reimbursement Plan is: ❑ N/A — no Medical Expense Reimbursement Plan is included. ❑X Available. ❑ Not Available. 6.8 Claims determination and appeal procedures: ❑X As provided in the Basic Plan Document. ❑ Other (Describe): Specifics on Available Benefits. The remainder of this Adoption Agreement, with the exception of the signature page, relates solely to each individual Available Benefit that is offered under the Plan as reflected in Section 2.28 (i.e. where (1) there is an Employer contribution towards benefits, and/or (2) the Employee may pay for certain benefits on a pre-tax basis. Article IX: Group Medical Benefits ❑X Available ❑ Not Available Group Medical Benefits are provided in accordance with the applicable Insurance Contracts, HMO agreements, other medical benefit agreements, and/or self-insured plan documents identified in Exhibit A attached to this Adoption Agreement. Article X: Dependent Care Expense Reimbursement Plan ❑X Available ❑ Not Available 10.3(a) Claims Run -Out Period means: ❑ The 60 -day period following the end of Plan Year. ❑X The 90 -day period following the end of Plan Year. ❑ Other (Describe): 10.8 Maximum Reimbursement: See the Basic Plan Document for the statutory limits. To implement further limits on the maximum available to employees, describe those limits in Section 10.12(b) below. Page 15 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. 10.9 Reimbursement of Dependent Care Expenses following termination of participation: XX Expenses incurred while a Participant may be reimbursed if submitted within the Claims Run -out Period identified in Section 10.3(a). ❑ Expenses incurred while a Participant may be reimbursed if submitted within «Number_Days» days following termination of participation. ❑ Expenses incurred during the Plan Year (whether while a Participant or after participation ceases) may be reimbursed if submitted within the Claims Run -Out Period identified in Section 10.3(a). ❑ No reimbursement of expenses shall occur following termination of participation. 10.12(b) Other dependent care limitations are as follows: ❑X N/A ❑ Other (Describe): Article XI: Medical Expense Reimbursement Plan XX Available ❑ Not Available Note: For a Limited Scope Medical Expense Reimbursement Plan intended to work with a Health Savings Account ("HSA"), see Article XIX. 11.3(a) Claims Run -Out Period means: ❑ The 60 -day period following the end of Plan Year. ® The 90 -day period following the end of Plan Year. ❑ Other (Describe): Page 16 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. 11.3(b) Dependent means: (a) An individual who: (1) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption); and (2) will not attain age 27 during the relevant calendar year. (b) An individual who: (1) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption), brother, sister, stepbrother, or stepsister, or a descendant of any such person; (2) has the same principal place of abode as you for at least one-half of the relevant year; (3) will not attain age 19 (or age 24 if a full time student) during the relevant year or is permanently and totally disabled; (4) did not provide over half of his/her own support during the relevant year; (5) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico; (6) is younger than you; and (7) does not file a joint tax return with his or her spouse. (c) An individual who: (1) is your child (or a descendant of a child), brother, sister, stepbrother, or stepsister, parent (or a parent's ancestor), stepparent, brother or sister's son or daughter, parent's brother or sister, Bon- in -law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law or, if not such a relative, an individual who has the same principal place of abode as you and is a member of your household; (2) has received more than one-half of his/her support from you during the relevant year; (3) is not your qualifying child or the qualifying child of anyone else (i.e., does not satisfy the requirements of paragraph (a) above with respect to any person); and (4) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico. DAs provided in the Basic Plan Document El Other (Describe): 11.3(d) Medical Expense means: ❑X As provided in the Basic Plan Document. ❑ Other (Describe): 11.6 With respect to orthodontia expenses: ❑X Expenses for orthodontia care shall be deemed incurred and may be reimbursed when the Participant makes an advance payment for the orthodontia care. ❑ Expenses for orthodontia care are incurred and may be reimbursed only as the care is provided. Page 17 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. 11.8 Maximum Elections • The amount of the maximum salary reduction contributions that may be made under Section 125(i) of the Code. • For a "short" Plan Year, the maximum election is: ❑X Not applicable. ❑ Pro -rated. ❑ Unchanged. a For Participants joining the Plan mid -Plan Year, the maximum election is: ❑ Pro -rated. ❑X Unchanged (i.e., the entire Employer Contribution for the Plan Year is available). Uniform Coverage. Because the full amount of a Participant's election (including salary reduction and allocation of Employer Contributions) under the Medical Expense Reimbursement Plan is available starting on the first day of the Plan Year (even though contributions are made over the course of the entire Plan Year), the amount of the maximum relates to the amount of risk the Employer assumes with respect to funding benefits under this plan. 11.9 Reimbursement of Medical Expenses following termination of participation: ❑X Expenses incurred while a Participant may be reimbursed if submitted within the claims run- out period identified in Section 13.12. ❑ Expenses incurred while a Participant may be reimbursed if submitted within «Number Days» days following termination of participation. ElNo reimbursement of expenses shall occur following termination of participation (unless required under COBRA). 11.12(a) Claims Grace Period: ❑ A Claims Grace Period is available under the Medical Expense Reimbursement Plan. ❑X A Claims Grace Period is not available under the Medical Expense Reimbursement Plan. 11.12(b) Carryover: ❑X Carryover is available under the Medical Expense Reimbursement Plan. ❑ Carryover is not available under the Medical Expense Reimbursement Plan. 11.14 Qualified Reservist Distributions: ❑ Qualified Reservist Distributions are available under the Medical Expense Reimbursement Plan. ❑X Qualified Reservist Distributions are not available under the Medical Expense Reimbursement Plan. 11.17(e) Other Medical Expense Reimbursement Plan limitations areas follows: ❑X None ❑ Other (Describe): Page 18 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. Article XII: Group Dental Benefits ❑X Available ❑ Not Available Group Dental Benefits are provided in accordance with the applicable Insurance Contracts, DMO agreements, other dental benefit agreements, and/or self-insured plan documents identified in Exhibit A attached to this Adoption Agreement. Article XIII: Group Vision Benefits ❑ Available ❑X Not Available Group Vision Benefits are provided in accordance with the applicable Insurance Contracts, other vision benefit agreements, and/or self-insured plan documents identified in Exhibit A attached to this Adoption Agreement. Article XIV: Group Term Life Benefits and/or AD&D Benefits ❑X Available ❑ Not Available Group Term Life and AD&D Benefits are provided in accordance with the applicable Insurance Contracts, other benefit agreements, and/or self-insured plan documents identified in Exhibit A attached to this Adoption Agreement. Article XV: Long Term Disability Benefits ❑X Available ❑ Not Available 15.6 Insurance Premiums paid through the Plan are: ❑X Included in the Participant's gross income (after-tax). ❑ Excluded from the Participant's gross income (pre-tax). Article XVI: Short Term Disability Benefits ❑ Available ❑X Not Available 16.6 Insurance Premiums paid through the Plan are: ❑ Included in the Participant's gross income (after-tax). ❑ Excluded from the Participant's gross income (pre-tax). Article XVII: Individual Premium Plan ❑ Available ❑X Not Available Page 19 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. 17.3(a) Claims Run -Out Period means: ❑ The 60 -day period following the end of Plan Year. ❑ The 90 -day period following the end of Plan Year. ❑ Other (Describe): 17.3(b) Dependent means: ❑ As provided in the Basic Plan Document. ❑ Other (Describe): Insurance Contract means: 17.3(8) ❑ As provided in the Basic Plan Document (i.e., all accident and health coverages except major medical coverage). ❑ All accident and health coverages (except as provided in the Basic Plan Document) other than coverages offered by the Employer on a group basis. ❑ Other (Describe): 17.7 Reimbursement of Individual Premium Expenses following termination of participation: ❑ Expenses incurred while a Participant may be reimbursed if submitted within claims run -out period identified in Section 17.3(a). ❑ Expenses incurred while a Participant may be reimbursed if submitted within <<Number_Days>> days following termination of participation. ❑ Expenses incurred during the Plan Year (whether while a Participant or after participation ceases) may be reimbursed if submitted within the claims run -out period identified in Section 17.3(a). ❑ No reimbursement of expenses shall occur following termination of participation. Article XVIII: HSA Contribution Feature ❑X Available ❑ Not Available 18.3(b) HSA means: ❑X An HSA provided through a trustee/custodian selected by the Employer. ❑ An HSA provided through any trustee/custodian selected by the Participant. 18.3(d) High Deductible Health Plan means: ❑X As provided in the Basic Plan Document (i.e., the Employer-sponsored High Deductible Health Plan). ❑ Any health plan constituting a high deductible health plan under Section 223 of the Code (i.e. a qualified health plan to be offered with a HSA). Page 110 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. 18.5 Certification of HSA Eligibility: ❑ A Certification of HSA Eligibility is required to participate in the HSA Contribution Feature. ❑X A Certification of HSA Eligibility is not required to participate in the HSA Contribution Feature. Article XIX: Limited Scope Medical Expense Reimbursement Plan ❑X Available ❑ Not Available 19.3(a) Claims Run -Out Period means: ❑ The 60 -day period following the end of Plan Year. ❑X The 90 -day period following the end of Plan Year. ❑ Other (Describe): 19.3(b) Dependent means: (a) An individual who: (1) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption); and (2) will not attain age 27 during the relevant calendar year. (b) An individual who: (1) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption), brother, sister, stepbrother, or stepsister, or a descendant of any such person; (2) has the same principal place of abode as you for at least one-half of the relevant year; (3) will not attain age 19 (or age 24 if a full time student) during the relevant year or is permanently and totally disabled; (4) did not provide over half of his/her own support during the relevant year; (5) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico; (6) is younger than you; and (7) does not file a joint tax return with his or her spouse. (c) An individual who: (1) is your child (or a descendant of a child), brother, sister, stepbrother, or stepsister, parent (or a parent's ancestor), stepparent, brother or sister's son or daughter, parent's brother or sister, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in- law, or sister-in-law or, if not such a relative, an individual who has the same principal place of abode as you and is a member of your household; (2) has received more than one-half of his/her support from you during the relevant year; (3) is not your qualifying child or the qualifying child of anyone else (i.e., does not satisfy the requirements of paragraph (a) above with respect to any person); and (4) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico. ❑X As provided in the Basic Plan Document ❑ Other (Describe): Page 111 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. 19.3(e) Limited Scope Medical Expense means: ❑ As provided in the Basic Plan Document. ❑X As provided in the Basic Plan Document plus Post -Deductible Expenses. ❑ Other (Describe): 19.6 With respect to orthodontia expenses: ❑X Expenses for orthodontia care shall be deemed incurred and may be reimbursed when the Participant makes an advance payment for the orthodontia care. ❑ Expenses for orthodontia care are incurred and may be reimbursed only as the care is provided. 19.8 Maximum Elections • The amount of the maximum salary reduction contributions that may be made under Section 125(1) of the Code. • For a "short" Plan Year, the maximum election is: ❑ Pro -rated. ❑ Unchanged. For Participants joining the Plan mid -Plan Year, the maximum election is: ❑ Pro -rated. ❑X Unchanged (i.e., the entire Employer Contribution for the Plan Year is available.) Uniform Coverage: Because the full amount of a Participant's election (including salary reduction and allocation of Employer contributions) under the Limited Scope Medical Expense Reimbursement Plan is available starting on the first day of the Plan Year (even though contributions are made over the course of the entire Plan Year), the amount of the maximum relates to the amount of risk the Employer assumes with respect to funding benefits under this plan. 19.9 Reimbursement of Limited Scope Medical Expenses following termination of participation: ❑X Expenses incurred while a Participant may be reimbursed if submitted with the claims run- out period identified in Section 19.12. ❑ Expenses incurred while a Participant may be reimbursed if submitted within «Number Days» days following termination of participation. ❑ No reimbursement of expenses shall occur following termination of participation. 19.12 (a) Claims Grace Period: ❑ A Claims Grace Period is available under the Limited Scope Medical Expense Reimbursement Plan. ❑X A Claims Grace Period is not available under the Limited Scope Medical Expense Reimbursement Plan. Page 112 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. 19.12 (b) Carryover: ❑X Carryover is available under the Limited Scope Medical Expense Reimbursement Plan. ❑ Carryover is not available under the Limited Scope Medical Expense Reimbursement Plan. 19.14 Qualified Reservist Distributions: ❑ Qualified Reservist Distributions are available under the Limited Scope Medical Expense Reimbursement Plan. ❑X Qualified Reservist Distributions are not available under the Limited Scope Medical Expense Reimbursement Plan. 19.17 (d) Other Limited Scope Medical Expense Reimbursement Plan limitations are as follows: ❑X N/A ❑ Other (Describe): Article XX: Cash Payment ❑ Available ❑X Not Available 20.0 Restrictions on the Cash Payment available ❑ N/A — no restrictions. ❑ Other (Describe): Page 113 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. Acknowledgements 1. This Plan has been duly adopted or authorized to be adopted by the Employer's managing body 2. Portions of this Plan are intended to be a "covered entity" for purposes of the Health Insurance Portability and Accountability Act (HIPAA). Date: If Affiliated Employers: ❑x N/A Date: ❑ N/A Date: EMPLOYER: Citv of Hutchinson By: Its: EMPLOYER: Hutchinson Housing & Redevelopment Authority By: Its: EMPLOYER: By: Its: Page 114 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. EXHIBIT A If more than one insurer/provider for a particular benefit, provide the additional insurer/provider information in the blank space provided below. Insurer/Provider Information Group Medical Benefits Group Term Life Benefits and/or AD&D Benefits ❑ Not Applicable ❑ Not Applicable Name of Insurer/Provider: MEDICA Name of Insurer/Provider: UNUM Address: PO Box 30900 Address: PO BOX 409548 City, State, Zip: _Salt Lake City, UT 84130 City, State, Zip: ATLANTA, GA 30384-9548_ Phone #: 1-800-952-3455 Phone #: Group #: _80509 & 80510 Group #: 0420922-001_ Group Dental Benefits ❑ Not Applicable Name of Insurer/Provider: Assurant Dental Address: 8t' Floor, Self-funded Dental Team City, State, Zip: Kansas City, MO 64141-6423 Phone #: 1-800-757-9796, ext. 8455 Group #: K1900993 Group Vision Benefits ❑X Not Applicable Name of Insurer/Provider: Address: City, State, Zip: Phone #: Group #: HSA Contribution Feature ❑ Not Applicable Name of HSA Vendor (if vendor selected by Employer): TASC Address: 2303 International Lane City, State, Zip: Madison, WI 53704-3140 Phone #: 1-800-422-4661 Group #: 4102-6282-9437_ Long Term Disability Benefits ❑ Not Applicable Name of Insurer/Provider: UNUM Address: PO BOX 409548 City, State, Zip: ATLANTA, GA 30384-9548 Phone #: Group #: 0420922-001 Short Term Disability Benefits ❑X Not Applicable Name of Insurer/Provider: Address: City, State, Zip: Phone #: Group #: Page 115 Flexible Benefit Plan Adoption Agreement © 2010 Hitesman & Associates, P.A. SUMMARY DESCRIPTION OF THE CITY OF HUTCHINSON FLEXIBLE BENEFITS PLAN January 1, 2017 TABLE OF CONTENTS INTRODUCTION.......................................................................................................................... I PART L GENERAL INFORMATION ABOUT THE PLAN ....................................................... 2 1.1 What is the purpose of the Flexible Benefits Plan? ................................................ 2 1.2 When did the Flexible Benefits Plan take effect? ................................................... 2 1.3 What benefits are offered through the Flexible Benefits Plan? .............................. 2 1.4 Who can participate in the Flexible Benefits Plan? ................................................ 3 1.5 When do I become a Participant and how long does participation last? ................ 3 1.6 How do I enroll and make benefit elections?.......................................................... 4 1.7 What is the maximum election I can make under the Flexible Benefits Plan?....... 5 1.8 Can I change my election during Plan Year?.......................................................... 5 1.9 Who holds the funds I have set aside under the Flexible Benefits Plan? ............. 16 1.10 What if I terminate my employment during the Plan Year? ................................. 16 1.11 Will I have any administrative costs under the Flexible Benefits Plan? ............... 16 1.12 How long will the Flexible Benefits Plan remain in effect? ................................. 16 1.13 Are my benefits taxable?...................................................................................... 16 1.14 What is the impact on my Social Security benefits? ............................................. 17 1.15 What contributions are made to the Flexible Benefits Plan? ................................ 17 1.16 What if coverage is provided to someone other than your spouse and tax dependents?........................................................................................................... 17 1.17 How are claims determined?................................................................................. 19 1.18 Who has authority to interpret the Plan?............................................................... 20 PART II. GROUP MEDICAL BENEFITS.................................................................................. 21 2.1 What benefits are provided?................................................................................. 21 2.2 How do I become a Participant in this portion of the Flexible Benefits Plan? ..... 21 2.3 How is the cost of group medical coverage paid? ................................................ 21 2.4 What if I am no longer eligible?........................................................................... 22 2.5 Can coverage be continued?................................................................................. 22 2.6 What if I am subject to a child support order? ...................................................... 22 PART III. GROUP DENTAL BENEFITS................................................................................... 23 3.1 What benefits are provided?................................................................................. 23 3.2 How do I become a Participant?........................................................................... 23 3.3 How is the cost of group dental coverage paid? ................................................... 23 3.4 What if I am no longer eligible?........................................................................... 24 3.5 Can coverage be continued?................................................................................. 24 3.6 What if I am subject to a child support order? ...................................................... 24 PART IV. GROUP TERM LIFE AND AD&D BENEFITS........................................................ 25 4.1 What benefits are provided?................................................................................. 25 4.2 How do I become a Participant in this portion of the Flexible Benefits Plan? ..... 25 4.3 How is my portion of the cost of coverage paid? ................................................. 25 4.4 How much group term life insurance coverage can I purchase? .......................... 26 4.5 What if I am no longer eligible?........................................................................... 26 © 2015 Hitesman & Wold, P.A. Flexible Benefits Plan Summary Description 4.6 Can coverage be continued?................................................................................. 26 PART V. LONG TERM DISABILITY BENEFITS.................................................................... 27 5.1 What benefits are provided?................................................................................. 27 5.2 How do I become a Participant in this portion of the Flexible Benefits Plan? ..... 27 5.3 How is my portion of the cost of coverage paid? ................................................. 27 5.4 What are the tax consequences if I receive benefits? ........................................... 27 5.5 What if I am no longer eligible?........................................................................... 28 PART VI. DEPENDENT CARE EXPENSE REIMBURSEMENT PLAN ................................. 29 6.1 What benefits are provided?................................................................................. 29 6.2 How do I become a Participant in the DC Plan? .................................................. 29 6.3 What is my dependent care account?.................................................................... 29 6.4 What are the maximum benefits I may receive? ................................................... 29 6.5 Who is a "Qualifying Individual" for whom I can submit claims for reimbursement? ............................................................................................................................... 30 6.6 What if two people wish to claim a child as a Qualifying Individual? ................. 31 6.7 What is an "Eligible Expense"?............................................................................ 33 6.8 How do I receive reimbursements under the DC Plan? ........................................ 34 6.9 What limits apply to reimbursements under the DC Plan? ................................... 34 6.10 Will I be taxed on the DC Plan benefits I receive? ............................................... 35 6.11 If I participate in the DC Plan, will I still be able to claim the dependent care tax credit on my federal income tax return?............................................................... 35 6.12 What is the dependent care tax credit?................................................................. 35 6.13 When might it be better for me to use the tax credit? ........................................... 35 6.14 What if I am no longer eligible?........................................................................... 36 6.15 What if I receive benefits in error?....................................................................... 36 6.16 What if the dependent care expenses I incur during the Plan Year are less than the annual benefit I have elected?............................................................................... 36 6.17 What reporting will I receive?.............................................................................. 36 PART VII. MEDICAL EXPENSE REIMBURSEMENT PLAN ................................................ 37 7.1 What benefits are provided?................................................................................. 37 7.2 How do I become a Participant?........................................................................... 37 7.3 What is my medical expense account?................................................................. 37 7.4 What is an "Eligible Expense"?............................................................................ 38 7.5 How do I receive my reimbursements under the ME Plan? ................................. 40 7.6 What limits apply to reimbursements under the ME Plan? .................................. 44 7.7 What are the maximum reimbursements I may receive? ...................................... 44 7.8 What if I am no longer eligible?........................................................................... 44 7.9 Can coverage be continued?................................................................................. 45 7.10 Can I carry over my ME Account to the next Plan Year? .................................... 45 7.11 What if I receive benefits in error?....................................................................... 46 7.12 What if I am subject to a child support order? ...................................................... 46 PART VIII. HSA CONTRIBUTION FEATURE........................................................................ 47 8.1 What benefits are provided?................................................................................. 47 © 2015 Hitesman & Wold, P.A. II Flexible Benefits Plan Summary Description 8.2 How do I become a Participant?........................................................................... 47 8.3 What is a Qualifying High Deductible Health Plan? ............................................ 47 8.4 What is Permitted Insurance and Permitted Coverage? ........................................ 48 8.5 What other coverage disqualifies me?.................................................................. 48 8.6 What is my HSA?................................................................................................. 48 8.7 What are the limits on the amount of contributions? ............................................ 48 8.8 What happens if my contributions exceed the contribution limit? ....................... 49 8.9 What are the tax consequences of the HSA Contribution Feature? ...................... 50 8.10 What are the rules regarding distributions from my HSA? .................................. 50 8.11 When does my participation end?......................................................................... 50 8.12 Can the contributions made to my HSA be forfeited? .......................................... 50 8.13 What are the reporting requirements?................................................................... 50 PART IX. LIMITED SCOPE MEDICAL EXPENSE BENEFITS .............................................. 51 9.1 What benefits are provided?................................................................................. 51 9.2 How do I become a Participant?........................................................................... 51 9.3 What is my limited scope medical expense account? ........................................... 51 9.4 What is an "Eligible Expense"?............................................................................ 52 9.5 How do I receive my reimbursements under the Limited Scope ME Plan? ......... 54 9.6 What limits apply to reimbursements under the Limited Scope ME Plan? .......... 58 9.7 What are the maximum reimbursements I may receive? ...................................... 59 9.8 What if I am no longer eligible?........................................................................... 59 9.9 Can coverage be continued?................................................................................. 59 9.10 Can I carry over my Limited Scope ME Account to the next Plan Year?............ 59 9.11 What if I receive benefits in error?....................................................................... 60 9.12 What if I am subject to a child support order? ...................................................... 60 PART X. CONTINUATION COVERAGE................................................................................. 61 10.1 What are my continuation rights under COBRA? ................................................ 61 10.2 What are my continuation rights under USERRA?.............................................. 61 10.3 What are my continuation and/or conversion rights for group health plan coverage understate law?..................................................................................................... 61 10.4 What are my continuation and/or conversion rights for group term life insurance coverage under state law?..................................................................................... 62 PART XI. FAMILY AND MEDICAL LEAVE ACT OF 1993 ................................................... 63 11.1 Family and Medical Leave Act of 1993............................................................... 63 PART XII. ADMINISTRATIVE INFORMATION..................................................................... 64 Exhibit A - Eligible Medical Care Expenses................................................................................ 66 Exhibit B - DC PLAN v. Claiming Dependent Care Tax Credit .................................................. 70 © 2015 Hitesman & Wold, P.A. Flexible Benefits Plan Summary Description INTRODUCTION Your employer, City of Hutchinson / Hutchinson Housing & Redevelopment Authority ("Employer"), is pleased to sponsor an employee benefit program known as the City of Hutchinson Flexible Benefits Plan (the " Flexible Benefits Plan") for its employees. Under federal tax laws, it is also known as a "cafeteria plan." The Employer provides you with the opportunity to use pre-tax dollars to pay certain benefit costs by entering into a salary reduction arrangement. This arrangement helps you because many of the benefits you elect are nontaxable; you should save social security and income taxes on the amount of your salary reduction. The City of Hutchinson is the Employer and the Hutchinson Housing & Redevelopment Authority is the affiliated employer. This summary describes the basic features of the Flexible Benefits Plan, how it operates, and how you can get the maximum advantage from it. It is only a summary of the key parts of the Flexible Benefits Plan, and a brief description of your rights as a Participant. To make use of this Flexible Benefits Plan, be sure to proceed through this booklet carefully so that you can make informed decisions that are right for you. If there is a conflict between the underlying Plan document and this summary, the intention is for the Flexible Benefits Plan document to govern. NOTE: The Employer is a Minnesota public sector entity. Therefore, the Employee Retirement Income Security Act of 1974 ("ERISA") does not apply to this Flexible Benefits Plan, including any of the benefits made available through it. HOW TO USE THIS DOCUMENT This document summarizes the benefits available through the Flexible Benefit Plan. The Flexible Benefit Plan is the mechanism through which you make selections from the available benefits and choose to pay your share of the cost on a pre-tax, tax favored basis. The Flexible Benefit Plan "sits on top" of the benefits made available through it. This means you must meet the requirements for coverage under the particular benefit and meet the requirements for participation in the Flexible Benefits Plan. There are two levels of requirements, the Flexible Benefit Plan requirements and the particular benefit requirements. Just because coverage changes with respect to the particular benefit does not necessarily mean your participation in the Flexible Benefits Plan changes. It is your responsibility to become familiar with the Summary Description and ask questions if you do not understand how the requirements impact you. © 2015 Hitesman & Wold, P.A. Flexible Benefits Plan Summary Description PART I. GENERAL INFORMATION ABOUT THE PLAN 1.1 What is the purpose of the Flexible Benefits Plan? The purpose of the Flexible Benefits Plan is to allow eligible employees to use funds provided through employee salary reduction and Employer Contributions (if any) to choose (and pay for) certain benefits made available by the Employer. 1.2 When did the Flexible Benefits Plan take effect? This Flexible Benefits Plan became effective January 1, 1993. This restatement is effective January 1, 2017. The Flexible Benefits Plan operates on a Plan Year running from January 1 through December 31. 1.3 What benefits are offered through the Flexible Benefits Plan? This Flexible Benefits Plan makes the following benefits available ("Available Benefits"): Premium Contributions: • Group Medical Benefits o The group medical benefit allows a Participant to pay the employee's share of the cost for medical coverage made available by the Employer with pre-tax dollars through salary reduction and Employer Contributions (if any). • Group Dental Benefits o The group dental benefit allows a Participant to pay the employee's share of the cost for dental coverage made available by the Employer with pre-tax dollars through salary reduction and Employer Contributions (if any). • Group Term Life Benefits and/or Group AD&D Benefits o The group term life benefit allows a Participant to pay the employee's share of the cost for group term life insurance coverage made available by the Employer with pre-tax dollars through salary reduction and Employer Contributions (if any). o The accidental death and dismemberment benefit allows a Participant to pay the employee's share of the cost for group accidental death and dismemberment coverage made available by the Employer with pre-tax dollars through salary reduction and Employer Contributions (if any). • Long Term Disability Benefits o The long term disability benefit allows a Participant to pay the employee's share of the cost for long term disability coverage made available by the Employer with pre-tax dollars through salary reduction and Employer Contributions (if any). Expense Reimbursement: Dependent Care Expense Reimbursement Plan o The dependent care reimbursement benefit allows a Participant to fund an account with pre-tax dollars through salary reduction and Employer Contributions (if any) © 2015 Hitesman & Wold, P.A. 2 Flexible Benefits Plan Summary Description that may be used to reimburse the Participant for eligible dependent care expenses. Medical Expense Reimbursement Plan o The medical expense reimbursement benefit allows a Participant to fund an account with pre-tax dollars through salary reduction and Employer Contributions (if any) that may be used to reimburse the Participant for eligible medical expenses. Limited Scope Medical Expense Reimbursement Plan o The limited scope medical expense reimbursement benefit allows a Participant to fund an account with pre-tax dollars through salary reduction and Employer Contributions (if any) that may be used to reimburse the Participant for limited medical expenses. It is made available for Participants wishing to make or receive contributions to a health savings account. Other: • HSA Contribution Feature o The HSA contribution feature allows a Participant to make contributions to an HSA with pre-tax dollars through salary reduction and to receive contributions to an HSA through Employer Contributions (if any). 1.4 Who can participate in the Flexible Benefits Plan? Each employee who is a regular full time employee who is regularly scheduled to work an average of at least 30 hours per week or a regular part time employee who is regularly scheduled to work more than 20 hours per week is eligible to participate in the Flexible Benefits Plan. Elected officials are not eligible to participate. Individuals who satisfy the eligibility requirements are called "Eligible Employees." Those Eligible Employees who actually participate in the Flexible Benefits Plan are called "Participants." There are certain exceptions. They are described in the underlying Plan document. You will be notified if you fall within one of the exceptions. "Employee" means a common-law employee of the Employer (including elected officials) who is on the Employer's W-2 payroll, except that the term "Employee" does not include any common- law employee who is a leased employee (including, but not limited to, an individual defined in Internal Revenue Code § 414(n)), or any common-law employee who is an individual classified by the Employer as a contract worker, independent contractor, temporary employee or casual employee, whether or not any such person is on the Employer's W-2 payroll. The term "Employee" also does not include any individual who performs services for the Employer but who is paid by a temporary or other employment agency such as "Kelly," "Manpower," etc., or any employee covered under a collective bargaining agreement unless the collective bargaining agreement so provides. The term "Employee" includes "former employees" for the limited purpose of allowing continued eligibility for benefits as provided hereunder after an employee ceases to be employed by the Employer. 1.5 When do I become a Participant and how long does participation last? For newly eligible Employees, participation may begin on the 1St day of the month following the date of employment and upon completion and submission of any required enrollment © 2015 Hitesman & Wold, P.A. 3 Flexible Benefits Plan Summary Description forms. If they are required, you must submit the enrollment forms within the time period established and communicated to you by the Plan Administrator. NOTE: With respect to premium contributions, if you have enrolled in the underlying benefit plan (e.g., the Group Medical Plan), you may automatically become a Participant in this Flexible Benefits Plan as described in Section 1.6. If you do not become a Participant when first eligible, you may become a Participant at the start of any subsequent Plan Year. As a condition to participation in the Flexible Benefits Plan, you must also: (a) observe all Plan rules and regulations; (b) agree to inquiries by the Plan Administrator with respect to any physician, hospital, or other provider of medical care or other services covered by this Flexible Benefits Plan; (c) submit to the Plan Administrator all notifications, reports, bills, and other information that the Plan Administrator may reasonably require; and (d) agree to repay any overpayments or incorrect payments you receive from the Flexible Benefits Plan. Participation continues until you elect not to participate, you are no longer an Eligible Employee, the Flexible Benefits Plan terminates, your contributions cease, or your participation is terminated for cause. 1.6 How do I enroll and make benefit elections? (a) Generally. The Plan Administrator will provide you with the forms necessary to enroll and make elections, including information about the costs of the various Available Benefits. (b) Initial Enrollment. If you become an Eligible Employee other than at the start of a Plan Year, the initial enrollment period takes place at the time you become eligible to participate as described in Section 1.5. If you do not make an election during the initial enrollment period, you must wait until the next annual enrollment period to begin participation. However, if you have enrolled in[the Group Medical Plan, Group Dental Plan, Group Term Life and AD&D Plan, and Long Term Disability Plan], you will be deemed to have elected to pay through salary reduction any portion of the cost for which you are responsible under such plans. This will occur unless you specifically elect not to participate with respect to such coverage. Such an election must be in writing and must be received by the Plan Administrator prior to the date your participation in the Flexible Benefits Plan would otherwise begin. (c) Annual Enrollment. The annual enrollment period for the coming Plan Year begins and ends on or before the last day of each Plan Year. If you do not make an election during the annual enrollment period, you will be deemed to have elected to not participate in the Flexible Benefits Plan for the coming Plan Year. However, if you have enrolled in [the Group Medical Plan, Group Dental Plan, Group Term Life and AD&D Plan, and Long Term Disability Plan] you will be deemed to have elected to pay through salary reduction any portion of the cost for which you are © 2015 Hitesman & Wold, P.A. 4 Flexible Benefits Plan Summary Description responsible under such plans. This will occur unless you specifically elect not to participate with respect to such coverage. Such an election must be in writing and must be received by the Plan Administrator prior to the first day of the Plan Year. CAUTION: With limited exceptions, once made, elections remain in effect for the entire Plan Year. The exceptions are described below at Question 1.8. 1.7 What is the maximum election I can make under the Flexible Benefits Plan? The maximum election available under this Flexible Benefits Plan is the sum of the cost of all Available Benefits elected (or deemed elected). Please refer to the other parts of this summary for additional information regarding maximum elections applicable to particular Available Benefits. 1.8 Can I change my election during Plan Year? Unless you experience an event described below, you cannot change your election regarding participation in the Flexible Benefits Plan or the benefits you have selected during the Plan Year. You may change your elections only during the annual enrollment period, and then, only for the coming Plan Year. However, your elections will terminate automatically if you cease to be eligible to participate in the Flexible Benefits Plan. In addition, there are several other exceptions to this general rule. Caution: The circumstances in which you are allowed to change your election, as further described below, are based upon the facts and circumstances of each particular situation. The descriptions of the rules below are general in nature. It is important to work through all possible bases for changing your election. If you have questions regarding the application of the rules to your specific fact situation, please contact the Plan Administrator immediately. Any request to change your election must be within the deadline described below. NOTE: The exceptions to the general rule that elections are irrevocable for the Plan Year are determined under regulations issued by the IRS. NOTE: The IRS recognizes only marriages between persons of the opposite sex that are valid under applicable state law. Accordingly, a reference to marital status or spouse in this Section 1.8 is applicable only if you are married to an individual of the opposite sex and the marriage is valid under applicable state law. NOTE: For purposes of this Section 1.8, if the election relates to an Available Benefit involving health benefits (e.g., Group Medical Plan, Group Dental Plan, Medical Expense Reimbursement Plan, the term "dependent" means a "tax dependent" as defined below in Section 1.16. If the election relates to the Dependent Care Expense Reimbursement Plan, the term "dependent" means a "qualifying individual" as defined in that plan. (a) Change in Status. You may change or revoke your previous election during the Plan Year if one or more of the following changes in status occur: © 2015 Hitesman & Wold, P.A. 5 Flexible Benefits Plan Summary Description (1) a change in your legal marital status, including marriage, divorce, death of your spouse, legal separation or annulment; (2) a change in the number of your dependents, including birth of a child, adoption or placement for adoption of a dependent, or death of a dependent; (3) any of the following events that change your employment status or the employment status of your spouse or dependent: termination or commencement of employment, a reduction or increase in hours worked, a switch between part-time and full-time, a strike or lockout, a change in worksite, commencement or return from an unpaid leave of absence, a switch between hourly and salaried, a switch between union and non-union, or any similar event; (4) an event causing a dependent to satisfy or cease to satisfy the eligibility requirements applicable under an Available Benefit provided or paid for through this Flexible Benefits Plan; or (5) a change in place of residence for you, your spouse or your dependent. A change or revocation shall be allowed in these circumstances only if such change or revocation is made on account of, and corresponds with, the change in status and the change in status affects eligibility for coverage under a plan sponsored by the Employer or another employer (referred to as the general consistency requirement). The Plan Administrator (in its sole discretion) shall determine, based on prevailing IRS guidance, whether a requested change or revocation satisfies the general consistency requirement. Example 1: An employee enrolls in single coverage under the Employer's Group Medical Plan and elects to pay the cost of that coverage through the Flexible Benefits Plan. The employee also elects to participate in the Medical Expense Reimbursement Plan. During the Plan Year, the employee gets married. If the employee enrolls his or her new spouse in the Group Medical Plan, the employee may change his or her election to pay the increased cost of that coverage through the Flexible Benefits Plan. In addition, the employee may increase his or her election under the Medical Expense Reimbursement Plan. Example 2: Employer has three medical plan options: an indemnity option, an HMO option with a service area covering the location of one of Employer's operations, and an HMO option with a service are covering the location of the other operation. An employee enrolls in the HMO option with a service area covering the area in which employee works and makes an election to pay the cost of the coverage through the Flexible Benefits Plan. Employee also elects to participate in the Medical Expense Reimbursement Plan. If employee is transferred to the other location, the employee may switch to the other HMO option or the indemnity option and change his or her election to pay the cost of the new option. The employee may also drop medical coverage and terminate his or her election under the Flexible Benefits Plan to pay the cost of medical coverage. The employee cannot change his or her election under the Medical Expense Reimbursement Plan because the change in work location does not affect his or her eligibility under the Medical Expense Reimbursement Plan. © 2015 Hitesman & Wold, P.A. 6 Flexible Benefits Plan Summary Description A requested change or revocation must also satisfy the following specific consistency requirements in order for you to be able to alter your election based on the change in status: (1) Loss of Dependent Eligibility. For a change in status involving your divorce, annulment or legal separation from your spouse, the death of your spouse or dependent, or your dependent ceasing to satisfy the eligibility requirements for coverage, you may elect to change your election only to reflect the cancellation of group health plan coverage for the affected spouse or dependent. Canceling coverage for any other individual under these circumstances fails to correspond with that change in status. For example, if you have elected group medical coverage for you, your spouse, and your child, and you divorce during the Plan Year, you may drop your ex-spouse from the coverage and make an election change under this Flexible Benefits Plan to reflect the reduced cost of coverage. However, you would not be allowed to change your election to reflect the reduced cost attributable to dropping coverage for yourself or your child. (2) Gain of Coverage Eligibility Under Another Employer's Plan. If you, your spouse, or your dependent gains eligibility for coverage under another employer's plan as a result of a change in marital status or a change in employment status, you may elect to terminate or decrease your election under this Flexible Benefits Plan on account of that change in status only if coverage becomes effective or is increased under the other employer's plan. (3) Dependent Care Expense Reimbursement Plan. With respect to the Dependent Care Expense Reimbursement Plan (if available), you may change or terminate your election only if (i) the change or termination is made on account of and corresponds with a change in status that affects eligibility for coverage under the Flexible Benefit Dependent Care Expense Reimbursement Plan; or (ii) the election change is on account of and corresponds with a change in status that affects eligibility of dependent care expenses for the tax exclusion available under the Internal Revenue Code. For example, if your child attains age 13 during the Plan Year, you may terminate your election under the Dependent Care Expense Reimbursement Plan because your child is no longer eligible to participate in the Dependent Care Expense Reimbursement Plan (i.e., she is no longer a qualifying individual). (4) Group Term Life Insurance and Disability Income Coverage. For a change of status involving your legal marital status or the employment status of your spouse or dependent, you may increase or decrease your group term life insurance or disability income coverage and change your election under the Flexible Benefits Plan to pay the increased or decreased cost of such coverage without regard to the requirement that the event cause a loss or gain of eligibility. © 2015 Hitesman & Wold, P.A. 7 Flexible Benefits Plan Summary Description (5) COBRA Coverage. If you, your spouse, and/or your dependent elects COBRA continuation coverage (or similar health plan continuation coverage under state law) with respect to a group health plan sponsored by the Employer, you may increase your election for the purpose of paying the cost of the increased premium for such continuation coverage, provided you are still eligible under the Flexible Benefits Plan and are receiving compensation from the Employer. (b) Other Change in Election Events. You may also change or revoke your previous election during the Plan Year in the following circumstances. (1) HIPAA Special Enrollment Rights. In certain cases, individuals are allowed to enroll in the Employer's Group Medical Plan pursuant to HIPAA special enrollment at times other than open enrollment. Generally, special enrollment is available upon: (i) acquiring a new spouse or dependent, (ii) losing other group coverage, (iii) effective April 1, 2009, losing coverage under Medicaid or a state children's health insurance program ("SCHIP"), and (iv) effective April 1, 2009, becoming eligible for a subsidy under Medicaid or SCHIP for coverage under the Employer's group health plan. (Please refer to the plan documentation for the Group Medical Plan for additional information regarding HIPAA special enrollment, including information regarding the situations in which special enrollment is available and the deadline for requesting special enrollment under that plan.) If you, your spouse, and/or your dependent actually enroll in the Group Medical Plan pursuant to HIPAA special enrollment, then you may make a new election under the Flexible Benefits Plan to pay the cost of that new or increased coverage. For purposes of this provision an election to add previously eligible dependents as a result of the acquisition of a new spouse or dependent child (a/k/a the Tag -along Rule), shall be considered consistent with the special enrollment right. Note: There are two separate steps involved in making an election change under this exception. You and/or your spouse and dependents must enroll in the Group Medical Plan within the HIPAA special enrolment time period required under that plan. If such enrollment in the Group Medical Plan changes your share of the cost of coverage, you must also request a change to your election under the Flexible Benefits Plan in accordance with the procedures described below. The time period described below begins to run on the effective date of the special enrollment in the Group Medical Plan. It is the coverage attributable to the HIPAA special enrollment that triggers the need to change election under the Flexible Benefits Plan. (2) Certain Judgments, Decrees and Orders. If a judgment, decree, or order (an "Order") resulting from a divorce, legal separation, annulment or change in legal custody (including a qualified medical child support order) requires you to cover your child (including a foster child who is your dependent) © 2015 Hitesman & Wold, P.A. $ Flexible Benefits Plan Summary Description under the Group Medical Plan, Group Dental Plan, Group Vision Plan, the Medical Expense Reimbursement Plan, or the Limited Scope Medical Expense Reimbursement Plan, you may change your election to pay the increased cost of coverage incurred to add the dependent child to your coverage. If an Order requires another individual to provide health coverage for your child (including a foster child who is your dependent) and the child is currently enrolled in the Group Medical Plan, Group Dental Plan, Group Vision Plan, the Medical Expense Reimbursement Plan, or the Limited Scope Medical Expense Reimbursement Plan, you may terminate coverage for the child and change your election to reflect the reduced cost of coverage (if any), provided the other individual actually provides coverage to the child as required by the Order. For example, if you have enrolled in single coverage under the Group Medical Plan, become divorced during the Plan Year, and are ordered to provide coverage to your child following the divorce, you may increase your election to pay the additional cost of the child's coverage under the Group Medical Plan. (3) Medicare and Medicaid. If you, your spouse, or your dependent is enrolled in the Group Medical Plan, Group Dental Plan, or Group Vision Plan, such individual subsequently enrolls in Medicare or Medicaid, and such individual's coverage under the Employer's plan is cancelled, you may change your election to reflect the reduced cost of coverage (if any) under the applicable Employer-sponsored group health plan. You may also reduce or cancel your election with respect to the Medical Expense Reimbursement Plan or the Limited Scope Medical Expense Reimbursement Plan. Further, if you, your spouse, or your dependent has been enrolled in Medicare or Medicaid, such individual loses eligibility for such coverage, and such individual enrolls in the Group Medical Plan, Group Dental Plan, or Group Vision Plan, you may change your election to reflect the increased cost of coverage (if any) under the applicable Employer-sponsored group health plan. You may also make or increase your election with respect to the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan. NOTE: Certain changes to an individual's Medicaid coverage also create a HIPAA special enrollment right. Election changes based upon HIPAA special enrollment rights are described above. © 2015 Hitesman & Wold, P.A. 9 Flexible Benefits Plan Summary Description (c) Change in Cost. NOTE: Although the Plan Administrator will be aware of an increase or decrease in the cost of many Available Benefits, you will need to notify the Plan Administrator of any changes to the cost of benefits under the Dependent Care Expense Reimbursement Plan and the Individual Premium Feature (if available). For example, if the cost of day care services for your dependent increases or decreases during the Plan Year (e.g., rates are changed, you change dependent care service providers, etc.), you may be able to change your election to correspond to the cost change. (1) Automatic Increase or Decrease for Insignificant Cost Changes. If the cost of coverage increases or decreases during a Plan Year by an insignificant amount, then your election to pay the cost of such coverage through the Flexible Benefits Plan shall be automatically increased or decreased to reflect such change in the cost. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether increases or decreases in costs are "insignificant" based upon all the surrounding facts and circumstances (including, but not limited to, the dollar amount or percentage of the cost change). NOTE: This rule does not allow changes to your election under the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan (if available). (2) Significant Cost Increases. If the Plan Administrator determines that the cost of coverage significantly increases during a Plan Year, you may either: (i) increase your election to pay the additional cost, (ii) enroll in another benefit package option providing similar coverage and change your election (if necessary) to pay the cost of that option through the Flexible Benefits Plan, or (iii) cancel the underlying coverage and revoke your election to pay the cost of that coverage through the Flexible Benefits Plan if no other benefit package option providing similar coverage is available. For example, if the cost of one option under the Group Medical Plan significantly increases during the Plan Year, you may increase your election to pay the increased cost or enroll in another option available under the Group Medical Plan and change your election to correspond to the new cost of Group Medical Plan coverage. If there is only one Group Medical Plan option, you may increase your election to pay the increased cost of that option or cancel Group Medical Plan coverage and revoke your election to pay for that coverage through the Flexible Benefits Plan. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a cost increase is significant and what constitutes "similar coverage" based upon all the surrounding facts and circumstances. © 2015 Hitesman & Wold, P.A. 10 Flexible Benefits Plan Summary Description NOTE: This rule does not allow changes to your election under the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan (if available). (3) Significant Cost Decrease. If the Plan Administrator determines that the cost of coverage significantly decreases during a Plan Year: (i) you may enroll in the coverage and make or change your election to pay the cost of such coverage through the Flexible Benefits Plan; or (ii) if you are already enrolled in the underlying coverage and are paying the cost of such coverage through the Flexible Benefits Plan, the Plan Administrator will automatically decrease your election to pay the cost of such coverage in accordance with the cost decrease. NOTE: This rule does not allow changes to your election under the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan (if available). (4) Cause of Cost Changes. For purposes of this rule, a change in cost allowing an election change can result from action taken by you (e.g., switching between full-time and part-time employment) or your Employer (e.g., changing the amount of Employer Contribution toward the cost of coverage). (5) Application to Dependent Care Reimbursement Plan. This rule does not apply to changes in cost if the dependent care provider is your relative. (d) Change in Coverage. (1) Significant Curtailment. If the Plan Administrator determines your coverage, or the coverage of your spouse or dependent, is significantly curtailed during a Plan Year, you may enroll in another benefit package option providing similar coverage and make a corresponding election change to pay for that new coverage through the Flexible Benefits Plan. Coverage is "significantly curtailed" only if there is an overall reduction in coverage provided to participants under the plan so as to constitute reduced coverage to all participants in general (e.g., a significant increase in the deductible, copays, or out-of-pocket maximum applicable under the plan). The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a curtailment is "significant," and whether a benefit package option constitutes "similar coverage" based upon all the surrounding facts and circumstances. NOTE: This rule does not allow changes to your election under the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan (if available). © 2015 Hitesman & Wold, P.A. 11 Flexible Benefits Plan Summary Description (2) Loss of Coverage. If the Plan Administrator determines that your coverage, or the coverage of your spouse or dependent, is lost during a Plan Year, you may: (i) enroll in another option providing similar coverage and make a corresponding election change to pay for that new coverage through the Flexible Benefits Plan, or (ii) if no other option providing similar coverage is available, cancel the underlying coverage and revoke your election to pay the cost of such coverage through this Flexible Benefits Plan. Coverage is deemed "lost" only if there is a complete loss of coverage (e.g., the benefit plan option is eliminated or an annual or lifetime maximum is reached) or other fundamental loss of coverage (e.g., a substantial decrease in the health care providers available under the option or a reduction in benefits for a specific type of medical condition with respect to which you or your spouse or dependent is currently receiving treatment. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a "loss" has occurred, and whether a benefit package option constitutes "similar coverage" based upon all the surrounding facts and circumstances. Application to Dependent Care Expense Reimbursement Plan. This rule allows you to change your election under the Dependent Care Expense Reimbursement Plan to reflect changes regarding your dependent care provider, including: (1) the termination of one provider and the hiring of another provider, and (2) the termination of a provider because a relative becomes available to care for your child at no cost. You will need to notify the Plan Administrator of any such change in coverage under the Dependent Care Expense Reimbursement Plan. NOTE: This rule does not allow changes to your election under the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan (if available). (3) Addition or Improvement of an Available Benefit. If during a Plan Year, a new plan or plan option is offered, or if coverage under an existing plan or option is significantly improved, you may enroll in the new or improved coverage and make or change your election to pay the cost of such coverage through the Flexible Benefits Plan. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether an Available Benefit has been "significantly improved" based upon all the surrounding facts and circumstances. NOTE: This rule does not allow changes to your election under the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan (if available). (4) Change Under Another Employer -Sponsored Plan. You may make an election change that is on account of and corresponds with a change made © 2015 Hitesman & Wold, P.A. 12 Flexible Benefits Plan Summary Description under another employer-sponsored plan (including a plan of the Employer or a plan of another employer) if. (i) the other plan permits its participants to make an election change that would be permitted under the prevailing IRS guidance, or (ii) the Plan Year of this Flexible Benefits Plan is different from the plan year under the other plan. For example, if your spouse drops your coverage during open enrollment under his or her employer's group medical plan and you enroll in the Employer's Group Medical Plan, you may make or change your election to pay for such coverage through the Flexible Benefits Plan. NOTE: This rule does not allow changes to your election under the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan (if available). (5) Loss of Governmental or Educational Coverage. If you add coverage under an Employer-sponsored group health plan (e.g., the Group Medical Plan, Group Dental Plan, or Group Vision Plan) for yourself or your spouse or dependent because such individual has lost coverage under any health coverage sponsored by a governmental or educational institution (including, but not limited to, the following: a medical care program of an Indian Tribal government, the Indian Health Service, or a tribal organization; a state health benefits risk pool; or a foreign government health plan), you may make or change your election to pay the cost of such coverage under the Flexible Benefits Plan. NOTE: Certain changes to an individual's coverage under a state children's health insurance program ("SCHIP") create a HIPAA special enrollment right. Election changes based upon HIPAA special enrollment rights are described above. NOTE: This rule does not allow changes to your election under the Medical Expense Reimbursement Plan and the Limited Scope Medical Expense Reimbursement Plan (if available). (6) Enrollment in Marketplace Coverage. (A) If you have made an election to pay for Group Medical Plan coverage, you may revoke that election if the following conditions are satisfied: (i) You either (1) are eligible to enroll in a qualified health plan through a public insurance exchange (the "Marketplace") via a special enrollment period (as provided in any guidance issued by the Department of Health and Human Services or any other applicable guidance), or (2) seek to enroll in a qualified health plan through the Marketplace during the Marketplace's annual open enrollment period; © 2015 Hitesman & Wold, P.A. 13 Flexible Benefits Plan Summary Description (ii) You cancel coverage under the Group Medical Plan in accordance with the requirements of that plan; and (iii) You, and any related individuals who were also enrolled in the Group Medical Plan, have enrolled in or intend to enroll in a qualified health plan through the Marketplace that will be effective no later than the day immediately following the last day for which coverage under the Group Medical Plan was effective (i.e., there is no break in coverage). The Plan Administrator may rely on your reasonable representation that the requirements of this paragraph (iii) are met. (B) If you have made an election to pay for Group Medical Plan coverage, you may reduce that election if the following conditions are satisfied: (i) Your spouse and/or dependents either (1) are eligible to enroll in a qualified health plan through the Marketplace via a special enrollment period (as provided in any guidance issued by the Department of Health and Human Services or any other applicable guidance), or (2) seek to enroll in a qualified health plan through the Marketplace during the Marketplace's annual open enrollment period; (ii) You cancel coverage under the Group Medical Plan for such spouse and/or dependents in accordance with the requirements of that plan; and (iii) Such spouse and/or dependents have enrolled in or intend to enroll in a qualified health plan through the Marketplace that will be effective no later than the day immediately following the last day for which the coverage under the Group Medical Plan was effective (i.e., there is no break in coverage). The Plan Administrator may rely on your reasonable representation that the requirements of this paragraph (iii) are met. (e) Reduction in Hours Without Loss of Eligibility. If you have made an election to pay for Group Medical Plan coverage, you may revoke that election if the following conditions are satisfied: (1) You have been in an employment status under which you were reasonably expected to average at least thirty (30) hours of service per week; (2) You have experienced a change in employment status such that you will reasonably be expected to average less than thirty (30) hours of service per week after the change but nevertheless will remain eligible for the Group Medical Plan; (3) You cancel coverage under the Group Medical Plan in accordance with the requirements of that plan; and (4) You, and any related individuals who were also enrolled in the Group Medical Plan, have enrolled or intend to enroll in other medical coverage that provides minimum essential coverage and that will be effective no later © 2015 Hitesman & Wold, P.A. 14 Flexible Benefits Plan Summary Description than the first day of the second month following the month in which coverage under the Group Medical Plan ends. The Plan Administrator may rely on your reasonable representation that the requirements of this paragraph (4) are met. (f) Family and Medical Leave Act. If you take a leave governed by the Family and Medical Leave Act of 1993 ("FMLA"), you may revoke or change an election as may be provided for under the FMLA and the Employer's FMLA policy required thereunder, provided the Employer is subject to FMLA. (g) Special Rule for HSA Contribution Feature. If the HSA Contribution Feature is an Available Benefit, you may change your election with respect to the HSA Contribution Feature prospectively on at least a monthly basis. You may also revoke your election with respect to the HSA Contribution Feature prospectively if you become ineligible to make or have made HSA contributions under the HSA Contribution Feature. (h) Other. The Plan Administrator shall have the discretion to allow a change to, or termination of, an election to the extent such change or termination is the result of any other situation informally recognized by the IRS as providing an exception to the general rule that elections are irrevocable (e.g., corrections of mistakes, failure to satisfy underwriting). If the Plan Administrator determines before or during any Plan Year that the Flexible Benefits Plan or an Available Benefit may fail to satisfy any nondiscrimination requirement imposed by the Internal Revenue Code or other applicable law, the Plan Administrator may take such action as the Plan Administrator deems appropriate, under rules uniformly applicable to similarly situated Participants, to further compliance with such requirements or limitation. Such action may include, without limitation, a modification of your election downward with or without your consent. (i) Change Must Relate to Event. Your election change must be on account of and consistent with the status change that has occurred. In general, that means the event must result in a change in coverage, including eligibility for coverage, that changes the cost. (j) Effective Date of Change. Subject to the provisions of the underlying group health plan, an election made to pay the cost of medical coverage for a newborn or newly adopted dependent child pursuant to a HIPAA special enrollment right may be retroactive for up to thirty (30) days, provided it applies to compensation not yet currently available. All other new elections shall be effective prospectively on the first day of the month immediately following the date the Participant experiences the event. The date of the event counts as day one. Elections made pursuant to this Section shall be effective for the balance of the Plan Year in which the election is made unless a subsequent event (described above) allows a further election change. Procedures for Requesting a Change. If a change in election is allowed under the rules described above, you must inform the Plan Administrator of your desire to © 2015 Hitesman & Wold, P.A. 15 Flexible Benefits Plan Summary Description change your election and the basis for that change within thirty (30) days of the occurrence of the event allowing the change. 1.9 Who holds the funds I have set aside under the Flexible Benefits Plan? Your salary reduction contributions are held in the Employer's general assets. There is no separate trust. 1.10 What if I terminate my employment during the Plan Year? If your employment with the Employer terminates during the Plan Year, your active participation with this Flexible Benefits Plan ceases and your elections are terminated. You will not be able to make any more contributions under this Flexible Benefits Plan. You may, however, be entitled to continuation coverage with respect to the underlying benefit plan. See the part of this summary entitled "Continuation Coverage" for additional information. If you are rehired after thirty (30) days following a termination of employment and again become a Participant, you will have two "periods of coverage" — that period prior to the termination of employment and that period following the re-employment. Expenses incurred prior to the termination of employment shall be subject to the election in effect upon termination. Upon re- employment, you shall have an opportunity to make a new election and expenses incurred after re- employment shall be subject to the election made upon re-employment. If you are rehired within thirty (30) days following a termination of employment, your election in effect prior to the termination of employment will be reinstated upon re-employment. 1.11 Will I have any administrative costs under the Flexible Benefits Plan? No. The entire cost of administering the Flexible Benefits Plan is paid by the Employer, from Plan forfeitures, or a combination of both. 1.12 How long will the Flexible Benefits Plan remain in effect? Although the Employer expects to maintain the Flexible Benefits Plan (including each of the Available Benefits) indefinitely, it has the right to amend or terminate the Flexible Benefits Plan in whole or in part at any time. It is also possible that future changes in state or federal tax laws may require that the Flexible Benefits Plan be amended or terminated accordingly. You will be informed if any changes are made to the Flexible Benefits Plan. 1.13 Are my benefits taxable? Since the Flexible Benefits Plan is intended to meet certain requirements of the federal tax laws, many of the benefits you receive under the Flexible Benefits Plan will not be currently taxable to you. However, neither the Employer nor the Plan Administrator can guarantee the tax treatment of benefits with respect to any Participant, as individual circumstances may produce differing results. If you are uncertain, you should consult your own tax advisor. You should realize that any medical expense you pay or are reimbursed on a pre-tax basis under this Flexible Benefits Plan cannot be claimed as a medical expense deduction on your income tax return. However, unless your medical expenses exceed ten percent (10%) of your adjusted gross income, you are not permitted to use the deduction anyway. © 2015 Hitesman & Wold, P.A. 16 Flexible Benefits Plan Summary Description Any reimbursements made with pre-tax dollars for dependent care expenses affect your ability to claim the dependent care credit. This is explained further in the description of the Dependent Care Expense Reimbursement Plan later in this summary. If your health coverage covers someone other than your spouse or tax dependent, see Section 1.16 for additional information regarding the tax consequence of such coverage. Furthermore, the receipt of certain other Available Benefits (e.g., some life insurance coverage, disability coverage, etc.) may result in taxable income. For additional information, please refer to the parts of this summary describing each Available Benefit. If the Plan Administrator determines before or during any Plan Year the Flexible Benefits Plan may fail to satisfy any nondiscrimination requirement imposed by the Internal Revenue Code, the Plan Administrator may take such action as the Plan Administrator deems appropriate, under rules uniformly applicable to similarly situated Participants, to further compliance with such requirements or limitation. Such action may include, without limitation, a re -characterization within the Plan Year of benefits provided under the Flexible Benefits Plan as taxable income, with or without consent of the affected Participants. 1.14 What is the impact on my Social Security benefits? Participating in the Flexible Benefits Plan will reduce the amount of your taxable compensation. Accordingly, your Social Security benefits, which are based upon your taxable compensation, may be affected at your retirement. However, the tax savings you obtain through participation in the Flexible Benefits Plan often will offset any reduction in your future Social Security benefits. 1.15 What contributions are made to the Flexible Benefits Plan? (a) Salary Deduction Contributions. Sometimes the Internal Revenue Code or your Employer does not allow payment with pre-tax dollars. Payments which may be made with after-tax dollars may be paid through a salary deduction agreement. A salary deduction agreement provides for a payroll deduction to be made throughout a Plan Year out of your compensation after taxes and withholdings have been made. 1.16 What if coverage is provided to someone other than your spouse and tax dependents? If you participate in a group health plan that properly covers a dependent who is not your "spouse" or "tax dependent," the entire cost of coverage for which you are responsible shall be paid pre-tax through this Flexible Benefits Plan and the fair market value of the coverage for that Dependent shall be imputed as income to you as the coverage is provided. This provision applies regardless of whether the cost of coverage is paid by salary reduction or allocation of available Employer Contributions (if any). NOTE: This discussion of tax treatment assumes the individuals receiving coverage through you are properly covered under the terms of the group health plan. For example, a child must be properly covered as a child under the terms of the particular plan. If properly covered under the © 2015 Hitesman & Wold, P.A. 17 Flexible Benefits Plan Summary Description terms of the Available Benefit, then this Questions 1.16 addresses the tax treatment of that For purposes of this Flexible Benefits Plan, "spouse" means a person to whom you are legally married in accordance with applicable state law. For purposes of this Flexible Benefits Plan, "tax dependent" generally includes an individual who satisfies the requirements of paragraph (a), (b), or (c) below: (a) An individual who: (1) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption); and (2) will not attain age 27 during the relevant calendar year. (b) An individual who: (1) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption), brother, sister, stepbrother, or stepsister, or a descendant of any such person; (2) has the same principal place of abode as you for at least one-half of the relevant year; (3) will not attain age 19 (or age 24 if a full time student) during the relevant year or is permanently and totally disabled; (4) did not provide over half of his/her own support during the relevant year; (5) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico; (6) is younger than you; and (7) does not file a joint tax return with his or her spouse. (c) An individual who: (1) is your child (or a descendant of a child), brother, sister, stepbrother, or stepsister, parent (or a parent's ancestor), stepparent, brother or sister's son or daughter, parent's brother or sister, son-in-law, daughter-in-law, father- in-law, mother-in-law, brother-in-law, or sister-in-law or, if not such a relative, an individual who has the same principal place of abode as you and is a member of your household; (2) has received more than one-half of his/her support from you during the relevant year; (3) is not your qualifying child or the qualifying child of anyone else (i.e., does not satisfy the requirements of paragraph (a) above with respect to any person); and (4) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico. © 2015 Hitesman & Wold, P.A. 18 Flexible Benefits Plan Summary Description NOTE: The definition of "tax dependent" is different than the definition applicable under the Internal Revenue Code for purposes of identifying who you may claim as an exemption on your federal income tax return and is different than the definition of "qualifying individual" that applies under the Dependent Care Expense Reimbursement Plan. Additional special rules apply in some cases. For additional information, please contact the Plan Administrator or your tax advisor. 1.17 How are claims determined? NOTE: This claims determination procedure only covers issues related to the Flexible Benefits Plan (e.g., the ability to pay for benefits on a pre-tax basis and the election of Available Benefits), claims for reimbursement under the Dependent Care Expense Reimbursement Plan, Medical Expense Reimbursement Plan, and Limited Scope Medical Expense Reimbursement Plan. Claims for other benefits (e.g., claims under the major medical and dental coverages or individual insurance policies) are handled under the claims determination procedures in those separate plans or (a) Claim Submission. Unless a separate procedure is provided with respect to an Available Benefit, a claim for benefits must be made in writing and submitted to the Plan Administrator. Please refer to the sections of this summary describing each Available Benefit for additional information. (b) Benefits Denials. The Claims Administrator will decide your claim within a reasonable time not longer than thirty (30) days after it is received. This time period may be extended for an additional fifteen (15) days for matters beyond the control of the Claims Administrator. You will receive written notice of any extension, indicating the reasons for the extension and the date by which a decision is expected to be made. If your claim is incomplete, and the Claims Administrator notifies you of that fact, the time period for deciding your claim will be suspended from the date the notice is provided through the date on which you respond or by which you are supposed to respond. You will be given at least forty-five (45) days in which to respond. The Claims Administrator may secure independent medical or other advice and require such other evidence as it deems necessary to decide your claim. If the Claims Administrator denies your claim, in whole or in part, you will be furnished with a written notice of adverse benefit determination setting forth: (1) the specific reason or reasons for the denial; (2) reference to the specific Plan provision on which the denial is based; (3) a description of any additional material or information necessary for you to complete your claim and an explanation of why such material or information is necessary; and (4) appropriate information as to the steps to be taken if you wish to appeal the Claims Administrator's determination, including your right to submit written comments and have them considered, and your right to review (on request and at no charge) relevant documents and other information. © 2015 Hitesman & Wold, P.A. 19 Flexible Benefits Plan Summary Description (c) Appealing a Denial. If your claim is denied in whole or in part, you may appeal to the Plan Administrator for a review of the denied claim. Your appeal must be made in writing within one hundred eighty (180) days of the Plan Administrator's initial notice of adverse benefit determination or you will lose your right to appeal your denial. (d) Decision upon Appeal. The Plan Administrator will review and decide your appeal within a reasonable time not longer than sixty (60) days after it is submitted and will notify you of its decision in writing. If the decision on appeal affirms the initial denial of your claim, you will be furnished with a notice of adverse benefit determination on review setting forth: (1) the specific reason(s) for the denial; and (2) the specific Plan provision(s) on which the decision is based. LIS Who has authority to interpret the Plan? To the fullest extent permitted under applicable law, the fiduciaries of the Plan (including each Available Benefit) shall have the authority and discretion to interpret and apply the terms of the Plan and the Available Benefit. © 2015 Hitesman & Wold, P.A. 20 Flexible Benefits Plan Summary Description PART H. GROUP MEDICAL BENEFITS 2.1 What benefits are provided? An important feature of the Flexible Benefits Plan is the opportunity it provides you to pay your share of the cost of medical coverage on a pre-tax basis. The medical coverage is provided through your Employer and is referred to herein as the "Group Medical Plan." Your share of the cost for that coverage is paid with the allocation of Employer Contributions (if any) and pre-tax dollars through salary reduction under this portion of the Flexible Benefits Plan. The Group Medical Plan is described in separate materials which have been provided to you either directly by the carrier (the insurance company or HMO) or by your Employer. Those descriptive materials are incorporated into this summary description by reference. If you have not been provided this information, you should contact the Plan Administrator. The group medical benefits are provided in accordance with the plan documentation governing the Group Medical Plan. The Group Medical Plan is subject to privacy and security provisions of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). 2.2 How do I become a Participant in this portion of the Flexible Benefits Plan? To participate in this portion of the Flexible Benefits Plan, you must first enroll in the Group Medical Plan. You may select coverage under the Group Medical Plan for just yourself, or you may select coverage for yourself and others who are eligible for coverage under the terms of the Group Medical Plan. Please refer to the contract or policy governing the Group Medical Plan for information regarding who is eligible for coverage under that plan and how to enroll in that plan. If you have enrolled in the Group Medical Plan, then you may participate in this portion of the Flexible Benefits Plan if you satisfy the general eligibility requirements for the Flexible Benefits Plan described in Section 1.4. See Section 1.6 for additional information regarding elections to pay the cost of Group Medical Benefits. 2.3 How is the cost of group medical coverage paid? If you participate in this portion of the Flexible Benefits Plan, the cost of coverage under the Group Medical Plan is paid by allocation of available Employer Contributions (if any) and, to the extent any such Employer Contributions are insufficient, with pre-tax dollars through salary reduction (unless provided otherwise in Section 1.16). NOTE: You must be a Participant in the Flexible Benefits Plan for your portion of the premiums to be paid pre-tax. If you pay the cost of Group Medical Plan coverage through this portion of the Flexible Benefits Plan and you have enrolled an individual who is not your spouse or "tax dependent" (as those terms are defined in Section 1.16), then the fair market value of that individual's coverage will be handled as described in Section 1.16. © 2015 Hitesman & Wold, P.A. 21 Flexible Benefits Plan Summary Description 2.4 What if I am no longer eligible? If you cease to be eligible for coverage under the Group Medical Plan, your coverage under that Plan will terminate in accordance with the terms and conditions of that Plan. In most cases, if you lose coverage under the Group Medical Plan, your participation in this portion of the Flexible Benefits Plan will cease as well, subject to the change in election rules described in Section 1.8. If you cease to be eligible to participate in this Flexible Benefits Plan, your ability to pay for coverage under the Group Medical Plan on a pre-tax basis through this portion of the Flexible Benefits Plan stops. 2.5 Can coverage be continued? If you cease to be eligible for coverage under the Group Medical Plan, you and any others who receive their coverage through you may be able to continue that coverage. Continuation coverage is available in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") applicable through the Public Health Services Act ("PHSA"), the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"), and applicable continuation requirements under state law. These continuation rights are described later in this summary. 2.6 What if I am subject to a child support order? The Group Medical Plan recognizes child support orders regarding the provision of medical coverage for a child, including orders under the Child Support Performance and Incentive Act of 1998 to the extent required by law. If a child is enrolled in the Group Medical Plan pursuant to a child support order, subject to Section 1. 16, you will be able to pay the cost of that coverage through this portion of the Flexible Benefits Plan, provided you participate as described in Section 2.2. Note: A child enrolled pursuant to a child support order may not be a tax dependent. See Section 1.16 for additional information regarding the cost of coverage for children who are not tax dependents. © 2015 Hitesman & Wold, P.A. 22 Flexible Benefits Plan Summary Description PART III. GROUP DENTAL BENEFITS 3.1 What benefits are provided? An important feature of the Flexible Benefits Plan is the opportunity it provides to pay your share of the cost of dental coverage on a pre-tax basis. The dental coverage is provided through your Employer and is referred to herein as the "Group Dental Plan." Your share of the cost for that coverage is paid with the allocation of Employer Contributions (if any) and pre-tax dollars through salary reduction under this portion of the Flexible Benefits Plan. The Group Dental Plan is described in separate materials which have been provided to you either directly by the carrier (the insurance company or DMO) or by your Employer. Those descriptive materials are incorporated into this summary description by reference. If you have not been provided this information, you should contact the Plan Administrator. The group dental benefits are provided in accordance with the plan documentation governing the Group Dental Plan. The Group Dental Plan is subject to the privacy and security provisions of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). 3.2 How do I become a Participant? To participate in this portion of the Flexible Benefits Plan, you must first enroll in the Group Dental Plan. You may select coverage under the Group Dental Plan for just yourself, or you may select coverage for yourself and others who are eligible for coverage under the terms of the Group Dental Plan. Please refer to the contract or policy governing the Group Dental Plan for information regarding who is eligible for coverage under that plan and how to enroll in that plan. If you have enrolled in the Group Dental Plan, then you may participate in this portion of the Flexible Benefits Plan if you satisfy the general eligibility requirements for the Flexible Benefits Plan described in Section 1.4. See Section 1.6 for additional information regarding elections to pay the cost of Group Dental Benefits. 3.3 How is the cost of group dental coverage paid? If you participate in this portion of the Flexible Benefits Plan the cost of coverage under the Group Dental Plan is paid by allocation of available Employer Contributions (if any) and, to the extent any such Employer Contributions are insufficient, with] pre-tax dollars through salary reduction (unless provided otherwise in Section 1.16). NOTE: You must be a Participant in the Flexible Benefits Plan for your portion of the premiums to be paid pre-tax. If you pay the cost of Group Dental Plan coverage through this portion of the Flexible Benefits Plan and you have enrolled an individual who is not your spouse or "tax dependent" (as those terms are defined in Section 1.16), then the fair market value of that individual's coverage will be handled as described in Section 1.16. © 2015 Hitesman & Wold, P.A. 23 Flexible Benefits Plan Summary Description 3.4 What if I am no longer eligible? If you cease to be eligible for coverage under the Group Dental Plan, your coverage under that Plan will terminate in accordance with the terms and conditions of that Plan. In most cases, if you lose coverage under the Group Dental Plan, your participation in this portion of the Flexible Benefits Plan will cease as well, subject to the change in election rules described in Section 1.8. If you cease to be eligible to participate in this Flexible Benefits Plan, your ability to pay for coverage under the Group Dental Plan on a pre-tax basis through this portion of the Flexible Benefits Plan stops. 3.5 Can coverage be continued? If you cease to be eligible for coverage under the Group Dental Plan, you and any others who receive their coverage through you may be able to continue that coverage. Continuation coverage is available in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") applicable through the Public Health Services Act ("PHSA"), the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"), and applicable continuation requirements under state law. These continuation rights are described later in this summary. 3.6 What if I am subject to a child support order? The Group Dental Plan recognizes child support orders regarding the provision of dental coverage for a child, including orders under the Child Support Performance and Incentive Act of 1998 to the extent required by law. If a child is enrolled in the Group Dental Plan pursuant to a child support order, subject to Section 1.16, you will be able to pay the cost of that coverage through this portion of the Flexible Benefits Plan, provided you participate as described in Section 2.2. Note: A child enrolled pursuant to a child support order may not be a tax dependent. See Section 1.16 for additional information regarding the cost of coverage for children who are not tax dependents. © 2015 Hitesman & Wold, P.A. 24 Flexible Benefits Plan Summary Description PART IV. GROUP TERM LIFE AND AD&D BENEFITS 4.1 What benefits are provided? An important feature of the Flexible Benefits Plan is the opportunity it provides you to pay your share of the cost of group term life insurance and/or accidental death and dismemberment insurance coverage on a pre-tax basis. The coverage is provided through your Employer and is referred to as the "Group Term Life and AD&D Plan". Your share of the cost for that coverage is paid with the allocation of Employer Contributions (if any) and pre-tax dollars through salary reduction under this portion the Flexible Benefits Plan. NOTE: Only the cost of your personal coverage may be paid through the Plan. The Plan cannot allow the pre-tax payment of the cost of coverage for your spouse or dependent. If you obtained life insurance coverage for your spouse or dependents from your Employer, premiums for that coverage will be paid on an after-tax basis outside of the Flexible Benefits Plan. The Group Term Life and AD&D Plan is fully insured, which means that all benefits are provided through one or more contracts or policies obtained by your Employer with one or more third party insurance carriers. The Group Term Life and AD&D Plan is described in separate materials which have been provided to you either directly by the provider (the insurance carrier) or by the Employer. Those descriptive materials are incorporated into this summary description by reference. If you have not been provided this information, you should contact the Plan Administrator. The group term life and accidental death and dismemberment benefits are provided in accordance with the applicable contract or policy issued by the carrier. 4.2 How do I become a Participant in this portion of the Flexible Benefits Plan? To participate in this portion of the Flexible Benefits Plan, you must first enroll in the Group Term Life and AD&D Plan. Please refer to the contract or policy governing the Group Term Life and AD&D Plan for information regarding how to enroll in that plan. If you have enrolled in the Group Term Life and AD&D Plan, then you may participate in this portion of the Flexible Benefits Plan if you satisfy the general eligibility requirements for the Flexible Benefits Plan described in Section 1.4. If you satisfy those requirements, you must elect to pay your share of the cost of Group Term Life and AD&D Plan coverage in accordance with Section 1.6. 4.3 How is my portion of the cost of coverage paid? If you participate in this portion of the Flexible Benefits Plan, the cost of coverage under the Group Term Life and AD&D Plan is paid by allocation of available Employer Contributions (if any) and, to the extent any such Employer Contributions are insufficient, with pre-tax dollars through salary reduction. NOTE: You must be a Participant in the Flexible Benefits Plan for your portion of the premiums to be paid pre-tax. © 2015 Hitesman & Wold, P.A. 25 Flexible Benefits Plan Summary Description 4.4 How much group term life insurance coverage can I purchase? Up to $50,000 worth of Employer paid coverage may be excluded from your taxable income. For this purpose, "Employer paid" includes coverage automatically provided by the Employer, coverage paid with Employer Contributions (if any), and coverage paid by you on a pre-tax basis through salary reduction under this Flexible Benefits Plan. If the face amount of the Employer paid coverage exceeds $50,000, the cost of the coverage in excess of $50,000 will be imputed to you as income to the extent required by law. 4.5 What if I am no longer eligible? If you cease to be eligible for coverage under the Group Term Life and AD&D Plan, your coverage under that plan will terminate in accordance with the terms and conditions of that plan. In most cases, if you lose coverage under the Group Term Life and AD&D Plan, your participation in this portion of the Flexible Benefits Plan will cease as well, subject to the change in election rules described in Section 1.8. If you cease to be eligible to participate in this Flexible Benefits Plan, your ability to pay for coverage under the Group Term Life and AD&D Plan on a pre-tax basis through this portion of the Flexible Benefits Plan stops. 4.6 Can coverage be continued? If you cease to be eligible for coverage under the Group Term Life and AD&D Plan, you may be able to continue that coverage. There shall be compliance with applicable state law regarding continuation of coverage and conversion of coverage to the extent such state law is not preempted by federal law. In addition, any continuation and conversion rights provided under the terms of the insurance contract(s) through which benefit are provided shall be available to the extent they are not prohibited or preempted by federal law. © 2015 Hitesman & Wold, P.A. 26 Flexible Benefits Plan Summary Description PART V. LONG TERM DISABILITY BENEFITS 5.1 What benefits are provided? An important feature of the Flexible Benefits Plan is the opportunity it provides you to pay your share of the cost of long term disability coverage on a pre-tax basis. The coverage is provided through your Employer and is referred to as the "Long Term Disability Plan". Your share of the cost for that coverage is paid with Employer Contributions under this portion the Flexible Benefits Plan. NOTE: The Plan cannot allow the pre-tax payment of the cost of coverage for spouse or dependent coverage. The Long Term Disability Plan is described in separate materials which have been provided to you either directly by the provider (the insurance carrier) or by the Employer. Those descriptive materials are incorporated into this summary description by reference. If you have not been provided this information, you should contact the Plan Administrator. The long term disability benefits are provided in accordance with the plan documentation governing the Long Term Disability Plan. 5.2 How do I become a Participant in this portion of the Flexible Benefits Plan? To participate in this portion of the Flexible Benefits Plan, you must first enroll in the Long Term Disability Plan. Please refer to the contract or policy governing the Long Term Disability Plan for information regarding how to enroll in that plan. If you have enrolled in the Long Term Disability Plan, then you may participate in this portion of the Flexible Benefits Plan if you satisfy the general eligibility requirements for the Flexible Benefits Plan described in Section 1.4. If you satisfy those requirements, you must elect to pay your share of the cost of Long Term Disability Plan coverage in accordance with Section 1.6. 5.3 How is my portion of the cost of coverage paid? If you participate in this portion of the Flexible Benefits Plan, the cost of coverage under the Long Term Disability Plan is paid by allocation of available Employer Contributions (if any) and, to the extent any such Employer Contributions are insufficient, with your contribution. All contributions to the cost of coverage will be included in your income (i.e., after-tax contributions). NOTE: You must be a Participant in the Flexible Benefits Plan for your portion of the premiums to be paid through the Flexible Benefits Plan. 5.4 What are the tax consequences if I receive benefits? If you receive benefits under the Long Term Disability Plan and the cost of the coverage under that plan was paid through this portion of the Flexible Benefits Plan on an after-tax basis, the short term disability benefits will not be taxable to you. © 2015 Hitesman & Wold, P.A. 27 Flexible Benefits Plan Summary Description 5.5 What if I am no longer eligible? If you cease to be eligible for coverage under the Long Term Disability Plan, your coverage under that plan will terminate in accordance with the terms and conditions of that plan. In most cases, if you lose coverage under the Long Term Disability Plan, your participation in this portion of the Flexible Benefits Plan will cease as well, subject to the change in election rules described in Section 1.8. If you cease to be eligible to participate in this Flexible Benefits Plan, your ability to pay for coverage under the Long Term Disability Plan on a pre-tax basis through this portion of the Flexible Benefits Plan stops. © 2015 Hitesman & Wold, P.A. 28 Flexible Benefits Plan Summary Description PART VI. DEPENDENT CARE EXPENSE REIMBURSEMENT PLAN 6.1 What benefits are provided? The Plan permits you to receive reimbursement for some or all of your work related dependent care expenses under the Dependent Care Expense Reimbursement Plan ("DC Plan"). Under the DC Plan, you provide a source of pre-tax dollars by entering into a salary reduction arrangement with your Employer. You may also use available Employer Contributions (if any). Those pre-tax dollars will be used to reimburse you for your eligible expenses. You save Social Security and income taxes on the amount of your salary reduction for dependent care expenses. NOTE: Participation in the DC Plan will impact your ability to receive the dependent care tax credit with respect to your federal income taxes. Please see the additional information below. 6.2 How do I become a Participant in the DC Plan? To become a Participant in the DC Plan, you must first become a Participant in the Flexible Benefits Plan. You must also satisfy the eligibility requirements for the DC Plan. The DC Plan's eligibility requirements are the same as the eligibility requirements for the Flexible Benefits Plan as described in Section 1.4. If you satisfy those requirements, you become a Participant in the DC Plan by electing benefits under the DC Plan during your initial or subsequent annual enrollment periods. 6.3 What is my dependent care account? If you elect benefits under the DC Plan, a dependent care account ("DC Account") will be established in your name to keep a record of the benefits to which you are entitled. When you complete the election form, you specify the amount of benefits you wish to receive. These benefits may be funded by allocation of available Employer Contributions (if any) and, to the extent any such Employer Contributions are insufficient, with pre-tax dollars through salary reduction contributions. A pro -rated portion of your election will be credited to your DC Account according to the schedule described in Section 1.14. The amount that is available in your DC Account at any particular time will be whatever has been credited to such DC Account less any reimbursements. The DC Account is a bookkeeping account only. The Employer pays benefits under the DC Plan from its general assets. There is no trust. NOTE: If you cannot make a salary reduction contribution to your DC Account as a result of being ineligible to receive a paycheck, the missed contribution will be made up on future paychecks. The Employer will automatically recalculate the contribution amount based on the number of remaining paychecks for the calendar year, the initial election amount and the remaining balance. 6.4 What are the maximum benefits I may receive? The maximum amount of benefits you may receive in a tax year is $5,000 if you: (a) are married and file a joint return; © 2015 Hitesman & Wold, P.A. 29 Flexible Benefits Plan Summary Description (b) are married, but you furnish more than one-half the cost of maintaining those dependents for whom you are eligible to receive tax-free reimbursements under the DC Plan, your spouse maintains a separate residence for the last six (6) months of the calendar year, and you file a separate tax return; or (c) are single, or a head of household for tax purposes. NOTE: The maximum is a combined maximum. If your spouse has a dependent care program available through his or her employer, the combined total under that program and this DC Plan is the maximum described above per tax year. It is your responsibility to monitor your combined maximum. This maximum is reduced if any of the following situations exist: (a) if you are married, reside together with your spouse, but file separate tax returns, the maximum is reduced to $2,500 (and only one parent may submit claims for reimbursement under the DC Plan); or (b) if you or your spouse have earned income less than $5,000 per tax year, the maximum is reduced to the lesser of your earned income or your spouse's earned income. NOTE: If your spouse is a student or is incapable of caring for himself or herself, in general, your spouse will be deemed to have earned income of not less than $250 per month if you have one Qualifying Individual or $500 per month you have two or more Qualifying Individuals. 6.5 Who is a "Qualifying Individual" for whom I can submit claims for reimbursement? NOTE: The rules are not the same as the tax deduction or exemption rules. It is your responsibility to determine whether you can request reimbursement for expenses incurred with respect to a particular individual. As discussed below, special rules apply in some cases. For additional information, please contact the Plan Administrator or your tax advisor. General Rule. Subject to the two special rules described below, you may be reimbursed for Eligible Expenses incurred with respect to any "Qualifying Individual." A Qualifying Individual is a person described in paragraph (a), (b), (c), (d) or (e) below. (a) Your "child" who: (1) is under age thirteen (13); (2) has the same principal place of abode as you for at least one-half of the year; (3) does not provide over half of his/her own support during the year; and (4) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico. (b) Your "child" who: (1) is mentally or physically unable to care for himself or herself, (2) has the same principal place of abode as you for at least one-half of the year; (3) does not provide over half of his/her own support during the year; © 2015 Hitesman & Wold, P.A. 30 Flexible Benefits Plan Summary Description (4) has not attained age nineteen (19) during the year (age twenty-four (24) if a full-time student) or is permanently and totally disabled; (5) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico; (6) is younger than you; and (7) does not file a joint tax return with his or her spouse. (c) Your "child" who: (1) is mentally or physically unable to care for himself or herself, (2) has the same principal place of abode as you for at least one-half of the year, (3) has received more than one-half of his/her support from you during the relevant year, (4) is not any person's "qualifying child" (as that term is defined under Section 152 of the Code), and (5) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico. (d) Your "relative" who: (1) is mentally or physically unable to care for himself or herself, (2) has the same principal place of abode as you for at least one-half of the year, (3) has received more than one-half of his/her support from you during the relevant year, (4) is not any person's "qualifying child" (as that term is defined under Section 152 of the Code), and (5) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico. (e) Your "spouse," if your spouse is physically or mentally incapacitated and has the same principal place of abode as you for at least one-half of the year. "Child" generally includes your son, daughter, stepson, stepdaughter, eligible foster child, brother, sister, stepbrother, stepsister, or a descendant of any such person. "Relative" generally includes parent (or a parent's ancestor), stepparent, parent's brother or sister, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law or an individual who (although not related to you) has the same principal place of abode as you and is a member of your household. "Spouse" means an individual to whom you are legally married under applicable state law. 6.6 What if two people wish to claim a child as a Qualifying Individual? With the exception of two parents that file income taxes jointly, only one person is entitled to treat the child as a Qualifying Individual. Where multiple people are involved, there are two special rules to determine which person is entitled to treat the child as a Qualifying Individual. © 2015 Hitesman & Wold, P.A. 31 Flexible Benefits Plan Summary Description (a) Divorced or Separated Parents, or Parents Living Apart. Important Note: Only one person is entitled to treat the child as a Qualified Individual for purposes of the DC Plan. If a child's parents are divorced, legally separated, separated pursuant to a written agreement, or live apart at all times during the last six (6) months of the calendar year, a special rule applies if. (i) the child is under age 13 or is mentally or physically unable to care for himself or herself, (ii) the child receives more than 50% of his or her support from the parents (in aggregate); and (iii) the child resides with the parents (in aggregate) for more than 50% of the year. In such situations, the child is the Qualifying Individual of the custodial parent even if the custodial parent has released the right to claim the child as a dependent. The custodial parent is generally the parent with whom the child resides for the greater number of nights during the calendar year or, if the child resides with both parents for an equal number of nights, the parent with the higher adjusted gross income for the year. (b) Other Situations. If the special rule described above regarding divorce, etc. does not apply, other special tie-breaker rules of may apply. If an individual is a Qualifying Individual (under paragraphs (a) or (b) of the definition provided above) with respect to more than one person, then: (1) if both persons are the individual's parents and they file separate federal income tax returns, then the child is the Qualifying Individual of the parent with whom the child resides for the longest period of time during the calendar year (or, if child resides with both parents for the same amount of time during the year, the parent with the highest adjusted gross income for the year). However, if that parent (i.e., the custodial parent or the parent with the highest adjusted gross income) does not claim the child as a qualifying child (as defined in Section 152 of the Internal Revenue Code) for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other parent (i.e., the non-custodial parent or the parent with the lowest adjusted gross income). This is the one person that is entitled to treat the child as a Qualifying Individual for purposes of the DC Plan. (2) if one person is the individual's parent and the other is not, the child is the Qualifying Individual of the parent. However, if the parent does not claim the child as a qualifying child (as defined in Section 152 of the Internal Revenue Code) for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other person (i.e., the non -parent). This is the one person that is entitled to treat the child as a Qualifying Individual for purposes of the DC Plan. © 2015 Hitesman & Wold, P.A. 32 Flexible Benefits Plan Summary Description (3) if neither person is the individual's parent, the child is the Qualifying Individual of the person with the highest adjusted gross income for the year in question. However, if that person does not claim the child as a qualifying child (as defined in Section 152 of the Internal Revenue Code) for any purpose (i.e., a dependent care expense reimbursement program, the Earned Income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other person (i.e., the person with the lowest adjusted gross income). This is the one person that is entitled to treat the child as a Qualifying Individual for purposes ofthe DC Plan. Important: If you enroll for dependent care benefits, it will be assumed that you are the one person entitled to treat the child as a Qualifying Individual for purposes of reimbursement under the DC Plan. 6.7 What is an "Eligible Expense"? (a) General Rule—Covered. An "Eligible Expense" generally means expenses for the care of a Qualifying Individual incurred by you (or your spouse) to enable you (and your spouse) to be gainfully employed. Eligible Expenses generally include: (1) day care expenses; (2) the cost of nursery school, preschool, or similar programs below the level of kindergarten; (3) the cost of after-school care (including care for Qualifying Individuals in kindergarten and beyond); (4) the cost of day camp, including specialty day camp, but not overnight camp; (5) the cost of transportation provided by a care provider; (6) the cost of meals incidental to and inseparable from care; (7) employment taxes paid on behalf of a care provider; (8) the cost of room and board provided for a care provider (e.g., a live in nanny); (9) certain indirect expenses, such as application and agency fees, if they must be paid to obtain the care and care is actually provided; and (10) placement or "hold the spot" fees, if they must be paid to obtain the care and care is actually provided. (b) General Rule—Not Covered. Expenses incurred that do not enable you to be gainfully employed are generally not "eligible" including, but not limited to, expenses incurred while on vacation, sick leave, or any other type of situation where you (and your spouse) are not at work or actively looking for work (i.e., gainfully employed). Your spouse, if any, is deemed to be gainfully employed if he/she is: (1) a full time student, or (2) mentally or physically incapable of self-care and resides with you for more than one-half of the calendar year. (c) Daily Allocation. Usually, expenses must be allocated on a daily basis so that expenses incurred on a day you (or your spouse) were not at work may not be reimbursed. © 2015 Hitesman & Wold, P.A. 33 Flexible Benefits Plan Summary Description Special Rule. If you pay for care on at least a weekly basis, without deduction for days on which care is not provided, you are not required to allocate expenses for short, temporary absences from work, such as vacations and sick days. You are also not required to allocate expenses on a daily basis if you (or your spouse) work on a part-time basis and you pay for care on at least a weekly basis without deduction for days on which care is not provided. (d) Who and Where Rules. Expenses that would otherwise be "Eligible Expenses" cannot be reimbursed if they are paid to: (1) an individual who is your child under the age of nineteen (19) at the end of the calendar year; (2) an individual you (or your spouse) claim as a dependent on your tax return; (3) an individual who was your spouse at any time during the calendar year; or (4) a parent of a Qualifying Individual who is your child under age thirteen (13). Expenses that would otherwise be "Eligible Expenses" for services provided outside of your home may be reimbursed only if the care is for a Qualifying Individual who is: (1) your (or your spouse's) "child" under the age of thirteen (13); or (2) is another Qualifying Individual who regularly spends at least eight (8) hours per day in your home. 6.8 How do I receive reimbursements under the DC Plan? (a) Periodic Reimbursements. When you incur an expense that is eligible for reimbursement, you submit a claim to the Claims Administrator on a claim form that will be supplied to you. The claim form will typically set forth: (1) the amount, date and nature of the expense; (2) the name of the person or entity to which the expense was paid; (3) your statement that the expense has not been reimbursed, and you will not seek reimbursement for the expense, from any other source; and (4) such other information as the Claim Administrator may require. You may also be required to submit copies of bills or receipts from the provider(s) to support your claim. If there are enough dollars credited to your DC Account, you will be reimbursed for your Eligible Expenses on a monthly basis. (b) Deadline. You may submit claims for reimbursement of Eligible Expenses incurred during the Plan Year for ninety (90) days following the end of that Plan Year. This period following the end of the Plan Year during which claims for reimbursement may be filed is referred to as the "claims run -out period." 6.9 What limits apply to reimbursements under the DC Plan? You cannot be reimbursed for any expenses above your available DC Account balance. If your claim was for an amount that was more than your current DC Account balance, the excess part of the claim will be carried over into following months, to be paid as your balance becomes adequate. You also cannot be reimbursed for any expenses that arise before the effective date of © 2015 Hitesman & Wold, P.A. 34 Flexible Benefits Plan Summary Description the DC Plan, for any expenses that arise before you become a Participant in the DC Plan, or for any expenses incurred after the close of the Plan Year. Please note that it is not necessary that you have actually paid an amount for that expense to be eligible for reimbursement. You only must have incurred the expense and not have been reimbursed or paid from another source. An expense is "incurred" when the service which gives rise to the expense has been provided, not when you are billed or when you pay the expense. 6.10 Will I be taxed on the DC Plan benefits I receive? You will not normally be taxed on benefits under the DC Plan. However to qualify for tax- free treatment, you will be required to file IRS Form 2441 or a similar form with a list of names and taxpayer identification numbers of any persons who provided you with dependent care services during the calendar year for which you claimed a tax-free reimbursement. 6.11 If I participate in the DC Plan, will I still be able to claim the dependent care tax credit on my federal income tax return? You may choose to participate in the DC Plan and receive credit on your federal income tax return too. However, the tax credit and the DC Account cannot be used for the same expenses. In addition, the amount of the dependent care tax credit is reduced dollar for dollar by the reimbursement you receive from your DC Account. In certain cases, it may be more beneficial for you to claim a tax credit for your dependent care expenses rather than pay for those expenses through the DC Account. You may want to consult your tax advisor regarding the best options under the applicable rules. 6.12 What is the dependent care tax credit? The dependent care tax credit is an allowance for a percentage of your annual eligible dependent care expenses as a credit against your federal income tax. In determining what the tax credit would be, you may take into account only $3,000 of such expenses for one dependent, or $6,000 for two or more dependents. Depending on your adjusted gross income, the percentage could be as much as 35% of your qualifying expenses (to a maximum credit amount of $1,050 for one dependent or $2,100 for two or more dependents) to a minimum of 20% of such expenses (producing a maximum credit of $600 for one dependent or $1,200 for two or more dependents.) The maximum 35% rate must be reduced by 1% (but not below 20%) for each $2,000 portion (or any fraction of $2,000) of your adjusted gross incomes over $15,000. 6.13 When might it be better for me to use the tax credit? In general, for most people, it will be more advantageous for you to participate in the DC Plan. However, you should analyze your own situation carefully to determine which method is right for you. The actual determination of the preferable method for treating benefit payments depends on a number of factors such as one's tax filing status (e.g., married, single, head of household), number of dependents, etc. Each Participant will have to determine his or her tax position individually in order to make the decisions between taxable and tax-free benefits. If you © 2015 Hitesman & Wold, P.A. 35 Flexible Benefits Plan Summary Description are uncertain about whether to participate in this DC Plan or take the dependent care credit, you should consult your tax advisor. Please refer to Exhibit B for an example of how choosing between participating in the DC Plan versus taking the dependent care tax credit will impact your disposable income. 6.14 What if I am no longer eligible? If your employment terminates or you otherwise cease to be eligible for coverage under the DC Plan, you may not make any further contributions to your DC Account. However, you may continue to submit claims for reimbursement of Eligible Expenses incurred while you were a Participant until the expiration of the claims run out period described above. 6.15 What if I receive benefits in error? If a reimbursement is made by the DC Plan in excess of the amount to which you are entitled under the DC Plan, the DC Plan has the right to recover such overpayment. Repayment of an overpayment is a condition of participation in the Flexible Benefits Plan. 6.16 What if the dependent care expenses I incur during the Plan Year are less than the annual benefit I have elected? Any amounts remaining in your DC Account attributable to a particular Plan Year shall be forfeited following the claims run -out period described above. You will not be entitled to receive any direct or indirect payment of any amount that represents the difference between the actual dependent care expenses you have incurred, on the one hand, and the annual benefit you have elected and paid for, on the other. If you do not use it, you lose it. 6.17 What reporting will I receive? The amounts reimbursed under this DC Plan for each calendar year will be reported on your W-2. If the actual amount paid is not known by the deadline for providing the W-2 (e.g., because of the claims run -out period), the Employer may report a reasonable estimate of the reimbursements that will be paid under the DC Plan for the year. A reasonable estimate may be the amount of benefits you elected under the DC Plan for the year. © 2015 Hitesman & Wold, P.A. 36 Flexible Benefits Plan Summary Description PART VII. MEDICAL EXPENSE REIMBURSEMENT PLAN 7.1 What benefits are provided? The Plan permits you to receive reimbursement for some or all of your uninsured medical and dental expenses under the Medical Expense Reimbursement Plan ("ME Plan"). Under the ME Plan, you provide a source of pre-tax dollars by entering into a salary reduction agreement with your Employer. You may also use available Employer Contributions (if any). Those pre-tax dollars will be used to reimburse you for your Eligible Expenses. You save Social Security and income taxes on the amount of your salary reduction for medical expenses. The coverage provided through the ME Plan is subject to the privacy and security provisions of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). The ME Plan is intended to be an excepted benefit under the HIPAA portability rules. Accordingly, neither the HIPAA portability rules nor the mandates of the Patient Protection and Affordable Care Act, as amended, such as the preventive care mandate, apply to the ME Plan. 7.2 How do I become a Participant? To become a Participant in the ME Plan, you must first become a Participant in the Flexible Benefits Plan. You must also satisfy the eligibility requirements for the ME Plan. The ME Plan's eligibility requirements are the same as the eligibility requirements for the Flexible Benefits Plan as described in Section 1.4. If you satisfy those requirements, you become a Participant in the ME Plan by electing benefits under the ME Plan during your initial or subsequent annual enrollment periods. NOTE: Participation in this ME Plan will make you ineligible to participate in the HSA Contribution Feature, and will make you and any of your dependents covered by the ME Plan ineligible to make or receive contributions to a health savings account. 7.3 What is my medical expense account? If you elect benefits under the ME Plan, a medical expense account ("ME Account") will be established in your name to keep a record of the benefits to which you are entitled. When you complete the election form, you specify the amount of benefits you wish to receive. These benefits may be funded by allocation of available Employer Contributions (if any) and, to the extent any such Employer Contributions are insufficient, with pre-tax dollars through salary reduction contributions. The full amount of your election under the ME Plan will be available at any time during the Plan Year, reduced by the amount of prior reimbursements under the ME Plan received during the Plan Year. The ME Account is a bookkeeping account only. Benefits under the ME Plan are paid from the Employer's general assets. There is no trust. NOTE: If you cannot make a salary reduction contribution to your ME Account as a result of being ineligible to receive a paycheck, the missed contribution will be collected from future © 2015 Hitesman & Wold, P.A. 37 Flexible Benefits Plan Summary Description paychecks. The Employer will automatically recalculate the contribution amount based on the number of remaining paychecks for the calendar year, the initial election amount and the remaining balance. 7.4 What is an "Eligible Expense"? Generally. An "Eligible Expense," in most situations, means any item for which you could have claimed a medical expense deduction on an itemized federal income tax return and for which you have not otherwise been reimbursed from health coverage, or some other source. Eligible Expenses include expenses incurred by you and your "spouse" and "dependents." For purposes of this ME Plan, "spouse" means a person to whom you are legally married in accordance with applicable state law. For purposes of this ME Plan, "dependent" generally includes an individual who satisfies the requirements of paragraph (1), (2), or (3) below: (1) An individual who: (i) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption); and (ii) will not attain age 27 during the relevant calendar year. (2) An individual who: (i) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption), brother, sister, stepbrother, or stepsister, or a descendant of any such person; (ii) has the same principal place of abode as you for at least one-half of the relevant year; (iii) will not attain age 19 (or age 24 if a full time student) during the relevant year or is permanently and totally disabled; (iv) did not provide over half of his/her own support during the relevant year; (v) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico; (vi) is younger than you; and (vii) does not file a joint tax return with his or her spouse. (3) An individual who: (i) is your child (or a descendant of a child), brother, sister, stepbrother, or stepsister, parent (or a parent's ancestor), stepparent, brother or sister's son or daughter, parent's brother or sister, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law or, if not such a relative, an individual who has the same principal place of abode as you and is a member of your household; © 2015 Hitesman & Wold, P.A. 38 Flexible Benefits Plan Summary Description (ii) has received more than one-half of his/her support from you during the relevant year; (iii) is not your qualifying child or the qualifying child of anyone else (i.e., does not satisfy the requirements of paragraph (1) above with respect to any person); and (iii) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico. NOTE: The definition of "dependent" is different than the definition applicable under the Internal Revenue Code for purposes of identifying who you may claim as an exemption on your federal income tax return. Furthermore, an individual eligible for dependent coverage under the Group Medical Plan is not necessarily a "dependent" for purposes of the ME Plan. Additional special rules apply in some cases. For additional information, please contact the Plan Administrator or your tax advisor. (b) Special rules for over-the-counter items. Eligible Expense also includes certain over-the-counter items that constitute medical care (under Section 213(d) of the Internal Revenue Code) even though a tax deduction is not available. Over-the- counter drugs and medicines (other than insulin) require a prescription as part of the claim substantiation. For this purpose, a "prescription" means a written or electronic order for a medicine or drug (1) that meets the legal requirements of a prescription in the state in which the medical expense is incurred, and (2) that is issued by an individual who is legally authorized to issue a prescription in that state. Absent this additional claims substantiation, the expense for the over-the-counter drug or medicine (other than insulin) is not reimbursable under the ME Plan. Note: Over-the-counter drugs and medicines are reimbursable under the ME Plan, provided the special rules described in this paragraph and Section 9.5 are followed. (c) Exceptions. Despite the general rule stated above, Eligible Expense does not include premiums for qualified long term care coverage or premiums for any group or individual health plan. IMPORTANT: Please review Exhibit AEligible Medical Care Expenses to help determine what is an Eligible Expense. You are also encouraged to consult your personal tax advisor or IRS Publication 502, "Medical and Dental Expenses" for further guidance as to what is or is not an Eligible Expense. CAUTION: Publication 502 addresses medical care expenses a person may deduct on his or her income taxes. Many, but not all, expenses that are tax deductible are also reimbursable under the ME Plan. © 2015 Hitesman & Wold, P.A. 39 Flexible Benefits Plan Summary Description 7.5 How do I receive my reimbursements under the ME Plan? (a) Periodic Reimbursements. When you incur an expense that is eligible for reimbursement, you submit a claim to the Claims Administrator on a claim form that will be supplied to you. The claim form will typically set forth: (1) the amount, date and nature of the expense; (2) the name of the person or entity to which the expense was paid; (3) your statement that the expense has not been reimbursed, and you will not seek reimbursement for the expense, from any other source; (4) a third party statement identifying the nature and amount of the expense (e.g., copies of bills or receipts from the provider(s)) and, for over-the- counter drugs and medicines (other than insulin) a copy of the prescription for the drug or medicine; and (5) such other information as the Claim Administrator may require. If there are enough dollars credited to your ME Plan, you will be reimbursed for your Eligible Expenses on a monthly basis. (b) Electronic Payment Card Claims. The electronic payment card allows you to pay for Eligible Expenses at the time that you incur the expense. Note: Except as specifically described below, using the electronic payment card to purchase medical care does not mean you have made a claim under the ME Plan or that a claim has been approved. You may still need to submit a paper claim in accordance with the procedures described above. The electronic payment card works as follows: (1) You must make an election to use the card. In order to be eligible for the electronic payment card, you must agree to abide by the terms and conditions of the electronic payment card program as set forth herein and in the electronic payment cardholder agreement (the "Cardholder Agreement"), including agreeing to any fees applicable to participate in the program, limitations as to card usage, the Plan's right to withhold and offset ineligible claims, etc. A Cardholder Agreement will be provided to you. The Cardholder Agreement is part of the terms and conditions of your Plan and this summary. (2) The balance of the card is limited to the balance of your ME Account. (3) The card will be turned off when you terminate employment or coverage under the Plan. (4) You must certify proper use of the card. As specified in the Cardholder Agreement, you certify during the applicable Plan Year that the amounts in your ME Account will only be used for Eligible Expenses (i.e., medical care expenses incurred by you, your spouse, and your tax dependents) and that © 2015 Hitesman & Wold, P.A. 40 Flexible Benefits Plan Summary Description you have not been reimbursed for the expense and that you will not seek reimbursement for the expense from any other source. Failure to abide by this certification will result in termination of card use privileges. (5) Reimbursement under the card is limited to health care providers and certain other places where you could purchase health care related items. The electronic payment card may be used only at merchants: (i) who have health care related merchant category codes other than the drug store or pharmacies merchant category code; (ii) who have the drug store or pharmacies merchant category code and with respect to whom 90% of the store's gross receipts during the prior taxable year consisted of items that qualify as expenses for medical care under Section 213(d) of the Code ("90% Pharmacies"); or (iii) who participate in an inventory information approval system developed by the card provider that verifies, at the time of purchase, that the goods being purchased constitute medical care. (6) You swipe the card at the health care provider like you do any other credit or debit card. When you incur an Eligible Expense at a doctor's office or pharmacy, such as a co -payment or prescription drug expense, you swipe the card at the provider's office much like you would a typical credit or debit card. The provider is paid for the expense up to the maximum reimbursement amount available under your ME Account (or as otherwise limited by the program) at the time you swipe the card. Every time you swipe the card, you certify to the Plan that the expense for which payment is being made is an Eligible Expense and that you have not been reimbursed by any other source nor will you seek reimbursement from another source. (7) You must obtain a third party statement from the health care provider (e.g. receipt, invoice, etc.) each time you swipe the card that includes the following information: 1) The nature of the expense (e.g. what type of service or treatment was provided). If the expense is for an over the counter drug, the written statement must indicate the name of the drug; 2) The date the expense was incurred; and 3) The amount of the expense. Although it is not required to be submitted for all purchases, you must retain this receipt for one year following the close of the Plan Year in which the expense was incurred. Even though payment may be made under the card arrangement, a written third party statement may be required to be submitted (except as otherwise provided in the Cardholder Agreement). You will receive a letter from the Claims Administrator if a third party statement is needed. If requested, you must provide the third party statement to the Claims Administrator within forty-five (45) days (or such longer period provided in the letter from the Claims Administrator) of the request. © 2015 Hitesman & Wold, P.A. 41 Flexible Benefits Plan Summary Description (8) There are situations where the third party statement will not be required to be provided to the Claims Administrator. There may be situations in which you will not be required to provide the written statement to the Claims Administrator, including: 1) Co -Pay Match. No written statement is required if the electronic payment card is used at medical care providers (i.e., merchants or service -providers that have health care related merchant category codes such as physicians, pharmacies, dentists, vision care offices, and hospitals) and the payment matches a specific co -payment you have under the Employer's group medical plan for the particular service that was provided or a multiple of that co -payment of not more than five (5) times the dollar amount of the co -payment. For example, if you have a $10 co -pay for physician office visits, and the payment was made to a physician office in the amount of $10, $20, $30, $40, or $50, you will not be required to provide the third party statement to the Claims Administrator. 2) PreviouslyApproved Claim Match. No written statement is required if the electronic payment card is used at medical care providers (i.e., merchants or service -provides that have health care related merchant category codes such as physicians, pharmacies, dentists, vision care offices, and hospitals) and the expense is in the same amount, for the same duration, and at the same provider as a previously approved expense (e.g. the Claims Administrator approves a thirty (30) count prescription with three (3) refills that was purchased at ABC Pharmacy; each time the card is swiped for subsequent refills at ABC Pharmacy the receipt need not be provided to the Claims Administrator if the expense incurred is the same amount). 3) Provider Match Program. No third party statement is required to be submitted to the Claims Administrator if the electronic claim file is accompanied by an electronic or written confirmation from the health care provider (e.g. your prescription benefits manager) that identifies the nature of the expenses and verifies the amount of the expense and that the expense is an Eligible Expense. 4) Inventory Information Approval System. No third party statement is required to be submitted to the Claims Administrator if the electronic payment card is used at a merchant (of any kind) that participates in an inventory information approval system developed by the card provider. Such system verifies, at the time of purchase, that the goods being purchased constitute medical care. Note: You should still obtain the third party receipt when you incur the expense and swipe the card, even if you think it will not be needed, so that you will have it in the event the Claims Administrator does request it. © 2015 Hitesman & Wold, P.A. 42 Flexible Benefits Plan Summary Description (9) Special rules apply to the use of the electronic payment card to purchase over-the-counter drugs and medicines other than insulin. Notwithstanding the rules described above regarding the use of the card to purchase medical care, the card may be used to purchase such over-the-counter drugs and medicines only in the following circumstances: 1) At any 90% pharmacy if the expense is substantiated after the purchase in accordance with paragraph (7) above. 2) At drug stores, pharmacies, non -health care merchants that have pharmacies, and mail order or web -based merchants that sell prescription drugs if (i) the cardholder presents the prescription to the pharmacist; (ii) the pharmacist assigns a prescription number and dispenses the over-the-counter drug or medicine in accordance with applicable law; (iii) the pharmacy retains a record of the transaction, including the name on prescription, prescription number, date, and the amount of the purchase; (iv) the pharmacy's records are accessible by the employer or its agent; (iv) the debit card system does not allow over-the-counter drugs or medicines without a prescription number; and (v) the expense is substantiated in accordance with the standard rules described above in paragraphs (7) and (8). 3) At merchants having healthcare related merchant codes (other than merchants described in item 2 above) if the expense is substantiated in accordance with the standard rules described above in paragraphs (7) and (8). Note: If the over-the-counter medicine cannot be purchased with the electronic payment card, it may still be reimbursed using the manual reimbursement procedures described in paragraph (a) above. (10) If you are unable to provide adequate or timely substantiation as requested by the Claims Administrator within the applicable time period, the card will be turned off and you must repay the Plan for the unsubstantiated expense. The deadline for repaying the Plan is set forth in the Cardholder Agreement. If you do not repay the Plan within the applicable time period, then the amount of the improperly paid claim may be withheld from your pay (if allowed by applicable law). If the Employer is unable to withhold the amount from your pay, an amount equal to the unsubstantiated expense will be offset against future eligible claims under the ME Plan. If no claims are submitted prior to the date you terminate coverage in the Plan, or claims are submitted but they are not sufficient to cover the unsubstantiated expense amount, the remaining unpaid amount may be treated as an indebtedness to the Employer. © 2015 Hitesman & Wold, P.A. 43 Flexible Benefits Plan Summary Description (11) You can use either the payment card or the paper claims approach. You have the choice as to how to submit your eligible claims. If you elect not to use the electronic payment card, you may also submit claims under the paper claims approach discussed above. Claims for which the electronic payment card has been used cannot be submitted as paper claims. (12) Your use of the payment card is not a claim. The use of an electronic payment card does not constitute a "claim" under the claims procedures. (c) Deadline. You may submit claims for reimbursement of Eligible Expenses incurred during the Plan Year for ninety (90) days following the end of that Plan Year. This period following the end of the Plan Year during which claims for reimbursement may be filed is referred to as the "claims run -out period." 7.6 What limits apply to reimbursements under the ME Plan? You cannot be reimbursed for any expenses above the amount of your election. You also cannot be reimbursed for any expenses that were incurred before the effective date of the ME Plan, for any expenses incurred before you become a Participant in the ME Plan, or for any expenses incurred after you terminate employment or otherwise cease to be eligible for coverage under the ME Plan, unless coverage is continued. Please note that it is not necessary that you have actually paid an amount for that expense to be eligible for reimbursement. You only must have incurred the expense and not have been reimbursed or paid from another source. An expense is "incurred" when the service which gives rise to the expense has been provided, not when you are billed or when you pay the expense. Special Rule: A special rule applies to expenses for orthodontia care. Such expenses may be reimbursed before the orthodontia care has been provided if you have actually paid the healthcare provider in advance in order to receive the services (e.g., an upfront payment required to receive services). 7.7 What is the maximum benefit I may elect to receive? The maximum amount of benefits you may elect under the ME Plan for a Plan Year is an amount equal to the maximum amount of salary reduction contributions that may be made to the ME Plan under the Code, which is an amount indexed for inflation. 7.8 What if I am no longer eligible? If your employment terminates, or you otherwise cease to be eligible for coverage under the ME Plan, your benefits under the ME Plan stop. You may not make any further contributions to your ME Account, and you may not submit claims for reimbursement of expenses incurred after you terminated employment or otherwise ceased to be eligible for coverage. You may, however, continue to submit claims for expenses incurred before you terminated employment or otherwise ceased to be eligible for coverage until the expiration of the claims run out period following the end of the Plan Year described above. © 2015 Hitesman & Wold, P.A. 44 Flexible Benefits Plan Summary Description NOTE: This rule may differ from the rule applicable to other Available Benefits. 7.9 Can coverage be continued? If your employment terminates or you otherwise cease to be eligible for the ME Plan, you and any others who receive their coverage through you may be able to continue that coverage. Continuation coverage is available in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") applicable through the Public Health Services Act ("PHSA") and the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"). These continuation rights are described later in this summary. 7.10 Can I carry over my ME Account to the next Plan Year? Yes. The ME Plan will provide a limited carryover of ME Account balances from Plan Year to Plan Year in accordance with the following conditions and restrictions: (a) You may carry over the lesser of (i) $500, or (ii) the balance of your ME Account remaining at the end of the Plan Year. The actual balance of your ME Account that may be carried over will be determined upon expiration of claims run -out period described above. Note, the balance of your ME Account at any point in time shall be equal to the amount credited to the ME Account for the Plan Year minus claims paid to date with respect to that Plan Year. (b) Although the balance of your ME Account that is available for the carryover is not determined until the close of the claims run -out period, your ME Account balance as of midnight on the last day of the Plan Year, up to the amount specified in paragraph (a) above, will be available to reimburse Eligible Expenses incurred on and after the first day of the new Plan Year. The Claims Administrator will administer claims submitted during the claims run out period (including allocating claims between your carryover balance and your election for the new Plan Year (if any)) in a manner consistent with applicable law (including regulatory guidance). (c) In general, carryovers occur within the ME Plan. However, you may receive the carryover to the Plan's Limited Scope ME Plan (if any) if. (i) you enroll in the Limited Scope ME Plan for the following plan year, or (ii) you direct the Plan Administrator, by no later than the last day of the Plan Year from which the carryover is to be made and in accordance with procedures adopted by the Plan Administrator, to make the carryover to the Limited Scope ME Plan. (d) In general, carryovers occur automatically. However, you may elect, in accordance with procedures adopted by the Plan Administrator, to waive the carryover. You must make such an election no later the last day of the Plan Year from which the carryover is to be made. (e) Unless otherwise required under applicable law (including regulatory guidance), you will receive a carryover only if you are eligible to make elections under the ME Plan (or Limited Scope ME Plan) as of the first day of the Plan Year to which the © 2015 Hitesman & Wold, P.A. 45 Flexible Benefits Plan Summary Description carryover will be made (regardless of whether you actually elect to participate in the Plan for that Plan Year). (f) A carryover does not count against the maximum reimbursement you may receive under the ME Plan for a Plan Year as described above. Any amounts remaining in your ME Account attributable to a particular Plan Year after the carryover shall be forfeited. You will not be entitled to receive any direct or indirect payment of any amount in your ME Account in excess of the amount that may be carried over to the next Plan Year. If you do not use it and it cannot be carried over, you lose it. 7.11 What if I receive benefits in error? If a payment for benefits is made by the ME Plan in excess of the benefit to which you are entitled under the ME Plan, the ME Plan has the right to recover such overpayment from the payee. Repayment of an overpayment is a condition of participation in the Flexible Benefits Plan. 7.12 What if I am subject to a child support order? Notwithstanding any provision in the ME Plan to the contrary, the ME Plan shall recognize child support orders regarding the provision of medical coverage for a child, including orders under the Child Support Performance and Incentive Act of 1998 to the extent required by law. If you are involved in a divorce or child custody matter, you or your legal counsel should contact the Plan Administrator. © 2015 Hitesman & Wold, P.A. 46 Flexible Benefits Plan Summary Description PART VIII. HSA CONTRIBUTION FEATURE 8.1 What benefits are provided? The Flexible Benefits Plan permits you to make contributions to a health savings account ("HSA") under the HSA Contribution Feature. Under the HSA Contribution Feature, you provide a source of pre-tax dollars by entering into a salary reduction arrangement with your Employer. You may also use available Employer Contributions (if any). Those pre-tax dollars will be contributed to your HSA. You save Social Security and income taxes on the amount of your salary reduction for HSA contributions. 8.2 How do I become a Participant? To become a Participant in the HSA Contribution Feature, you must first become a Participant in the Flexible Benefits Plan. You must also satisfy the eligibility requirements for the HSA Contribution Feature. The HSA Contribution Feature's eligibility requirements are, in general, the same as the eligibility requirements for the Flexible Benefits Plan as described in Section 1.4. In addition, you must meet certain other requirements in order to participate in the HSA Contribution Feature. To be eligible, you must: (a) be covered by the Employer's Qualifying High Deductible Health Plan; (b) not be claimed as another person's tax dependent; (c) not be actually covered by Medicare; and (d) not have any health coverage other than coverage under a High Deductible Health Plan, except "Permitted Insurance" or "Permitted Coverage," whether or not such coverage is sponsored by your Employer. If you satisfy those requirements, you become a Participant in the HSA Contribution Feature by electing benefits under the HSA Contribution Feature during your initial or subsequent annual enrollment periods. 8.3 What is a Qualifying High Deductible Health Plan? A "Qualifying High Deductible Health Plan" generally is a health plan providing coverage that meets one of the following requirements: (a) self -only coverage with a deductible of at least $1,300 (as indexed for inflation) before any reimbursement is made for eligible medical expenses (other than preventive care) and with an annual out-of-pocket limit of not more than $6,450 (as indexed for inflation); or (b) family coverage with a deductible of at least $2,600 (as indexed for inflation) before any reimbursement is made for eligible medical expenses (other than preventive care), without an embedded individual deductible less than $2,600, and with an annual out-of-pocket limit of not more than $12,900 (as indexed for inflation). NOTE: A health plan that covers prescription drugs prior to the specified deductible is not a Qualifying High Deductible Health Plan. © 2015 Hitesman & Wold, P.A. 47 Flexible Benefits Plan Summary Description 8.4 What is Permitted Insurance and Permitted Coverage? "Permitted Insurance" is: (a) insurance in which substantially all of the coverage relates to liabilities incurred under workers' compensation laws, tort liabilities, liabilities related to ownership or use of property, or similar liabilities as specified by the IRS; (b) insurance for specified disease or illness (e.g., cancer insurance); or (c) insurance that pays a fixed amount per day (or other period) of hospitalization (e.g., hospital indemnity insurance). "Permitted Coverage" is coverage (whether through insurance or otherwise) for accidents, disability, dental care, vision care, or long-term care. Permitted coverage includes some medical reimbursement accounts and health reimbursement arrangements (HRAs), such as limited scope medical reimbursement accounts and HRAs (i.e., the Limited Scope ME Plan provided through this Flexible Benefits Plan), HRAs for which the payment or reimbursement of medical expenses (except expenses for preventive care, dental care, vision care, or long-term care premiums) is suspended, post -deductible medical reimbursement accounts and HRAs, and retirement HRAs. It also includes wellness programs and employee assistance programs that do not provide significant benefits in the nature of non -preventive medical care or treatment. 8.5 What other coverage disqualifies me? You are not eligible to make or receive contributions to an HSA if you have any coverage that is not coverage under a Qualifying High Deductible Health Plan, coverage under Permitted Insurance, or Permitted Coverage. Other coverage that will disqualify you from being eligible for the HSA Contribution Feature includes, but is not limited to, coverage under your spouse's health plan (that is not a Qualifying High Deductible Health Plan), coverage under the ME Plan, coverage under your spouse's medical expense reimbursement plan, and coverage under a health reimbursement arrangement, including your spouse's health reimbursement arrangement. Note: You must consider "coverage" you have through the plan's sponsored by your spouse's employer when determining whether you are eligible for HSA contributions. 8.6 What is my HSA? Your HSA is a health savings account (as defined under the Internal Revenue Code) established by you with a third party trustee/custodian (e.g., bank or insurance company) that is authorized to be the trustee of HSAs and is selected by your Employee. Your Employer does not establish or sponsor your HSA. Furthermore, your Employer does not own your HSA; it is owned by you. You may invest the funds in your HSA as allowed by the trustee/custodian of the account. Your Employer has no control of or responsibility for the investment of your HSA. 8.7 What are the limits on the amount of contributions? The total contributions made by you and/or made on your behalf (i.e., contributions by your Employer) into HSAs owned by you are subject to a maximum contribution limit. Generally, © 2015 Hitesman & Wold, P.A. 48 Flexible Benefits Plan Summary Description the maximum contribution you may make or receive in a year is an indexed amount (for 2017: $3,400 if you have self -only coverage or $6,750 if you have family coverage). You are allowed to make or receive an additional "catch-up" contribution for the year in which you will attain age 55 before the end of the year and for any year thereafter while you remain eligible. The catch-up contribution is currently $1,000 per year. If you are eligible for contributions for only a portion of the year, your maximum contribution (including catch up contributions) is determined in accordance with the following rules: (a) Not Eligible on December V. If you cease to be eligible for contributions prior to December 1St of a particular year, the contribution limit for that year will be a fraction of the maximum contribution for the full year based upon the number of months in which you were eligible. For example, if you have single coverage under a Qualifying High Deductible Health Plan, are not eligible for catch up contributions, but are eligible only during January through June (i.e., six months of the year), your maximum contribution limit is 50% of the annual maximum. (b) Eligible on December V. If you become eligible for HSA contributions during a particular year and you are eligible as of December 1St of that year, your maximum contribution for that year is the full indexed amount. However, if you become ineligible for HSA contributions during the following year, you will not be entitled to the full maximum contribution. Instead, your maximum contribution will be a fraction of the maximum contribution for the full year based upon the number of months in which you were eligible during that year. The excess contributions will be included in your gross income and a 10% additional tax will be imposed on those contributions. If you are married, both you and your spouse have coverage under a Qualifying High Deductible Health Plan, and both you and your spouse have health savings accounts, the limit is divided equally between you (unless you agree to a different allocation). Rollover contributions may also be made to an HSA from another health savings account or from an Archer MSA. Rollover contributions are not subject to the contribution limit described above. 8.8 What happens if my contributions exceed the contribution limit? If the contributions to your HSA exceed the applicable maximum contribution limit for a year, generally the excess contributions will be included in your income and an excise tax will be imposed upon them. You will also be taxed on any earnings earned on the excess amounts. However, you can avoid the excess tax if you take a distribution of the excess contributions (and the net income attributable to the excess contribution) before the last day (including extensions) for filing your federal income tax return. © 2015 Hitesman & Wold, P.A. 49 Flexible Benefits Plan Summary Description 8.9 What are the tax consequences of the HSA Contribution Feature? The contributions made under this HSA Contribution Feature will not be included in your gross income, unless they exceed the applicable maximum contribution limit as discussed above. 8.10 What are the rules regarding distributions from my HSA? Your Employer has no control over or involvement with distributions made from your HSA. Your Employer does not substantiate expenses for which such distributions are made. Information regarding the procedure for obtaining distributions and the consequences of taking distributions is available from the trustee/custodian of your HSA. Note: The definition of dependent for purposes of HSA distributions differs from the definition of "dependent" or "tax dependent" used in this document. Distributions from your HSA for expenses incurred by non -dependents may be considered taxable income and be subject to penalties. Please contact your tax advisor for additional information regarding the taxation of HSA distributions. 8.11 When does my participation end? Participation in the HSA Contribution Feature ends upon the earlier of the date your participation in the Plan ceases or the date you no longer satisfy the eligibility requirements described in Section 9.2. However, you need not be a participant in the HSA Contribution Feature (or be employed by the Employer) in order to obtain distributions from your HSA. In addition, you may make contributions to your HSA outside this Flexible Benefits Plan, provided you are eligible to do so under IRS rules, after you have left employment with the Employer or have ceased to be a participant in the Flexible Benefits Plan. NOTE: This HSA Contribution Feature is not a group health plan for purposes of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), the Family and Medical Leave Act (FMLA), and the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). COBRA, FMLA, and USERRA do not apply to this HSA Contribution Feature. However, COBRA, FMLA, and USERRA may apply to the Qualifying High Deductible Health Plan. 8.12 Can the contributions made to my HSA be forfeited? No, once the contributions have been deposited in your HSA, you will have a nonforfeitable interest in the funds. You will be free to request a distribution of the funds or to move them to another provider of HSAs, to the extent allowed by law. NOTE: A very limited exception exists if the person was never HSA eligible. 8.13 What are the reporting requirements? Your Employer is responsible for reporting contributions made to your HSA through this HSA Contribution Feature on your Form W-2. You are also responsible for reporting contributions to your HSA, and for reporting distributions from your HSA, on appropriate forms available from the IRS. © 2015 Hitesman & Wold, P.A. 50 Flexible Benefits Plan Summary Description PART IX. LINHTED SCOPE MEDICAL EXPENSE BENEFITS 9.1 What benefits are provided? The Flexible Benefits Plan permits you to receive reimbursement for some or all of your uninsured medical and dental expenses under the Limited Scope Medical Expense Reimbursement Plan ("Limited Scope ME Plan"). Under the Limited Scope ME Plan, you provide a source of pre-tax dollars by entering into a salary reduction agreement with your Employer. You may also use available Employer Contributions (if any). Those pre-tax dollars will be used to reimburse you for your Eligible Expenses. You save Social Security and income taxes on the amount of your salary reduction for medical expenses. The coverage provided through the Limited Scope ME Plan is subject to the privacy and security provisions of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). The Limited Scope ME Plan is intended to be an excepted benefit under the HIPAA portability rules. Accordingly, neither the HIPAA portability rules nor the mandates of the Patient Protection and Affordable Care Act, as amended, such as the preventive care mandate, apply to the Limited Scope ME Plan. 9.2 How do I become a Participant? To become a Participant in the Limited Scope ME Plan, you must first become a Participant in the Flexible Benefits Plan. You must also satisfy the eligibility requirements for the Limited Scope ME Plan. The Limited Scope ME Plan's eligibility requirements are the same as the eligibility requirements for the Flexible Benefits Plan as described in Section 1.4. If you satisfy those requirements, you become a Participant in the Limited Scope ME Plan by electing benefits under the Limited Scope ME Plan during your initial or subsequent annual enrollment periods. NOTE: Participation in this Limited Scope ME Plan will not make you ineligible to participate in the HSA Contribution Feature, and will not make you and any of your dependents covered by the Limited Scope ME Plan ineligible to make or receive contributions to a health savings account. 9.3 What is my limited scope medical expense account? If you elect benefits under the Limited Scope ME Plan, a limited scope medical expense account ("Limited Scope ME Account") will be established in your name to keep a record of the benefits to which you are entitled. When you complete the election form, you specify the amount of benefits you wish to receive. These benefits may be funded by allocation of available Employer Contributions and, to the extent any such Employer Contributions are insufficient, with pre-tax dollars through salary reduction contributions. The full amount of your election under the Limited Scope ME Plan will be available at any time during the Plan Year, reduced by the amount of prior reimbursements under the Limited Scope ME Plan received during the Plan Year. The Limited Scope ME Account is a bookkeeping account only. Benefits under the Limited Scope ME Plan are paid from the Employer's general assets. There is no trust. © 2015 Hitesman & Wold, P.A. 51 Flexible Benefits Plan Summary Description NOTE: If you cannot make a salary reduction contribution to your Limited Scope ME Account as a result of being ineligible to receive a paycheck, the missed contribution will be collected from future paychecks. The payroll system will automatically recalculate the contribution amount based on the number of remaining paychecks for the calendar year, the initial election amount and the remaining balance. 9.4 What is an "Eligible Expense"? (a) Generally. An "Eligible Expense," in most situations, means any expense: (1) for which you could have claimed a medical expense deduction on an itemized federal income tax return; (2) for which you have not otherwise been reimbursed from health coverage, or some other source; and (3) that is for (i) dental or vision care (incurred at any time during the Plan Year); (ii) any type of medical care, provided the expense is incurred after the applicable "minimum annual deductible" has been satisfied for the Plan Year. "Minimum annual deductible " means the applicable minimum annual deductible for a high deductible health plan under Section 223(c)(2)(A)(i) of the Internal Revenue Code. This amount typically changes from year to year. If you have either a Spouse or Dependents during the Plan Year, the minimum annual deductible will be the minimum deductible for family coverage. If you have no Spouse or Dependents during the Plan Year, the minimum annual deductible will be the minimum deductible for single coverage. Eligible Expenses include expenses incurred by you and your "spouse" and "dependents." For purposes of this Limited Scope ME Plan, "spouse" means a person to whom you are legally married in accordance with applicable state law. For purposes of this Limited Scope ME Plan, "dependent" generally includes an individual who satisfies the requirements of paragraph (1), (2), or (3) below: (4) An individual who: (i) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption); (ii) and will not attain age 27 during the relevant calendar year. (5) An individual who: (i) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption), brother, sister, stepbrother, or stepsister, or a descendant of any such person; (ii) has the same principal place of abode as you for at least one-half of the relevant year; © 2015 Hitesman & Wold, P.A. 52 Flexible Benefits Plan Summary Description (iii) will not attain age 19 (or age 24 if a full time student) during the relevant year or is permanently and totally disabled; (iv) did not provide over half of his/her own support during the relevant year; (v) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico; (vi) is younger than you; and (vii) does not file a joint tax return with his or her spouse. (6) An individual who: (i) is your child (or a descendant of a child), brother, sister, stepbrother, or stepsister, parent (or a parent's ancestor), stepparent, brother or sister's son or daughter, parent's brother or sister, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law or, if not such a relative, an individual who has the same principal place of abode as you and is a member of your household; (ii) has received more than one-half of his/her support from you during the relevant year; (iii) is not your qualifying child or the qualifying child of anyone else (i.e., does not satisfy the requirements of paragraph (1) above with respect to any person); and (iii) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico. NOTE: The definition of "dependent" is different than the definition applicable under the Internal Revenue Code for purposes of identifying who you may claim as an exemption on your federal income tax return. Furthermore, an individual eligible for dependent coverage under the Group Medical Plan is not necessarily a "dependent" for purposes of the Limited Scope ME Plan. Additional special rules apply in some cases. For additional information, please contact the Plan Administrator or your tax advisor. (b) Special rules for over-the-counter items. Eligible Expense also includes certain over-the-counter items that meet the requirements described above and that constitute medical care (under Section 213(d) of the Internal Revenue Code) even though a tax deduction is not available. Over-the-counter drugs and medicines (other than insulin) purchased require a prescription as part of the claim substantiation. For this purpose, a "prescription" means a written or electronic order for a medicine or drug (1) that meets the legal requirements of a prescription in the state in which the medical expense is incurred, and (2) that is issued by an individual who is legally authorized to issue a prescription in that state. Absent this additional claims substantiation, the expense is not reimbursable under the Limited Scope ME Plan. © 2015 Hitesman & Wold, P.A. 53 Flexible Benefits Plan Summary Description Note: Over-the-counter drugs and medicines are reimbursable under the Limited Scope ME Plan, provided the special rules described in this paragraph and Section 9.5 are followed. (c) Exceptions. Despite the general rule stated above, Eligible Expense does not include premiums for any group or individual health plan or long term care coverage. IMPORTANT: Please review the "Dental & Orthodontic Care" and "Vision Care" sections of Exhibit AEligible Medical Care Expenses. You are also encouraged to consult your personal tax advisor or IRS Publication 502, "Medical and Dental Expenses" for further guidance as to what is or is not an Eligible Expense. CAUTION: Publication 502 addresses medical care expenses a person may deduct on his or her income taxes. Many, but not all, dental, vision, and preventive care expenses that are tax deductible are also reimbursable under the Limited Scope ME Plan. 9.5 How do I receive my reimbursements under the Limited Scope ME Plan? (a) Periodic Reimbursements. When you incur an expense that is eligible for reimbursement, you submit a claim to the Claims Administrator on a claim form that will be supplied to you. The claim form will typically set forth: (1) the amount, date and nature of the expense, (2) the name of the person or entity to which the expense was paid, (3) your statement that the expense has not been reimbursed, and you will not seek reimbursement for the expense, from any other source, (4) a third party statement identifying the nature and amount of the expense (e.g., copies of bills or receipts from the provider(s)) and, for over-the- counter drugs and medicines (other than insulin) a copy of the prescription for the drug or medicine, and (5) such other information as the Claim Administrator may require. If there are enough dollars credited to your Limited Scope ME Plan, you will be reimbursed for your Eligible Expenses on a monthly basis. (b) Electronic Payment Card Claims. The electronic payment card allows you to pay for Eligible Expenses at the time that you incur the expense. Note: Except as specifically described below, using the electronic payment card to purchase medical care does not mean you have made a claim under the Limited Scope ME Plan or that a claim has been approved. You may still need to submit a paper claim in accordance with the procedures described above. The electronic payment card works as follows: (1) You must make an election to use the card. In order to be eligible for the electronic payment card, you must agree to abide by the terms and © 2015 Hitesman & Wold, P.A. 54 Flexible Benefits Plan Summary Description conditions of the electronic payment card program as set forth herein and in the electronic payment cardholder agreement (the "Cardholder Agreement"), including agreeing to any fees applicable to participate in the program, limitations as to card usage, the Plan's right to withhold and offset ineligible claims, etc. A Cardholder Agreement will be provided to you. The Cardholder Agreement is part of the terms and conditions of your Plan and this summary. (2) The balance of the card is limited to the balance of your Limited Scope ME Account. (3) The card will be turned off when you terminate employment or coverage under the Plan. (4) You must certify proper use of the card. As specified in the Cardholder Agreement, you certify during the applicable Plan Year that the amounts in your ME Account will only be used for Eligible Expenses (i.e., medical care expenses incurred by you, your spouse, and your tax dependents) and that you have not been reimbursed for the expense and that you will not seek reimbursement for the expense from any other source. Failure to abide by this certification will result in termination of card use privileges. (5) Reimbursement under the card is limited to health care providers and certain other places where you could purchase health care related items. The electronic payment card may be used only at merchants: (i) who have health care related merchant category codes other than the drug store or pharmacies merchant category code; (ii) who have the drug store or pharmacies merchant category code and with respect to whom 90% of the store's gross receipts during the prior taxable year consisted of items that qualify as expenses for medical care under Section 213(d) of the Code; or (iii) who participate in an inventory information approval system developed by the card provider that verifies, at the time of purchase, that the goods being purchased constitute medical care. (6) You swipe the card at the health care provider like you do any other credit or debit card. When you incur an Eligible Expense at a doctor's office or pharmacy, such as a co -payment or prescription drug expense, you swipe the card at the provider's office much like you would a typical credit or debit card. The provider is paid for the expense up to the maximum reimbursement amount available under your ME Account (or as otherwise limited by the program) at the time you swipe the card. Every time you swipe the card, you certify to the Plan that the expense for which payment is being made is an Eligible Expense and that you have not been reimbursed by any other source nor will you seek reimbursement from another source. (7) You must obtain a third party statement from the health care provider (e.g. receipt, invoice, etc.) each time you swipe the card that includes the following information: 1) The nature of the expense (e.g. what type of service or treatment was provided). If the expense is for an over the counter drug, the written statement must indicate the name of the drug; 2) The date the expense was incurred; and © 2015 Hitesman & Wold, P.A. 55 Flexible Benefits Plan Summary Description 3) The amount of the expense. Although it is not required to be submitted for all purchases, you must retain this receipt for one year following the close of the Plan Year in which the expense was incurred. Even though payment may be made under the card arrangement, a written third party statement may be required to be submitted (except as otherwise provided in the Cardholder Agreement). You will receive a letter from the Claims Administrator if a third party statement is needed. If requested, you must provide the third party statement to the Claims Administrator within forty-five (45) days (or such longer period provided in the letter from the Claims Administrator) of the request. (8) There are situations where the third party statement will not be required to be provided to the Claims Administrator. There may be situations in which you will not be required to provide the written statement to the Claims Administrator, including: 1) Co -Pay Match. No written statement is required if the electronic payment card is used at medical care providers (i.e., merchants or service -providers that have health care related merchant category codes such as physicians, pharmacies, dentists, vision care offices, and hospitals) and the payment matches a specific co -payment you have under the Employer's group medical plan for the particular service that was provided or a multiple of that co -payment of not more than five (5) times the dollar amount of the co -payment. For example, if you have a $10 co -pay for physician office visits, and the payment was made to a physician office in the amount of $10, $20, $30, $40, or $50, you will not be required to provide the third party statement to the Claims Administrator. 2) PreviouslyApproved Claim Match. No written statement is required if the electronic payment card is used at medical care providers (i.e., merchants or service -provides that have health care related merchant category codes such as physicians, pharmacies, dentists, vision care offices, and hospitals) and the expense is in the same amount, for the same duration, and at the same provider as a previously approved expense (e.g. the Claims Administrator approves a thrity (30) count prescription with three (3) refills that was purchased at ABC Pharmacy; each time the card is swiped for subsequent refills at ABC Pharmacy the receipt need not be provided to the Claims Administrator if the expense incurred is the same amount). 3) Provider Match Program. No third party statement is required to be submitted to the Claims Administrator if the electronic claim file is accompanied by an electronic or written confirmation from the health care provider (e.g. your prescription benefits manager) that © 2015 Hitesman & Wold, P.A. 56 Flexible Benefits Plan Summary Description identifies the nature of the expenese and verifies the amount of the expense and that the expense is an Eligible Expense. 4) Inventory Information Approval System. No third party statement is required to be submitted to the Claims Administrator if the electronic payment card is used at a merchant (of any kind) that participates in an inventory information approval system developed by the card provider. Such system verifies, at the time of purchase, that the goods being purchased constitute medical care. Effective January 1, 2011, this rule does not apply to over-the-counter drugs and medicines (other than insulin). Note: You should still obtain the third party receipt when you incur the expense and swipe the card, even if you think it will not be needed, so that you will have it in the event the Claims Administrator does request it. (9) Special rules apply to the use of the electronic payment card to purchase over-the-counter drugs and medicines other than insulin. Notwithstanding the rules described above regarding the use of the card to purchase medical care, the card may be used to purchase such over-the-counter drugs and medicines only in the following circumstances: 1) At any 90% pharmacy if the expense is substantiated after the purchase in accordance with paragraph (7) above. 2) At drug stores, pharmacies, non -health care merchants that have pharmacies, and mail order or web -based merchants that sell prescription drugs if (i) the cardholder presents the prescription to the pharmacist; (ii) the pharmacist assigns a prescription number and dispenses the over-the-counter drug or medicine in accordance with applicable law; (iii) the pharmacy retains a record of the transaction, including the name on prescription, prescription number, date, and the amount of the purchase; (iv) the pharmacy's records are accessible by the employer or its agent; (iv) the debit card system does not allow over-the-counter drugs or medicines without a prescription number; and (v) the expense is substantiated in accordance with the standard rules described above in paragraphs (7) and (8). 3) At merchants having healthcare related merchant codes (other than merchants described in item 2 above) if the expense is substantiated in accordance with the standard rules described above in paragraphs (7) and (8). Note: If the over-the-counter medicine cannot be purchased with the electronic payment card, it may still be reimbursed using the manual reimbursement procedures described in paragraph (a) above. © 2015 Hitesman & Wold, P.A. 57 Flexible Benefits Plan Summary Description (10) If you are unable to provide adequate or timely substantiation as requested by the Claims Administrator within the applicable time period, the card will be turned off and you must repay the Plan for the unsubstantiated expense. The deadline for repaying the Plan is set forth in the Cardholder Agreement. If you do not repay the Plan within the applicable time period, then the amount of the improperly paid claim may be withheld from your pay (if allowed by applicable law). If the Employer is unable to withhold the amount from your pay, an amount equal to the unsubstantiated expense will be offset against future eligible claims under the ME Plan. If no claims are submitted prior to the date you terminate coverage in the Plan, or claims are submitted but they are not sufficient to cover the unsubstantiated expense amount, the remaining unpaid amount may be treated as an indebtedness to the Employer. (11) You can use either the payment card or the paper claims approach. You have the choice as to how to submit your eligible claims. If you elect not to use the electronic payment card, you may also submit claims under the paper claims approach discussed above. Claims for which the electronic payment card has been used cannot be submitted as paper claims. (12) Your use of the payment card is not a claim. The use of an electronic payment card does not constitute a "claim" under the claims procedures. (c) Deadline. You may submit claims for reimbursement of Eligible Expenses incurred during the Plan Year for ninety (90) days following the end of that Plan Year. This period following the end of the Plan Year during which claims for reimbursement may be filed is referred to as the "claims run -out period." 9.6 What limits apply to reimbursements under the Limited Scope ME Plan? You cannot be reimbursed for any expenses above the amount of your election. You also cannot be reimbursed for any expenses that were incurred before the effective date of the Limited Scope ME Plan, for any expenses incurred before you become a Participant in the Limited Scope ME Plan, or for any expenses incurred after you terminate employment or otherwise cease to be eligible for coverage under the Limited Scope ME Plan, unless coverage is continued. Please note that it is not necessary that you have actually paid an amount for that expense to be eligible for reimbursement. You only must have incurred the expense and not have been reimbursed or paid from another source. An expense is "incurred" when the service which gives rise to the expense has been provided, not when you are billed or when you pay the expense. Special Rule: A special rule applies to expenses for orthodontia care. Such expenses may be reimbursed before the orthodontia care has been provided if you have actually paid the healthcare provider in advance in order to receive the services (e.g., an upfront payment required to receive services). © 2015 Hitesman & Wold, P.A. S$ Flexible Benefits Plan Summary Description 9.7 What are the maximum reimbursements I may receive? The maximum amount of benefits you may elect under the Limited Scope ME Plan for a Plan Year is an amount equal to the maximum amount of salary reduction contributions that may be made to the ME Plan under the Code, which is an amount indexed for inflation. 9.8 What if I am no longer eligible? If your employment terminates, or you otherwise cease to be eligible for coverage under the Limited Scope ME Plan, your benefits under the Limited Scope ME Plan stop. You may not make any further contributions to your Limited Scope ME Account, and you may not submit claims for reimbursement of expenses incurred after you terminated employment or otherwise ceased to be eligible for coverage. You may, however, continue to submit claims for expenses incurred before you terminated employment or otherwise ceased to be eligible for coverage until the expiration of the claims run out period following the end of the Plan Year described above. NOTE: This rule may differ from the rule applicable to other Available Benefits. 9.9 Can coverage be continued? If your employment terminates or you otherwise cease to be eligible for the Limited Scope ME Plan, you and any others who receive their coverage through you may be able to continue that coverage. Continuation coverage is available in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") applicable through the Public Health Services Act ("PHSA") and the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"). These continuation rights are described later in this summary. 9.10 Can I carry over my Limited Scope ME Account to the next Plan Year? Yes. The Limited Scope ME Plan will provide a limited carryover of Limited Scope ME Account balances from Plan Year to Plan Year in accordance with the following conditions and restrictions: (a) You may carry over the lesser of. (i) $500, or (ii) the balance of your Limited Scope ME Account remaining at the end of the Plan Year. The actual balance of your Limited Scope ME Account that may be carried over will be determined upon expiration of claims run -out period described above. Note, the balance of your Limited Scope ME Account at any point in time shall be equal to the amount credited to the Limited Scope ME Account for the Plan Year minus claims paid to date with respect to that Plan Year. (b) Although the balance of your Limited Scope ME Account that is available for the carryover is not determined until the close of the claims run -out period, your Limited Scope ME Account balance as of midnight on the last day of the Plan Year, up to the amount specified in paragraph (a) above, will be available to reimburse Eligible Expenses incurred on and after the first day of the new Plan Year. The Claims Administrator will administer claims submitted during the claims run out period (including allocating claims between your carryover balance and your © 2015 Hitesman & Wold, P.A. 59 Flexible Benefits Plan Summary Description election for the new Plan Year (if any)) in a manner consistent with applicable law (including regulatory guidance). (c) In general, carryovers occur automatically. However, you may elect, in accordance with procedures adopted by the Plan Administrator, to waive the carryover. You must make such an election no later the last day of the Plan Year from which the carryover is to be made. (d) Unless otherwise required under applicable law (including regulatory guidance), you will receive a carryover only if you are eligible to make elections under the Limited Scope Plan as of the first day of the Plan Year to which the carryover will be made (regardless of whether you actually elect to participate in the Plan for that Plan Year). (e) A carryover does not count against the maximum reimbursement you may receive under the Limited Scope ME Plan for a Plan Year as described above. Any amounts remaining in your Limited Scope ME Account attributable to a particular Plan Year after the carryover shall be forfeited. You will not be entitled to receive any direct or indirect payment of any amount in your Limited Scope ME Account in excess of the amount that may be carried over to the next Plan Year. If you do not use it and it cannot be carried over, you lose it. 9.11 What if I receive benefits in error? If a payment for benefits is made by the Limited Scope ME Plan in excess of the benefit to which you are entitled under the Limited Scope ME Plan, the Limited Scope ME Plan has the right to recover such overpayment from the payee. Repayment of an overpayment is a condition of participation in the Flexible Benefits Plan. 9.12 What if I am subject to a child support order? Notwithstanding any provision in the Limited Scope ME Plan to the contrary, the Limited Scope ME Plan shall recognize child support orders regarding the provision of medical coverage for a child, including orders under the Child Support Performance and Incentive Act of 1998 to the extent required by law. If you are involved in a divorce or child custody matter, you or your legal counsel should contact the Plan Administrator. © 2015 Hitesman & Wold, P.A. 60 Flexible Benefits Plan Summary Description PART X. CONTINUATION COVERAGE 10.1 What are my continuation rights under COBRA? [The Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") requires most employers with twenty (20) or more employees to offer employees and their families (spouse and/or dependent children) the opportunity to pay for a temporary extension of health coverage (called "continuation coverage") at group rates in certain instances where health coverage under employer sponsored group health plan(s) would otherwise end. There is no requirement that a person be insurable to elect continuation coverage. However, a person who continues coverage may have to pay all of the premium for the continuation coverage. The Group Medical Plan, Group Dental Plan, Medical Expense Reimbursement Plan, and Limited Scope Medical Expense Reimbursement Plan shall be operated consistent with COBRA and pursuant to COBRA policies and procedures contained in a separate document and is incorporated by reference into this Flexible Benefits Plan. This document is available to you upon request, at no charge. 10.2 What are my continuation rights under USERRA? If you are called to active duty in the uniformed services, you may elect to continue coverage for you and your eligible dependents under USERRA for a period of up to 24 months. You and your eligible dependents qualify for this extension if you are called into active or reserve duty, whether voluntary or involuntary, in the Armed Forces, the Army National Guard, the Air National Guard, full-time National Guard duty (under a federal, not a state, call-up), the commissioned corps of the Public Health Services and any other category of persons designated by the President of the United States. This continuation right is similar to, and runs concurrent with, your continuation right under COBRA (if any). The Group Medical Plan, Group Dental Plan, Medical Expense Reimbursement Plan, and Limited Scope Medical Expense Reimbursement Plan shall be operated consistent with USERRA and pursuant to USERRA policies and procedures contained in a separate document and is incorporated by reference into this Flexible Benefits Plan. This document is available to you upon request, at no charge. 10.3 What are my continuation and/or conversion rights for group health plan coverage under state law? Minnesota requires continuation and conversion of group health plan coverage (including medical, dental, and vision coverage) upon certain events. These laws may apply to both insured and self-insured plans other than health flexible spending accounts. Your continuation and conversion rights, and the rights of those who are covered through you, are described in the separate materials that have been provided to you either directly by the carrier (the insurance company) or by your Employer. If you have not been provided this information, you should contact the Plan Administrator. © 2015 Hitesman & Wold, P.A. 61 Flexible Benefits Plan Summary Description 10.4 What are my continuation and/or conversion rights for group term life insurance coverage under state law? Minnesota requires continuation and conversion of group -term life insurance. Your continuation and conversion rights, and the rights of those who are covered through you, are described in the separate materials that have been provided to you either directly by the carrier (the insurance company) or by your Employer. If you have not been provided this information, you should contact the Plan Administrator. © 2015 Hitesman & Wold, P.A. 62 Flexible Benefits Plan Summary Description PART XI. FAMILY AND MEDICAL LEAVE ACT OF 1993 11.1 Family and Medical Leave Act of 1993 As a Minnesota public sector employer, your Employer is deemed to have fifty (50) or more employees for purposes of FMLA. NOTE: You should contact your Employer regarding any FMLA questions. The Claims Administrator does not have authority to make these decisions. © 2015 Hitesman & Wold, P.A. 63 Flexible Benefits Plan Summary Description ADMINISTRATIVE INFORMATION NOTE: The Employer is a Minnesota public sector entity. Therefore, the Employee Retirement Income Security Act of 1974 ("ERISA") does not apply to this Flexible Benefits Plan, including any of the benefits made available through it. Plan: Plan Name: City of Hutchinson Flexible Benefit Plan Plan Type: Section 125 Cafeteria Plan Employer, Plan Administrator, and Agent for Service of Legal Process: Name: City of Hutchinson Address: 111 Hassan St SE City, State Zip: Hutchinson, MN 55350 Phone/Fax Number: 320/587-5151 / 320/234-4240 EIN: 41 6005253 Contact Person: Brenda Ewing Affiliated Emnlover: Name: Hutchinson Housing & Redevelopment Authority Address: 111 Hassan St SE City, State Zip: Hutchinson, MN 55350 Phone/Fax Number: 320/234-4251 / 320/234-4240 EIN: Contact Person: Jean Ward PLAN NAME PLAN TYPE INSURER/CLAIMS ADMINISTRATOR City of Hutchinson Flexible Benefits Plan City of Hutchinson Group Medical Plan City of Hutchinson Dependent Care Expense Reimbursement Plan City of Hutchinson Medical Expense Reimbursement Plan City of Hutchinson Group Dental Plan City of Hutchinson Group Term Life Plan City of Hutchinson Long Term Disability Plan City of Hutchinson Limited © 2015 Hitesman & Wold, P.A. Flexible Benefits Plan Summary Description Cafeteria Plan City of Hutchinson Health and Accident MEDICA Dependent Care Expense TASC Reimbursement Health and Accident TASC Health and Accident Assurant Life UNUM Health and Accident UNUM Health and Accident TASC 64 Scope Medical Expense Reimbursement Plan This Plan does not have a trust; therefore, there are no trustees. © 2015 Hitesman & Wold, P.A. 65 Flexible Benefits Plan Summary Description EXHIBIT A Eligible Medical Care Expenses ME Plan. Medical and dental expenses that qualify as expenses for medical care under Internal Revenue Service rules generally qualify as Eligible Expenses for reimbursement under the ME Plan. Those may take the form of co -pays, deductibles, and medical expenses not covered by other insurance. Often expenses that qualify for deductions under IRS rules are Eligible Expenses, but in some instances expenses that are deductible will not be reimbursable and expenses that are not deductible will be reimbursable. Some specific examples are identified below. The following is not an exhaustive list and there are other expenses that are eligible if they satisfy the IRS rules. [Limited Scope ME Plan. Only a limited number of the following expenses are Eligible Expenses for reimbursement under the Limited Scope ME Plan. The expenses must be for dental, vision care. Dental care expenses are listed under the "Dental & Orthodontic Care" section. Vision care expenses are listed under the "Vision Care" section. Allowable expenses: • Dental treatment • Artificial teeth/dentures • Braces, orthodontic devices Allowable expenses: • X-ray treatments • Treatment for alcoholism or drug dependency • Legal sterilization • Acupuncture • Vaccinations • Hair transplant (to treat specific medical condition) • Electrolysis (to treat specific medical condition) • Physical therapy (as a medical treatment) • Fee to use swimming pool for exercises prescribed by physician to alleviate specific medical condition such as rheumatoid arthritis • Speech therapy • Smoking cessation programs and prescribed drugs to alleviate nicotine withdrawal Expenses specifically disallowed by the IRS or courts: Teeth whitening Toothbrushes and toothpaste, even if special tune is recommended by dentist Expenses specifically disallowed by the IRS or courts: • Physical treatments unrelated to a specific health problem (e.g., massage for general well being) • Any illegal treatment • Cosmetic surgery • Treatment for baldness (unless it is for a specific medical condition and not for cosmetic purposes) Allowable expenses: Expenses specifically disallowed by the IRS or • Physician's fees and hospital services courts: © 2015 Hitesman & Wold, P.A. 66 Flexible Benefits Plan Summary Description • Nursing services for care of a specific medical ailment • Cost of a nurse's room and board if paid by the taxpayer where nurse's services qualify • Social Security tax paid with respect to wages of a nurse where nurse's services qualify • Services of chiropractors • Christian Science practitioner fees • Diagnostic tests Allowable expenses: • Hearing aids and hearing aid batteries • Hearing aid repair • Special telephone eauipment Allowable expenses: • Medicine and drugs that require a prescription • Insulin • Other over the counter medicine and drugs if (1) used to alleviate or treat personal injuries or sickness (including antacids, antihistamines, aspirin/pain relievers, cold medicines, acne medicine, etc.) and (2) prescribed by a health care provider • Payments to domestic help, companion, babysitter, chauffeur, etc. who primarily render services of a non- medical nature • Nursemaids or practical nurses who render general care for healthy infants • Fees for exercise, athletic, or health club membership when there is no specific health reason for needing membership • Marriage counseling provided by Expenses specifically disallowed by the IRS or courts: • Medicine and drugs for personal, general health, or cosmetic purposes • Dietary supplements if for general health Allowable expenses: Expenses specifically disallowed by the IRS or • Blood sugar test kits courts: • Wheelchair or autoette (cost of • Wigs, when not medically necessary operating/maintaining) for mental health • Crutches (purchased or rented) • Vacuum cleaner purchased by an • Special mattress & plywood boards individual with dust allergy prescribed to alleviate arthritis • Mechanical exercise device not • Oxygen equipment and oxygen used to specifically prescribed by physician relieve breathing problems that result from a medical condition • Artificial limbs • Support hose (if medical necessary) © 2015 Hitesman & Wold, P.A. 67 Flexible Benefits Plan Summary Description • Wigs (where necessary to mental health of individual who loses hair because of disease) • Excess cost of orthopedic shoes over cost of ordinary shoes • Breast pumps for nursing mothers Allowable expenses: • Physicals and other well visits • Immunizations Allowable expenses: • Optometrist's or ophthalmologist's fees • Eyeglasses and prescription sunglasses • Insurance for replacement of lost or damaged contact lenses • Contact lens and contact lens solutions • Laser eye surgery Assistance for the Handicapped Allowable expenses: • Cost of guide for a blind person • Cost of note -taker for a deaf child in school • Cost of Braille books and magazines in excess of cost of regular editions • Seeing eye dog (cost of buying, training and maintaining) • Household visual alert system for deaf person • Excess costs of specifically equipping automobile for handicapped person over cost of ordinary automobile; device for lifting handicapped person into automobile • Special devices, such as tape recorder and tvpewriter, for a blind person Allowable expenses: • Services of psychotherapists, psychiatrists and psychologists © 2015 Hitesman & Wold, P.A. 6$ Flexible Benefits Plan Summary Description Expenses specifically disallowed by the IRS or courts: • Phvsicals for ses Expenses specifically disallowed by the IRS or courts: • Psychoanalysis undertaken to satisfy curriculum requirements of a student Allowable expenses: Expenses specifically disallowed by the IRS or • X-rays courts: • Expenses for services connected with • Expenses of divorce when doctor or donating an organ psychiatrist recommends divorce • Excess cost pf Medically prescribed • Cost of toiletries, cosmetics, and sundry diet items (e.g., soap, toothbrushes) • The cost of a medically prescribed • Cost of special foods taken as a weight loss program substitute for regular diet, when the • Breast reconstructive surgery following special diet is not medically necessary mastectomy as part of treatment for or taxpayer cannot show cost in excess cancer of cost of a normal diet • Contraceptives • Maternity clothes • Fertility treatments • Diaper service • Medical records charges • Distilled water purchased to avoid • Cost of transportation primarily for and drinking fluoridated county water essential to medical care (e.g., the supply expense of traveling to and from a • Installation of power steering in medical service provider) automobile • Bandages • Pajamas purchased to wear in hospital • Lactation supplies for nursing mothers • Mobile telephone used for personal calls as well as calls to physician • Union dues for sick benefits for members • Contributions to state disability funds • Auto insurance providing medical coverage for all persons injured in or by the taxpayer's automobile, where amounts allocable to taxpayer and dependent is not stated separately • Long-term care services • Funeral expenses Allowable expenses: Expenses specifically disallowed by the IRS or • None courts: • Health insurance premiums (including individual and non -employer sponsored coverage) • Long term care insurance premiums © 2015 Hitesman & Wold, P.A. 69 Flexible Benefits Plan Summary Description EXHIBIT B DC PLAN v. Claiming Dependent Care Tax Credit EXAMPLE — MARRIED EMPLOYEE WITH TWO CHILDREN EARNING $48,000 DC PLAN 1. W-2 Gross Wages (both spouses combined) $48,000.00 2. DC PLAN Salary Reductions -$5,000.00 3. W-2 Gross Wages $43,000.00 4. Standard Deduction $11,400.00 5. Exemptions (4 individuals x $3,650) $14,600.00 6. Taxable Income (line 3 minus lines 4 and 5) $17,000.00 Calculation of Disposable Income 7. W-2 Gross Wages $43,000.00 8. Out -of -Pocket Dependent Care Expenses Not Reimbursed by DC PLAN $0.00 9. FICA Tax (calculated separately on each spouse's share of the wages) -$3,290.00 10. Federal Income Tax (line 6 @ tax schedule) -$1,713.00 11. Non -Refundable Dependent Care Tax Credit $0.00 12. Non -Refundable Child Tax Credit $1,713.00 13. Refundable Earned Income Tax Credit $500.00 14. Refundable Additional Child Tax Credit $287.00 15. Refundable Making Work Pay Credit $800.00 15. Disposable Income (line 7 minus lines 8-10 plus lines 11-14) $41,297.00 CLAIMING DEPENDENT CARE TAX CREDIT $48,000.00 $0.00 $48,000.00 -$11,400.00 -$15,600.00 $22,000.00 $48,000.00 -$5,000.00 -$3,672.00 -$2,463.00 $1,000.00 $1,463.00 $0.00 $537.00 $800.00 $40,665.00 HUTCHINSON CITY COUNCIL c`=y-f 0' a_ � Request for Board Action 79 M-W Agenda Item: Backstop improvements-South Central Drainage Area project Department: Parks LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: Sara Witte Agenda Item Type: Presenter: Reviewed by Staff ❑ Consent Agenda Time Requested (Minutes): 0 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: With the impeding South Central Drainage area pond project to happen in 2018 as identified in the currently drafted City Capital Improvement Plan, the Parks Department is needing to make upgrades to the existing ball fields that will be utilized on a more frequent basis throughout our community. The The two locations identified for modifications this fall are Riverside and Tartan park ball fields. A late fall construction time will allow for new fencing to be completed before the winter and grading/restoration efforts in the spring, before the start of baseball/softball season. The window to complete these types of upgrades can be limited, with spring, summer and even fall ball programs. We see the upgrades on these two locations to be beneficial to the youth of our community for playability and safety of the fields. Per the Finance department, the project will be accounted for within the Capital Projects fund in order to properly account for the capital assets within the Governmental funds. The Storm Water Utility fund will ultimately finance the costs with an inter-fund transfer to the Capital Projects fund. It would not be appropriate to capitalize a general fixed asset within an enterprise fund. BOARD ACTION REQUESTED: Approval to purchase and have installed new backstop and dugout fencing at Riverside and Tartan parks. Along with a new outfield fence at Riverside park. Fiscal Impact: $ 64,900.00 Funding Source: FTE Impact: Budget Change: No Included in current budget: Yes PROJECT SECTION: Total Project Cost: $ 250,000.00 Total City Cost: $ 250,000.00 Funding Source: Stormwater Funds via Capital Projects fund Remaining Cost: $ 0.00 Funding Source: Ctt Purchase Order Number PURCHASE REQUISITION GJ art i on Parks ,Accou (C # ' 4171 500-90540 === i7 to 09120f17 8ubmittedEi: Sara Witte Check the Appropriate Box. Is Item Budgeted 0 YES I ❑ NO Part of the stormwater-Linden ark ro ect 2018 De rriis - Hila.. . E .:.:.:.:.:.:.:.:.....:.: 1 s Dir 't �€€€€€ .................,.,.:.:.:.:.:.:.:. = i�rtirlistr�t r ___ .............................. ...... ]ri i ii l j i i Hutchinson Cit Center Y S. ii!ig-, .......1....9 --.;{dr :.:.:.:.:. .. . ... Hutchinson Parks C]ept. it T..... 19? Hassan St SE attn: Sara Witte Hutchinson MN 55350 1100 Adams 5t. E S Hutchinson MN 55350 Century Fence CompanyContact.�l���' Scott Roush AddSs PO Box 277 R£fereiteiN�7:::.:iiiiiii Forest s Lake MN 55Q25 Phone N�7 - 551 464-737 1✓ieAlCi:: ''''' 651-464-7377 Check if onlysource available and state reason ❑ Check Bax DR a E RIN I lVP b R M�Tit)hl :: QUANTITY UNITS DESCRIPTION UNIT PRICE TOTAL 1 ea Tartan backstop and 2 dugouts 28,850.00 $2$.850,00 1 ea Riverside backstop and dugout, outfield fence 36,050.00 $36,050.00 $64,900.00 List additional quotes and comments on the reverse side of this form. (You may attach quote sheets if available). Vri 4r iaaReeied : �kmt::�:r:�:t: V::e:::ii:fi:�:d:::::::..:.............---.:.:.:. � rB 7TAL $68,800.001 REQ Backstops Tartan Riverside V!~QR I!I~ C3 l ICN lendi7r ... Lake Area Fence Eiitaetfi==_.:.:: Sharon AM Ots ;; = 30830 Belair drive I�efer�rirre N. = ; ; _ ; ; -Linstrom, MN 55045 Pcri Nti: 651-246-7032 -a1ri; :::i 651-344-4731 Wmmer ID; O. RM3iERIi51GlNEtCMJ4Tl01�1 QUANTITY -UNITS DESCRIPTION UNIT PRICEI TOTAL 1 ea Tartan backstop, 2 dugouts 32,400.00 $32,400.00 1 ea Riverside backstop, 2 dugouts and outfield fence 36.400,001 $36.400.00 7TAL $68,800.001 REQ Backstops Tartan Riverside Office (651) 464-7373 ium FENCE Toll Free (800) 328-9558 ir C OMPA N Y Fax (651 ) 464-7377 Cell Phone (612) 309-2148 :;ii°-jr..r 917 THP MARK 4F PERMANENCE sroush@centuryfence.com P.O. Box 277, Forest Lake, MN 55025 9/2/2017 Phone: 320-234-4228 Fax: Proposal To: City of Hutchinson Sara Witte 900 Harrington St. SW Hutchinson, MN 55350 Ship To: Various Parks in Huthinson, MN Installed 1:1 Material Only 1:1 Prepaid Freight ❑ Freight Collect F.O.B. Job Site Delivery Schedule: Description Furnish and Install: Tartan: 20' x 20' x 20' x 24' high backstop and 2 dugouts with 10' high fence in front and 9' fence in the rear. one walk thru per dugout. Materials and Labor $ 28,850.00 Riverside: 20'x 20'x 20'x 24' high backstop and 2 dugouts with 8' high fence in front and 7' fence in the rear. one walk thru per dugout. 70 I.f. of new fence fabric on sideline. 336 I.f. of new 6' high outfield fence. Materials and Labor $36,050.00 Northwoods North: 2 dugouts with existing fence in front and 7' fence in the rear. one walk thru per dugout. 400 U. of new 6' high outfield fence. Materials and Labor $ 15,160.00 Northwoods Main: 20'x 20'x 20'x 18' high backstop and 2 dugouts with 8' high fence in front. One walk thru per dugout. 100 I.f. of new fence fabric on sideline. 432 ff. of new 6' high outfield fence. Material and Labor $ 30,812.00 Includes removal and disposal of all existing fence as required Excludes excavation through rock, frost, or backfill Excludes locating of private utilities Proposal is valid for 20 days Acceptance: This proposal when accepted in writing by purchaser and by Century Fence Company's Main Office becomes a contract between two parties. The conditions on the attached "Terms and Conditions" sheet are made a part of this contract. Terms of Payment: Net Cash upon receipt of Invoice. Buyer's signature Date Submitted by Scott Roush LAKE AREA FFE:NCE, l!tilC. 3OB30 Se:i AjR DRIVE LINDSTROM, MN 55045 OF=FICE: 651-246-7032 FAx: 65 1 -344-0173 1 Tartan 20'x 20'x 20' x 24 ' high backstop. 2 dugouts with 10' high fence in front and 9' fence in the back. Total $ 32,400.00 Riverside 20' x 20' x 20' x 24 ' high backstop. 2 dugouts with V high fence in front and 7' fence in the back. 336 feet of 6' high outfield fence. Total $36,400.00 Northwoods North Existing fence in front and 7' fence in the rear. 400 feet of new 6' high outfield fence. Total $ 159660.00 Northwoods Main 20' x 20' x 20' x 18' high backstop. 2 dugouts with S' high fence in front. 100 I.f. 432 Lf. of 6' high outfield fence. Total $ 31,625.00 Proposal is valid for 15 days Removals by others CHECK REGISTER FOR CITY OF HUTCHINSON CHECK DATE FROM 09/27/2017 - 10/10/2017 Check Date ------------------- 09/29/2017 Check -------------- EFT553 Vendor Name ------------------------------------------------------------------ EFTPS Description ---------------------------------------------------------------------- 9/10 - 9/23/2017 PAYROLL Amount -------------------- 68,099.49 09/29/2017 EFT554 Aflac 9/10 - 9/23/2017 PAYROLL 170.41 09/29/2017 EFT555 MN Dept of Revenue 9/10 - 9/23/2017 PAYROLL 12,952.15 09/29/2017 EFT556 PERA 9/10 - 9/23/2017 PAYROLL 47,061.73 09/29/2017 EFT557 TASC-Flex 9/10 - 9/23/2017 PAYROLL 1,886.76 09/29/2017 EFT558 TASC-H S A 9/10 - 9/23/2017 PAYROLL 11,787.62 09/29/2017 EFT559 ICMA 9/10 - 9/23/2017 PAYROLL 2,224.32 09/29/2017 EFT560 VOYA 9/10 - 9/23/2017 PAYROLL 990.00 09/29/2017 EFT561 MNDCP 9/10-9/23/2017 PAYROLL 305.00 09/29/2017 198090 HART 9/10 - 9/23/2017 PAYROLL 662.21 10/10/2017 198091 ACE HARDWARE VARIOUS R&M SUPPLIES 756.21 10/10/2017 198092 VOID 10/10/2017 198093 AHLGREN ELECTRIC ROBERTS PARK - EXHAUST FANS 1,155.97 10/10/2017 198094 ALPHA TRAINING & TACTICS LLC BALLISTIC VEST - PD OFFICER 909.00 10/10/2017 198095 ALPHA WIRELESS VARIOUS ELECTRICAL R&M 659.00 10/10/2017 198096 AMBORN, THERESA REFUNDABLE DAMAGE DEPOSIT 300.00 10/10/2017 198097 AMERICAN BOTTLING CO SEPTEMBER COST OF GOODS - LIQUOR 400.80 10/10/2017 198098 AMERICAN RED CROSS WATER SAFETY INSTRUCTOR COURSE - PARKS 665.00 10/10/2017 198099 AMERICAN WATER WORKS ASSN DUES - 12/1/17-11/30/18 394.00 10/10/2017 198100 AMERIPRIDE SERVICES VARIOUS CLEANING SUPPLIES 100.31 10/10/2017 198101 ANCHOR PROMOTIONS FIRE PREVENTION SUPPLIES 1,387.54 10/10/2017 198102 ARBUCKLE, RICARDO REFUND - RESTROOM WASN'T OPEN 40.00 10/10/2017 198103 ARCTIC GLACIER USA INC. SEPTEMBER COST OF GOODS - LIQUOR 535.27 10/10/2017 198104 ARNESON DISTRIBUTING CO SEPTEMBER COST OF GOODS - LIQUOR 575.50 10/10/2017 198105 ARTISAN BEER COMPANY SEPTEMBER COST OF GOODS - LIQUOR 1,482.00 10/10/2017 198106 AUTO VALUE - GLENCOE VARIOUS AUTO R&M SUPPLIES 352.83 10/10/2017 198107 B & B COMMERICAL COATING LLC LIBRARY HAIL DAMAGE REPAIR TO WINDOWS 6,180.00 10/10/2017 198108 B & C PLUMBING & HEATING INC VARIOUS PLUMBING R&M 810.19 10/10/2017 198109 BACHMAN'S VARIOUS PLANTS 856.40 10/10/2017 198110 BECKER ARENA PRODUCTS STAMINA MATS, SOCCER GOALS & NETS 1,767.14 10/10/2017 198111 BELLBOY CORP SEPTEMBER COST OF GOODS - LIQUOR 1,206.08 10/10/2017 198112 BELLINAAME MEDSPA & CROW RIVER SIGN SIGN & AWNING GRANT 805.31 10/10/2017 198113 BERNICK'S SEPTEMBER COST OF GOODS - LIQUOR 323.10 10/10/2017 198114 BETTER HALF EMBROIDERY SHIRTS & EMBROIDERY - PUBLIC WORKS SHIRTS 870.68 10/10/2017 198115 BLUE WATER ENTERPRISES LLC 2004 ISUZU, FIX A/C - STREETS DEPT 566.60 10/10/2017 198116 BRADLEY SECURITY LLC NEW LOCKS & REKEY AT CIVIC ARENA 655.00 10/10/2017 198117 BRANDON TIRE CO UNIT 302, PATCH ON TIRE/TUBE 30.00 10/10/2017 198118 BRAUN INTERTEC CORP PROF SERVICES - EDA INCUBATOR / HTI DRIVE 9,699.75 10/10/2017 198119 BREAKTHRU BEVERAGE SEPTEMBER COST OF GOODS - LIQUOR 16,310.66 10/10/2017 198120 BUSINESSWARE SOLUTIONS SEPTEMBER Cost per Print for Copiers 1,462.20 10/10/2017 198121 C & L DISTRIBUTING SEPTEMBER COST OF GOODS - LIQUOR 32,371.42 10/10/2017 198122 CALIFORNIA CONTRACTORS SUPPLIES RESPIRATOR VALVES, DUST MASKS 100.60 10/10/2017 198123 CARLOS CREEK WINERY SEPTEMBER COST OF GOODS - LIQUOR 552.00 10/10/2017 198124 CARS ON PATROL SHOP LLC SQUAD #3 -REPLACED BRAINBOX FOR RADAR 7,135.62 10/10/2017 198125 CHANKASKA CREEK SEPTEMBER COST OF GOODS - LIQUOR 159.60 10/10/2017 198126 CHEP RECYCLED PALLET SOLUTIONS LLC PALLETS - CREEKSIDE 1,809.11 10/10/2017 198127 COLORADO TIME SYSTEMS WEATHERPROOF PACE CLOCK - WATERPARK 1,300.00 10/10/2017 198128 COMDATA CORPORATION CASH WISE PURCHASES- VARIOUS DEPTS 370.95 10/10/2017 198129 CORE & MAIN LP 8 NEW WATER METERS 1,017.78 10/10/2017 198130 CORPORATE MECHANICAL BOILER REPAIRS- CITY CENTER 820.53 10/10/2017 198131 CROW RIVER AUTO & TRUCK REPAIR 2004 JEEP - REPAIR REAR WINDOW - WWTP 245.37 10/10/2017 198132 CROW RIVER GOLF CLUB BANQUET, RENTAL - LIQUOR STORE EVENT 536.88 10/10/2017 198133 CROW RIVER WINERY SEPTEMBER COST OF GOODS - LIQUOR 839.50 10/10/2017 198134 DAUWALTER, ASHLEY UB refund for account: 3-525-7500-2-02 102.69 10/10/2017 198135 DAVE GRIEP CLEANING CLEAN WINDOWS- LIQUOR STORE 45.00 10/10/2017 198136 DELUXE SMALL BUSINESS SALES INC 1099'S FORMS FOR FINANCE REPORTING 63.54 10/10/2017 198137 DLT SOLUTIONS AUTODESK AUTOCAD - BILL TO HUC 1,263.64 10/10/2017 198138 DOOLEY'S PETROLEUM INC DIESEL 909.99 10/10/2017 198139 DROP -N -GO SHIPPING INC SEPTEMBER UTILITY BILLING MAILING SERVICE 860.33 10/10/2017 198140 E2 ELECTRICAL SERVICES INC WIRING REC CENTER WITH RENOVATION 10,253.60 CHECK REGISTER FOR CITY OF HUTCHINSON CHECK DATE FROM 09/27/2017 - 10/10/2017 Check Date ------------------- 10/10/2017 Check -------------- 198141 Vendor Name ------------------------------------------------------------------ EMERGENCY APPARATUS MAINT Description ---------------------------------------------------------------------- PUMP TEST ON 3 FIRE TRUCKS Amount -------------------- 2,400.54 10/10/2017 198142 EMPLOYMENT RESOURCE CENTER TEMPORARY STAFFING - CREEKSIDE 2,550.12 10/10/2017 198143 EWERT BROS INC TELEVISE SANITARY SEWER & STORM SEWER 11,349.78 10/10/2017 198144 FARM -RITE EQUIPMENT VARIOUSTOOLS- FORESTRY, PUBLIC WORKS 4,838.11 10/10/2017 198145 FASTENAL COMPANY VARIOUS R&M SUPPLIES 205.24 10/10/2017 198146 FILZEN, MARY REIMBURSE: TRAVEL FOR MDRA MEETING 90.60 10/10/2017 198147 FIRST CHOICE FOOD & BEVERAGE SOLUTI COFFEE - CITY CENTER 166.20 10/10/2017 198148 FOSTER MECHANICAL SERVICE CONTRACT - LIQUOR STORE 475.00 10/10/2017 198149 G & K SERVICES MATS, TOWELS, COVERALLS, CLEANERS 143.43 10/10/2017 198150 G R DANIELS TRUCKING INC PAID CONTRACTOR TO TRANSPORT NEW TRUCK 185.00 10/10/2017 198151 GLENCOE SILVER LAKE COMMUNITY ED 2017 FALL SOCCER REGISTRATION 50.00 10/10/2017 198152 GOLDSTAR PRODUCTS INC RUST CONVERTER, WINTER GUARD 1,938.70 10/10/2017 198153 GRAINGER PNEUMATIC BYPASS VALVE, FILTERS 376.56 10/10/2017 198154 GRAPE BEGINNINGS, INC SEPTEMBER COST OF GOODS - LIQUOR 1,305.00 10/10/2017 198155 GREAT PLAINS INSTITUTE ENERGY INNOVATION TICKET- J.PAULSON 105.00 10/10/2017 198156 GREEN EARTH LAWN CARE INC MOWING: 970 7TH AVE NE & 750 DALE ST SW 170.00 10/10/2017 198157 HAGER JEWELRY INC. ENGRAVING 17.50 10/10/2017 198158 HANSON & VASEK CONSTRUCTION CONCRETE REPAIR - VARIOUS LOCATIONS 1,625.00 10/10/2017 198159 HAUGEN, MARV REIMBURSE FOR TRAVEL EXPENSES 86.79 10/10/2017 198160 HAWK PERFORMANCE SPECIALITIES PAINT CIVIC ARENA ICE 1,635.00 10/10/2017 198161 HENRY'S WATERWORKS INC WATER METER PARTS 1,253.58 10/10/2017 198162 HILLYARD / HUTCHINSON PAPER TOWELS, TOILET PAPER 170.88 10/10/2017 198163 HOFF, RANDY WELCOME BABY BOY - TYLER & COURTNEY 33.00 10/10/2017 198164 HOMESOURCE STORE, THE WASHING MACHINE R&M - FIRE DEPT 139.99 10/10/2017 198165 HP INC COMPUTERS/MONITORS VARIOUS DEPTS 9,091.36 10/10/2017 198166 HRA PAUKERT LOAN PYMT CORRECTION 746.00 10/10/2017 198167 HUTCHINSON CO-OP ANTI -FOAM, KLEEN UP 44.74 10/10/2017 198168 HUTCHINSON CONVENTION & VISITORS BU AUGUST 2017 LODGING TAX 10,113.85 10/10/2017 198169 HUTCHINSON FIRE DEPT RELIEF ASSN STATE & LOCAL PENSION AID PAYMENTS 183,252.89 10/10/2017 198170 HUTCHINSON HEALTH PD COMMUNITY EXPOSURE TESTING 521.45 10/10/2017 198171 HUTCHINSON J.O. VOLLEYBALL REIMBURSEMENT OF FEES 1,410.00 10/10/2017 198172 HUTCHINSON LEADER WEB ADVERTISING, UNITED WAY TAB 3,543.53 10/10/2017 198173 HUTCHINSON SENIOR ADVISORY BOARD SR TOUR TRIP EXPENSES 1,848.95 10/10/2017 198174 HUTCHINSON UNITED SOCCER ASSN. COACHING FEES 1,027.50 10/10/2017 198175 HUTCHINSON UTILITIES RELOCATE TRANSFORMER - MIDCOUNTRY LOT 12,763.30 10/10/2017 198176 HUTCHINSON WHOLESALE #1550 SHOP PARTS - STREETS DEPT 716.91 10/10/2017 198177 HUTCHINSON WHOLESALE #1551 SHOP PARTS - CREEKSIDE 15.76 10/10/2017 198178 HUTCHINSON WHOLESALE #1552 SHOP PARTS - PARKS DEPT 6.21 10/10/2017 198179 HUTCHINSON WHOLESALE #2520 SHOP PARTS- FIRE DEPT 702.95 10/10/2017 198180 HUTCHINSON, CITY OF WATER & SEWER 8/1-8/31'17 - HATS FACILITY 1,004.61 10/10/2017 198181 I.M.S. SHARPENING SERVICE CATCH BASIN REPAIR 1,800.00 10/10/2017 198182 ICE SKATING INSTITUTE DOMESTIC ARENA/CLUB RENEWAL 395.00 10/10/2017 198183 IDEAL SERVICE INC SERVICE ON PUMP #1 MAIN LIFT STATION 325.00 10/10/2017 198184 INDIAN ISLAND WINERY SEPTEMBER COST OF GOODS - LIQUOR 129.12 10/10/2017 198185 INTEPLAST GROUP TOP SOIL & SAND - CREEKSIDE INVENTORY 31,242.05 10/10/2017 198186 INTERSTATE POWER COMPANIES INC BAGGER: TAKE-UP BLOCK 504.65 10/10/2017 198187 INTERSTATE BATTERY SYSTEM MINNEAPOL SHOP PART 17.99 10/10/2017 198188 JACK'S UNIFORMS & EQUIPMENT PD SHIRTS, BATON HOLDERS, RAINCOATS 1,032.47 10/10/2017 198189 JEFFERSON FIRE & SAFETY INC FIRE GEAR (PPE): TAILS, PANTS 1,886.40 10/10/2017 198190 JJ TAYLOR DIST OF MN SEPTEMBER COST OF GOODS - LIQUOR 6,854.35 10/10/2017 198191 JOHNSON BROTHERS LIQUOR CO. SEPTEMBER COST OF GOODS - LIQUOR 30,643.95 10/10/2017 198192 JONNY ROCKS BODY SHOP BODY REPAIR WORK - CREEKSIDE MACK TRUCK 8,415.62 10/10/2017 198193 JUUL CONTRACTING CO INSTALL 12" GATE VALVE SOUTH OF EXISTING 76,259.33 10/10/2017 198194 KDUZ KARP RADIO ADVERTISING :30 SPOTS - LIQUOR STORE 605.00 10/10/2017 198195 KERI L WILLIAMS SEPTEMBER CONTRACTED CLEANING 3,344.00 10/10/2017 198196 KLAPHAKE, GLEN UB refund for account: 3-755-0470-6-02 18.96 10/10/2017 198197 KNIFE RIVER CORPORATION SAP 133-090-004 [1-21317-03] - SCHOOL RD & 86,954.45 10/10/2017 198198 KOHLS SWEEPING SERVICE JD 700H DOZER - PILED CONCRETE & ASPHALT 992.50 10/10/2017 198199 KRISS PREMUIM PRODUCTS INC COOLING TOWER TREATMENT, BALL VALVE 580.25 10/10/2017 198200 L & P SUPPLY CO JD GATOR RENTAL - STORM WATER 858.74 CHECK REGISTER FOR CITY OF HUTCHINSON CHECK DATE FROM 09/27/2017 - 10/10/2017 Check Date ------------------- 10/10/2017 Check -------------- 198201 Vendor Name ------------------------------------------------------------------ LANDSCAPE CONCEPTS INC Description ---------------------------------------------------------------------- WORK ON LEWIS AVE LIFT STATION Amount -------------------- 1,100.81 10/10/2017 198202 LOCHER BROTHERS INC SEPTEMBER COST OF GOODS - LIQUOR 22,048.54 10/10/2017 198203 LOGIS NETWORK THRU 8/26/17 -VARIOUS 8,765.00 10/10/2017 198204 MARK BETKER CONSTRUCTION LLC REPAIR HAIL DAMAGE ROOFS - PARKS 4,550.00 10/10/2017 198205 MCLEOD COOP POWER ASSN ELECTRIC CONNECTION - 2 RESIDENCES 1,600.00 10/10/2017 198206 MCLEOD COUNTY AUDITOR -TREASURER 2ND HALF PROP TAXES - VARIOUS CITY PARCELS 13,010.57 10/10/2017 198207 MCLEOD COUNTY COURT ADMINISTRATOR BAIL - J. JESSEN 250.00 10/10/2017 198208 MCLEOD COUNTY FIRE CHIEFS ASSN ACTIVE 911 DUES 360.00 10/10/2017 198209 MCLEOD PUBLISHING INC ADVERTISER - WEDDING DIRECTORY - EVENT CTR 17.50 10/10/2017 198210 MEEKER WASHED SAND & GRAVEL SAND FOR HATS OPERATIONS 188.21 10/10/2017 198211 MENARDS HUTCHINSON VARIOUS R&M SUPPLIES 965.15 10/10/2017 198212 MIDWEST MACHINERY CO TRACTOR RENTAL -LEAF VACUUM & SNOW REMOV 25,200.00 10/10/2017 198213 MINNEAPOLIS, CITY OF AUG 2017 APS TRANSACTION FEES 52.20 10/10/2017 198214 MINNESOTA DEPT OF LABOR & INDUSTRY PRESSURE VESSEL 10.00 10/10/2017 198215 MINNESOTA DEPT OF MOTOR VEHICLE TITLE & REGISTRATION - NEW IT MINIVAN 3,054.33 10/10/2017 198216 MINNESOTA VALLEY TESTING LAB SAMPLE TESTING FOR WASTEWATER PROCESS 491.30 10/10/2017 198217 MITCHELL, DAWN & DAVID PERMIT REFUND PM17-0094 51.00 10/10/2017 198218 MORGAN CREEK VINEYARDS SEPTEMBER COST OF GOODS - LIQUOR 272.40 10/10/2017 198219 MRPA MRPA CONFERENCE - 4 PARKS EMPLOYEES 1,400.00 10/10/2017 198220 MUELLERLLEILE, SONJA REIMBURSE: MAC CEMETERY CONFERENCE 360.54 10/10/2017 198221 N -DIMENSION SOLUTIONS ANNUAL NETWORK MONITORING SERVICE 5,000.00 10/10/2017 198222 NILES, JIM REIMBURSE: WORK GLOVES FOR COOLER 24.00 10/10/2017 198223 NORTHERN BUSINESS PRODUCTS NOTE PADS, CLEANER, GLOVES 26.34 10/10/2017 198224 NORTHERN STATES SUPPLY INC SIGN SHOP: 14" CHOP SAW 250.98 10/10/2017 198225 NU -TELECOM October Phone Service 4,162.14 10/10/2017 198226 OFFICE DEPOT LETTER POCKETS 85.18 10/10/2017 198227 PAUSTIS WINE COMPANY SEPTEMBER COST OF GOODS - LIQUOR 5,927.81 10/10/2017 198228 PAVEMENT RESOURCES SPRAY INJECTION PATCHING - POTHOLES/CRACKS 9,150.00 10/10/2017 198229 PELLER, GREG REIMBURSE: STORAGE CLOSET PROJECT - FIRE DEPT 171.66 10/10/2017 198230 PEOPLEREADY INC TEMPORARY STAFFING - CREEKSIDE 775.20 10/10/2017 198231 PHILLIPS WINE & SPIRITS SEPTEMBER COST OF GOODS - LIQUOR 24,960.53 10/10/2017 198232 PINE PRODUCTS YARDS OF PINE BARK- CREEKSIDE INVENTORY 4,760.00 10/10/2017 198233 POSTMASTER OCTOBER POSTAGE - UTILITY BILLS 1,600.00 10/10/2017 198234 PRIDE SOLUTIONS INC BAGGER BLENDING LINE - UHMW SHEETS 465.00 10/10/2017 198235 PRO AUTO MN INC. DURANGO, FRONT SUSPENSION REPAIR - FIRE 929.72 10/10/2017 198236 QUADE ELECTRIC LIGHT BULBS - WWTP 54.00 10/10/2017 198237 QUALITY FLOW SYSTEMS HARMONY LIFT STATION PUMP REPLACEMENT & 24,940.00 10/10/2017 198238 QUILL CORP VARIOUS OFFICE SUPPLIES 110.45 10/10/2017 198239 R & R EXCAVATING SAP 133-117-0141_21317-02 145,679.24 10/10/2017 198240 RANDY'S REPAIR SERVICE ANNUAL DOT INSPECTIONS:FLATBED TRAILER, 650.00 10/10/2017 198241 RDO EQUIPMENT CO. ASPHALT GRINDER REPAIRS / SERVICE 1,448.06 10/10/2017 198242 REINER ENTERPRISES INC FLATBED TRUCKING - CREEKSIDE 11,754.30 10/10/2017 198243 ROSTI CONSTRUCTION COMPANY OF MN 1_61317-06 9/5-9/25'17 HOTEL SITE ACCESS 243,716.80 10/10/2017 198244 ROYAL TIRE SHOP PART: FS TRANS HT BILK LRE LT235/85 719.84 10/10/2017 198245 RUNNING'S SUPPLY JACKET, BOOTS, GLOVES 159.07 10/10/2017 198246 SAM'S CLUB DIRECT MONITOR STAND, PAPER, COFFEE 215.74 10/10/2017 198247 SHAW, KAREN SEPTEMBER 240.00 10/10/2017 198248 SHELLEY, BARB UB refund for account: 3-060-1090-1-04 17.14 10/10/2017 198249 SKYVIEW DAIRY INC SEPT 2017 COMPOSTED MANURE 5,031.52 10/10/2017 198250 SORENSEN'S SALES & RENTALS GENIE RENTAL 29.00 10/10/2017 198251 SOUTHERN WINE & SPIRITS OF MN SEPTEMBER COST OF GOODS - LIQUOR 35,691.25 10/10/2017 198252 STAPLES ADVANTAGE LINERS, FRAME, PENS, LABEL TAPE 399.88 10/10/2017 198253 STATE CHEMICAL SOLUTIONS EZ GRAFFITI WIPES 228.21 10/10/2017 198254 STREICH TRUCKING CREEKSIDE ON SITE HAULING 688.75 10/10/2017 198255 TAPS-LYLE SCHROEDER CLEANING - EVENT CENTER 25.00 10/10/2017 198256 TASC November 2017 Flex Adm. Fees 104.12 10/10/2017 198257 THIESEN, JOHN UB refund for account: 3-105-9580-0-00 9.49 10/10/2017 198258 THOMSON REUTERS -WEST WEST INFORMATION CHARGES- LEGAL DEPT 829.34 10/10/2017 198259 TKO WINES OCTOBER COST OF GOODS - LIQUOR 900.00 10/10/2017 198260 TOWMASTER INC. REPLACE SANDER ON PLOW TRUCK 3,055.00 CHECK REGISTER FOR CITY OF HUTCHINSON CHECK DATE FROM 09/27/2017 - 10/10/2017 Check Date ------------------- 10/10/2017 Check -------------- 198261 Vendor Name ------------------------------------------------------------------ TRI-STATE BOBCAT Description ---------------------------------------------------------------------- KNIFE SHARPENING Amount -------------------- 169.20 10/10/2017 198262 TRICK'S WOODWORKING LLC FINGER PRINTING MACHINE 60.00 10/10/2017 198263 UNITED PACKAGING & DESIGN SLIP SHEETS - CREEKSIDE BAGGING PROCESS 1,080.00 10/10/2017 198264 US BANK EQUIPMENT FINANCE MONTHLY COST ON COPIER - ADMIN/FINANCE 413.20 10/10/2017 198265 VERIZON WIRELESS AUG24-SEPT23'2017 CELLPHONE SERVICE 3,224.93 10/10/2017 198266 VIKING BEER SEPTEMBER COST OF GOODS - LIQUOR 22,558.85 10/10/2017 198267 VIKING COCA COLA SEPTEMBER COST OF GOODS - LIQUOR 352.34 10/10/2017 198268 VINOCOPIA INC SEPTEMBER COST OF GOODS - LIQUOR 7,822.04 10/10/2017 198269 VIVID IMAGE ANNUAL WEBSITE HOSTING & UPGRADE PLAN 720.00 10/10/2017 198270 WACONIA COMMUNITY ED 5TH/6TH GRADE VB SCHEDULING 40.00 10/10/2017 198271 WACONIA TREE FARMS DEVELOPMENT TREES - 705 PARK ISLAND DRIVE 534.00 10/10/2017 198272 WASTE MANAGEMENT OF WI -MN REFUSE DISPOSAL SEPT IST - 15TH 6,715.77 10/10/2017 198273 WATER CONSERVATION SERVICE INC LEAK LOCATE 15 - 3RD AVE NW 479.90 10/10/2017 198274 WILD MOUNTAIN WINERY, INC SEPTEMBER COST OF GOODS - LIQUOR 114.00 10/10/2017 198275 WINE MERCHANTS INC SEPTEMBER COST OF GOODS - LIQUOR 15,524.75 10/10/2017 198276 WRS IMPORTS LLC SEPTEMBER COST OF GOODS - LIQUOR 516.00 Total - Check Disbursement 1,448,192.53 HUTCHINSON CITY COUNCIL c`=y-f 0, a_ � Request for Board Action 79 M-W Agenda Item: 141 5th Avenue NE - Hazardous Building Department: Legal LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: K. Dimler/M. Sebora Agenda Item Type: Presenter: K. Dimler/M. Sebora Reviewed by Staff ❑ Public Hearing Time Requested (Minutes): 10 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: City staff is requesting that the City Council initiate an action for abating the hazardous building at 141 5th Avenue NE. The condition of the structure on the premises is unsafe due to little or no maintenance over the years. The City has posted the dwelling as uninhabitable since October 2012. The City has corresponded with the record owner of the property, Blue Kin Homes, LLC, over the last year about the condition of the property. Blue Kin Homes, LLC, is located in Las Vegas, Nevada. This past August, the City sent the owner another letter once again notifying them of the dilapidated condition of the structure on the premises and giving them 30 days to either remedy the hazardous condition or raze the structure entirely. The owner was informed if they did not comply that the matter would be put before the City Council on October 10, 2017, to deem the structure as hazardous and to move forward with obtaining a court order to authorize repair or demolition of the property. This is the same procedure that the City utilized to abate the nuisance condition at 430 Water Street NW. Minnesota Statutes Section 463.15 through 463.251 details the process for hazardous/nuisance building removal. Most of the statute talks about a court centered process for the removal but there is a provision for voluntary removal of the nuisance. However, since Blue Kin Homes, LLC has not responded to the City's request from August, it is the assumption of City staff that they do not wish to voluntarily comply with the City's request. Attached please find a Resolution, information from the City's building official and the order for the City Council's consideration. It is a staff recommendation that you approve the Resolution and accompanying order. BOARD ACTION REQUESTED: Approve Resolution No. 14792 - A Resolution Ordering the Abatement of Hazardous Property Conditions at 141 5th Avenue NE in the City of Hutchinson and proposed Order for Abatement Fiscal Impact: Funding Source: FTE Impact: Budget Change: No Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: Remaining Cost: $ 0.00 Funding Source: Resolution No. 14792 A RESOLUTION ORDERING THE ABATEMENT OF HAZARDOUS PROPERTY CONDITIONS AT 141 5TH AVENUE NORTHEAST IN THE CITY OF HUTCHINSON WHEREAS, the property located at 141 5th Avenue North East, Hutchinson Minnesota, 55350 is legally described as: The Center One -Third of Lot Nine (9), Block Four (4) of Townsite of Hutchinson North Half, Excepting therefrom the Northerly 150 feet thereof, McLeod County, Minnesota WHEREAS, Blue Kin Homes, LLC, is the record owner of the property ("Owner"); and, WHEREAS, Minnesota Statutes, Section 463.15 Subdivision 3 defines a "hazardous building" as "any building..., which because of inadequate maintenance, dilapidation, physical damage, unsanitary condition, or abandonment, constitutes a fire hazard or a hazard to public safety or health;" and, WHEREAS, on September 15, 2017, the City of Hutchinson's Building Official conducted an inspection, as a follow up to an inspection conducted on October 18, 2012, of the Property and found the dwelling to be a hazardous structure; said report and photographs of the structure on the property are attached hereto as "Exhibit A" and, WHEREAS, since October 18, 2012, the structure on the property has been deemed to be a hazardous building and posted "DO NOT OCCUPY" due to its unsafe condition; and, WHEREAS, water and wastewater services have not been utilized on the premises since October of 2008; and, WHEREAS, because of these safety hazards it is the recommendation of the Building Official that the structure on the property be razed; and, WHEREAS, the most recent inspection to the property shows the condition of the property remains unchanged since the October 18, 2012, inspection; and, WHEREAS, Minnesota Statutes 463.161 et seq., authorizes a city to remove hazardous property conditions, and to raze nuisance properties and to assess the costs of nuisance abatement against the real estate if the owner of record fails to abate the hazardous conditions within a reasonable time and the District Court enters a judgement sustaining the City's order, NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUTCHINSON, MINNESOTA: 1. Because the City Building Official's September 15, 2017, inspection found the structures on the premises to be hazardous according to Minnesota Statute 463.15. 2. Based on that inspection, the recommendation of the Building Official is that the structure on the premises be razed. 3. An Abatement Order substantially similar to that attached as "Exhibit B" shall be served on the Claimant as required by Minnesota Statutes 463.17 in order to effectuate this resolution. 4. The City Attorney is authorized to take all necessary legal steps to secure compliance with the Order and to obtain authority to remove and abate the hazardous conditions on the Property by court order or consent and assess the costs thereof against the Property pursuant to Minnesota Statutes, Sections 463.21 and 463.22. 5. Adopted by the City Council this 10th day of October, 2017. Gary T. Forcier Mayor ATTEST: Matthew Jaunich City Administrator C September 18, 2017 Mr. Matt Jaunich City Administrator City of Hutchinson 111 Hassan St. SF Hutchinson, MN 55350 RE: 1415t'' Ave. NE — Hazardous Buiiding. Determination Dear Mr. Jaunich, Hutchinson City Center i I I Hassan strQCn SE Hutchinson. MN 55350-2522 Phone 320-587-5151. Fax 320-234-4240 On Friday, September 15, 2017, 1 completed an inspection of the exterior conditions of the structure located at 1415" Ave. NE, Hutchinson, WIN. The purpose of this inspection was to verify whether the condition of this property has been improved or worsened since the October 18, 2012 inspection completed by Building Official Lenny Rutledge. It was upon the basis of this inspection in 2012 that Building Official Rutledge determined this property was in violation of Hutchinson Ordinance 150,52, was deemed to be a hazardous building, and posted "DO NOT OCCUPY" due to its unsafe condition. The findings of my inspection include the following very significant violations. I. The building's foundation has numerous cracks, breakages, and holes rendering the foundation unstable and unable to distribute the loads imposed on it by the rest of the building properly. The holes in the foundation also allow vermin to harbor inside this building endangering the health and welfare of occupants and the public. 2. The building's exterior walls have multiple holes allowing the entry of and harboring of vermin. Again endangering the health and welfare of occupants and the public. 3. The building has multiple window openings in the exterior walls that have no flashing to ensure bulk water drains away from the Building rather than entering the wall cavities and causing structural deterioration of the bearing wall framing members. 4. The east and west exterior bearing walls of this building appear to be leaning out of plumb to the point of being unable to properly support the loads imposed by the 2"d story floor and roof structures. 5. The roof structures of this building are sagging and leaning extensively, giving clear evidence that the roof structure is unable to properly support the imposed loads creating a significant hazard of possible collapse without warning. 6. The building has, at some point had a "front porch" added onto it. However, the floor of this porch construction is of materials that are not permitted for exterior use. As a result, the porch floor is deteriorated to the point that an occupant or member of the public may fall through the floor sheathing without warning possibly leading to significant injury, 7. The porch on the front of this building also has a roof structure that is sagging significantly and Framed wail openings that have beams which are inadequately supporting the roof structure, again making col€apse of the roof without warning a significant hazard. Due to the existing conditions at this property and the fact that there has been no attempt to remedy the deficiencies since it was posted as a hazardous building in 20121 find that the structure at 141 5th Ave. NE, Hutchinson, MN is in fact a hazardous structure, as defined in Hutchinson Ordinance 150 and MN Statute Chapter 463, and it is my opinion that the City of Hutchinson would be best served by the abatement of this property via its removal. Please feel free to contact me should you have any questions regarding this inspection or report. Respectfully, (7`` zi�d �' Kyle Dimler Building Official City of Hutchinson MN B0002615 ■ �s•- 4 t � 4 � � � �� f . s� � �� 1� i 4 � �- -. r - f •� , '� � NP. Ato- or, An pso"CE No Ir oc"'O", f. P 04 Wtesti i" Ir Mil I i .sae l� 1 r 4_ r i •' ��y .r lk W111-1 LIJ It I -''t"" Y I A .. ` ' � � . _ . �' �: �. �►_�-_'sem i,.': � _ - F -j. 'vo4prA .r r .ik iia" MOP", I'd - a - �= r. ' �, j W" 74. I e� '. � '� � '`4 •,rte � .^� )� • i ` f a A F k • % tea, .w VVol. � W.'- lk Qkl- Y'_� EXHIBIT B ABATEMENT ORDER State of Minnesota County of McLeod In the Matter of the Hazardous Building located at 141 5t' Avenue NE, Hutchinson, Minnesota 55350 To: Blue Kin Homes, LLC District Court First Judicial District Case Type: Other Civil Case 9: ORDER FOR ABATEMENT OF A HAZARDOUS BUILDING The City Council of the City of Hutchinson orders that within 20 days of service of this Order, you abate hazardous conditions which exist on the Property located at: 141 5t' Avenue NE, Hutchinson, Minnesota 55350, which Property is legally described as: The Center One -Third of Lot Nine (9), Block Four (4) of Townsite of Hutchinson North Half, Excepting therefrom the Northerly 150 feet thereof, McLeod County, Minnesota The City of Hutchinson, pursuant to Minnesota Statute, Sections 463.15 to 463.261, and based on the authorization of City Council Resolution Number 14792, adopted on October 10, 2017, a copy of which is attached hereto and incorporated by reference herein, finds that the dwelling located at the Property because of numerous structural defects constitutes a hazardous building within the meaning of Minnesota Statute, Section 463.15, subdivision 3. Pursuant to Minnesota Statutes, Section 463.16 you are hereby ORDERED to abate the hazardous Property conditions within 20 days of the date of service of this Order by razing and removing the dwelling on the Property. You must apply for and obtain the appropriate permit(s) for the work you intend to perform from the appropriate city offices before abating the hazardous conditions. This Order is not a permit. You are further advised that unless such corrective action is taken or an answer is served on the City and filed with the McLeod County District Court Administrator within 20 days of the date of service of this order upon you, a motion for summary enforcement of this order will be made to the McLeod County District Court. You are further advised that you have 20 days to remove any personal property or fixtures from the Property that will unreasonably interfere with the razing and removal of the hazardous building on the property. If you fail to remove any personal property or fixtures within this time period, the City may sell the same at public auction or destroy the same. You are further advised that if you do not comply with this Order and the City is compelled to take any corrective action, all necessary costs incurred by the City in taking the corrective action will be assessed against the Property pursuant to Minnesota Statutes, Section 463.21. In connection thereto, the City intends to recover all its expenses incurred in carrying out this order, including specifically, but not exclusively, filing fees, service fees, publication fees, attorney's fees, appraiser's fees, witness fees, including expert witness fees and traveling expenses incurred by the City from the time this order was originally made pursuant to Minnesota Statute Section 463.22 Dated: , 2017 By: Marc A Sebora (0251239) Hutchinson City Attorney 111 Hassan Street Southeast Hutchinson, MN 55350 (320) 587-5151 HUTCHINSON CITY COUNCIL ci=y-f� Request for Board Action 7AL =-ft Agenda Item: Conduct hearing to consider declaring a tree as a nuisance tree Department: PW/Eng LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: John Olson Agenda Item Type: Presenter: John Olson Reviewed by Staff ❑ Public Hearing Time Requested (Minutes): 10 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OF AGENDA ITEM: Public Works staff, including the Arborist, requests that following the public hearing, and after considering the current condition of the tree located at 475 Hwy 7 E, that the tree be declared a nuisance and order work to render the tree nonhazardous.. There is a large, dead branch that has the potential to be hazardous to people or property utilizing the right-of-way. As you can see from the drawing provided by Engineering staff, the majority of the tree is on private property. Per City policy, the property having the greatest share of the tree is responsible for maintaining the tree. Attached is the notice that has been sent to the property owner and the advertisement for the hearing. Public Works staff will be on hand to answer any questions. BOARD ACTION REQUESTED: Conduct hearing at 6:00 p.m. to consider declaring tree at 475 Hwy 7 E a nuisance tree for the purpose of ordering the tree to be rendered nonhazardous. Fiscal Impact: Funding Source: FTE Impact: Budget Change: No Included in current budget: Yes PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: Remaining Cost: $ 0.00 Funding Source: October 4, 2017 City of Hutchinson Public Works Forestry 1400 Adams St SE Hutchinson, MN 55350 Phone (320) 234-4459 Fax (320) 234-6971 To: Honorable Mayor and City Council members From: John Olson, Public Works Manager Subject: Tree at 475 Hwy 7 E A tree at 475 Hwy 7 E has been diagnosed as being a hazardous condition to people or property, considering the current condition of the tree. City staff recommends the tree at this property be rendered non -hazardous as soon as possible. The property owner was notified of the tree's current condition and was asked to take appropriate action to render the tree(s) located on your property non -hazardous. A public hearing is necessary to declare the tree as a nuisance condition. Following the declaration, tree work must be done within 20 days following declaration of the tree as a nuisance at this hearing. If the necessary work to render the tree nonhazardous is completed prior to the hearing, there will be no need to conduct a hearing. Following the declaration of the tree as a nuisance, the City is authorized under city ordinance to preform necessary tree work and bill the total removal costs and an administrative fee to the property owner. Costs may also be assessed upon agreement with the property owner, or if billings remain unpaid. For nuisance and diseased trees, there are the following payment options: 1) Property owner may choose to do the work or have the work done prior to the deadline; 2) Property owner may choose, or by not performing work within the timeline indicated, to have the City and/or their contractor do the work and pay for the work, plus an administrative fee upon completion, or; 3) Property owner may choose to have the City and/or their contractor do the work have the costs, plus an administrative fee, assessed to property taxes over a 1, 2 or 3 year period, depending upon the total cost as outlined under a separate assessment agreement. If the work is not completed by the deadline or if there is no assessment agreement, costs incurred by the City to complete the work will be tabulated and an assessment hearing will established. Following the assessment hearing, the costs will be assessed to the property. AGREEMENT I (we), owner(s) of real property at this address: , Hutchinson, MN 55350, hereby petition that improvements be made by identified work on tree(s) on my (our) property determined by the City to be hazardous and/or infected/infested. And, pursuant to Minnesota Statutes, Chapter 429, that the City of Hutchinson shall assess the entire cost of the improvement against my(our) property described and hereby agree to pay the entire cost as apportioned by the city. I (we) agree that the City of Hutchinson will perform the work or secure a minimum of two price quotations for identified tree work from contractors who derive the majority of their income from arboricultural activities. I (we) further agree that the City of Hutchinson will utilize the lowest of the prices received whenever practicable, but may utilize the option that is most able to perform the work in a timely manner. I (we) agree the identified tree work will be done by the City or contractor(s), and I (we) authorize entry onto my (our) property for the City or City's contractor to complete the work in a workmanlike manner. I (we) agree the costs of the tree work will be paid initially by the City of Hutchinson. I (we) further agree that after the City of Hutchinson has incurred the cost of tree work, that cost, plus applicable administrative fees, will be: CHECK ONE OPTION 1) At my (our) option as indicated, I (we) will be billed directly once the work is completed, at which time I (we) agree that I (we) shall make full payment within 30 days. I (we) further agree that if the billing is not paid on or before the date due, a finance charge of 1%% (18% per annum) will be added to any unpaid balance and that any unpaid balance at October 31 of any year will be assessed to my (our) property taxes. I (we) further agree that if assessed, interest rates shall apply to any unpaid balances, consistent with other assessments made by the City during that year. I (we) choose / do not choose terms of the agreement identified in option 1. OR 2) 1 (we) authorize the City to assess 100 percent (100%) of the cost of the tree work, including applicable administrative fees to my (our) property. I (we) agree to pay said costs, as may be determined by the Council of the City to be a fair apportionment of the costs of the tree work. I (we) agree that said assessments shall be assessed over a period of years. (1 year = $0 to $500. 2 years = $501 to $1, 000. 3 years = Over $1, 000) I (we) further agree that the estimated assessment may be exceeded if the increases are a result of specific requests I (we) make or are otherwise approved by me (us) in a subsequent and separate written agreement. I (we) further agree that interest rates shall apply to any unpaid balances, consistent with other assessments made by the City during that year. I (we) expressly waive rights to objection and to any irregularity with regard to the assessments and any claim that the amount that is levied against my (our) property is excessive, together with all rights to appeal in the courts. I (we) choose / do not choose terms of the agreement identified in option 2. Signature of Owner(s) Property Address I � F4vrt�U 9�t�T�t� tA r s iS i 1 i -4k PUBLICATION NO. 8252 NOTICE OF HEARING TO WHOM IT MAY CONCERN: Notice is hereby given that the City Council of Hutchinson, Minnesota, will meet in the Council Chambers of the Hutchinson City Center, 111 Hassan Street SE, Hutchinson, MN, at 6:00 pm on the October 10, 2017, to consider declaring nuisance tree(s) located at 475 Highway 7 E pursuant to Minnesota Statutes, Sections 429.011 to 429.111. The estimated cost of removing said tree(s) is $1,000, the entire cost to be borne by the property owner. A reasonable estimate of the impact of the assessment will be available at the hearing. Such persons as desire to be heard with reference to the tree(s) being declared a nuisance will be heard at this meeting. Dated: 09/18/2017 Matt Jaunich, City Administrator PLEASE NOTE: IT IS IMPORTANT THAT YOU ATTEND THIS HEARING, WHETHER YOU ARE FOR OR AGAINST THE DECLARATION OF NUISANCE TREE(S), IN ORDER THAT YOUR COUNCIL CAN BE BETTER INFORMED OF A TRUE REPRESENTATION OF OPINION. PUBLISHED IN THE HUTCHINSON LEADER ON WEDNESDAY, SEPTEMBER 20TH, 2017. Charles & Colleen Mallinson 475 Hwy 7 E Hutchinson, MN 55350 Assessable work description: Other costs: TOTAL ESTIMATED COST: ESTIMATED COST City PID No. 32-117-29-12-0190 County PIN 232460090 Property Address: 475 Hwy 7 E Tree removal & cleanup $1,000 City administrative fee $ 50 1050 NOTES: 1. Methods and amounts of estimated assessments are subject to change. 2. Assessments for tree work are typically allocated to properties over: 1 year ($04500) 2 years ($501-$1000) 3 years (over $1,000). (interest rate estimated to be 4 to 6%). 3. Call 320-234-4219 or 320-234-4459 if you have questions regarding the estimated cost. HUTCHINSON CITY COUNCIL c`=y-f 0, a_ � Request for Board Action 79 M-W Agenda Item: Assessment Hearing & Award for Alley #52 Improvements Project (L14/P17-14) Department: PW/Eng LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: Kent Exner Agenda Item Type: Presenter: Kent Exner Reviewed by Staff ❑ Public Hearing Time Requested (Minutes): 10 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: The City received three (3) bids (see attached bid tabulation) for the Alley #52 Improvements project. The apparent low bid is from R & R Excavating Inc. of Hutchinson, MN, in the amount of $89,194.09 (approximately 18% higher than the final Engineer's Estimate). This bid appears to be responsive and reflects prices associated with relatively small quantities of typical road building work. This project's total cost and associated funding contributions were reviewed by the Resource Allocation Committee and are accounted for within the City's proposed 2017 Infrastructure Improvement Program. City staff will provide a brief overview of the project scope, bids, schedule and associated improvement special assessments prior to opening the public communication portion of the Assessment Hearing. City staff has worked closely with adjacent property owners as this project has proceeded to address any construction and assessment issues. The final Assessment Roll and necessary Resolutions to award this project are attached. We recommend approving the provided Assessment Roll and Resolutions. BOARD ACTION REQUESTED: Approval of Assessment Roll & Resolutions Fiscal Impact: Funding Source: FTE Impact: Budget Change: No Included in current budget: Yes PROJECT SECTION: Total Project Cost: $ 89,194.09 Total City Cost: $ 75,258.58 Funding Source: Infrastructure Maintenance Funds Remaining Cost: $ 13,935.51 Funding Source: Improvement Special Assessments RESOLUTION NO. 14790 RESOLUTION ADOPTING ASSESSMENT ASSESSMENT ROLL NO. SA -5117 LETTING NO. 14/PROJECT NO. 17-14 WHEREAS, pursuant to resolution and notice of hearing the Council has met and reviewed the proposed assessment for improvement of: Alley #52 located south of 5th Avenue SE between Jefferson Street SE & Adams Street SE: Alley improvements by construction of grading, storm sewer, concrete curbing, bituminous pavement and appurtenances, NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUTCHINSON, MINNESOTA: 1. Such proposed assessment, a copy of which is attached hereto and made a part hereof, is hereby accepted, and shall constitute the special assessment against the lands named therein, and each tract of land therein included is hereby found to be benefited by the proposed improvement in the amount of the assessment levied against it. 2. Such assessment shall be payable in equal annual installments extending over period of two (2) years, the first of the installments to be payable on or before the first Monday in January, 2018 and shall bear interest at the rate of _ percent per annum as set down by the adoption of this assessment resolution. To the first installment shall be added interest on the entire assessment from November 1, 2017, until the 31st day of December 2018. To each subsequent installment when due, interest shall be added for one year on all unpaid installments. 3. The owner of any property so assessed may, at any time prior to certification of the assessment to the County Auditor, pay the whole of the assessment on such property, with interest accrued to the date of payment, to the City Finance Department, except that no interest shall be charged if the entire assessment is paid by the 15th day of November, 2017; and he may, at any time thereafter, pay to the City Finance Department the entire amount of the assessment remaining unpaid, with interest accrued to the 31 st day of December, of the year in which such payment is made. Such payment must be made before November 15, or interest will be charged through December 31, of the next succeeding year. 4. The Administrator shall forthwith transmit a certified duplicate of this assessment to the County Auditor to be extended on the property tax lists of the County, and such assessment shall be collected and paid over in the same manner as other municipal taxes. Adopted by the Council this 10th day of October 2017. Gary Forcier, Mayor Matthew Jaunich, City Administrator RESOLUTION NO. 14791 RESOLUTION ACCEPTING BID AND AWARDING CONTRACT LETTING NO. 14/PROJECT NO. 17-14 Whereas, pursuant to a solicitation for quotes for the furnishing of all labor and material for the improvement of: Alley #52 located south of 5th Avenue SE between Jefferson Street SE & Adams Street SE: Alley improvements by construction of grading, storm sewer, concrete curbing, bituminous pavement and appurtenances, bids were received, opened and tabulated according to law, and the following bids were received complying with the advertisement: Bidder Total Bid R & R Excavating Inc of Hutchinson MN $89,194.09 Juul Contracting Company of Hutchinson MN $94,923.25 Hjerpe Contracting Inc of Hutchinson MN $102,970.00 and whereas, it appears that R & R Excavating Inc of Hutchinson MN is the lowest responsible bidder. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUTCHINSON, MINNESOTA: The mayor and city administrator are hereby authorized and directed to enter into a contract with R & R Excavating Inc of Hutchinson MN in the amount of $89,194.09 in the name of the City of Hutchinson, for the improvement contained herein, according to the plans and specifications therefor approved by the City Council and on file in the office of the City Engineer. The City Engineer is hereby authorized and directed to return forthwith to all bidders the deposits made with their bids, except that the deposits of the successful bidder and the next lowest bidder shall be retained until a contract has been signed, and the deposit of the successful bidder shall be retained until satisfactory completion of the contract. Adopted by the Hutchinson City Council this 10th day of October 2017. Mayor, Gary Forcier City Administrator, Matthew Jaunich Pagel of 1 CITY OF HUTCHINSON, 111 HASSAN ST SE, HUTCHINSON MN 55350 320-234-4209 BID TABULATION - CITY OF HUTCHINSON LETTING NO. 14/PROJECT NO. 17-14 Alley #36 BID OPENING: 09/20/2017 @ 11:00 AM ENGINEER'S ESTIMATE $75,501.00 COMPLETION DATE: 10/03/2017 z z - zo r _ o = Engineer's R & R Excavating Inc Brent Reiner 1149 Hwy 22 South Hutchinson MN 55350 Estimate michelle@mex-ting.net 320-587-5918 fax 320-587-1044 Juul Contracting Company Merrill Wendlandt P O Box 189 1060 Adams St BE Hutchinson MN 55350 j ulcont@hutchtel.net 320-587-2989 fax 320-587-0964 Hjerpe Contracting Inc Kurt H. Hjerpe 16246 Hwy 15 S P O Box 517 Hutchinson MN 55350 esti mating@hj erpecoutracting .com 320-2348305 fax 320-2347305 BID PRICE I BID TOTAL BID PRICE I BID TOTAL BID PRICE I BID TOTAL BID PRICE I BID TOTAL BASE BID $75,501.50 $89,194.09 $94,923.25 $102,970.00 1 2021.501 MOBILIZATION LUMP SUM 1 $1,300.00 $1,300.00 $5,277.01 $5,277.01 $1,500.00 $1,500.00 $3,400.00 $3,400.00 2 2104.501 REMOVE CURB AND GUTTER LIN FT 46 $6.50 $299.00 $5.39 $247.94 $4.00 $184.00 $3.00 $138.00 3 2104.503 REMOVE CONCRETE WALK SO FT 60 $2.00 $120.00 $4.13 $247.80 $4.00 $240.00 $1.00 $60.00 4 2104.505 REMOVE CONCRETE DRIVEWAY PAVEMENT SO YD 80 $7.00 $560.00 $3.10 $248.00 $9.00 $720.00 $8.00 $640.00 5 2104.505 REMOVE BITUMINOUS PAVEMENT SO YD 61 $12.00 $732.00 $4.07 $248.27 $3.50 $213.50 $6.00 $366.00 6 2104.511 SAWING CONCRETE PAVEMENT FULL DEPTH LIN FT 20 $7.00 $140.00 $3.81 $76.20 $15.15 $303.00 $6.00 $120.00 7 2104.513 SAWING BITUMINOUS BITUMINOUS FULL DEPTH LIN FT 235 $5.00 $1,175.00 $2.23 $524.05 $3.15 $740.25 $2;L0$470.00 8 2105.501 COMMON EXCAVATION CU YD 390 $12.00 $4,680.00 $11.12 $4,336.80 $6.80 $2,652.00 $9.85 $3,841.50 9 1 2105.604 IGEOTEXTILE FABRIC TYPE V SO YD 950 $1.751 $1,662.50 $1.011 $959.50 $2.001 $1,900.00 $1.55 $1,472.50 10 2112.604 SUBGRADE PREPARATION SO YD 950 $1.45 $1,377.50 $1.69 $1,605.50 $0.80 $760.00 $1.70 $1,615.00 11 2211.501 AGGREGATE BASE CLASS 5 TON 15 $33.00 $495.00 $18.80 $282.00 $31.10 $466.50 $25.00 $375.00 12 2211.503 AGGREGATE BASE CLASS 5 (CV) (P) CU YD 201 $24.00 $4,824.00 $14.69 $2,952.69 $19.50 $3,919.50 $34.00 $6,834.00 13 2357.502 BITUMINOUS MATERIAL FOR TACK COAT GALLON 50 $7.50 $375.00 $6.09 $304.50 $7.00 $350.00 $2.65 $132.50 14 2360.503 TYPE SP 9.5 WEARING COURSE MIXTURE (2,B) 1.5' THICK SO YD 740 $8.50 $6,290.00 $13.24 $9,797.60 $14.05 $10,397.00 $9.25 $6,845.00 15 2360.503 TYPE SP 12.5 NON WEARING COURSE MIXTURE 2,B 2.5' THICK SO YD 670 $12.25 $8,207.50 $18.57 $12,441.90 $19.30 $12,931.00 $17.65 $11,825.50 16 2360.503 TYPE SP 12.5 NON WEARING COURSE MIXTURE (2,B) 4.5' THICK SO YD 70 $28.00 $1,960.00 $41.60 $2,912.00 $42.00 $2,940.00 $35.60 $2,492.00 17 2503.511 8" PVC PIPE SEWER LIN FT 100 $26.00 $2,600.00 $62.86 $6,286.00 $48.00 $4,800.00 $81.00 $8,100.00 18 2503.511 12" PVC PIPE SEWER LIN FT 308 $28.00 $8,624.00 $33.94 $10,453.52 $48.75 $15,015.00 $56.00 $17,248.00 19 1 2503.602 ICONNECT TO EXISTING STORM SEWER EACH 1 $750.00 $750.00 $1,105.12 $1,105.12 $600.00 $600.00 $4,200.00 $4,200.00 20 2506.502 CONSTRUCT DRAINAGE STRUCTURE TYPE C EACH 2 $2,100.00 $4,200.00 $1,938.84 $3,877.68 $2,118.00 $4,236.00 $2,650.00 $5,300.00 21 2506.502 CONSTRUCT DRAINAGE STRUCTURE DES 60A020 EACH 1 $4,900.00 $4,900.00 $7,528.92 $7,528.92 $9,235.00 $9,235.00 $8,500.00 $8,500.00 22 2521.501 6" CONCRETE WALK SO FT 80 $6.00 $480.00 $7.28 $582.40 $9.30 $744.00 $8.30 $664.00 23 2531.501 CONCRETE CURB AND GUTTER DESIGN D418 LIN FT 585 $19.00 $11,115.00 $22.10 $12,928.50 $19.90 $11,641.50 $16.70 $9,769.50 24 2531.501 CONCRETE CURB AND GUTTER DESIGN B618 LIN FT 45 $49.00 $2,205.00 $27.36 $1,231.20 $28.80 $1,296.00 $25.90 $1,165.50 25 2531.507 6" CONCRETE DRIVEWAY PAVEMENT SO YD 80 $49.00 $3,920.00 $12.05 $964.00 $72.55 $5,804.00 $74.00 $5,920.00 26 2563.601 TRAFFIC CONTROL LUMP SUM 1 $1,500.00 $1,500.00 $710.23 $710.23 $300.00 $300.00 $700.00 $700.00 27 2573.530 STORM DRAIN INLET PROTECTION EACH 2 $100.00 $200.00 $76.10 $152.20 $80.00 $160.00 $75.00 $150.00 28 2574.525 COMMON TOPSOIL BORROW (LV) CU YD 8 $45.00 $360.00 $57.07 $456.56 $40.00 $320.00 $22.00 $176.00 29 2575.501 SEEDING SO YD 150 $3.00 $450.00 $3.04 $456.00 $3.70 $555.00 $3.00 $450.00 Pagel of 1 COMPILED BY: PVANDERVEEN ASSESSMENT ROLL NO. SA -5117 LETTING NO. 14/PROJECT NO. 17-14 Alley #52 located south of 5th Avenue SE between Jefferson Street S & Adams Street, : Alley improvements by construction of grading, storm sewer, concrete curbing, bituminous pavement and appurtenances COST PER FRONT FOOT: COMPUTED BY: PVANDERVEEN $15.38 ALLEY COST/FF CHECKED BY: KENT EXNER IST HEARING 08/22/2017 NUMBER OF YEARS 5 2ND HEARING 10/10/2017 INTEREST RATE: 2017 Bond Rate BOND FUND 337 ADOPTED: FIN ACCT# i G Q CITY PID NO COUNTY PID NO PROPERTY ADDRESS OWNER NAME OWNER ADDRESS -1 OWNER ADDRESS -2 LEGAL DESCRIPTION -1 FF FF CREDIT TOTAL FF TOTAL ASSESSMENT TOTAL DEFERRED ASSESSMENT $A5115A TOTAL ACTIVE ASSESSMENT SA -5114 1 06 116 29 06 0960 230504950 565 Jefferson St SE T93 Properties LLC c/o Troy Pullis 2974 Oak Lawn Ln Mound MN 55364 Lots 6, 11 & 12, Block 60, Townsite of Hutchinson, South Half 186.08 0.00 186.08 $2,861.91 $0.00 $2,861.91 2 1 06 116 29 06 0970 230504960 1535 Jefferson St SE River Place Management, LLC 2974 Oaklawn Ln Mound MN 55364 Lots 7 & 8, Black 60, Townsite of Hutchinson, South Half 132.00 0.001 132.00 $2,030.16 $0.00 $2,030.16 3 06 116 29 06 0990 230504970 515 Jefferson St SE Justin T Peterson 515 Jefferson St SE Hutchinson MN 55350 Lot 9, Block 60, Townsite of Hutchinson, South Half 66.00 0.00 66.00 $1,015.08 $0.00 $1,015.08 4 06 116 29 06 0990 230504980 2065th Ave SE Corey Sturges 2065th Ave SE Hutchinson MN S5350 Lot 10, Block 60, Townsite of Hutchinson, South Half 66.00 0.00 66.00 $1,015.08 $0.00 $1,015.08 5 06 116 29 07 0680 230504900 506 Adams St SE Nicholas A Hanson, Etal 506 Adams St SE Hutchinson MN 55350 Lot 1, Block 60, Townsite of Hutchinson, South Half 66.00 0.00 66.00 $1,015.08 $0.00 $1,015.08 6 06 116 29 07 0690 23 050 4910 516 Adams St SE U.S. Bank National Association 4802 Frederica St Owensboro KY 42301 Lot 2, Block 60, Townsite of Hutchinson, South Half 66.00 0.00 66.00 $1,015.08 $0.00 $1,015.08 1 0611629070700 230504920 526 Adams St SE Doreen ASmithers 526 Adams St SE Hutchinson MN 55350 Lot 3, Block 60, Townsite of Hutchinson, South Half 66.00 0.00 66.00 $1,015.08 $0.00 $1,015.08 8 06 116 29 07 0710 230504930 534 Adams St SE Pauline A Johnson 534 Adams St SE Hutchinson MN 55350 Lot 4, Block 60, Townsite of Hutchinson, South Half 66.00 0.00 66.00 $1,015.08 $0.00 $1,015.08 9 06 116 29 07 0720 230504940 542 Adams St SE Jeremy A& Nicole L Ellinghuysen 1225 Prairie Ridge Ln Lester Prairie MN 55354 Lot 5, Block 60, Townsite of Hutchinson, South Half 66.00 0.00 66.00 $1,015.08 $0.00 $1,015.08 10 0611629070730 230504990 546 Adams St SE Bernard M&Mary McRaith 600 Tyler St SW Hutchinson MN 55350 Lots 13 & 14 EX S60' of Lot 14, Block 60, Townsite of Hutchinson, South Half 66.00 0.00 66.00 $1,015.08 $0.00 $1,015.08 11 06 116 29 07 0740 230505000 554 Adams St SE Bryan PLarson 554 Adams St SE Hutchinson MN 55350 S60' of Lot 14, Block 60, Townsite of Hutchinson, South Half 60.00 0.00 60.00 1 $922.80 $0.00 $922.80 12 06 116 29 10 0300 231420010 562 Adams St SE Apostolic Lighthouse Church 754 Craig Ave SW Hutchinson MN 55350 Lot 1, Park Subdivision 66.00 66.00 0.00 $0.00 $0.00 $0.00 13 06 116 29 10 0310 231420020 572 Adams St SE Vemarmn Verstyak 1634Knight St Shoreview MN 55126 Lot 2, Park Subdivision 66.00 66.00 0.00 $0.00 $0.00 $0.00 14 06 116 29 10 0350 23 142 0060 575 Jefferson St SE Eiden Properties Inc 575 Jefferson St SE Hutchinson MN 55350 Lot 6 EX Triangular Tract 10' x 33.09' x 34.56' in NW Corner, Park Subdivision 68.12 68.12 0.00 $0.00 $0.00 $0.00 15 06 116 29 10 0360 23 142 0070 585 Jefferson St SE Eiden Properties Inc 575 Jefferson St SE Hutchinson MN 55350 Lot 7, Park Subdivision 63.50 63.50 0.00 $0.00 $0.00 $0.00 16 06 116 29 10 Go 1 23139 0050 1600 Adams St SE 1 Hutchinson Coop Gas Station IP O Box 148 Hutchinson MN 55350 Lots 3-4-5, Mortensen's Addition 1 0.00 0.00 0.00 $0.00 $0.00 $0.00 TOTAL ASSESSMENT ROLL NO. SA5117 - L14P17-14 1169.7 263.62 906.08 $13,935.51 $0.00 $13,935.51 $13,935.51 G.MSSESSM ENT ROLLSXNOLL51201TSA5117 - L14P17-14 - Alky a521G--ASSESSMENT ROLL AR -5117 1-141`17.14 Alley a52 - Pap. 1 of 1 1rhe Hutchinson Public Ulbrarjf At a Glance... Who uses the Hutchinson Public Library? Registered Users for 2016: 16,415 area residents 414 reciprocal borrowers 418 new cards issued Jan. -Sept. 2017 What brings people to the Hutchinson Public• `� evENTS �y�p CALCN ONIt 51,627 items 9 desktop computers Programs (books & much more) 2 laptops; 5 iPads for all ages! Open Monday -Saturday 58 hours per week 52 weeks per year 2,939 public service hours in 2016 Fun with Summer Reading! 2017 Children's Program: 485 sign-ups 282 completions (58% completion) 2017 Teen Program: 63 sign-ups 32 completions (51% completion) 10 Stories in the Park = 1,657 people! Estimated # books read = 192! 2017 Adult Program: "Pop Open a Good Book" 32 participants -5 completions -2 winners! 1,�­ Hutchinson Public Library's Calendar of Events Sun Mon Tue Wed Thu ) � c tQbPz Fri Sat 1 2 3 4 5 6 7 I Nonfiction Book Club Teen Advisory Board Bookworm Club @ 5 p.m. Book Topic: Harvest/Farming 4-5 p.m. Buddies 10 a.m. 8 9 10 11 12 13 14 Bookworm Buddies Teen Read Week Building Buddies MN YA Author M. G. Nelson 10 a.m. Oct. 8-14 6:30 p.m. 7 p.m. R.E.A.D. «. 7 p.m. Registration required 15 16 17 18 19 20 21 Teen Art Bookworm Buddies Journaling 10 a.m. 4:30-5:30 p.m. R.E.A.D. 19 7 p.m. Registration required 22 23 24 25 26 27 28 Library Board Meeting 4:30 p.m. MN Mystery Author Y �Y Christine Husom Bookworm Buddies 10 a.m. 7 p.m. R.E.A.D. 7 p.m. Registration required 29 30 31 Watch for more library programs in November... McLeod County Bayley Schluter - Director AN,380McLeod County Historic Partnership School RD NW©© Hutchinson, MN 55350 Historic Partnership 320-587-2109 mchpdirector@gmail.com To the Members of the Hutchinson City Council, In December 2016, Historic Hutchinson and the McLeod County Historic Partnership began the First Phase in a project aimed toward preserving and exhibiting the historic graffiti inside the Hutchinson Great Northern Railway Depot. Mon- ica Wehler worked to create a twine grid that could easily be adjusted and wouldn't touch the walls (See Section A on Page 2) and hired a Photographer who worked to capture each square, but also each sectioned area within that square (See Sections B & C on Page 2). With written notes to accompany each photo, a Researcher named Kimberley Ortloff began to sift through the text and drawings, some of which were barely legible, and bring the graffiti to life. Beginning in May 2017 and working through the Summer, our researcher combed through resources at the McLeod County His- torical Society, the Minnesota Historical Society and the Great Northern Railway Museum in St. Paul to find a face that matched what was written on the walls decades ago. With a focus on connections to the Great Northern Railway, McLeod County and/or Minnesota; we were able to write over fifty complete biographies with more possible in the future. (See Section D on Page 3). The final steps are being taken to organize the photographs and biographies into one cohesive report that will be made available online through the McLeod County Historical Society. Once the Final Report has been submitted and approved by the Minnesota Historical Society, we will be able to move forward with making the necessary structural changes to make the Depot accessible to the residents of McLeod County. After speaking to the Preservation Office at the Minnesota Historical Society, the McLeod County Historic Partnership is recommending that the City of Hutchinson hire a mechanical engineer that could recommend ways to install an HVAC system and electric lights in a way that wouldn't disturb the Graffiti and also a Historic Preservation Consultant (See Section E on Page 4) to recommend ways to make the Graffiti last another one hundred years. By adding HVAC and electricity to the Depot, you would have a large and unique space in Hutchinson that could be rented out with the Meeting Room next door. The graffiti and it's history would be an iconic addition to any wedding reception, family re- union or city event. Having a Consultant to make recommendations on preserving the graffiti and be there during the installation would ensure this remarkable structure lasts for the next generations. Both endeavors are grant fundable through the Legacy Amendment; estimated at $4,000-$8,000 for a Mechanical Engineer and $10,000 for a Consultant and the installation of any preservation equipment.. There is no building comparable to this in the state of Minnesota; literal floor to ceiling text and drawings written with wet coal dating back to the early -1900s. Some of those men, women and children who left their names would become bankers, farmers, politicians, soldiers, and shop owners across Minnesota and the United States. Some were the chil- dren or grandchildren of immigrants, and others were immigrants themselves. It is your responsibility, as owners and caretakers of the Hutchinson Depot, to tell their stories and share them with the people of McLeod County. By taking the necessary steps toward preserving the graffiti and making the Depot more accessible with the Meeting Room, you would have a truly unique structure that could showcase everything that Hutchinson has to offer. Respectfully Yours, Bayley Schluter Director - McLeod County Historic Partnership A: The twine grid on the North Wall B: Section 9C on the South Wall C: Section 9-9C-2 D: Biographies John Lambertson White The north wall of the depot contains a depiction of the name "John L. White" with "Vermont" written beneath it. John White is a descendant of prominent members of the Hutchinson community. His father, Harry White, was born in Eatontown, New Jersey on July 13, 1868 to Lyttleton and Mary (Lambertson) White. Harry graduated from Harvard Di- vinity and Law School. He married Sophie Pendergast in 1905. On January 2, 1918, Harry opened a law office in Hutchinson over the O.A. Kohler and Company Store. He would eventually own his own building at the north end of Hassan Street. Harry died in 1920. John Lambertson White was born on April 17, 1906 in Duluth to Harry and Sophie (Pendergast) White. That same year the family moved to Natick, Massachusetts. Harry sent a collage of photographs and a letter to his mother-in-law on February 20, 1909 from Natick. There are five photos of John White with a sled. The letter contains details about "John's winsome qualities". John's family moved to Oklahoma City, Oklahoma and then to Hutchinson in 1917. Like many of his peers, some of whom also have connections to the graffiti in the depot, John participated in "Pageant of Pilgrims" which was performed by the pupils of the Hutchinson Public Schools. The Pageant Master was E.P.T. Larson and the Pageant Mistress was Blanche Tennyson. In 1920, when John was thirteen, the family lived on Hassan Street. John attended Hutchinson High School. He was a member of the first band at the local high school. He graduated in 1923 with fifty-one other students. The commencement was held at Bpm on 4 May 29, 1923 at the high school gymna- sium. John was a member of the Minnesota Territorial Pioneers, a group that was organized in 1897 and incorporated in 1924. Members can trace their ancestry to those who settled in Minnesota before statehood in 1858. John worked as a railroad employee. Personnel records from the Great Northern Railroad included one John Lambertson White who worked as a station helper at Spring Park. His obituary indicated that he worked as a railway express man, a railway postal clerk, and other capacities. John married Milly and they had four daughters named Penny, Patty, Polly, and Prue. His second wife Mabel Johnson White was a librarian at the Hutchinson Public Library from 1938-1965. John died on October 4, 1990 in Ramsey County. Memorial services were held at the Episcopal Church Home in St. Paul. He was bur- ied next to his wife Mabel at Oakland Cemetery in Hutchinson. Fred C. Trendy The north wall of the depot contains a depiction of the name "Fred Trendy' and the south wall reads, "Fred Trendy is a bull". Fred Trendy was born on May 10, 1889 in Renville. His parents were from Germany. They were still living in Renville in 1905 when they filed their information with the census. He attended Hutchinson Public Schools. When Fred registered for the draft in 1917 he had dark brown hair. In 1930 he owned a house at 25 Adams Street North that was valued at three thousand dollars. He worked as an Ex- press Agent with the Great Northern Railroad. When he registered for the draft in 1942, he was fifty-two years old and lived in Hutchinson. He stood five feet, nine inches tall and weighed one hundred sixty-three pounds. His eyes were blue and his complexion was ruddy. His hair had turned gray. Fred Trendy died on June 7, 1961. He is buried in Oakland Cemetery in Hutchinson. E: Companies with HVAC Engineers and Historic Preservation Consultants Hammel Green and Abrahamson (HGA) Ginny Lackovic, AIA Minneapolis, MN Specialties: Architects, Civil Engineers, Electrical Engineers, Mechanical (HVAC) Engi- neers, Strucural Engineers, Historic Preservation Consultants, Interior Designers, Landscape Architects & Designers, Lighting Consultants, Masonry Restoration, Pho- tography & Document Training/Experience: HGA has a core group of preservation specialists with expertise in preservation planning and historical regulatory procedures including; forensic in- vestigation, Historic Building Condition Assessments, Historical Structures Reports, Section 106 Consultation, HPC and SHPO review. HGA has full A/E services including; Architecture, Mechanical, Electrical, Civil/Landscape, Interior Design, and Cost Esti- mating. Our team of specialists exceeds the historic preservation professional qualifi- cation standards for engineering and historic architecture as defined by the National Park Service. Notable Projects: Minnesota State Capitol Interior & Exterior Renovation, the Nelson Cultural Center at the American Swedish Institute and the St. Paul Union Depot Resto- ration LHB - Minneapolis Contact: Phillip Waugh Minneapolis, MN Notes: Historic architects, historic preservation, tax credits, research, Section 106, inte- riors, master planning, historic site reports Notable Projects: Jay Cook Swinging Bridge Restoration in the Jay Cook State Park, Re- naissance Box Rehabilitation in St. Paul and the Fort Snelling LRT and Upper Post Mas- ter Plan 1a�. i §&v, t wv iFk i�7 .tea a Hutchinson Historic Depot Recommendations Based on my involvement in this project to date and my knowledge of historic structures and graffiti, I recommend the following for the careful preservation and interpretation of the interior of the Depot: 1. Conduct a study on the possibility of adding climate control (HVAC) to the space; the addition of a system will enhance the preservation of the graffiti and artifacts to be placed in the building. Stabilizing the environment within the Depot is the most effective way to ensure graffiti and artifact longevity and security. a. It is extremely important to create a controlled environment within the Depot to protect against infestation of termites and other damaging bugs, as well as from moisture and water damage that may cause the wood structure to rot. b. I highly recommend Rebecca Ellis of Questions & Answers Engineering as an HVAC consultant. 2. Regardless of whether or not an HVAC system is installed, the most imperative act of preserving of historic graffiti is recording and inventorying for archival purposes. Historic Hutchinson has done the community a great service by documenting all graffiti present at the depot, ensuring the content of the collection of graffiti will be available and useful for years to come. 3. The second priority of preservation is the active protection of significant graffiti. Based on the layout of the Depot graffiti and potential exposure to the public, I suggest utilizing an exhibit system to highlight significant graffiti with glass/acrylic panels, and cover/protect less significant graffiti with interpretive panels (see sketch from 9.13.17 email). a. The system should feature minimal intervention to the building (ie as few holes as possible). I suggest a system of panels that are suspended from tensioned cables mounted to a wall track placed at the top and bottom of the walls. b. Lighting will need to be considered when deciding upon exhibit materials and protective measures to ensure the graffiti is visible. 4. There are many varieties of intervention and protection; thus, a Maintenance Plan should also be created for the collection of graffiti in the Depot to ensure continued observation, photography and monitoring of any changes. ** The point to stress here is that there are many options applicable to historic graffiti, but the resulting conservation work is what matters. Ideally, an HVAC system would be installed, not only to protect the graffiti but also the historic depot building itself. In addition, the ideal means of preserving this unique collection of historic graffiti is the installation of an exhibit that both highlights significant graffiti (by covering with clear panels) while covering less -significant graffiti with opaque interpretive panels. I think these are the most respectful and appropriate means of protecting and promoting the wealth of information written on the Depot walls. See below for more on Protective Measures and a sample Maintenance Plan. Recommended Protective Measures Graffiti can be found on any type of material, in this case, wood. The following threats are possibilities within the Depot: 1. Lichen and other biological substances 2. Insects 3. Humans/Accidents 4. Rotting Wood 5. Deterioration 6. Dust/Dirt 7. Water Techniques for protection, cleaning, removal, and other possible interventions and applications are discussed below. These techniques were found to be used in the research and case studies carried out in Minnesota and the UK. They vary in complexity and implementation, and it is important to note that many other forms of intervention are available. White glass shields White glass shields are a suitable means of protecting historic graffiti. They should be cut to an appropriate size and installed sympathetically in regard to the surface upon which the graffiti are located. The use of fixing holes is encouraged, which may exist from previous protective interventions, therefore maintaining historic fabric. White glass shields used as protection Acrylic cover There are a range of acrylic sheets suitable for graffiti protection. Similar to the white glass shields, an acrylic sheet cover should be attached to the wall in an appropriate manner for the historic substrate. Maintenance plans should be designed to clean the glass or acrylic shields, which will no doubt collect dust and fingerprints, thus obscuring the graffiti. The use of glass or acrylic shields is favorable for keeping visitors from touching or damaging historic graffiti because finger oil can deplete surface graffiti. Protection from touching The method of preventing the touching of historic graffiti is a matter of management more than physical intervention. Many sites that have historic graffiti prohibit them being touched. Typically, a sign and/or stanchions are installed or tour guides would mention to visitors that they are not allowed to touch. This method is often beneficial to the preservation of graffiti because finger oil can deplete surface graffiti. Sample Maintenance Plan The objective of an historic site is to share it with visitors and use it as an educational tool. To ensure historic properties, buildings, and objects are preserved for future generations, a Maintenance Plan is recommended. This plan includes basic practices to act as a support for building maintenance, security programs, pest management, and collections management. A schedule should be set up for routine housekeeping. This schedule ranges from daily activities to annual activities. A log should be kept for all housekeeping duties performed to ensure completion, and should provide space to report on collection conditions, infestation, or changes in general condition. The following housekeeping schedule is a sample of what could be adapted at the Historic Depot once an exhibit is installed: Daily: • Vacuum public traffic runners and non -historic carpets • Dust walls, window frames, exhibit components • Remove all insect carcasses • Sweep floors, interior and exterior, shake out non -historic rugs • Empty all trash bins • Enter work in housekeeping log Weekly or Biweekly: • Dust tops of all doors 0 Wash floors and non -historic rugs • Clean door screens (if applicable) • Enter work in housekeeping log Monthly: • Clean exhibit glass/acrylic and picture glass • Vacuum historic rugs with protective screen (all rugs should be vacuumed twice a year) • Dust ceramics, light fixtures, and glassware • Enter work in housekeeping log Quarterly: • Clean windows • Wash non -historic table coverings and curtains • Vacuum any upholstery or other historic textiles (all should be cleaned on a semiannual basis) • Enter work in housekeeping log Semi-annually: • Vacuum or dust ceilings • Dust and clean wood details with cotton swabs • Wet -clean all window shutters, if applicable • Enter work in housekeeping log Annually: • Conduct a roof inspection • Mass -photograph all significant graffiti and compare to original inventory project photographs to look for changes • Remove and clean all wall -exhibit components • Clean exposed artifacts, if applicable • Dust artifacts and rafters • Remove and clean all light fixtures • Enter work in housekeeping log General Maintenance Plan Recommendations • Create a Disaster -Preparedness Plan if one is not already in place • Routine monitoring of all structural components • Routine monitoring of infestation • Routine monitoring of water damage in all areas of the building City of Hutchinson Plat Maps: The McLeod County Historical Society and Museum would like to let the Council know that the two original town plat maps of Hutchinson, MN may be damaged by the following in their current location and display methods: • Ultra Violet rays from interior lights -this will overtime fade the printing on the paper and it will disappear. • Hanging Stress from gravity -hanging the maps on the wall adds stress to the fibers of the paper and over time the paper will tear at the stress points. • Acidic Exposure -Adhesives or other mounting/framing techniques can cause the paper to dry out and become brittle overtime due to the migration of acid from one item pressed against the maps. • Temperature and Humidity Fluctuation -Although I would have to take readings over a year at day and evening intervals to know if the maps could be suffering ill effects from this, paper is very susceptible to damage with the fluctuation of temperature and humidity. The more stable and constant the temperature and humidity can be kept throughout the year the aging process of the paper can be slowed. McLeod County Historical Society and Museum staff would recommend the following steps to ensure the prolonged life of the original Hutchinson Plat Maps: • Remove the Plat Maps from their current frames/mats, being tremendously careful and aware that any adhesive products that may have been used need to be removed using paper conservation methods. • High Resolution, (1200 to 2400 dpi) scans or photos of the Plat Maps should be taken and along with their history, provenance information, measurements and a detailed condition report should be taken to prevent handling and regulate their preservation plan in the future. • Create a custom Mylar enclosure that is at least two inches wider than the actual document and allows for air circulation and uses no adhesive, creates no holes or damage of any sort to the maps. (Rule of thumb, never do anything to a piece that cannot be undone.) • The Encapsulated Maps should then be placed in acid free boxes or custom made envelopes. I would recommend two metal edge acid free boxes, stored flat in a dry temperature and humidity controlled space. Currently when artifacts like the Plat Maps are donated to the Museum, the Museum will cover all supply and labor costs to do the above. The Maps would then be stored in our archive that can be accessed by the public via our research library, or the images and history via our online website and in-house database. As a thank you to the donor, Museum staff will create a digital copy of the image for the donor's personal use. If the donor wishes to retain the original, the Museum will take a high resolution scan or photo of the artifact for our records and to share with the public. The Museum will do the preservation work for the donor at a cost for supplies and labor. The cost to preserve the two Hutchinson Plat maps would be: • Mylar with breathable enclosures on three sides -$50.00 • Two Acid Free Metal Edge boxes -$180.00 • Shipping -$20.00 • Labor to remove from the frame/matting and custom encapsulation -$40.00 Total Cost: $290.00 If you have any questions, please feel free to contact me via email or phone below: Lori Pickell-Stangel MCHS Executive Director 320-587-2109 asa@hutchtel.net Recommendations and Guidelines for Preservation Damage Caused by Displays Acidic Storage: "Some of the deterioration that items in storage suffer is caused by the acids and other harmful substances in the containers, supports, and mounts that are used to protect them. These harmful substances migrate from storage materials into the items, causing such problems as discoloration, corrosion, and embrittlement. For example, discoloration caused by an acidic window mat can disfigure and hasten the deterioration of a drawing on paper that has been matted and framed." -Storage Containers, Supports, and Mounts. Conservation Office of MNHS Light Damage: "Any exposure to light, even for a brief time, is damaging, and the damage cannot be reversed. Although all wavelengths of light are harmful, ultraviolet (UV) is particularly harmful. One of the most common sources of UV is the sun. Certain types of lamps, such as fluorescent tubes, also emit high amounts of UV energy and should be avoided. If they cannot be avoided, they can be filtered with relatively inexpensive plastic filtration films that reduce UV emissions." -Basic Preservation Considerations: How Much Light Is Too Much? Conservation Office of MNHS Proper Storage Boxes or Drawers: "Oversize materials, such as maps and large prints, are best stored flat in the drawers of map cases or in large covered boxes. Place the items in folders, and cut all the folders to fit the size of the drawer or box. Allow adequate room where oversize materials are stored to remove them safely from drawers or shelves, and make sure there is a place to put them down once they are removed." -Paper: Oversize Items. Conversation Office of MNHS Acid -Free: "Folders, envelopes, tissue, and papers for interleaving sheets should be lignin -free and made of chemically stable fibers. The board for boxes should also be lignin -free and chemically purified. The board used for matting drawings and other sorts of items should be a 100 percent cotton or linen rag board or an otherwise lignin -free, chemically purified conservation mounting board. Tapes for making mats, folders, and boxes should be chemically stable, non -staining, and free of damaging components if possible. Such materials commonly are described as acid -free. It is important to be aware that not all paper based materials are acid -free. Standard museum preservation practice maintains, however, that only acid -free materials should be used." -Storage Containers, Supports, and Mounts: Paper -Based Storage Materials Should Be Acid - Free. Conservation Office of MNHS Substitutions "Substitution works especially well for paper items. While all materials are susceptible to the environmental and security hazards presented by display, paper is particularly vulnerable. Many items made of paper are easy to copy, and thanks to new technologies, the copies look similar to the original. Some examples follow: • High-quality laser color copiers produce excellent substitutes of documents, newspapers, book pages, and some art on paper. If the substitute is made on a sheet of paper that is similar in texture to the original, it is even more convincing. Check your telephone directory for a copy service in your area. • A substitute of a photograph can be made from the original negative, if it is available and in acceptable condition, or from a copy negative, if that is available. If not, it can be made from the original print. This latter alternative will give you a copy negative to keep for future use. Often a local photographer can do this. • Digital scanning technology also can be used to produce substitutes of documents, newspapers, book pages, photographs, and some art on paper. This technology allows the image to be manipulated in a variety of ways so that blemishes and evidence of physical damage can be lessened if this is deemed appropriate." -Display: Use of Substitutions. Conservation Office of MNHS HUTCHINSON CITY COUNCIL c`=y-f 0' a_ � Request for Board Action 79 M-W Agenda Item: Consideration of the Second Reading and Adoption of Ordinance 17-777 Department: Administration LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: Matt Jaunich Agenda Item Type: Presenter: Matt Jaunich Reviewed by Staff ❑ Unfinished Business Time Requested (Minutes): 5 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: With the city council authorizing the development of a dog park, certain city codes were in need of updating to allow for the proper usage at the dog park. The proposed attached ordinance would allow for dogs to be off-leash within a public park. The first reading of the ordinance was held at your last meeting. Staff is asking that the second reading and adoption take place. There have been no changes to the ordinance since its first reading. BOARD ACTION REQUESTED: Consider the second reading and adoption of Ordinance 17-777- An ordinance amending Chapter 93 & 95 of the Hutchinson City Code to accommodate the Establishment of a Dog Park Fiscal Impact: $ 0.00 Funding Source: FTE Impact: Budget Change: No Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: Remaining Cost: $ 0.00 Funding Source: ORDINANCE 17-777 AN ORDINANCE AMENDING CHAPTER 93 AND 95 OF THE HUTCHINSON CITY CODE TO ACCOMMODATE THE ESTABLISHMENT OF A DOG PARK The City Council hereby ordains: WHEREAS, the City is in the process of constructing a dog park within city limits; and WHEREAS, Hutchinson's current city code is in need of being updated to allow for use of a dog park within city limits; and NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Hutchinson, that Chapter 93 and Chapter 95 of the City Code is hereby amended to read as follows: § 93.01 ANIMAL WASTE; REMOVAL REQUIRED. (A) Definitions. For the purpose of this section, the following definitions shall apply unless the context clearly indicates or requires a different meaning. ANIMAL. A dog, cat or other animal. OWNER. Any person who harbors, feeds, boards, possesses, keeps or has custody of an animal. OFF LEASH DOG PARK. A public, city -designated area where a dog owner is permitted to allow a dog or dogs to socialize and exercise off leash, subject to the rules and regulations for such an area. (B) Unlawful acts. It is unlawful for any owner to: (1) Suffer or permit an animal to defecate upon public property, or the private property of another, without immediately removing the excrement and disposing of it in a sanitary manner; (2) Suffer or permit an animal to be upon public property, unless it's an off leash dog park, or the private property of another, unless the animal is in the custody of a person of suitable age and discretion having in his or her possession equipment and supplies for excrement removal; or (3) Permit animal excrement to accumulate for a period in excess of seven days on premises occupied by him or her without removal and sanitary disposal. §93.18 RUNNING AT LARGE PROHIBITED. It shall be unlawful for the dog or cat of any person who owns, harbors or keeps a dog or cat to run at large. A person who owns, harbors, or keeps a dog or cat which runs at large shall be guilty of a misdemeanor. Dogs or cats on a leash and controlled by a reasonable person shall be permitted in streets or on public land unless prohibited with signs reading "Dogs and Cats Prohibited", except that dogs under the supervision of their owner may be unrestrained in the area designated as an Off Leash Dog Park. Dogs or cats who are under the control and direction of a responsible person so as to be effectively restrained by leash or an electronic control device shall be permitted only on private property at the consent of the property owner or in a public area designated as such. § 95.05 DEFINITIONS. OFF LEASH DOG PARK. A public, city -designated area where a dog owner is permitted to allow a dog or dogs to socialize and exercise off leash, subject to the rules and regulations for such an area. FURTHERMORE BE IT ORDAINED that the effective date of this Ordinance is upon passage of this Ordinance by the City Council ADOPTED BY THE HUTCHINSON CITY COUNCIL THIS I0TU DAY OF OCTOBER, 2017 Attest: Matthew Jaunich, City Administrator Gary T. Forcier, Mayor FIRST AMENDMENT TO VACANT LAND PURCHASE AGREEMENT This First Amendment to Vacant Land Purchase Agreement (this "Amendment") is made and entered into effective as of , 2017, by and between the City of Hutchinson, Minnesota, a public body corporate and politic ("Seller"), and Hutchcobble, LLC, a Minnesota limited liability company, or it assigns ("Buyer"). RECITALS A. Seller and Buyer entered into that certain Vacant Land Purchase Agreement dated effective as of April 11, 2017 (the "Purchase Agreement"), concerning the purchase and sale of certain vacant real property located in the City of Hutchinson, County of McLeod, Minnesota, and being more particularly described in the Purchase Agreement. Capitalized terms used herein and not defined herein shall have the meanings given to them in the Purchase Agreement. B. Seller and Buyer desire to amend the Purchase Agreement as set forth herein. AGREEMENTS NOW, THEREFORE, for and in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party hereto, Seller and Buyer hereby agree as follows: 1. Extension of Closing Date. The Purchase Agreement is amended to provide that the purchase and sale contemplated by the Purchase Agreement (the "Closing") shall occur on November 22, 2017, or such other time as mutually agreed to by the parties (the "Closing Date"), at a title company reasonably selected by the parties ("Title Company"). Seller agrees to deliver possession of the Property immediately after closing. 2. Continuance of Purchase Agreement. Binding Effect; Governing Law. All provisions of the Purchase Agreement, as amended hereby, shall remain in full force and effect and unchanged, except as provided herein. If any provision of this Amendment conflicts with the Purchase Agreement, the provisions of this Amendment shall control. This Amendment is binding upon and shall inure to the benefit of Seller and Buyer, and their respective successors and permitted assigns. This Amendment shall be governed by and construed in accordance with the laws of the State of Minnesota. 3. Counterparts. This Amendment may be executed in any number of counterparts (including execution by facsimile or other electronic transmission) with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same document. Signature pages may be detached from the counterparts and attached to a single copy of this consent to physically form one document. Seller and Buyer have executed this Amendment as of the date set forth above. SELLER CITY OF HUTCHINSON By: Its: BUYER HUTCHCOBBLE, LLC By. Its: l HUTCHINSON CITY COUNCIL Cityaf Request for Board Action 7 Aa L� Resolution 14789 Authorizing Issuance of $17,455,000 Public Utilities Revenue Agenda Item: Bonds, Series 2017B Department: Finance LICENSE SECTION Meeting Date: 10/10/2017 Application Complete Contact: Jeremy Carter Agenda Item Type: Presenter: Nick Anhut - Ehlers Reviewed by Staff New Business Time Requested (Minutes): License Contingency iN, Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: Nick Anhut, from Ehlers, will review the bids received for the 2017 bond issuance. BOARD ACTION REQUESTED: Consider and approve the issuance of $17,455,000 Public Utilities Revenue Bonds, series 20178, by adopting resolution 14789. Fiscal Impact: $ 0.00 Funding Source: FTE Impact: Budget Change: No Included in current budget: Yes PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: N/A Remaining Cost: $ 0.00 Funding Source: N/A CERTIFICATION OF MINUTES RELATING TO PUBLIC UTILITY REVENUE REFUNDING BONDS, SERIES 2017B City: City of Hutchinson, Minnesota Governing Body: City Council Kind, date, time and place of meeting: A regular meeting, held on October 10, 2017, at 5:30 o'clock p.m. in the Council Chambers at the Hutchinson City Center. Members present: Members absent: Documents Attached: Minutes of said meeting (pages): RESOLUTION NO. 14789 RESOLUTION AUTHORIZING ISSUANCE, PRESCRIBING THE FORM AND DETAILS AND PROVIDING FOR THE PAYMENT OF PUBLIC UTILITY REVENUE BONDS, SERIES 2017B I, the undersigned, being the duly qualified and acting recording officer of the public corporation issuing the bonds referred to in the title of this certificate, certify that the documents attached hereto, as described above, have been carefully compared with the original records of said corporation in my legal custody, from which they have been transcribed; that said documents are a correct and complete transcript of the minutes of a meeting of the governing body of said corporation, and correct and complete copies of all resolutions and other actions taken and of all documents approved by the governing body at said meeting, so far as they relate to said bonds; and that said meeting was duly held by the governing body at the time and place and was attended throughout by the Councilmembers indicated above, pursuant to call and notice of such meeting given as required by law. WITNESS my hand officially as such recording officer October 10, 2017. Matt Jaunich, City Administrator (SEAL) The City Administrator reported that [ (F 1) proposals had been received by the City prior to 11:00 A.M., Central Time today for the purchase of the Bonds in accordance with the Terms of Proposal for the $17,455,000 Public Utility Revenue Bonds, Series 2017B of the City as previously approved by a resolution of the City Council. The bids have been read and tabulated, and the terms of each have been determined to be as follows: Bid for Name of Bidder Principal (See Attached) Total Interest Interest Cost -Net Average Rates Rate RESOLUTION AUTHORIZING ISSUANCE, PRESCRIBING THE FORM AND DETAILS AND PROVIDING FOR THE PAYMENT OF PUBLIC UTILITY REVENUE BONDS, SERIES 2017B BE IT RESOLVED by the City Council of the City of Hutchinson, Minnesota (the "City"), as follows: SECTION 1. RECITALS, AUTHORIZATION AND SALE. 1.01. Recitals and Authorization. (a) The City of Hutchinson now owns and operates through the Hutchinson Utilities Commission (the "Commission"), as a revenue-producing convenience, a system for the generation and distribution of electricity and natural gas for the use of the City and its inhabitants and other customers (the "Utility"). The City Council on October 28, 1986 adopted a resolution designating the Commission a municipal power agency pursuant to Minnesota Statutes, Chapter 453, and the Commission by a resolution adopted October 7, 1986, as amended by a resolution adopted November 3, 1986, has determined to proceed to exercise any and all power granted to a municipal power agency pursuant to the provisions of Minnesota Statutes, Chapter 453. (b) It is necessary and expedient for the City to issue at this time its Public Utility Revenue Bonds, Series 2017B in the principal amount of $17,455,000 (the "Bonds"), upon the terms and conditions hereinafter set forth, to construct improvements to the Utility, including procurement of two new engines for additional power generation (the "Project"). It is in the best interest of the City and Commission that the Bonds be payable primarily from the net revenues of the Utility. 1.02. Sale of the Bonds. The City has retained Ehlers & Associates, Inc., an independent municipal advisor, to assist the City in connection with the sale of the Bonds. The Bonds are being sold pursuant to Minnesota Statutes, Section 475.60, Subdivision 2, paragraph (9), without meeting the requirements for public sale under Minnesota Statutes, Section 475.60, Subdivision 1. Pursuant to the Terms and Conditions of Sale for the Bonds, [ ] ([ ]) sealed bids for the purchase of the Bonds were received at or before the time specified for receipt of bids. The bids have been opened and publicly read and considered, and the purchase price, interest rates and net interest cost under the terms of each bid have been determined. The most favorable proposal received is that of [ ], of [ , ] (the Purchaser), to purchase the Bonds at a price of $[ ], the Bonds to bear interest at the rates set forth in Section 3.01. The proposal is hereby accepted, and the Mayor and the City Administrator are hereby authorized and directed to execute a contract on the part of the City for the sale of the Bonds with the Purchaser. The good faith deposit of the Purchaser, if any, shall be retained and deposited by the City until the Bonds have been delivered, and shall be deducted from the purchase price paid at settlement. 1.03. Issuance of Bonds. All acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed prior to the issuance of the Bonds have been done, do exist, have happened, and have been performed, wherefore it is now necessary for this Council to establish the form and terms of the Bonds, to provide for the security thereof, and to issue the Bonds forthwith. SECTION 2. FORM OF BONDS. The Bonds shall be prepared in substantially the form attached as Exhibit A hereto. SECTION 3. BOND TERMS, EXECUTION AND DELIVERY AND R F.GTgTR A R 3.01. Maturities, Interest Rates, Denominations, Pam. The City shall forthwith issue and deliver the Bonds, which shall be denominated "Public Utility Revenue Bonds, Series 201713" and shall be payable primarily from the 2017 Utility Bond Fund created in Section 4.02 hereof. The Bonds shall bear a date of original issue of October [31], 2017, shall be issuable in the denomination of $5,000 each or any integral multiple thereof, shall mature on December I in the years and amounts set forth below, and Bonds maturing in such years and amounts shall bear interest from the date of original issue until paid or duly called for redemption at the rates per annum shown opposite such years and amounts as follows: Year Amount Rate Year Amount Rate 2019 $740,000 2029 $ 915,000 2020 750,000 2030 940,000 2021 760,000 2031 975,000 2022 775,000 2032 1,005,000 2023 790,000 2033 1,040,000 2024 805,000 2034 1,080,000 2025 820,000 2035 1,115,000 2026 840,000 2036 1,160,000 2027 860,000 2037 1,200,000 2028 885,000 [REVISE MATURITY SCHEDULE FOR ANY TERM BONDS] The Bonds shall be prepared in substantially the form attached as Exhibit A hereto and shall be issuable only in fully registered form. The interest thereon and, upon surrender of each Bond, the principal amount thereof, shall be payable by check or draft issued by the Registrar described herein. Each Bond shall be dated by the Registrar as of the date of its authentication. 3.02. Dates, Interest Payment Dates. Interest on the Bonds shall be payable on June 1 and December 1 in each year, commencing June 1, 2018, to the owner of record thereof as of the close of business on the fifteenth day of the immediately preceding 2 month, whether or not such day is a business day. Interest on the Bonds will be computed on the basis of a 360 -day year consisting of twelve 30 -day months and will be rounded pursuant to the rules of the Municipal Securities Rulemaking Board. 3.03. Registration. The City shall appoint, and shall maintain, a bond registrar, transfer agent and paying agent (the Registrar). The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: (a) Register. The Registrar shall keep at its principal corporate trust office a bond register in which the Registrar shall provide for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. (b) Transfer of Bonds. Upon surrender for transfer of any Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until such interest payment date. (c) Exchange of Bonds. Whenever any Bond is surrendered by the registered owner for exchange, the Registrar shall authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity, as requested by the registered owner or the owner's attorney duly authorized in writing. (d) Cancellation. All Bonds surrendered upon any transfer or exchange shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When any Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name any Bond is at any time registered in the bond register as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Bond and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the City upon such Bond to the extent of the sum or sums so paid. (g) Taxes, Fees and Charges. For every transfer or exchange of Bonds (except for an exchange upon a partial redemption of a Bond), the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. (h) Mutilated, Lost, Stolen or Destroyed Bonds. In case any Bond shall become mutilated or be lost, stolen or destroyed, the Registrar shall deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any such Bond lost, stolen or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Bond lost, stolen or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Bond was lost, stolen or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance and amount satisfactory to it, in which both the City and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the City. If the mutilated, lost, stolen or destroyed Bond has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Bond prior to payment. 3.04. Appointment of Initial Re ig strar. The City hereby appoints Bond Trust Services Corporation in Roseville, Minnesota, as the initial Registrar. The Mayor and City Finance Director are authorized to execute and deliver, on behalf of the City, a contract with Bond Trust Services Corporation, as Registrar. Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized by law to conduct such business, such corporation shall be authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove any Registrar upon thirty (30) days' notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar shall deliver all cash and Bonds in its possession to the successor Registrar. On or before each principal or interest due date, without further order of this Council, the City Finance Director shall transmit to the Registrar from the 2017 Utility Bond Fund described in Section 4.02 hereof, moneys sufficient for the payment of all principal and interest then due. 3.05. Redemption. Bonds maturing in the years 2019 through 2027 shall not be subject to redemption prior to maturity, but Bonds maturing in the years 2028 and thereafter shall be subject to redemption and prepayment at the option of the City, in whole or in part, in such order as the City shall determine and by lot as to Bonds having the same maturity date, on December 1, 2027 and on any date thereafter (whether or not an interest payment date), at a price equal to the principal amount thereof and accrued interest to the date of redemption. [Bonds maturing on December 1, 20 are subject to mandatory redemption, at a redemption price equal to their principal amount plus interest accrued thereon to the fl redemption date, without premium, on February 1 in each of the years shown below, in an amount equal to the following principal amounts: Bonds Maturins4 on December 1, 20 Sinking Fund Aggregate Payment Date Principal Amount] Prior to the date set for redemption of any Bond prior to its stated maturity date, the City Administrator shall cause notice of the call for redemption thereof to be published as required by law and, not more than sixty (60) and not fewer than thirty (30) days prior to the designated redemption date, shall cause notice of the call to be mailed to the registered holders of any Bonds to be redeemed at their addresses as they appear on the bond register described in Section 3.03 hereof, but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. The notice of redemption shall specify the redemption date, redemption price, the numbers, interest rates and CUSIP numbers of the Bonds to be redeemed and the place at which the Bonds are to be surrendered for payment, which is the principal office of the Registrar. Official notice of redemption having been given as aforesaid, the Bonds or portions thereof so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions thereof shall cease to bear interest. Bonds in a denomination larger than $5,000 may be redeemed in part in any integral multiple of $5,000. The owner of any Bond redeemed in part shall receive without charge, upon surrender of such Bond to the Registrar, one or more new Bonds of such same series in authorized denominations equal in principal amount to the unredeemed portion of the Bond so surrendered. 3.06. Preparation and Delivery. The Bonds shall be prepared under the direction of the City Administrator and shall be executed on behalf of the City by the signatures of the Mayor and the City Administrator. In case any officer whose signature shall appear on the Bonds shall cease to be such officer before the delivery of any Bond, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. Notwithstanding such execution, no Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this resolution unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on each Bond shall be conclusive evidence that it has been authenticated and delivered under this resolution. When the Bonds have been so executed and authenticated, they shall be delivered by the 5 City Administrator to the purchaser thereof upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the purchaser shall not be obligated to see to the application of the purchase price. 3.07. Securities Depositgn. (a) For purposes of this Section the following terms shall have the following meanings: "Beneficial Owner" shall mean, whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant, or such person's subrogee. "Cede & Co." shall mean Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Bonds. "DTC" shall mean The Depository Trust Company of New York, New York. "Participant" shall mean any broker-dealer, bank or other financial institution for which DTC holds Bonds as securities depository. "Representation Letter" shall mean the Representation Letter from the City to DTC. (b) The Bonds shall be initially issued as separately authenticated fully registered bonds, and one Bond shall be issued in the principal amount of each stated maturity of the Bonds. Upon initial issuance, the ownership of such Bonds shall be registered in the bond register in the name of Cede & Co., as nominee of DTC. The Registrar and the City may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal of or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed, if any, giving any notice permitted or required to be given to registered owners of Bonds under this resolution, registering the transfer of Bonds, and for all other purposes whatsoever; and neither the Registrar nor the City shall be affected by any notice to the contrary. Neither the Registrar nor the City shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any Participant, or any other person which is not shown on the bond register as being a registered owner of any Bonds, with respect to the accuracy of any records maintained by DTC or any Participant, with respect to the payment by DTC or any Participant of any amount with respect to the principal of or interest on the Bonds, with respect to any notice which is permitted or required to be given to owners of Bonds under this resolution, with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or with respect to any consent given or other action taken by DTC as registered owner of the Bonds. So long as any Bond is registered in the name of Cede & Co., as nominee of DTC, the Registrar shall pay all principal of and interest on such Bond, and shall give all notices with respect to such Bond, only to Cede & Co. in accordance with the Representation Letter, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and interest on the Bonds to the extent of the 0 sum or sums so paid. No person other than DTC shall receive an authenticated Bond for each separate stated maturity evidencing the obligation of the City to make payments of principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the Bonds will be transferable to such new nominee in accordance with paragraph (e) hereof. (c) In the event the City determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bonds in the form of bond certificates, the City may notify DTC and the Registrar, whereupon DTC shall notify the Participants of the availability through DTC of Bonds in the form of certificates. In such event, the Bonds will be transferable in accordance with paragraph (e) hereof. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and the Registrar and discharging its responsibilities with respect thereto under applicable law. In such event the Bonds will be transferable in accordance with paragraph (e) hereof. (d) The execution and delivery of the Representation Letter to DTC by the Mayor, in the form presented to this Council with such changes, omissions, insertions and revisions as the Mayor shall deem advisable, is hereby authorized, and execution of the Representation Letter by the Mayor shall be conclusive evidence of such approval. The Representation Letter shall set forth certain matters with respect to, among other things, notices, consents and approvals by registered owners of the Bonds and Beneficial Owners and payments on the Bonds. The Registrar shall have the same rights with respect to its actions thereunder as it has with respect to its actions under this resolution. (e) In the event that any transfer or exchange of Bonds is permitted under paragraph (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this resolution. In the event Bonds in the form of certificates are issued to owners other than Cede & Co., its successor as nominee for DTC as owner of all the Bonds, or another securities depository as owner of all the Bonds, the provisions of this resolution shall also apply to all matters relating thereto, including, without limitation, the printing of such Bonds in the form of bond certificates and the method of payment of principal of and interest on such Bonds in the form of bond certificates. 3.08. Use of Proceeds. Upon payment for the Bonds by the Purchaser, the City Administrator shall deposit proceeds of the Bonds in the amount of $[ ] in the Capital Improvement Account to pay the costs of the Project, shall deposit [proceeds of the Bonds] [Utility reserves] in the amount of $[ ] in the Reserve Account created in Section 4 and shall deposit the accrued interest on the Bonds, if any, in the Sinking Fund created in Section 4 hereof. 7 SECTION 4. ADMINISTRATION OF THE PUBLIC UTILITIES FUND. 4.01. Public Utilit S sem. As used in this resolution the term "Utility" shall mean and refer to the electric generation and distribution system and the natural gas distribution system referred to in the City Charter and now operated by the Commission. 4.02. Public Utilities Fund. From and after the issuance of the Bonds herein authorized, all of the gross income and revenue derived from the operation of the Utility, and of any future additions thereto and betterments thereof, including all amounts received in respect of sales of utility services, facilities, products or by-products furnished by the System to the City and its inhabitants and all other customers, are hereby set aside, appropriated and pledged to the Public Utilities Fund, which shall be maintained as a separate and special fund on the books of the City and the Commission at least until said Bonds and all additional bonds secured by this resolution have been fully paid. The Commission and the City Finance Director shall maintain books and records showing all receipts and disbursements of revenues herein pledged to that Fund and of all other moneys pertaining to the system, on which books and records there shall be maintained, the separate subfunds or accounts hereinafter designated in this Section 4. An Account of the type designated in each of the Sections 4.03 through 4.06 shall be maintained for each utility included in the Public Utility Fund. 4.03. Capital Improvement Account. The Capital Improvement Account shall be used only to pay expenses which under accepted accounting practice constitute capital costs necessarily incurred for the acquisition and betterment of the Utility, including but not limited to land, easements, buildings, structures, machinery and equipment, and the cost of all architectural, engineering, legal and other professional services, printing and publication, and other costs reasonably necessary and incidental thereto. To this Account shall be credited a portion of the proceeds of the Bonds as provided in Section 3.08 hereof, and the proceeds of any additional bonds issued in the future as contemplated by this resolution, for the financing of capital improvements or additions to the Utility, and such other funds as may from time to time be appropriated by the Commission for this purpose. From the balance, if any, remaining in the Capital Improvement Account after the project to be financed by the proceeds of any additional bonds is completed and the costs paid there shall be transferred to the Reserve Account the amount required, if any, to bring the balance on hand in such Account to the amount required; and any amount not so transferred shall be transferred to the Sinking and Interest Account established by Section 4.04. 4.04. General Account. To this Account shall be credited, as received, all of the gross revenues received from the operation of the Utility, and all penalties and proceeds of the voluntary sale of any real or personal property comprising part of the Utility. The General Account shall be used only to pay, promptly when due, expenses which under accepted accounting practice constitute current, reasonable and necessary costs of the Utility, including but not limited to the amounts to be paid to the City, exclusive of depreciation and interest costs, and to maintain in accordance with accepted accounting practice a reasonable working capital and reserves for recurring expenses. The revenues of the Utility from time to time on hand in the General Account in excess of the foregoing requirements are the net revenues pledged and appropriated, to make the transfers to other subfunds or accounts in the Public Utilities Fund required and contemplated in this Section 4. 4.05. Sinking and Interest Account. From the net revenues of the Utility, there shall be transferred to the Sinking and Interest Account from the General Account each month, a sum not less than one -twelfth of the aggregate amount of principal to become due within the twelve months next following, and not less than one-sixth of the amount of interest to become due within the six months next following, on all then outstanding bonds issued pursuant to and as contemplated by this resolution which have been made payable therefrom, exclusive of interest to be paid from the Capital Improvement Account and exclusive of the principal of the Bonds. This requirement is cumulative, and if the full amount required cannot be transferred in any month, the deficiency shall be restored from the next net revenues available in the General Account. The Sinking and Interest Account shall be used only to pay the interest and principal when due on the Bonds issued pursuant to and as contemplated by this resolution. Upon the call of any revenue bonds for redemption in advance of maturity, there shall also be provided in the Sinking and Interest Account, over and above the amounts herein required, from surplus net revenues or the proceeds of refunding revenue bonds, additional funds sufficient to pay the principal amount of the obligations redeemed and the premium required for such redemption. 4.06. Reserve Account. There shall be maintained in the Reserve Account an amount equal to the lesser of (i) 10% of the original principal amount of the Bonds if then outstanding and the original principal amount of any series of additional bonds payable from the Sinking and Interest Account on a parity with the Bonds secured by this resolution then outstanding, (ii) the maximum annual amount of principal and interest to become due on the Bonds and all additional bonds secured by this resolution, or (iii) 125% of the average annual amount of principal and interest to become due on the Bonds and all additional bonds secured by this resolution (the "Reserve Requirement"). It shall be a condition to the issuance of any series of additional bonds payable from the Sinking and Interest Account that the amount in the Reserve Account be equal to the Reserve Requirement upon the issuance of such additional bonds. Such requirement may be satisfied by cash or a Qualified Surety Bond (as hereinafter defined), or any combination thereof. Any Qualified Surety Bond shall be valued at the amount available to be drawn thereon. Such required balance shall be maintained by the transfer to the Reserve Account of net revenues in excess of the requirements of the General Account and Sinking and Interest Account whenever and to the extent necessary. If the balance in the Reserve Account is more than required, the excess shall be transferred to the Sinking and Interest Account. The Reserve Account shall be used only to pay interest or principal actually due on the Bonds and any additional bonds secured by this resolution, when and if and to the extent that such interest or principal cannot be paid in full from the Sinking and Interest Account. If the balance in the Sinking and Interest Account should at any time be insufficient to pay principal and interest then due on the Bonds and any additional bonds secured by this resolution, and cannot be made sufficient by the transfer of funds from the Reserve Account, the combined balance in said Accounts shall first be used to pay the interest due on all such obligations, and any funds then remaining shall be 9 used to pay the principal of said obligations in order of their maturity dates, or as among obligations in order of their maturity dates, or as among obligations maturing on the same date by lot. A Qualified Surety Bond means a surety bond issued for the Reserve Account by an insurance company rated in the highest rating category by Standard & Poor's and Moody's Investors Service, Inc. and, if rated by A.M. Best & Company, must also be rated in the highest rating category by A.M. Best & Company. At any time the Reserve Account contains both cash and a Qualified Surety Bond, the cash shall be used first to pay principal and interest due on the Bonds and any additional bonds secured by this resolution, when and if are to the extent that such interest or principal cannot be paid in full from the Sinking and Interest Account, before any demand is made on the Qualified Surety Bond. In the event the Reserve Account contains more than one Qualified Surety Bond, any draw on the Qualified Surety Bonds to pay principal and interest on the Bonds and any additional bonds secured by this resolution shall be made on a pro rata basis. If the balance in the Reserve Account is less than the Reserve Requirement net revenue transferred to the Reserve Account shall be used first to reimburse any issuer of a Qualified Surety Bond for amounts drawn thereon, thereby remarketing the Qualified Surety Bonds, second to replenish the cash in the Reserve Account, and third to pay any other issuer of a Qualified Surety Bond for interest due on any amounts advanced under a Qualified Surety Bond. 4.07. Depreciation and Replacement Account. The Depreciation and Replacement Account may be used to segregate net revenues of the Utility from time to time received in excess of those currently needed for the purposes of the General Account, the Sinking and Interest Account and the Reserve Account, and any balance therein shall be transferred to these Accounts whenever and to the extent needed for such purposes, but when not so needed may be transferred to the Capital Improvement Account and used to make repairs, replacements and improvements of utility properties, or to the Sinking and Interest Account for the purpose of redemption of obligations in advance of maturity; or may be transferred to any other fund and used for any proper municipal purpose, in accordance with the City Charter. 4.08. Safekeeping; Investment. All revenues and bond proceeds appropriated to the Public Utilities Fund shall be kept on deposit with one or more depository banks duly qualified under the laws of the State, with the security therein required, except that such revenues and funds may be invested and reinvested in securities which are authorized by law for the investment of municipal sinking funds and, with respect to the investment of funds in the Sinking and Interest Account and Reserve Account, are described in Exhibit B hereto. All securities so purchased shall mature at or before the time when it is estimated that the proceeds thereof will be needed for the purposes of the account from which funds are withdrawn for the purchase, provided that securities purchased for the Reserve Account and Sinking and Interest Account shall mature within no more than one year from the date of purchase. All income, gain and loss on such investments shall be credited or charged, as the case may be, to the account from which the investment was made. 10 SECTION 5. ADDITIONAL COVENANTS. 5.01. General Covenant. The City covenants and agrees with the holders from time to time of all obligations payable from the Sinking and Interest Account in the Public Utilities Fund that until such obligations and interest thereon are fully paid or discharged as provided in this resolution, it will fully and promptly perform and do all additional acts and things provided in this Section 5. 5.02. Rate Covenant. The City will establish and maintain charges, fees and rentals for all service and benefits of whatsoever nature furnished and made available by the Utility to all individuals, firms, corporations and governmental subdivisions and agencies, including the City itself, in accordance with schedules such that the gross revenues derived therefrom will at all times be sufficient to meet all payments due from and to maintain all reserves required in the Public Utilities Fund and the several accounts therein as provided in Section 4, and also to provide adequate funds in the Depreciation and Replacement Account for repairs, replacements and improvements of utility properties, and will revise such rates, charges and rentals whenever necessary for these purposes; and sufficient to produce each year net revenues of not less than one and three tenths (1.30) times the amount of all principal and interest to become due and payable from the Sinking and Interest Account in such year. 5.03. Improvements. The City will complete all capital improvements for which revenue bonds may be issued in the future as contemplated in this Resolution, in accordance with plans and specifications approved and to be approved by the Commission and at a total cost not to exceed the amount of the revenue bond proceeds and net revenues of the Utility or other moneys available and appropriated for the payment thereof. 5.04. Continued Ownership. The City will continue its ownership and operation of the Utility now owned, and will cause it to be maintained in good and efficient operating condition, free from all liens on the revenues or the physical properties thereof, other than the liens herein provided, and will not sell or otherwise dispose of any capital assets of the Utility except at their fair market value, and will use the proceeds of any such sale or disposition to procure other capital assets of equal usefulness for the purposes of the Utility. 5.05. Book and Records. The City will cause proper and adequate books of record and account to be maintained, reflecting all receipts and disbursements and all accrued claims and expenses in connection with the operation and maintenance of the Utility and the payment of obligations incurred therefor, and will make such records available for inspection at all reasonable times by the holder of any such obligations or such holder's agent or attorney, and will cause them to be audited annually by a qualified public accountant. 5.06. Insurance. The City will procure and keep in force at all times insurance on all buildings, structures, improvements, machinery and equipment constituting at any time a part of the Utility, exclusive of foundations and excavations, against the perils 11 covered under "all risk" insurance approved by the Insurance Department of the State of Minnesota, in such amounts as like properties are customarily insured for by prudent owners thereof, and will maintain public liability insurance at all times in amounts not less than the amounts in excess of which the City is immune from tort liability under the laws of the State of Minnesota, for all acts and omissions of its officers and employees concerned with the operation and maintenance of the system, and will procure and keep in force surety company bonds covering all officers and employees handling utility funds, in amounts sufficient to cover at all times the funds in their hands. In the event of loss or damage compensated by any such insurance or bonds, the proceeds thereof shall be used to repair and restore the damage compensated. 5.07. Bondholders' Rights. No holder of any revenue bond issued and secured under the provisions of this resolution shall have the right to institute any proceedings, judicial or otherwise, for the enforcement of the covenants herein contained, without the written concurrence of the holders of not less than 25% in aggregate principal amount of the obligations which are at such time outstanding and payable from the Sinking and Interest Account, but the holders of this amount of such obligations may, either at law or in equity, by suit, action or other proceeding, protect and enforce the rights of all holders of such bonds and compel the performance of any and all of the covenants required herein to be performed by the City and its officers and agents, including fees and rentals and the collection and proper segregation of revenues and the use thereof. The holders of a majority in principal amount of such outstanding obligations shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to such holders or the exercise of any power conferred upon them, and the right to waive a default in the performance of any such covenant, and its consequences, except a default in the payment of the principal of or interest on any such obligation when due. However, nothing herein shall impair the absolute and unconditional right of the holder of each such obligation to receive payment of the principal thereof and interest thereon as such principal and interest respectively become due, from the net revenues pledged and appropriated for the payment thereof, and to institute suit for the enforcement of any such payment. SECTION 6. ADDITIONAL REVENUE BONDS. 6.01. Subordinate Bonds. No series of additional revenue bonds shall be issued and secured under this Resolution except as provided in this Section 6, and no other obligations of any kind, payable from or constituting a charge upon the net revenues of the Utility shall be issued unless such obligations are made junior and subject to the lien and charge on the net revenues of the revenue bonds secured by this resolution. 6.02. Refunding Matured Bonds. The City reserves the right to issue one or more additional series of revenue bonds to refund the bonds secured by this resolution at their stated maturity dates, if and to the extent that the balance then on hand or available for transfer to the Sinking and Interest Account is insufficient for their payment. Such refunding revenue bonds shall be payable from the Sinking and Interest Account on a parity with any non -refunded bonds payable therefrom but the maturities of any 12 refunding revenue bonds issued under these circumstances shall be subsequent to the maturity of all other revenue bonds then outstanding. 6.03. Parity Bonds. The City also reserves the right to issue one or more additional series of revenue bonds for the purpose of financing capital improvements and additions to the Utility, or of refunding outstanding obligations secured by the provisions of this resolution in advance of the maturity thereof, which revenue bonds shall be payable from the Sinking and Interest Account on a parity with those issued hereunder and shall be secured by each and all of the covenants and other provisions of this resolution as fully as though such additional revenue bonds were expressly described and authorized herein, provided that: (a) The amount of the net revenues of the Utility during the fiscal year (January 1 to December 31) next preceding the issuance of such additional revenue bonds shall have been not less than one and three tenths (1.30) times the maximum amount of principal and interest to become due and payable from the Sinking and Interest Account in any subsequent fiscal year of the term of the then outstanding bonds payable from said Account, on such outstanding bonds and the bonds to be issued. (b) In the computation of the principal and interest to become due and subsequent to the issuance of any additional revenue bonds, the principal and interest payable on the additional revenue bonds shall be included and that which would have been payable on any obligations refunded thereby shall be excluded; and (c) If the rates, charges and rentals for utility service in effect at the time of issuance of any additional bonds have been changed in any manner since the beginning of the preceding fiscal year, the net revenues for that year, for the purpose of subsection (a) of this Section 6.03, shall be deemed to be those which would have been received from such rates, charges and rentals if applied to the quantities of utility services furnished and made available during the year, after deduction of the actual operation and maintenance expenses incurred during the year. SECTION 7. DEFEASANCE. When all of the Bonds have been discharged as provided in this section, all pledges, covenants and other rights granted by this resolution to the holders of the Bonds shall cease. The City may discharge its obligations with respect to any Bonds which are due on any date by depositing with the paying agent on or before that date a sum sufficient for the payment thereof in full; or, if any Bond should not be paid when due, it may nevertheless be discharged by depositing with the paying agent a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. The City may also at any time discharge its obligations with respect to any Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a bank or trust company qualified by law as an escrow agent for this purpose, cash or securities which are general obligations of the United States or securities of United States agencies which are authorized by law 13 to be so deposited, bearing interest payable at such time and at such rates and maturing on such dates as shall be required, without reinvestment, to pay all principal and interest to become due thereon to maturity. SECTION 8. COUNTY AUDITOR REGISTRATION, CERTIFICATION AND PROCEEDINGS, INVESTMENT OF MONEYS, ARBITRAGE AND OFFICIAL STATEMENT AND PAYMENT OF COSTS. 8.01. County Auditor Registration. The City Administrator is hereby authorized and directed to file a certified copy of this resolution with the County Auditor of McLeod County, together with such other information as the County Auditor shall require, and to obtain from said County Auditor a certificate that the Bonds have been entered on his bond register to the extent required by law. 8.02 Certification of Proceedings. The officers of the City and the County Auditor of McLeod County are hereby authorized and directed to prepare and furnish to the Underwriter and to Dorsey & Whitney LLP, Bond Counsel, certified copies of all proceedings and records of the City, and such other affidavits, certificates and information as may be required to show the facts relating to the legality and marketability of the Bonds as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the facts recited therein. 8.03. Covenant. The City covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the Code), and Regulations promulgated thereunder (the Regulations), as such are enacted or promulgated and in effect on the date of issue of the Bonds, and covenants to take any and all actions within its powers to ensure that the interest on the Bonds will not become subject to taxation under such Code and Regulations. The Improvements and any other improvements financed pursuant to Section 4.01 will be owned and maintained by the City and available for use by members of the general public on a substantially equal basis. The City shall not enter into any lease, use or other agreement with any non- governmental person relating to the use of such improvements or security for the payment of the Bonds which might cause the Bonds to be considered "private activity bonds" or "private loan bonds" within the meaning of Section 141 of the Code. 8.04. Arbitrage Certification. The Mayor and City Administrator, being the officers of the City charged with the responsibility for issuing the Bonds pursuant to this resolution, are authorized and directed to execute and deliver to the purchaser thereof a certificate in accordance with the provisions of Section 148 of the Code, and Section 1.148 of the Regulations, stating the facts, estimates and circumstances in existence on the date of issue and delivery of the Bonds which make it reasonable to expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be arbitrage bonds within the meaning of the Code and Regulations. 14 8.05. Arbitrage Rebate. The City shall take such actions as are required to comply with the arbitrage rebate requirements of paragraphs (2) and (3) of Section 148(f) of the Code. 8.06. Not Qualified Tax Exempt Obligations. The Bonds are not designated as "qualified tax-exempt obligations" for purpose of Section 265(b) of the Code. 8.08. Official Statement. The Official Statement relating to the Bonds, prepared and distributed on behalf of the City by Ehlers & Associates, Inc., is hereby approved. The officers of the City are hereby authorized and directed to execute such certificates as may be appropriate concerning the accuracy, completeness and sufficiency of the Official Statement. 8.09. Continuing Disclosure. (a) Purpose and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit the Purchaser and other participating underwriters in the primary offering of the Bonds to comply with amendments to Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2-12), relating to continuing disclosure (as in effect and interpreted from time to time, the "Rule"), which will enhance the marketability of the Bonds, the City hereby makes the following covenants and agreements for the benefit of the Owners (as hereinafter defined) from time to time of the Outstanding Bonds. The City is the only obligated person in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. If the City fails to comply with any provisions of this section, any person aggrieved thereby, including the Owners of any Outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of any agreement or covenant contained in this section, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder to the extent permitted by law. Notwithstanding anything to the contrary contained herein, in no event shall a default under this section constitute a default under the Bonds or under any other provision of this resolution. As used in this section, Owner or Bondowner means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial Owner (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, Beneficial Owner means, in respect of a Bond, any person or entity which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of the Bond for federal income tax purposes. (b) Information To Be Disclosed. The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: 15 (1) on or before twelve months after the end of each fiscal year of the City, commencing with the fiscal year ending December 31, 2017, the following financial information and operating data in respect of the City (the "Disclosure Information"): (A) the audited financial statements of the City for such fiscal year, containing balance sheets as of the end of such fiscal year and a statement of operations, changes in fund balances and cash flows for the fiscal year then ended, showing in comparative form such figures for the preceding fiscal year of the City, prepared in accordance with generally accepted accounting principles promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under Minnesota law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof, and certified as to accuracy and completeness in all material respects by the fiscal officer of the City; and (B) to the extent not included in the financial statements referred to in paragraph (A) hereof, the information for such fiscal year or for the period most recently available of the type contained in the Official Statement under headings: "HISTORICAL ELECTRIC AND GAS UTILITY REVENUES AND EXPENSES," "DESCRIPTION OF ELECTRIC UTILITY," "DESCRIPTION OF NATURAL GAS UTILITY," "VALUATIONS—Current Property Valuations," "DEBT - Direct Debt," "TAX RATES, LEVIES AND COLLECTIONS—Tax Levies and Collections," "GENERAL INFORMATIONU.S. Census Data" and "Employment / Unemployment Data," which information may be unaudited. Notwithstanding the foregoing paragraph, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within 10 days after the receipt thereof, the City shall provide the audited financial statements. Any or all of the Disclosure Information may be incorporated by reference, if it is updated as required hereby, from other documents, including official statements, which have been filed with the SEC or have been made available to the public on the Internet Web site of the Municipal Securities Rulemaking Board ("MSRB"). The City shall clearly identify in the Disclosure Information each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect, provided, however, if 16 such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be a Material Fact (as defined in paragraph (2) hereof), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this section is amended as permitted by this paragraph (b)(1) or subsection (d), then the City shall include in the next Disclosure Information to be delivered hereunder, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner not in excess of ten business days after the occurrence of the event, notice of the occurrence of any of the following events (each, a "Material Fact"): (A) Principal and interest payment delinquencies; (B) Non-payment related defaults, if material; (C) Unscheduled draws on debt service reserves reflecting financial difficulties; (D) Unscheduled draws on credit enhancements reflecting financial difficulties; (E) Substitution of credit or liquidity providers, or their failure to perform; (F) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (G) Modifications to rights of security holders, if material; (H) Bond calls, if material, and tender offers; (I) Defeasances; (J) Release, substitution, or sale of property securing repayment of the securities, if material; (K) Rating changes; (L) Bankruptcy, insolvency, receivership or a similar event with respect to the City; (M) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (N) Appointment of a successor or additional trustee or the change of name of a trustee, if material. As used herein, for those events that must be reported if material, an event is "material" if it is an event as to which a substantial likelihood exists that a reasonably prudent investor 17 would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed hereunder or information generally available to the public. Notwithstanding the foregoing sentence, a material fact is also an event that would be deemed material for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. For the purposes of the event identified in (L) hereinabove, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information required under paragraph (b)(1) at the time specified thereunder; (B) the amendment or supplementing of this section pursuant to subsection (d), together with a copy of such amendment or supplement and any explanation provided by the City under subsection (d)(2); (C) the termination of the obligations of the City under this section pursuant to subsection (d); (D) any change in the accounting principles pursuant to which the financial statements constituting a portion of the Disclosure Information are prepared; and (E) any change in the fiscal year of the City. (c) Manner of Disclosure. (1) The City agrees to make available to the MSRB, in an electronic format as prescribed by the MSRB from time to time, the information described in subsection (b); (2) All documents provided to the MSRB pursuant to this subsection (c) shall be accompanied by identifying information as prescribed by the MSRB from time to time. (d) Term, Amendments, Interpretation. 110 (1) The covenants of the City in this section shall remain in effect so long as any Bonds are Outstanding. Notwithstanding the preceding sentence, however, the obligations of the City under this section shall terminate and be without further effect as of any date on which the City delivers to the Registrar an opinion of Bond Counsel to the effect that, because of legislative action or final judicial or administrative actions or proceedings, the failure of the City to comply with the requirements of this section will not cause participating underwriters in the primary offering of the Bonds to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended, or any statutes or laws successory thereto or amendatory thereof. (2) This section (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (c)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of this Council filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that: (i) such amendment or supplement (a) is made in connection with a change in circumstances that arises from a change in law or regulation or a change in the identity, nature or status of the City or the type of operations conducted by the City, or (b) is required by, or better complies with, the provisions of paragraph (b)(5) of the Rule; (ii) this section as so amended or supplemented would have complied with the requirements of paragraph (b)(5) of the Rule at the time of the primary offering of the Bonds, giving effect to any change in circumstances applicable under clause (i)(a) and assuming that the Rule as in effect and interpreted at the time of the amendment or supplement was in effect at the time of the primary offering; and (iii) such amendment or supplement does not materially impair the interests of the Bondowners under the Rule. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) This section is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so as to satisfy the requirements of paragraph (b)(5) of the Rule. SECTION 9. AUTHORIZATION OF PAYMENT OF CERTAIN COSTS OF ISSUANCE OF THE BONDS. The City authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses to Klein Bank, on the closing date for further distribution as directed by the City's financial advisor, Ehlers & Associates, Inc. 19 Adopted: October 10, 2017. ATTEST: City Administrator 20 Mayor The motion for the adoption of the foregoing resolution was duly seconded by Member voted in favor thereof: and upon vote being taken thereon, the following Members and the following voted against the same: whereupon said resolution was declared duly passed and adopted. 21 No. R-14793 Interest Rate EXHIBIT A Form of Series 2017B Bond UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF McLEOD CITY OF HUTCHINSON PUBLIC UTILITY REVENUE BOND, SERIES 2017B Maturity Date December 1, 20 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: DOLLARS Date of Original Issue October [31], 2017 CUSIP THOUSAND THE CITY OF HUTCHINSON, McLeod County, Minnesota (the "City"), acknowledges itself to be indebted and, for value received, hereby promises to pay to the registered owner above named, the principal amount indicated above, on the maturity date specified above, with interest thereon from the date of original hereof specified above at the annual rate specified above computed on the basis of a 360 -day year consisting of twelve 30 -day months, payable on June 1 and December 1 in each year, commencing June 1, 2018, to the person in whose name this Bond is registered at the close of business on the 15th day (whether or not a business day) of the immediately preceding month, all subject to the provisions referred to herein with respect to the redemption of the principal of this Bond before maturity. The interest hereon and, upon presentation and surrender hereof, the principal hereof, are payable in lawful money of the United States of America by check or draft of Bond Trust Services Corporation, in Roseville, Minnesota, as Bond Registrar, Transfer Agent and Paying Agent (the "Bond Registrar"), or its successor designated under the Resolution described herein. This Bond is one of an issue in the aggregate principal amount of $17,455,000 (the "Bonds"), all of like date and tenor except as to serial number, interest rate and maturity date issued pursuant to a resolution adopted by the City Council on October 10, 2017 (the "Resolution") to financing the costs of improvements to the distribution system and natural gas system of the City which are operated and managed by the Hutchinson Utilities Commission and is issued pursuant to and in full conformity with the provisions of the Constitution and laws of the State of Minnesota thereunto enabling, including Minnesota Statutes, Chapter 475. This Bond is payable exclusively from net revenues of the City's electric system and natural gas system which have been pledged and appropriated to the payment thereof and do not constitute a debt of the City within the meaning of any charter, constitutional or statutory limitation of indebtedness, and the full faith and credit and taxing power of the City are not pledged to the payment of the Bonds. In the event of any default hereunder, the holder of this Bond may exercise any of the rights and privileges granted by the laws of the State of Minnesota subject to the provisions of the Resolution. Additional revenue bonds may be issued on a parity of lien upon the net revenues of the electric system and natural gas system with the Bonds as provided in the Resolution. The Bonds are issuable only as fully registered bonds, in denominations of $5,000 or any multiple thereof, of single maturities. Bonds maturing in the years 2019 through 2027 are payable on their respective stated maturity dates without option of prior payment, but Bonds having stated maturity dates in the years 2028 and thereafter are each subject to redemption and prepayment, at the option of the City and in whole or in part and if in part, in the maturities selected by the City and by lot, assigned in proportion to their principal amount, within any maturity, on December 1, 2027 and on any date thereafter, at a price equal to the principal amount thereof to be redeemed plus interest accrued to the date of redemption. [Bonds maturing on December 1, 20 are subject to mandatory redemption, at a redemption price equal to their principal amount plus interest accrued thereon to the redemption date, without premium, on December 1 in each of the years shown below, in an amount equal to the following principal amounts: Sinking Fund Aggregate Payment Date Principal Amount 20 $ 20 (maturity) At least thirty days prior to the date set for redemption of any Bond, notice of the call for redemption will be mailed to the Bond Registrar and to the registered owner of each Bond to be redeemed at his address appearing in the Bond Register, but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond, not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price herein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Bond or portions of Bonds shall cease to bear interest. Upon the partial redemption of any Bond, a new Bond or Bonds will be delivered to the registered owner without charge, representing the remaining principal amount outstanding. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Bond Registrar, by the registered owner hereof in person or by his attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory 2 to the Bond Registrar, duly executed by the registered owner or his attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange, the City will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City and the Bond Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed precedent to and in the issuance of this Bond in order to make it a valid and binding special and limited obligation of the City according to its terms have been done, do exist, have happened and have been performed in regular and due form as so required; that prior to the issuance hereof, the City has covenanted and agreed to establish and maintain charges, fees and rentals for all service, products and benefits of whatsoever nature furnished and made available by the electric system and natural gas system to all individuals, firms, corporations and governmental subdivisions and agencies, including the City itself, in accordance with schedules such that the gross revenues therefrom will at all times be sufficient to meet all payments of current costs of operation, administration and maintenance of said systems and to maintain a reasonable working capital and reserves for recurring expenses, and from the net revenues in excess of these requirements, to transfer each month to the Sinking and Interest Account in the Public Utilities Fund a sum not less than one -twelfth of the aggregate amount of principal to become due within the twelve months next following, and not less than one-sixth of the aggregate amount of interest to become due within the six months next following, on the Bonds of this series and all other obligations payable from the Public Utilities Fund, including any additional obligations hereafter issued by the City and payable on a parity with the Bonds from the Public Utilities Fund and to establish and maintain a balance in the Reserve Account in the Public Utilities Fund for security of such payments in the amount required by the Resolution; and that the issuance of this Bond does not cause the indebtedness of the City to exceed any charter, constitutional or statutory limitation. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon shall have been executed by manual signature of the authorized representative of the Bond Registrar. IN WITNESS WHEREOF, the City of Hutchinson, McLeod County, State of Minnesota, by its City Council, has caused this Bond to be executed by the signatures of the Mayor and the City Administrator and has caused this Bond to be dated as of the date set forth below. CITY OF HUTCHINSON, MINNESOTA (Facsimile Signature - City Administrator) (Facsimile Signature — Mayor) CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. Date of Authentication: BOND TRUST SERVICES CORPORATION, as Bond Registrar I= A Authorized Representative The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to the applicable laws or regulations: TEN COM as tenants UNIF TRANS MIN ACT.......... Custodian......... in common (Cust) (Minor) TEN ENT as tenants under Uniform Transfers to Minors by the entireties Act ................................................... (State) JT TEN as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used. fl ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: NOTICE: This signature(s) to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration, enlargement or any change whatsoever. Signature(s) must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Bond Registrar, which requirements include membership or participation in the Securities Transfer Association Medalion Program (STAMP) or such other "signature guaranty program" as may be determined by the Bond Registrar in addition to or in substitution for STAMP, all in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 5 EXHIBIT B LIST OF PERMISSIBLE INVESTMENTS FOR INDENTURED FUNDS A. Direct obligations of the United States of America (including obligations issued or held in book -entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): 1. U.S. Export -Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership 2. Farmers Home Administration (FmHA) Certificates of beneficial ownership 3. Federal Financing Bank 4. Federal Housing Administration Debentures (FHA) 5. General Services Administration Participation certificates 6. Government National Mortgage Association (GNMA or "Ginnie Mae") GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations (not acceptable for certain cash-flow sensitive issues.) 7. U.S. Maritime Administration Guaranteed Title XI financing U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non -full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): HIM Federal Home Loan Bank System Senior debt obligations 2. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") Participation Certificates Senior debt obligations 3. Federal National Mortgage Association (FNMA or "Fannie Mae") Mortgage-backed securities and senior debt obligations 4. Student Loan Marketing Association (SLMA or "Sallie Mae") Senior debt obligations 5. Resolution Funding Corp. (REFCORP) obligations 6. Farm Credit System Consolidated systemwide bonds and notes D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G; AAA -m; or AA -m and if rated by Moody's rated Aaa, Aal or Aa2. E. Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF. G. Investment Agreements, including GIC's, Forward Purchase Agreements and Reserve Fund Put Agreements acceptable to MBIA (Investment Agreement criteria is available upon request). H. Commercial paper rated, at the time of purchase, "Prime -V by Moody's and "A-1" or better by S&P. I. Bonds or notes issued by any state or municipality which are rated by Moody's and S&P in one of the two highest rating categories assigned by such agencies. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - 1" or "A3" or better by Moody's and "A-1" or "A" or better by S&P. K. Repurchase Agreements for 30 days or less must follow the following criteria. Repurchase Agreements which exceed 30 days must be acceptable to MBIA (criteria available upon request) Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date. Repos must be between the municipal entity and a dealer bank or securities firm a. Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by Standard & Poor's Corporation and Moody's Investor Services, or b. Banks rated "A" or above by Standard & Poor's Corporation and Moody's Investor Services. 2. The written repo contract must include the following: a. Securities which are acceptable for transfer are: (1) Direct U.S. governments, or (2) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FHLMC) b. The term of the repo may be to 30 days The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities). d. Valuation of Collateral (1) The securities must be valued weekly, marked -to -market at current market price plus accrued interest (a) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by municipality, then additional cash and/or acceptable securities must be transferred. If, however, the WN securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%. 3. Leal opinion which must be delivered to the municipal entity. a. Repo meets guidelines under state law for legal investment of public funds. Additional Notes (i) There is no list of permitted investments for non -indentured funds. Your own credit judgment and the relevant circumstances (e.g., amount of investment and timing of investment) should dictate what is permissible. (ii) Any state administered pool investment fund in which the issuer is statutorily permitted or required to invest will be deemed a permitted investment. (iii) Reserve Account investments should be valued at fair market value and marked to market at least once per year. Reserve Account investments may not have maturities extending beyond 5 years, except for Investment Agreements approved by the Insurer. COUNTY AUDITOR'S CERTIFICATE AS TO BOND REGISTRATION I, the undersigned, being the duly qualified and acting County Auditor of McLeod County, Minnesota, hereby certify that there has been filed in my office a certified copy of a resolution adopted October 10, 2017, by the City Council of the City of Hutchinson, Minnesota, setting forth the form and details of an issue of $17,455,000 Public Utility Revenue Bonds, Series 2017B, dated as of October [31], 2017, and levying taxes for the payment thereof. I further certify that the bond issue has been entered on my bond register as required by Minnesota Statutes, Sections 475.61 to 475.63. WITNESS my hand and official seal this day of , 2017. McLeod County Auditor (SEAL) E HL ERS LEADERS IN PUBLIC FINANCE October 10, 2017 Sale Day Report for City of Hutchinson, Minnesota $16,675,000 Public Utility Revenue Bonds, Series 2O17B Prepared by: Nick Anhut, CIPMA Senior Municipal Advisor and Bruce Kimmel, CIPMA Senior Municipal Advisor 1-800-552-1171 1 www.ehlers-inc.com Sale Day Report — October 10, 2017 City of Hutchinson, Minnesota $16,675,000 Public Utility Revenue Bonds, Series 2017B Purpose: Rating: Number of Bids: Low Bidder Comparison from Lowest to Highest Bid: (TIC as bid) To provide funds for the public purpose of financing engine acquisition and system improvements to the City's electric utility operated through the Hutchinson Utilities Commission. Affirmed by Moody's Investor's Service at "A1" 5 Piper Jaffray, Minneapolis, Minnesota Low Bid High Bid 2.8147% 3.0116% Interest Difference $585,446 Summary of Results: Pre -Sale Estimate Results of Sale Principal Amount*: $17,455,000 $16,675,000 Underwriter's Discount: $104,730 $71,801 Reoffering Premium: $0 $671,927 True Interest Cost: 3.2812% 2.8232% Costs of Issuance: $105,000 $102,213 Yield: 1.45% - 3.75% 1.10% - 3.29% Ave. Annual P&I: $1,246,505 $1,181,692 Total Net P&I: $24,235,070 $23,058,907 Notes: * Upon discussion with HUC staff, the final principal amount was reduced due to a premium bid and lower than budgeted financing costs. The final True Interest Cost was recalculated to reflect the adjustment. Closing Date: October 31, 2017 City Council Action: Adopt a resolution awarding the sale of $16,675,000 Public Utility Revenue Bonds, Series 2017B. Attachments: . Bid Tabulation • Sources and Uses of Funds • Updated Debt Service Schedules • Moody's Rating Report Sale Day Report 0 City of Hutchinson, Minnesota October 10, 2017 BID TABULATION $17,455,000* Public Utility Revenue Bonds, Series 2017B City of Hutchinson, Minnesota SALE: October 10, 2017 AWARD: PIPER JAFFRAY Rating: Moody's Investors Services "AI" EHLERS LEADERS IN PUBLIC FINANCE BBI: 3.63% Non -Bank Qualified NET TRUE MATURITY REOFFERING INTEREST INTEREST NAME OF BIDDER (December 1) RATE YIELD PRICE COST RATE PIPER JAFFRAY Minneapolis, Minnesota UBS Financial Services Inc. 2019 4.000% 1.100% 2020 4.000% 1.200% 2021 4.000% 1.350% 2022 4.000% 1.570% 2023 4.000% 1.750% 2024 4.000% 1.900% 2025 4.000% 2.090% 2026 4.000% 2.250% 2027 4.000% 2.350% 2028 2.500% 2.560% 2029 2.500% 2.690% 2030 3.000% 2.800% 2031 3.000% 2.900% 2032 3.000% 3.000% 2033 3.000% 3.070% 2034 3.000% 3.160% 2035 3.000% 3.210% 2036 3.000% 3.250% 2037 3.125% 3.290% $18,103,143.10 $5,959,944.40 2.8147% Subsequent to bid opening the issue size was decreased to $16,675,000. Adjusted Price - $17,275,126.31 Adjusted Net Interest Cost - $5,783,780.40 Adjusted TIC - 2.8232% 1-800-552-1171 1 www.ehiers-inc.com NET TRUE MATURITY REOFFERING INTEREST INTEREST NAME OF BIDDER (December 1) RATE YIELD PRICE COST RATE BAIRD Milwaukee, Wisconsin NORTHLAND SECURITIES, INC. Minneapolis, Minnesota 2019 3.000% 2020 3.000% 2021 3.000% 2022 4.000% 2023 4.000% 2024 4.000% 2025 4.000% 2026 4.000% 2027 4.000% 2028 3.000% 2029 3.000% 2030 3.000% 2031 3.125% 2032 3.125% 2033 3.250% 2034 3.000% 2035 3.000% 2036 3.125% 2037 3.125% 2019 5.000% 2020 5.000% 2021 5.000% 2022 5.000% 2023 5.000% 2024 5.000% 2025 5.000% 2026 5.000% 2027 5.000% 2028 4.000% 2029 4.000% 2030 4.000% 2031 3.000% 2032 3.000% 2033 3.000% 2034 3.000% 2035 3.000% 2036 3.125% 2037 3.125% Bid Tabulation City of Hutchinson, Minnesota $17,455,000* Public Utility Revenue Bonds, Series 2017B $18,098,992.05 $6,104,445.44 2.8784% $18,690,935.66 $6,279,131.01 2.9281% October 10, 2017 Page 2 NET TRUE MATURITY REOFFERING INTEREST INTEREST NAME OF BIDDER (December 1) RATE YIELD PRICE COST RATE BANK OF AMERICA MERRILL LYNCH New York, New York HUTCHINSON, SHOCKEY, ERLEY & CO. Chicago, Illinois 2019 5.000% 2020 5.000% 2021 5.000% 2022 5.000% 2023 5.000% 2024 5.000% 2025 5.000% 2026 5.000% 2027 5.000% 2028 5.000% 2029 4.000% 2030 4.000% 2031 3.000% 2032 3.000% 2033 3.000% 2034 3.125% 2035 3.125% 2036 3.125% 2037 4.000% 2019 5.000% 2020 5.000% 2021 5.000% 2022 5.000% 2023 5.000% 2024 5.000% 2025 5.000% 2026 5.000% 2027 5.000% 2028 5.000% 2029 3.000% 2030 3.500% 2031 3.500% 2032 3.500% 2033 3.000% 2034 3.125% 2035 4.000% 2036 4.000% 2037 3.250% Bid Tabulation City of Hutchinson, Minnesota $17,455,000* Public Utility Revenue Bonds, Series 2017B $18,955,904.50 $6,371,390.99 2.9362% $18,943,672.70 $6,545,389.80 3.0116% October 10, 2017 Page 3 Hutchinson, Minnesota $16,675,000 Public Utility Revenue Bonds, 2017B Dated: October 31, 2017 Sources & Uses Dated 10/31/2017 1 Delivered 10/31/2017 Sources Of Funds Par Amount of Bonds $16,675,000.00 Reofferine Premium 671.927.45 Total Sources Uses Of Funds Total Underwriter's Discount (0.431%) 71,801.14 Costs of Issuance 102,213.00 Deposit to Debt Service Reserve Fund (DSRF) 522,335.64 Deposit to Project Construction Fund 16,650,577.67 Total Uses 2017B Public Util Rev Bon I New Money 1 10/10/2017 1 12:23 PM EHLERS LEADERS IN PUBLIC FINANCE Page 1 Hutchinson, Minnesota $16,675,000 Public Utility Revenue Bonds, 2017B Dated: October 31, 2017 Debt Service Schedule Date PrinCipal Coupon Interest Total P+I Fiscal Total 10/31/2017 $6,383,906.71 $23,058,906.71 Yield Statistics - - $201,355.90 06/01/2018 12.075 Years Average Coupon 327,434.64 327,434.64 - 12/01/2018 2.8232075% Bond Yield for Arbitrage Purposes 279,328.13 279,328.13 606,762.77 06/01/2019 - - 279,328.13 279,328.13 - 12/01/2019 625,000.00 4.000% 279,328.13 904,328.13 1,183,656.26 06/01/2020 - - 266,828.13 266,828.13 12/01/2020 645,000.00 4.000% 266,828.13 911,828.13 1,178,656.26 06/01/2021 - - 253,928.13 253,928.13 12/01/2021 675,000.00 4.000% 253,928.13 928,928.13 1,182,856.26 06/01/2022 240,428.13 240,428.13 12/01/2022 700,000.00 4.000% 240,428.13 940,428.13 1,180,856.26 06/01/2023 - - 226,428.13 226,428.13 12/01/2023 730,000.00 4.000% 226,428.13 956,428.13 1,182,856.26 06/01/2024 - - 211,828.13 211,828.13 12/01/2024 760,000.00 4.000% 211,828.13 971,828.13 1,183,656.26 06/01/2025 - - 196,628.13 196,628.13 12/01/2025 790,000.00 4.000% 196,628.13 986,628.13 1,183,256.26 06/01/2026 - - 180,828.13 180,828.13 12/01/2026 820,000.00 4.000% 180,828.13 1,000,828.13 1,181,656.26 06/01/2027 164,428.13 164,428.13 12/01/2027 850,000.00 4.000% 164,428.13 1,014,428.13 1,178,856.26 06/01/2028 - - 147,428.13 147,428.13 12/01/2028 885,000.00 2.500% 147,428.13 1,032,428.13 1,179,856.26 06/01/2029 - - 136,365.63 136,365.63 12/01/2029 910,000.00 2.500% 136,365.63 1,046,365.63 1,182,731.26 06/01/2030 - - 124,990.63 124,990.63 12/01/2030 930,000.00 3.000% 124,990.63 1,054,990.63 1,179,981.26 06/01/2031 - - 111,040.63 111,040.63 12/01/2031 960,000.00 3.000% 111,040.63 1,071,040.63 1,182,081.26 06/01/2032 96.640.63 96,640.63 12/01/2032 990,000.00 3.000% 96,640.63 1,086,640.63 1,183,281.26 06/01/2033 - - 81,790.63 81,790.63 12/01/2033 1,020,000.00 3.000% 81,790.63 1,101,790.63 1,183,581.26 06/01/2034 - 66,490.63 66,490.63 12/01/2034 1,050,000.00 3.000% 66,490.63 1,116,490.63 1,182,981.26 06/01/2035 - 50,740.63 50,740.63 12/01/2035 1,080,000.00 3.000% 50,740.63 1,130,740.63 1,181,481.26 06/01/2036 - 34,540.63 34,540.63 12/01/2036 1,110,000.00 3.000% 34,540.63 1,144,540.63 1,179,081.26 06/01/2037 17,890.63 17,890.63 12/01/2037 1,145,000.00 3.125% 17,890.63 1,162,890.63 1,180,781.26 Total $16,675,000.00 $6,383,906.71 $23,058,906.71 Yield Statistics Bond Year Dollars $201,355.90 Average Life 12.075 Years Average Coupon 3.1704592% Net Interest Cost (NIC) 2.8724166% True Interest Cost (TIC) 2.8232075% Bond Yield for Arbitrage Purposes 2.7805445% All Inclusive Cost (AIC) 2.8843642% IRS Form 8038 Net Interest Cost 2.7926478% Weighted Average Maturity 11.791 Years 20178 Public Util Rev Bon I New Money 1 10/10/2017 1 12:23 PM EHLERS LEADERS IN PUBLIC FINANCE Page 2 Hutchinson, Minnesota $16,675,000 Public Utility Revenue Bonds, 2017B Dated: October 31, 2017 Proof of Reserve Fund Requirement Date Principal Interest Existing D/S TOTAL P+I 12/01/2017 - 1,587,550.00 1,587,550.00 12/01/2018 - 606,762.77 1,969,100.00 2,575,862.77 12/01/2019 625,000.00 558,656.26 1,979,350.00 3,163,006.26 12/01/2020 645,000.00 533,656.26 1,995,850.00 3,174,506.26 12/01/2021 675,000.00 507,856.26 2,047,650.00 3,230,506.26 12/01/2022 700,000.00 480,856.26 2,150,050.00 3,330,906.26 12/01/2023 730,000.00 452,856.26 2,158,550.00 3,341,406.26 12/01/2024 760,000.00 423,656.26 2,173,800.00 3,357,456.26 12/01/2025 790,000.00 393,256.26 2,183,000.00 3,366,256.26 12/01/2026 820 000.00 361 656.26 2,184,000.00 3 365 656.26 12/01/2027 850,000.00 328,856.26 1,178,856.26 12/01/2028 885,000.00 294,856.26 1,179,856.26 12/01/2029 910,000.00 272,731.26 1,182,731.26 12/01/2030 930,000.00 249,981.26 1,179,981.26 12/01/2031 960 000.00 222 081.26 1,182,081.26 12/01/2032 990,000.00 193,281.26 1,183,281.26 12/01/2033 1,020,000.00 163,581.26 1,183,581.26 12/01/2034 1,050,000.00 132,981.26 1,182,981.26 12/01/2035 1,080,000.00 101,481.26 1,181,481.26 12/01/2036 1,110,000.00 69,081.26 1,179,081.26 12/01/2037 1,145,000.00 35,781.26 1,180,781.26 Total $16,675,000.00 $6,3839906.71 $209428,900.00 $439487,806.71 PROOF OF RESERVE FUND MAXIMUM PERIODIC DEBT SERVICE 100 % of the Maximum Periodic Debt Service 3,366,256.26 AVERAGE PERIODIC DEBT SERVICE Total P+I 43,487,806.71 Bond Years (Delivery Date) 20.09 125 % of the Average Periodic Debt Service 2,706,335.64 PERCENT OF PAR Total Par (Existing + New) 33,090,000.00 10 % of Par 3,309,000.00 RESERVE REQUIREMENT Computed Requirement 522,335.64 Proofs Requirement 2,706,335.64 Portion of reserve requirement funded extemally 2,184,000.00 Lowest Requirement less external funding 522,335.64 2017B Public Util Rev Bon I New Money 1 10/10/2017 1 12:23 PM EHLERS LEADERS IN PUBLIC FINANCE Page 8 CREDIT OPINION City of Hutchinson, MN Combined Utility 5 October 2017 Enterprise New Issue New Issue - Moody's assigns Al to Hutchinson, MN Combined Utility Enterprise's Revenue Bonds Rate this Research Summary Rating Rationale Moody's Investors Service has assigned an Al rating to the City of Hutchinson Combined Utility Enterprise's $17.5 million Public Utility Revenue Bonds, Series 2017B. Concurrently, Moody's has affirmed the Al on outstanding senior lien revenue debt of the enterprise. Contacts Inclusive of the current sale, the utility has $33.9 million of senior lien revenue debt. Brandi Head 1.312.706.9976 VP -Senior Analyst The Al senior lien rating reflects the combined electric and natural gas enterprise's modest brandi.head@moodys.com but stable service area anchored by 3M, the area's largest employer and principal customer Matthew Butler 312-706-9970 of the utility. The rating also incorporates strong debt service coverage, ample liquidity, and VP -Senior Analyst unlimited rate -setting authority. matthew.butter@moodys.com Credit Strengths CLIENT SERVICES » Monopoly control of stable service area, with no retail choice Americas 1-212-553-1653 Asia Pacific 852-3551-3077 » Unlimited rate setting authority and use of automatic power and fuel cost adjustments Japan 81-3-5408-4100 » Strong debt service coverage and healthy liquidity EMEA 44-20-7772-5454 » purchased power contract with well-established municipal power agency Credit Challenges » Customer concentration, with top ten customers comprising 43% of total electric revenue and 36% of total natural gas revenue in 2016 » Modest service area and revenue base Rating Outlook Outlooks are usually not assigned to local government credits with this amount of debt. Factors that Could Lead to an Upgrade » Material expansion and diversification of the service area and customer base, in conjunction with maintenance of strong debt service coverage and liquidity Factors that Could Lead to a Downgrade » Weakened debt service coverage or liquidity Hutchinson, Minnesota $16,675,000 Public Utility Revenue Bonds, 2017B Dated: October 31, 2017 Detail Costs Of Issuance Dated 10/31/2017 1 Delivered 10/31/2017 COSTS OF ISSUANCE DETAIL Financial Advisor 100.00 Bond Counsel (Dorsey & Whitney) $20,000.00 Rating Agency Fee (Moody's) $22,500.00 Paying Agent (Bond Trust Services) $613.00 TOTAL 2017B Public Util Rev Bon I New Money 1 10/10/2017 1 12:23 PM EHLERS LEADERS IN PUBLIC FINANCE Page 9 u Significant leveraging of net utility revenue Weakened economic profile of the service area Key Indicators Exhibit 1 City of Hutchinson Combined Utility Enterprise 2011 2012 2013 2014 2015 2016 Total Sales(mwh) 309,443 317,850 294,453 295,611 303,715 307,046 Debt Outstanding ($'000) 24,634 42,050 20,690 19,515 18,290 17,005 Debt Rat io(%) 29.0 21.4 21.3 19.9 18.7 17.1 Adjusted Days Liquidity on Hand (ind. Bank Lines) (days) 144 days 80 days 70 days 82 days 145 days 184 days Adjusted Debt ServiceOoverage(x) (Fast Trasfers(RLDTs- Senior Lien) 3.78 2.84 2.73 2.74 2.68 3.15 Source: Hutchinson's audited financial statements, Moody's Investors Service Detailed Rating Considerations Revenue Generating Base: Stable but concentrated service area west of Twin Cities The enterprise's customer base is stable, although the dominance of two large customers, 3M and TDK lends some vulnerability to system revenue. The enterprise serves the City of Hutchinson, approximately 60 miles west of the Minneapolis -St. Paul area (both rated Aa1 stable). Median family income in the area is 95.3% of the US median and the local population is approximately 14,000. The utility has monopoly rights to provide electric and natural gas services within its service area and the City of Hutchinson has complete authority to establish rates and charges for the electric and natural gas utilities. Over the past five years, both electric and natural gas customers grew modestly, with electric customers increasing to 7,112 in 2016 from 7,041 in 2012 and natural gas customers increasing to 5,604 from 5,470 over the same time period. In 2016, residential customers represented approximately 86.8% and 90.1% of the electric and natural gas base, respectively. The ten largest consumers account for 43.2% of total electric billings and 36.0% of total natural gas billings. The top customers consist of a mix of manufacturing, health care, technology, retail and commercial establishments. 3M is the largest customer, representing 24.1% of 2016 electric revenues and 21.9% of natural gas revenues. 3M's local plant is one of its principal facilities and the likelihood of a move is very low. The utility's second largest customer is TDK, a Japanese multinational electronics company that manufactures electronic materials, electronic components, and recording and data -storage media. TDK comprises 9.6% of total electric billings but only 1.9% of total gas billings. The city anticipates the 2019 entry of a large customer, Uponor, manufacturer of cross-linked polyethylene (PEX) pipe and related products. Uponor purchased an existing 237,000 -square -foot manufacturing facility and office space in Hutchinson, which is approximately 70 miles west from Uponor's North American headquarters in Apple Valley, MN. Given its size and scale of operations, Uponor is expected to become a top ten customer. While the enterprise historically was a sizeable generator of power, it has since transitioned away from that role. The utility maintains a long-term contract with Missouri River Energy Services (MRES ) for a purchased power allocation of 25 MW. The MRES contract provides for demand of 25 MW starting in 2013, ending in 2046. Hutchinson expects the MRES contract to comprise 65-70% of its energy needs in the near term. The MRES contracts are take and pay contracts where the utility is only required to pay for energy delivered to designated delivery points. For additional information on MRES, please see our most recent report on its financing arm, Western Minnesota Municipal Power Agency (WMMPA, Aa3 Stable). In anticipation of procurement of additional generation financed by the bonds, the utility entered into a 20 -year agreement with Rice Lake Utilities in April 2017 to sell 20 MW of capacity starting June 2020 to May 2040, a contract projected to generate $1.2 million in annual revenue. The system currently maintains 101.1 MW of installed natural gas fired capacity that it utilizes as a hedge against high This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. 2 5 October 2017 City of Hutchinson, MN Combined Utility Enterprise: New Issue - Moody's assigns Al to Hutchinson, MN Combined Utility Enterprise's Revenue Bonds MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE market prices for energy requirements above its baseload purchase power contracts. In 2016, the system's generation assets produced approximately 4.4% of its energy needs. The enterprise plans to use proceeds of the subject offering to replace two of its generating units and increase dependable capacity from 112,600 KW to 132,000. When able to generate energy at a cheaper cost than market prices, the system generates its own energy. In addition, the utility also sells energy into the wholesale market when economical. It is currently selling 40 MW of excess capacity to Southern Minnesota Municipal Power Agency (SMMPA) through a contract which expires in May 2020. There's also has a contract to sell capacity to AEP Energy Partners, Inc. The contract provides 5 MW from June 2019 to May 2020 and 45 MW from June 2020 to May 2025. Debt Service Coverage and Liquidity: Sound coverage and strong liquidity We expect Hutchinson's combined utility enterprise to maintain a strong financial profile. In the three years through 2016, net revenue coverage of annual debt service averaged 2.9x after operational transfers to the city's general fund. With the current issuance, annual debt service is estimated to rise to $3.2 million in the coming years from $2.1 million currently. With no change in net revenue, coverage would remain strong at close to or above 2.0x. LIQUIDITY The enterprise's liquidity is expected to remain strong and in line with reserve policies. The system has historically financed capital acquisitions and capital improvement projects with cash. The utility closed fiscal 2016 with a cash balance of $15.6 million, up $3 million over 2015. The 2016 balance was equivalent to a strong 184 days of operating expenses. In 2016, the city established a policy to maintain a minimum of 60 days of operating expenses in available cash. There are no plans to substantially draw down cash, though some existing liquidity may be applied to capital improvements. Debt and Legal Covenants: Moderate debt burden, sound legal covenants Although the current issuance doubles the amount of debt secured by net utility revenue, a moderate debt ratio will remain a credit strength. The system's debt ratio was a strong 17.1% in fiscal 2016 and represented a steady decrease in leverage over the past eight years. The current three-year average debt ratio is 18.6%. The debt ratio may rise to close to 35% with the current issuance, but this will remain moderate compared to most power and gas systems. The enterprise has been an infrequent issuer of debt due to regular cash financing of capital projects and does not plan to borrow in the next few years. Legal provisions include a rate covenant that requires collection of net revenue equal to a minimum of 1.30x annual debt service. The additional bonds test is set at 1.30x maximum annual debt service. The city maintains a debt service reserve fund equal to the least of 10% of the aggregate principal of bonds outstanding, maximum annual debt service coming due on all parity bonds, or 125% of the average annual debt service payable on all parity bonds. DEBT STRUCTURE All of the system's debt is long term and fixed rate. DEBT -RELATED DERIVATIVES The system has no exposure to any debt related derivatives. PENSIONS AND OPEB The system currently has 50 full-time and 4 seasonal employees. All full-time employees are covered by defined benefit pension plans administered by the Public Employee Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost-sharing multiple -employer retirement plans. PERA members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security. The utility's fiscal 2016 contribution to the plan was $5.6 million, which is equivalent to 14.6% of operating revenue. Management and Governance The City Council of Hutchinson maintains autonomous control of the setting of annual utility charges. Management of the utility reviews rates routinely and submits recommendations for adjustments to city leaders for consideration. The recommendations are subject to veto of City Council by a four-fifths vote, which has not occurred in recent history. Both electric rates and natural gas rates include a power cost adjustment, which adjusts charges to cover changes in the cost of purchased power or natural gas. Enactment of 3 5 October 2017 City of Hutchinson, MN Combined Utility Enterprise: New Issue - Moody's assigns Al to Hutchinson, MN Combined Utility Enterprise's Revenue Bonds the adjustment is automatic and occurs monthly should costs rise over such a period. Neither cost adjustment requires management or commission approval. Base residential and commercial electric rates haven't changed since 2006 and industrial rates were decreased over 3 years starting in 2015 and ending in 2017. Metered residential electric is $6.50 per meter, while the state average is closer to $12. Metered gas rates are also small compared to peers. A comprehensive rate study is currently underway. Legal Security The bonds are secured by a first lien on net revenue of the combined electric and gas utility. Use of Proceeds Proceeds of the Series 2017B Revenue Bonds will finance two new engines for additional power generation and construction of utility system improvements. Obligor Profile The electric utility provides retail electric service within the city limits of Hutchinson. The utility also supplies natural gas to Hutchinson and surrounding areas. The city is located in McLeod County, approximately 60 miles west of Minneapolis. The city encompasses an area of nine square miles with an estimated population of 14,000. Other Considerations: Mapping to the Grid Note: The grid indicated rating of Aa3 recognizes the consistent sound financial management of the utility. The grid is a reference tool that can be used to approximate credit profiles. However, the grid is a summary that does not include every rating consideration. Please see our US Public Power Electric Utilities with Generation Ownership Exposure Rating Methodology for information about limitations inherent to grids. Exhibit 2 US Public Power Electric Utilities with Generation Ownership Exposure Rating Methodology Grid: Hutchinson, MN Electric and Gas Systems tactor Subfactor Soore Metric 1. Cost Fecovery Framework Within Service Territory A 2. Wllingnessand Ability to Recover Costswith Sound Financial Metrics Aa 3. Generation and Flower Proairement Fisc Exposure Baa 4. Competitiveness FBI e Compet it iveness Aa 5. Financial 3rength and Liquidity a) Adjusted days liquidity on hand (3 -year avg) (days) A 137 b) Debt ratio (3 -year avg) (%) Aaa 18.6 c) Adjusted Debt Service Coverage or Fixed Obligation Charge Coverage (3 -year avg) (x) Aaa 2.79 Preliminary Grid Indicated rating from Grid factors 1-5 Aa3 Notch 6. Operational Considerations 0 7. Debt 3 ructure and F aserves 0 8. Fevenue Elability and Diversity -1 Grid Indicated Haling: Al Source: Moody's Investors Service 4 5 October 2017 City of Hutchinson, MN Combined Utility Enterprises New Issue - Moody's assigns Al to Hutchinson, MN Combined Utility Enterprise's Revenue Bonds MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Methodology The principal methodology used in this rating was US Public Power Electric Utilities With Generation Ownership Exposure published in March 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology. Ratings Exhibit 3 Hutchinson (City of) MN Issue Rating Public Utility Revenue Bonds, Series 2017B Al Rating Type Underlying LT Sale Amount $17,455,000 Expected Sale Date 10/10/2017 Rating Description Revenue: Government Enterprise Source: Moody's Investors Service 5 October 2017 City of Hutchinson, MN Combined Utility Enterprise: New Issue - Moody's assigns Al to Hutchinson, MN Combined Utility Enterprise's Revenue Bonds HUTCHINSON CITY COUNCIL c`=y-f 0, a_ � Request for Board Action 79 M-W Agenda Item: Resolution 14786 Authorizing Issuance of $2,535,000 G.O. Bonds 2017A Department: Finance LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: Andy Reid Agenda Item Type: Presenter: Nick Anhut - Ehlers Reviewed by Staff ❑ New Business Time Requested (Minutes): 5 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: Nick Anhut, from Ehlers & Associates, will review the bids received for the 2017 bond issuance. The new debt, with a total par value of $2,535,000, will finance the following projects which comprise the 2017 Construction Fund: 1) Denver Avenue extension 2) School Road and Roberts Road reconstruction 3) School Road and Roberts Road trail 4) Hwy 7 & 15 hotel site access roadway 5) City Alleys #36 & #52 improvements The City's debt management plan has been updated for this debt issuance and the future projected debt levy graph can be found directly after this page. It's important to point out that the debt service payments will be funded by the existing debt levy and does not require a tax increase. A copy of the Standard & Poors bond rating is attached, reaffirming the City's bond rating of AA-. BOARD ACTION REQUESTED: Consider and approve the issuance of $2,535,000 general obligation improvement bonds, series 2017A, by adopting resolution 14786. Fiscal Impact: Funding Source: 2017 Debt Service Fund FTE Impact: 0.00 Budget Change: No Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: Remaining Cost: $ 0.00 Funding Source: S&P Global Ratings RatingsDirect 9 Summary: Hutchinson, Minnesota; General Obligation; Non -School State Programs Primary Credit Analyst: Caroline E West, Chicago (1) 312-233-7047; caroline.west@spglobal.com Secondary Contact: Eric J Harper, Chicago (1) 312-233-7094; eric.harper@spglobal.com Table Of Contents Rationale Outlook WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 3, 2017 1 Summary: Hutchinson, Minnesota; General Obligation; Non -School State Programs US$2.535 mil GO imp bnds ser 2017A dtd 10/31/2017 due 02/01/2033 Long Term Rating AA -/Stable New Hutchinson GO Long Term Rating AA -/Stable Affirmed Rationale S&P Global Ratings assigned its 'AA-' long-term rating to Hutchinson, Minn.'s series 2017A general obligation (GO) improvement bonds. At the same time, we affirmed our 'AA-' ratings on the city's previously rated GO bonds. The outlook is stable. The series 2017A bonds are secured by a pledge of the city's full faith credit and resources and an agreement to levy ad valorem property taxes without limitation as to rate or amount. The bonds are also payable from special assessments; the rating is based on the unlimited ad valorem tax pledge, which we view as the stronger security. Series 2017A bond proceeds will be used to finance various improvement projects including streets and parking. The 'AA-' rating reflects our view of the city's: • Weak economy, with market value per capita of $65,748 and projected per capita effective buying income (EBI) at 88.6% of the national level; • Strong management, with "good" financial policies and practices under our Financial Management Assessment (FMA) methodology; • Strong budgetary performance, with operating surpluses in the general fund and at the total governmental fund level in fiscal 2016; • Very strong budgetary flexibility, with an available fund balance in fiscal 2016 of 60% of operating expenditures; • Very strong liquidity, with total government available cash at 2.8x total governmental fund expenditures and 18.7x governmental debt service, and access to external liquidity we consider strong; • Adequate debt and contingent liability position, with debt service carrying charges at 14.8% of expenditures and net direct debt that is 176.9% of total governmental fund revenue, as well as rapid amortization, with over 65% of debt scheduled to be retired in 10 years; and • Strong institutional framework score. Weak economy We consider Hutchinson's economy weak. The city, with an estimated population of 13,954, is in McLeod County, approximately 55 miles west of Minneapolis and 52 miles south of St. Cloud. It has a projected per capita EBI of 88.6% of the national level and per capita market value of $65,748. The county unemployment rate was 4.5% in 2016. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 3, 2017 2 Summary: Hutchinson, Minnesota; General Obligation; Non -School State Programs We do not consider Hutchinson tied to a metropolitan statistical area. The tax base is primarily residential (63%) with a sizable commercial/industrial component (36%). Leading employers include 3M Co. (1,700 employees), Hutchinson Technology Inc. (800), Hutchinson Area Health Care (600), and the local school district (469). Recently, McLeod County's employment concentration in the manufacturing sector has dipped below 30% of total employment, which we view as a positive factor to indicate diversity in the local economy beyond manufacturing. However, given that additional manufacturing jobs are planned for the area, we expect the manufacturing employment concentration is likely to fluctuate, and therefore we do not view the recent reduction in manufacturing concentration as a major credit factor. Strong management We view the city's management as strong, with "good" financial policies and practices under our FMA methodology, indicating financial practices exist in most areas, but that governance officials might not formalize or monitor all of them on a regular basis. Strengths of the assessment, in our opinion, include strong revenue and expenditure assumptions and the use of historical data when formulating the budget. Other highlights include management's monthly reporting to the city council on budget -to -actual performance and investment holdings. The city has comprehensive long-term financial and capital improvement plans that are updated annually and shared with the council. It lacks a robust debt management policy but adheres to state guidelines. In addition, it maintains a board -adopted fund balance policy that requires a minimum unrestricted general fund balance equal to 40% of the next year's operating budget, a target it is currently exceeding. Strong budgetary performance Hutchinson's budgetary performance is strong, in our opinion. The city had operating surpluses of 2.7% of expenditures in the general fund and 2.8% across all governmental funds in fiscal 2016. General fund operating results of the city have been stable over the last three years, with results of 1.1% in 2015 and 4.5% in 2014. Our results are calculated after adjustments for capital outlay supported by bond proceeds, recurring transfers from enterprise funds, and one-time capital costs. The city continues to rely on transfers from its enterprise funds (primarily its electric/natural gas and liquor funds) to the general fund to support operations. Hutchinson recently signed an agreement for payments from the electric/natural gas fund to increase incrementally over the next three years. We view the utilities as strong and believe the transfers will continue to be a reliable source of revenue for the general fund in the coming years. The general fund budget for 2017 is balanced operationally, and officials plan to spend approximately $500,000 for capital expenses and $50,000 to support operations of a new aquatic park. The park opened in 2017 and has not generated revenue as budgeted, leading officials to use general fund revenue to subsidize it. So far in 2017, general fund building permit revenue is over -budget, and officials now expect that even after supporting the aquatic park's capital and operational needs, the general fund will be near break-even and maintain current reserves. Management anticipates adopting a balanced budget for 2018, including a levy increase up to 3% and a rise in transfers from the enterprise funds. The general fund typically outperforms the budget, and so we would expect at WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 3, 2017 3 Summary: Hutchinson, Minnesota; General Obligation; Non -School State Programs least a minor operating surplus in 2018. The city's most recent audit (year-end Dec. 31, 2016) shows a deficit of about $200,000 in the general fund, reflecting a use of $500,000 in reserves toward construction of the aquatic park. Excluding this one-time cost and excluding the use of bond proceeds, operationally, the city generated surpluses in the general fund and across total governmental funds. Very strong budgetary flexibility Hutchinson's budgetary flexibility is very strong, in our view, with an available fund balance in fiscal 2016 of 60% of operating expenditures, or $6.7 million. We expect the available fund balance to remain above 30% of expenditures for the current and next fiscal years, which we view as a positive credit factor. Over the past three years, the total available fund balance has remained at a consistent level overall, totaling 61% of expenditures in 2015 and 62% in 2014. Included in what we consider available fund balance is the city's general fund balance marked committed for working capital. Also, a small amount of cash is available in the liquor fund. Even though the city plans to spend $500,000 in general fund reserves in 2017 for capital costs at the aquatic park, given strong operational results expected in 2017 as well as a planned balanced budget for 2018, we anticipate available general fund reserves to remain flat and we believe that overall budgetary flexibility will remain very strong. Very strong liquidity In our opinion, Hutchinson's liquidity is very strong, with total government available cash at 2.8x total governmental fund expenditures and 18.7x governmental debt service in 2016. In our view, the city has strong access to external liquidity if necessary. Hutchinson had roughly $46.4 million in cash available for liquidity purposes at fiscal year-end 2016 (not including any unspent bond proceeds or other restricted cash). The city has demonstrated strong access to the capital markets with a history of issuing GO and revenue debt. Its investments are mostly in CDs, money markets, and U.S. government securities. It has no direct -purchase or variable-rate debt that we expect could pose a liquidity risk and we expect the liquidity profile will remain very strong. Adequate debt and contingent liability profile In our view, Hutchinson's debt and contingent liability profile is adequate. Total governmental fund debt service is 14.8% of total governmental fund expenditures, and net direct debt is 176.9% of total governmental fund revenue. Over 65% of the direct debt is scheduled to be repaid within 10 years, which is, in our view, a positive credit factor. The city's debt profile excludes revenue debt and self-supporting GO debt paid from the city's enterprise funds. Hutchinson is likely to continue its regular issuance for infrastructure projects at around $2.5 million for the next several years. We anticipate any upcoming bonds will be off -set by maturing debt. Hutchinson's combined required pension and actual other postemployment benefit (OPEB) contributions totaled 6.7% of total governmental fund expenditures in 2016. The city made 100% of its annual required pension contribution in 2016. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 3, 2017 4 Summary: Hutchinson, Minnesota; General Obligation; Non -School State Programs Employees are covered by defined -benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). Hutchinson does not pay for any portion of retiree health care premiums, but allows employees to stay in its health insurance plan on retirement and continue to pay active premium rates. As such, a portion of the city's contributions to the health care plan for active employees constitutes an implicit subsidy contribution on behalf of its retirees. Strong institutional framework The institutional framework score for Minnesota cities with a population greater than 2,500 is strong. Outlook The stable outlook reflects our expectation that the rating will not change within the two-year outlook horizon given our expectation that Hutchinson will continue to exhibit very strong budgetary flexibility and liquidity supported by strong management conditions. Upside scenario We could raise the rating after substantial improvement in the city's economic and debt profiles, but we view this as unlikely, limiting upward rating potential, in our view. Downside scenario While unlikely, deterioration in financial performance and budgetary flexibility could pressure the rating. Hutchinson GO bnds Long Term Rating AA -/Stable Affirmed Hutchinson GO imp bnds ser 2011A dtd 11/02/2011 due 02/01/2013-2027 Long Term Rating AA -/Stable Affirmed Hutchinson GO imp bnds ser 2012C dtd 10/30/2012 due 02/01/2028 Long Term Rating AA -/Stable Affirmed Hutchinson GO imp bnds ser 2013A dtd 09/05/2013 due 02/01/2015-2023 2025 2027 2029 Long Term Rating AA -/Stable Affirmed Hutchinson GO imp bnds ser 2015A dtd 10/01/2015 due 02/01/2017-2024 2026 2028 2031 Long Term Rating AA -/Stable Affirmed Hutchinson GO rfdg bnds ser 2012B dtd 07/25/2012 due 02/01/2015-2022 Long Term Rating AA -/Stable Affirmed Hutchinson GO Non-Sch St Prog Long Term Rating AA+/Stable Affirmed Underlying Rating for Credit Program AA -/Stable Affirmed Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 3, 2017 5 Summary: Hutchinson, Minnesota; General Obligation; Non -School State Programs Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com. All ratings affected by this rating action can be found on the S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 3, 2017 6 Copyright © 2017 by Standard & Poor's Financial Services LLC. All rights reserved. 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WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 3, 2017 7 CERTIFICATION OF MINUTES RELATING TO $2,535,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2017A Issuer: City of Hutchinson, Minnesota Governing Body: City Council Kind, date, time and place of meeting: A regular meeting, held on October 10, 2017, at 5:30 o'clock p.m., in the Council Chambers at the Hutchinson City Center. Councilmembers present: Councilmembers absent: Documents Attached: Minutes of said meeting (pages): 1 through 16 RESOLUTION NO. 14786 RESOLUTION RELATING TO $2,535,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2017A; AUTHORIZING THE ISSUANCE, AWARDING THE SALE, FIXING THE FORM AND DETAILS, PROVIDING FOR THE EXECUTION AND DELIVERY THEREOF AND THE SECURITY THEREFOR AND LEVYING AD VALOREM TAXES FOR THE PAYMENT THEREOF I, the undersigned, being the duly qualified and acting recording officer of the public corporation issuing the obligations referred to in the title of this certificate, certify that the documents attached hereto, as described above, have been carefully compared with the original records of said corporation in my legal custody, from which they have been transcribed; that said documents are a correct and complete transcript of the minutes of a meeting of the governing body of said corporation, and correct and complete copies of all resolutions and other actions taken and of all documents approved by the governing body at said meeting, so far as they relate to said obligations; and that said meeting was duly held by the governing body at the time and place and was attended throughout by the members indicated above, pursuant to call and notice of such meeting given as required by law. WITNESS my hand officially as such recording officer this day of October, 2017. Matt Jaunich (SEAL) City Administrator The City Administrator reported that [ ] Q ]) proposals had been received by the City prior to 11:00 A.M., Central Time today for the purchase of the Bonds in accordance with the Terms of Proposal for the $2,535,000 General Obligation Improvement Bonds, Series 2017A of the City as previously approved by a resolution of the City Council. The bids have been read and tabulated, and the terms of each have been determined to be as follows: Name of Bidder Bid for Interest Principal Rates (See Attached) Total Interest Cost -Net Average Rate Councilmember introduced the following resolution and moved its adoption, the reading of which was dispensed with by unanimous consent: RESOLUTION NO. _14786_ RESOLUTION RELATING TO $2,535,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2017A; AUTHORIZING THE ISSUANCE, AWARDING THE SALE, FIXING THE FORM AND DETAILS, PROVIDING FOR THE EXECUTION AND DELIVERY THEREOF AND THE SECURITY THEREFOR AND LEVYING AD VALOREM TAXES FOR THE PAYMENT THEREOF BE IT RESOLVED by the City Council of the City of Hutchinson, Minnesota (the City), as follows: Section 1. Recitals. 1.01. Authorization. This Council has heretofore ordered various street improvement projects designated as the 2017 Infrastructure Improvement Program (together, the Improvements), to be constructed within the City under and pursuant to Minnesota Statutes, Chapter 429. This Council has previously determined to issue and sell $2,535,000 principal amount of General Obligation Improvement Bonds, Series 2017A, of the City (the Bonds) to defray a portion of the expense incurred and estimated to be incurred by the City in making the Improvements, including every item of cost of the kinds authorized in Minnesota Statutes, Section 475.65. The remaining costs of the Improvements, if any, will be paid from City funds and from interest earnings on proceeds of the Bonds. 1.02. Sale of Bonds. The City has retained Ehlers & Associates, Inc., an independent municipal advisor, to assist the City in connection with the sale of the Bonds. The Bonds are being sold pursuant to Minnesota Statutes, Section 475.60, Subdivision 2, paragraph (9), without meeting the requirements for public sale under Minnesota Statutes, Section 475.60, Subdivision 1. Pursuant to the Terms and Conditions of Sale for the Bonds, [ ([__]) sealed bids for the purchase of the Bonds were received at or before the time specified for receipt of bids. The bids have been opened and publicly read and considered, and the purchase price, interest rates and net interest cost under the terms of each bid have been determined. The most favorable proposal received is that of [ 1, of [ , I (the Purchaser), to purchase the Bonds at a price of $[ �, the Bonds to bear interest at the rates set forth in Section 3.01. The proposal is hereby accepted, and the Mayor and the City Administrator are hereby authorized and directed to execute a contract on the part of the City for the sale of the Bonds with the Purchaser. The good faith deposit of the Purchaser, if any, shall be retained and deposited by the City until the Bonds have been delivered, and shall be deducted from the purchase price paid at settlement. 1.03. Issuance of Bonds. All acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed prior to the issuance of the Bonds have been done, do exist, have happened, and have been performed, wherefore it is now necessary for this Council to establish the form and terms of the Bonds, to provide for the security thereof, and to issue the Bonds forthwith. 1.04. Maturities. This Council finds and determines that the maturities of the Bonds, as set forth in Section 3.01 hereof, are warranted by the anticipated collection of the assessments and ad valorem taxes to be levied for the cost of the Improvements. 1.05. Consolidation of Improvements. Pursuant to Minnesota Statutes, Section 435.56, the Improvements are hereby consolidated and j oined as one project. Section 2. Form of Bonds. The Bonds shall be prepared in substantially the form attached as Exhibit A hereto. Section 3. Bond Terms, Execution and Delivery. 3.01. Maturities, Interest Rates, Denominations, Pam. The City shall forthwith issue and deliver the Bonds, which shall be denominated "General Obligation Improvement Bonds, Series 2017A" and shall be payable primarily from the 2017 Improvement Bond Fund created in Section 4.02 hereof. The Bonds shall bear a date of original issue of October [31], 2017, shall be issuable in the denomination of $5,000 each or any integral multiple thereof, shall mature on February 1 in the years and amounts set forth below, and Bonds maturing in such years and amounts shall bear interest from the date of original issue until paid or duly called for redemption at the rates per annum shown opposite such years and amounts as follows: Year Amount Rate Year Amount Rate 2019 $245,000 2027 $165,000 2020 170,000 2028 165,000 2021 165,000 2029 155,000 2022 165,000 2030 160,000 2023 165,000 2031 165,000 2024 155,000 2032 170,000 2025 155,000 2033 175,000 2026 160,000 [REVISE MATURITY SCHEDULE FOR ANY TERM BONDS] The Bonds shall be issuable only in fully registered form. The interest thereon and, upon surrender of each Bond, the principal amount thereof, shall be payable by check or draft issued by the Registrar described herein. Each Bond shall be dated by the Registrar as of the date of its authentication. 3.02. Dates, Interest Payment Dates. Interest on the Bonds shall be payable on February 1 and August 1 in each year, commencing August 1, 2018, to the owner of record thereof as of the close of business on the fifteenth day of the immediately preceding month, whether or not such day is a business day. Interest on the Bonds will be computed on the basis of a 360 -day year consisting of twelve 30 -day months and will be rounded pursuant to the rules of the Municipal Securities Rulemaking Board. 2 3.03. Registration. The City shall appoint, and shall maintain, a bond registrar, transfer agent and paying agent (the Registrar). The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: (a) Resister. The Registrar shall keep at its principal corporate trust office a bond register in which the Registrar shall provide for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. (b) Transfer of Bonds. Upon surrender for transfer of any Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until such interest payment date. (c) Exchange of Bonds. Whenever any Bond is surrendered by the registered owner for exchange, the Registrar shall authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity, as requested by the registered owner or the owner's attorney duly authorized in writing. (d) Cancellation. All Bonds surrendered upon any transfer or exchange shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When any Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name any Bond is at any time registered in the bond register as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Bond and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the City upon such Bond to the extent of the sum or sums so paid. (g) Taxes, Fees and Charges. For every transfer or exchange of Bonds (except for an exchange upon a partial redemption of a Bond), the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. (h) Mutilated, Lost, Stolen or Destroyed Bonds. In case any Bond shall become mutilated or be lost, stolen or destroyed, the Registrar shall deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any such Bond lost, stolen or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Bond lost, stolen or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Bond was lost, stolen or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance and amount satisfactory to it, in which both the City and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the City. If the mutilated, lost, stolen or destroyed Bond has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Bond prior to payment. 3.04. Appointment of Initial Rei r . The City hereby appoints Bond Trust Services Corporation in Roseville, Minnesota, as the initial Registrar. The Mayor and City Finance Director are authorized to execute and deliver, on behalf of the City, a contract with Bond Trust Services Corporation, as Registrar. Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized by law to conduct such business, such corporation shall be authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove any Registrar upon thirty (30) days' notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar shall deliver all cash and Bonds in its possession to the successor Registrar. On or before each principal or interest due date, without further order of this Council, the City Finance Director shall transmit to the Registrar from the 2017 Improvement Bond Fund described in Section 4.02 hereof, moneys sufficient for the payment of all principal and interest then due. 3.05. Redemption. Bonds maturing in the years 2019 through 2026 shall not be subject to redemption prior to maturity, but Bonds maturing in the years 2027 and thereafter shall be subject to redemption and prepayment at the option of the City, in whole or in part, in such order as the City shall determine and by lot as to Bonds having the same maturity date, on February 1, 2026 and on any date thereafter (whether or not an interest payment date), at a price equal to the principal amount thereof and accrued interest to the date of redemption. [Bonds maturing on February 1, 20 are subject to mandatory redemption, at a redemption price equal to their principal amount plus interest accrued thereon to the redemption date, without premium, on February I in each of the years shown below, in an amount equal to the following principal amounts: Bonds Maturing on February 1, 20 Sinking Fund Aggregate Payment Date Principal Amount] .19 Prior to the date set for redemption of any Bond prior to its stated maturity date, the City Administrator shall cause notice of the call for redemption thereof to be published as required by law and, not more than sixty (60) and not fewer than thirty (30) days prior to the designated redemption date, shall cause notice of the call to be mailed to the registered holders of any Bonds to be redeemed at their addresses as they appear on the bond register described in Section 3.03 hereof, but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. The notice of redemption shall specify the redemption date, redemption price, the numbers, interest rates and CUSIP numbers of the Bonds to be redeemed and the place at which the Bonds are to be surrendered for payment, which is the principal office of the Registrar. Official notice of redemption having been given as aforesaid, the Bonds or portions thereof so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions thereof shall cease to bear interest. Bonds in a denomination larger than $5,000 may be redeemed in part in any integral multiple of $5,000. The owner of any Bond redeemed in part shall receive without charge, upon surrender of such Bond to the Registrar, one or more new Bonds of such same series in authorized denominations equal in principal amount to the unredeemed portion of the Bond so surrendered. 3.06. Preparation and Delivery. The Bonds shall be prepared under the direction of the City Administrator and shall be executed on behalf of the City by the signatures of the Mayor and the City Administrator. In case any officer whose signature shall appear on the Bonds shall cease to be such officer before the delivery of any Bond, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. Notwithstanding such execution, no Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this resolution unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on each Bond shall be conclusive evidence that it has been authenticated and delivered under this resolution. When the Bonds have been so executed and authenticated, they shall be delivered by the City Administrator to the purchaser thereof upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the purchaser shall not be obligated to see to the application of the purchase price. 3.07. Securities Depository. (a) For purposes of this Section the following terms shall have the following meanings: "Beneficial Owner" shall mean, whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant, or such person's subrogee. "Cede & Co." shall mean Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Bonds. 5 "DTC" shall mean The Depository Trust Company of New York, New York. "Participant" shall mean any broker-dealer, bank or other financial institution for which DTC holds Bonds as securities depository. "Representation Letter" shall mean the Representation Letter from the City to DTC. (b) The Bonds shall be initially issued as separately authenticated fully registered bonds, and one Bond shall be issued in the principal amount of each stated maturity of the Bonds. Upon initial issuance, the ownership of such Bonds shall be registered in the bond register in the name of Cede & Co., as nominee of DTC. The Registrar and the City may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal of or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed, if any, giving any notice permitted or required to be given to registered owners of Bonds under this resolution, registering the transfer of Bonds, and for all other purposes whatsoever; and neither the Registrar nor the City shall be affected by any notice to the contrary. Neither the Registrar nor the City shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any Participant, or any other person which is not shown on the bond register as being a registered owner of any Bonds, with respect to the accuracy of any records maintained by DTC or any Participant, with respect to the payment by DTC or any Participant of any amount with respect to the principal of or interest on the Bonds, with respect to any notice which is permitted or required to be given to owners of Bonds under this resolution, with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or with respect to any consent given or other action taken by DTC as registered owner of the Bonds. So long as any Bond is registered in the name of Cede & Co., as nominee of DTC, the Registrar shall pay all principal of and interest on such Bond, and shall give all notices with respect to such Bond, only to Cede & Co. in accordance with the Representation Letter, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than DTC shall receive an authenticated Bond for each separate stated maturity evidencing the obligation of the City to make payments of principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the Bonds will be transferable to such new nominee in accordance with paragraph (e) hereof. (c) In the event the City determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bonds in the form of bond certificates, the City may notify DTC and the Registrar, whereupon DTC shall notify the Participants of the availability through DTC of Bonds in the form of certificates. In such event, the Bonds will be transferable in accordance with paragraph (e) hereof. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and the Registrar and discharging its responsibilities with respect thereto under applicable law. In such event the Bonds will be transferable in accordance with paragraph (e) hereof. (d) The execution and delivery of the Representation Letter to DTC by the Mayor, in the form presented to this Council with such changes, omissions, insertions and revisions as the rel Mayor shall deem advisable, is hereby authorized, and execution of the Representation Letter by the Mayor shall be conclusive evidence of such approval. The Representation Letter shall set forth certain matters with respect to, among other things, notices, consents and approvals by registered owners of the Bonds and Beneficial Owners and payments on the Bonds. The Registrar shall have the same rights with respect to its actions thereunder as it has with respect to its actions under this resolution. (e) In the event that any transfer or exchange of Bonds is permitted under paragraph (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this resolution. In the event Bonds in the form of certificates are issued to owners other than Cede & Co., its successor as nominee for DTC as owner of all the Bonds, or another securities depository as owner of all the Bonds, the provisions of this resolution shall also apply to all matters relating thereto, including, without limitation, the printing of such Bonds in the form of bond certificates and the method of payment of principal of and interest on such Bonds in the form of bond certificates. Section 4. Security Provisions. 4.01. 2017 Improvement Construction Fund. There is hereby created a special bookkeeping fund to be designated as the "2017 Improvement Construction Fund" (hereinafter referred to as the Construction Fund), to be held and administered by the City Finance Director separate and apart from all other funds of the City. The City appropriates to the Construction Fund (a) the proceeds of the sale of the Bonds, and (b) all collections of special assessments levied for the Improvements until completion and payment of all costs of the Improvements. The Construction Fund shall be used solely to defray expenses of the Improvements, including but not limited to the transfer to the Bond Fund, created in Section 4.02 hereof, of amounts sufficient for the payment of interest and principal, if any, due upon the Bonds prior to the completion and payment of all costs of the Improvements and the payment of the expenses incurred by the City in connection with the issuance of the Bonds set forth in Section 8 hereof. Upon completion and payment of all costs of the Improvements, but in any event no later than October 31, 2022, any balance of the proceeds of Bonds remaining in the Construction Fund may be used to pay the cost, in whole or in part, of any other improvements instituted pursuant to the Act, as directed by the City Council, but any balance of such proceeds not so used shall be credited and paid to the Bond Fund. 4.02. 2017 Improvement Bond Fund. So long as any of the Bonds are outstanding and any principal of or interest thereon unpaid, the City Finance Director shall maintain a separate and special bookkeeping fund designated "2017 Improvement Bond Fund" (hereinafter referred to as the Bond Fund) to be used for no purpose other than the payment of the principal of and interest on the Bonds and on such other improvement bonds of the City as have been or may be directed to be paid therefrom. The City irrevocably appropriates to the Bond Fund (a) the collections of special assessments and other funds to be credited and paid thereto in accordance with the provisions of Section 4.01, (b) any taxes levied in accordance with this resolution, (c) all income derived from the investment of amounts on hand in the Bond Fund, and (d) all such other moneys as shall be received and appropriated to the Bond Fund from time to time. If the balance in the Bond Fund is at any time insufficient to pay all interest and principal then due on all bonds 7 payable therefrom, the payment shall be made from any fund of the City which is available for that purpose, subject to reimbursement from the Bond Fund when the balance therein is sufficient, and the Council covenants and agrees that it will each year levy a sufficient amount to take care of any accumulated or anticipated deficiency, which levy is not subject to any constitutional or statutory tax limitation. There are hereby established two accounts in the Bond Fund, designated as the "Debt Service Account" and the "Surplus Account." All money appropriated or to be deposited in the Bond Fund shall be deposited as received into the Debt Service Account. On each February 1, the City Finance Director shall determine the amount on hand in the Debt Service Account. If such amount is in excess of one -twelfth of the debt service payable from the Bond Fund in the immediately preceding 12 months, the City Finance Director shall promptly transfer the amount in excess to the Surplus Account. The City appropriates to the Surplus Account any amounts to be transferred thereto from the Debt Service Account as herein provided and all income derived from the investment of amounts on hand in the Surplus Account. If at any time the amount on hand in the Debt Service Account is insufficient to meet the requirements of the Bond Fund, the City Finance Director shall transfer to the Debt Service Account amounts on hand in the Surplus Account to the extent necessary to cure such deficiency. The City reserves the right to establish a revolving fund pursuant to Minnesota Statutes, Section 429.091, subdivision 7a, and to provide that the Bonds shall be payable from such revolving fund. If the City determines to establish such a revolving fund and to provide that the Bonds are payable therefrom, then any remaining amounts in the Construction Fund shall be deposited in the construction account in the revolving fund and amounts in the Bond Fund shall be deposited in the debt service account in the revolving fund. Any future collections of special assessments levied with respect to the Improvements shall be deposited in the construction account or debt service account as the City Council or an officer designated by the City Council may determine. 4.03. Additional Bonds. The City reserves the right to issue additional bonds payable from the Bond Fund as may be required to finance costs of the Improvements not financed hereby; provided that the City Council shall, prior to the delivery of such additional bonds, levy or agree to levy by resolution sufficient additional special assessments and ad valorem taxes, if any, which, together with other moneys or revenues pledged for the payment of said additional obligations, will produce revenues at least five percent (5%) in excess of the amount needed to pay when due the principal and interest on all bonds payable from the Bond Fund. The additional special assessments, ad valorem taxes and moneys or revenues so pledged, levied or agreed to be levied shall be irrevocably appropriated to the Bond Fund in the manner provided by Minnesota Statutes, Section 475.61. 4.04. Levy of Special Assessments. The City hereby covenants and agrees that for payment of the cost of each of the Improvements it will do and perform all acts and things necessary for the full and valid levy of special assessments against all assessable lots, tracts and parcels of land benefited thereby and located within the area proposed to be assessed therefor, based upon the benefits received by each such lot, tract or parcel, in an aggregate principal amount not less than twenty percent (20%) of the cost of the Improvements. In the event that any such assessment shall be at any time held invalid with respect to any lot, piece or parcel of N. land, due to any error, defect or irregularity in any action or proceeding taken or to be taken by the City or this Council or any of the City's officers or employees, either in the making of such assessment or in the performance of any condition precedent thereto, the City and this Council hereby covenant and agree that they will forthwith do all such further acts and take all such further proceedings as may be required by law to make such assessments a valid and binding lien upon such property. The Council presently estimates that the special assessments shall be in the principal amount of $642,445, a portion of which equal to approximately $251,890 has been or is expected to be prepaid, and a portion of which equal to approximately $227,321 is expected to be deferred. 4.05. Ad Valorem Taxes. The full faith and credit and taxing powers of the City are irrevocably pledged for the prompt and full payment of the principal of and interest in the Bonds as the same become respectively due. For the purpose there is hereby levied upon all of the taxable property of the City a direct, annual ad valorem tax, which shall be spread upon the tax rolls prepared in each of the following years and collected with other taxes in the following years and amounts as follows: Lever Collection Years Amount SEE ATTACHED SCHEDULE I The foregoing tax levies are such that if collected in full they will produce at least five percent (5%) in excess of the amount needed to pay when due the principal of and interest on the Bonds. This tax shall be irrevocably appropriated to the Bond Fund as long as any of the Bonds are outstanding and unpaid; provided that the City reserves the right and power to reduce the levies in the manner and to the extent permitted by Minnesota Statutes, Section 475.61. 4.06. Full Faith and Credit Pledged. The full faith and credit of the City are irrevocably pledged for the prompt and full payment of the principal of and the interest on the Bonds, and the Bonds shall be payable from the Bond Fund in accordance with the provisions and covenants contained in this resolution. It is estimated that the taxes and special assessments levied and to be levied for the payment of the Improvements will be collected in amounts not less than five percent (5%) in excess of the annual principal and interest requirements of the Bonds. If the money on hand in the Bond Fund should at any time be insufficient for the payment of principal and interest then due, this City shall pay the principal and interest out of any fund of the City, and such other fund or funds shall be reimbursed therefor when sufficient money is available to the Bond Fund. If on February 1 in any year the sum of the balance in the Bond Fund plus the amount of taxes and special assessments theretofore levied for the Improvements and collectible through the end of the following calendar year is not sufficient to pay when due all principal and interest become due on all Bonds payable therefrom in said following calendar year, or the Bond Fund has incurred a deficiency in the manner provided in this Section 4.06, a direct, irrepealable, ad valorem tax shall be levied on all taxable property within the corporate limits of the City for the purpose of restoring such accumulated or anticipated deficiency in accordance with the provisions of this resolution. z Section 5. Defeasance. When all of the Bonds have been discharged as provided in this section, all pledges, covenants and other rights granted by this resolution to the holders of the Bonds shall cease. The City may discharge its obligations with respect to any Bonds which are due on any date by depositing with the paying agent on or before that date a sum sufficient for the payment thereof in full; or, if any Bond should not be paid when due, it may nevertheless be discharged by depositing with the paying agent a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. The City may also at any time discharge its obligations with respect to any Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a bank or trust company qualified by law as an escrow agent for this purpose, cash or securities which are general obligations of the United States or securities of United States agencies which are authorized by law to be so deposited, bearing interest payable at such time and at such rates and maturing on such dates as shall be required, without reinvestment, to pay all principal and interest to become due thereon to maturity. Section 6. Registration, Certification of Proceedings, Investment of Moneys, Arbitrage and Official Statement. 6.01. Registration. The City Administrator is hereby authorized and directed to file a certified copy of this resolution with the County Auditor of McLeod County, together with such other information as he shall require, and to obtain from the County Auditor a certificate that the Bonds have been entered on his bond register and that the tax required for the payment thereof has been levied and filed as required by law. 6.02. Certification of Proceedings. The officers of the City and the County Auditor of McLeod County are hereby authorized and directed to prepare and furnish to the Purchaser, and to Dorsey & Whitney LLP, Bond Counsel, certified copies of all proceedings and records of the City, and such other affidavits, certificates and information as may be required to show the facts relating to the legality and marketability of the Bonds as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the facts recited therein. 6.03. Covenant. The City covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the Code), and Regulations promulgated thereunder (the Regulations), as such are enacted or promulgated and in effect on the date of issue of the Bonds, and covenants to take any and all actions within its powers to ensure that the interest on the Bonds will not become subject to taxation under such Code and Regulations. The Improvements and any other improvements financed pursuant to Section 4.01 will be owned and maintained by the City and available for use by members of the general public on a substantially equal basis. The City shall not enter into any lease, use or other agreement with any non- governmental person relating to the use of such improvements or security for the payment of the Bonds which might cause the Bonds to be considered "private activity bonds" or "private loan bonds" within the meaning of Section 141 of the Code. 10 6.04. Arbitrage Certification. The Mayor and City Administrator, being the officers of the City charged with the responsibility for issuing the Bonds pursuant to this resolution, are authorized and directed to execute and deliver to the Purchaser a certificate in accordance with the provisions of Section 148 of the Code, and Section 1.148-2(b)(2) of the Regulations, stating the facts and estimates in existence on the date of issue and delivery of the Bonds which make it reasonable to expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be arbitrage bonds within the meaning of said Code and Regulations. 6.05. Arbitrage Rebate. The City shall take such actions as are required to comply with the arbitrage rebate requirements of paragraphs (2) and (3) of Section 148(f) of the Code. 6.06. Not Qualified Tax Exempt Obligations. The Bonds are not designated as "qualified tax-exempt obligations" for purpose of Section 265(b) of the Code. 6.07. Official Statement. The Official Statement relating to the Bonds, prepared and distributed on behalf of the City by Ehlers & Associates, Inc., is hereby approved. The officers of the City are hereby authorized and directed to execute such certificates as may be appropriate concerning the accuracy, completeness and sufficiency of the Official Statement. 6.08. Reimbursement. The City certifies that the proceeds of the Bonds will not be used by the City to reimburse itself for any expenditure with respect to the financed facilities which the City paid or will have paid more than 60 days prior to the issuance of the Bonds unless, with respect to such prior expenditures, the City shall have made a declaration of official intent which complies with the provisions of Section 1.150-2 of the Regulations, provided that a declaration of official intent shall not be required (i) with respect to certain de minimis expenditures, if any, with respect to the financed facilities meeting the requirements of Section 1.150-2(f)(1) of the Regulations, or (ii) with respect to "preliminary expenditures" for the financed facilities as defined in Section 1.150-2(f)(2) of the Regulations, including engineering or architectural expenses and similar preparatory expenses, which in the aggregate do not exceed 20% of the "issue price" of the Bonds. Section 7. Continuing Disclosure. (a) Purpose and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit the Purchaser and other participating underwriters in the primary offering of the Bonds to comply with amendments to Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2-12), relating to continuing disclosure (as in effect and interpreted from time to time, the "Rule"), which will enhance the marketability of the Bonds, the City hereby makes the following covenants and agreements for the benefit of the Owners (as hereinafter defined) from time to time of the Outstanding Bonds. The City is the only obligated person in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. If the City fails to comply with any provisions of this section, any person aggrieved thereby, including the Owners of any Outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of any agreement or covenant contained in this section, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder to the extent permitted by law. Notwithstanding anything to the contrary contained 11 herein, in no event shall a default under this section constitute a default under the Bonds or under any other provision of this resolution. As used in this section, Owner or Bondowner means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial Owner (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, Beneficial Owner means, in respect of a Bond, any person or entity which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of the Bond for federal income tax purposes. (b) Information To Be Disclosed. The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: (1) on or before twelve months after the end of each fiscal year of the City, commencing with the fiscal year ending December 31, 2017, the following financial information and operating data in respect of the City (the "Disclosure Information"): (A) the audited financial statements of the City for such fiscal year, containing balance sheets as of the end of such fiscal year and a statement of operations, changes in fund balances and cash flows for the fiscal year then ended, showing in comparative form such figures for the preceding fiscal year of the City, prepared in accordance with generally accepted accounting principles promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under Minnesota law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof, and certified as to accuracy and completeness in all material respects by the fiscal officer of the City; and (B) to the extent not included in the financial statements referred to in paragraph (A) hereof, the information for such fiscal year or for the period most recently available of the type contained in the Official Statement under headings: "VALUATIONS—Current Property Valuations," "DEBT—Direct Debt," and "TAX RATES, LEVIES AND COLLECTIONS—Tax Levies and Collections" and "GENERAL INFORMATIONUS Census Data" and "-Employment / Unemployment Data," which information may be unaudited. Notwithstanding the foregoing paragraph, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within 10 days after the receipt thereof, the City shall provide the audited financial statements. 12 Any or all of the Disclosure Information may be incorporated by reference, if it is updated as required hereby, from other documents, including official statements, which have been filed with the SEC or have been made available to the public on the Internet Web site of the Municipal Securities Rulemaking Board ("MSRB"). The City shall clearly identify in the Disclosure Information each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect, provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be a Material Fact (as defined in paragraph (2) hereof), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this section is amended as permitted by this paragraph (b)(1) or subsection (d), then the City shall include in the next Disclosure Information to be delivered hereunder, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner not in excess of ten business days after the occurrence of the event, notice of the occurrence of any of the following events (each, a "Material Fact"): (A) Principal and interest payment delinquencies; (B) Non-payment related defaults, if material; (C) Unscheduled draws on debt service reserves reflecting financial difficulties; (D) Unscheduled draws on credit enhancements reflecting financial difficulties; (E) Substitution of credit or liquidity providers, or their failure to perform; (F) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (G) Modifications to rights of security holders, if material; (H) Bond calls, if material, and tender offers; (I) Defeasances; (J) Release, substitution, or sale of property securing repayment of the securities, if material; (K) Rating changes; (L) Bankruptcy, insolvency, receivership or a similar event with respect to the City; (M) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (N) Appointment of a successor or additional trustee or the change of name of a trustee, if material. 13 As used herein, for those events that must be reported if material, an event is "material" if it is an event as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed hereunder or information generally available to the public. Notwithstanding the foregoing sentence, a material fact is also an event that would be deemed material for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. For the purposes of the event identified in (L) hereinabove, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information required under paragraph (b)(1) at the time specified thereunder; (B) the amendment or supplementing of this section pursuant to subsection (d), together with a copy of such amendment or supplement and any explanation provided by the City under subsection (d)(2); (C) the termination of the obligations of the City under this section pursuant to subsection (d); (D) any change in the accounting principles pursuant to which the financial statements constituting a portion of the Disclosure Information are prepared; and (E) any change in the fiscal year of the City. (c) Manner of Disclosure. (1) The City agrees to make available to the MSRB, in an electronic format as prescribed by the MSRB from time to time, the information described in subsection (b); (2) All documents provided to the MSRB pursuant to this subsection (c) shall be accompanied by identifying information as prescribed by the MSRB from time to time. (d) Term, Amendments, Interpretation. 14 (1) The covenants of the City in this section shall remain in effect so long as any Bonds are Outstanding. Notwithstanding the preceding sentence, however, the obligations of the City under this section shall terminate and be without further effect as of any date on which the City delivers to the Registrar an opinion of Bond Counsel to the effect that, because of legislative action or final judicial or administrative actions or proceedings, the failure of the City to comply with the requirements of this section will not cause participating underwriters in the primary offering of the Bonds to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended, or any statutes or laws successory thereto or amendatory thereof. (2) This section (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (c)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of this Council filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that: (i) such amendment or supplement (a) is made in connection with a change in circumstances that arises from a change in law or regulation or a change in the identity, nature or status of the City or the type of operations conducted by the City, or (b) is required by, or better complies with, the provisions of paragraph (b)(5) of the Rule; (ii) this section as so amended or supplemented would have complied with the requirements of paragraph (b)(5) of the Rule at the time of the primary offering of the Bonds, giving effect to any change in circumstances applicable under clause (i)(a) and assuming that the Rule as in effect and interpreted at the time of the amendment or supplement was in effect at the time of the primary offering; and (iii) such amendment or supplement does not materially impair the interests of the Bondowners under the Rule. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) This section is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so as to satisfy the requirements of paragraph (b)(5) of the Rule. Section 8. Authorization of Pavment of Certain Costs of Issuance of the Bonds. The City authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses to Klein Bank, on the closing date for further distribution as directed by the City's financial advisor, Ehlers & Associates, Inc. Attest: 15 Mayor City Administrator The motion for the adoption of the foregoing resolution was duly seconded by Councilmember , and upon vote being taken thereon, the following Councilmembers voted in favor thereof - and the following Councilmembers voted against the same: whereupon said resolution was declared duly passed and adopted, and was signed by the Mayor, which was attested by the City Administrator. 16 No. R-_14786 Interest Rate UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF McLEOD CITY OF HUTCHINSON GENERAL OBLIGATION IMPROVEMENT BOND, SERIES 2017A Maturity Date February 1, 20 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: Date of Original Issue October [31], 2017 C1 TSTP THOUSAND DOLLARS THE CITY OF HUTCHINSON, McLeod County, Minnesota (the "City"), acknowledges itself to be indebted and, for value received, hereby promises to pay to the registered owner above named, the principal amount indicated above, on the maturity date specified above, with interest thereon from the date of original hereof specified above at the annual rate specified above computed on the basis of a 360 -day year consisting of twelve 30 -day months, payable on February 1 and August 1 in each year, commencing August 1, 2018, to the person in whose name this Bond is registered at the close of business on the 15th day (whether or not a business day) of the immediately preceding month, all subject to the provisions referred to herein with respect to the redemption of the principal of this Bond before maturity. The interest hereon and, upon presentation and surrender hereof, the principal hereof, are payable in lawful money of the United States of America by check or draft of Bond Trust Services Corporation, in Roseville, Minnesota, as Bond Registrar, Transfer Agent and Paying Agent (the "Bond Registrar"), or its successor designated under the Resolution described herein. This Bond is one of an issue in the aggregate principal amount of $2,535,000 (the "Bonds"), all of like date and tenor except as to serial number, interest rate, redemption privilege and maturity date, issued pursuant to a resolution adopted by the City Council on October 10, 2017 (the "Resolution") to pay the cost of construction of various street improvements in the City (the "Improvements"), and is issued pursuant to and in full conformity with the provisions of the Constitution and laws of the State of Minnesota thereunto enabling, including Minnesota Statutes, Chapters 429 and 475. This Bond is payable primarily from the 2017 Improvement Bond Fund (the "Fund") of the City, but the City is required by law to pay maturing principal hereof and interest thereon out of any funds in the treasury if moneys on hand in the Fund are insufficient therefor. The Bonds are issuable only as fully registered bonds, in denominations of $5,000 or any integral multiple thereof, of single maturities. A-1 Bonds maturing in the years 2016 through 2026 are payable on their respective stated maturity dates without option of prior payment, but Bonds having stated maturity dates in the years 2027 and thereafter are each subject to redemption and prepayment, at the option of the City and in whole or in part and if in part, in the maturities selected by the City and by lot, assigned in proportion to their principal amount, within any maturity, on February 1, 2026 and on any date thereafter, at a price equal to the principal amount thereof to be redeemed plus interest accrued to the date of redemption. [Bonds maturing on February 1, 20 are subject to mandatory redemption, at a redemption price equal to their principal amount plus interest accrued thereon to the redemption date, without premium, on February 1 in each of the years shown below, in an amount equal to the following principal amounts: Sinking Fund Aggregate Payment Date Principal Amount 20 $ 20 (maturity) At least thirty days prior to the date set for redemption of any Bond, notice of the call for redemption will be mailed to the Bond Registrar and to the registered owner of each Bond to be redeemed at his address appearing in the Bond Register, but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond, not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price herein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Bond or portions of Bonds shall cease to bear interest. Upon the partial redemption of any Bond, a new Bond or Bonds will be delivered to the registered owner without charge, representing the remaining principal amount outstanding. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Bond Registrar, by the registered owner hereof in person or by his attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar, duly executed by the registered owner or his attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange, the City will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City and the Bond Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed precedent to and in the issuance of this Bond in order to make it a valid and binding general obligation of the City according to its terms have been done, do exist, have happened and have been performed as so required; that prior to the issuance hereof the City has levied or agreed to levy special assessments on property specially benefitted by the Improvements and ad valorem taxes on all taxable property within the City, collectible in the years and amounts required to produce sums not less than 5% in excess of the principal of and interest on the Bonds as such principal and interest respectively become due, and has appropriated the same to the Fund in the manner specified in Minnesota Statutes, Section 429.091, Subdivision 4; that, to take care of any accumulated or anticipated deficiency in the Fund, additional ad valorem taxes are required by law to be levied upon all taxable property in the City without limitation as to rate or amount; and that the issuance of this Bond does not cause the indebtedness of the City to exceed any charter, constitutional or statutory limitation. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon shall have been executed by by manual signature of the authorized representative of the Bond Registrar. IN WITNESS WHEREOF, the City of Hutchinson, McLeod County, State of Minnesota, by its City Council, has caused this Bond to be executed by the signatures of the Mayor and the City Administrator and has caused this Bond to be dated as of the date set forth below. CITY OF HUTCHINSON, MINNESOTA (Facsimile Signature - City Administrator) (Facsimile Signature — Mayor) CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. Date of Authentication: BOND TRUST SERVICES CORPORATION, as Bond Registrar LM :: Authorized Representative The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to the applicable laws or regulations: TEN COM as tenants in common TEN ENT as tenants by the entireties JT TEN as joint tenants with right of survivorship and not as tenants in common UNIF TRANS MIN ACT................Custodian.............. (Cust) (Minor) under Uniform Transfers to Minors Act................................................... (State) Additional abbreviations may also be used. ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto , the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: Signature(s) must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Bond Registrar, which requirements include membership or participation in the Securities Transfer Association Medalion Program (STAMP) or such other "signature guaranty program" as may be determined by the Bond Registrar in addition to or in substitution for STAMP, all in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. NOTICE: This signature(s) to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration, enlargement or any change whatsoever. SCHEDULE I PROJECTED TAX LEVIES AND ASSESSMENTS [TO COME] Date Levy Assessments 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Total COUNTY AUDITOR'S CERTIFICATE AS TO BOND REGISTRATION AND TAX LEVY I, the undersigned, being the duly qualified and acting County Auditor of McLeod County, Minnesota, hereby certify that there has been filed in my office a certified copy of a resolution adopted October 10, 2017, by the City Council of the City of Hutchinson, Minnesota, setting forth the form and details of an issue of $2,535,000 General Obligation Improvement Bonds, Series 2017A, dated as of October [31], 2017, and levying taxes for the payment thereof. I further certify that the bond issue has been entered on my bond register and the tax required by law for payment of the Bonds has been levied and filed, as required by Minnesota Statutes, Sections 475.61 to 475.63. WITNESS my hand and official seal this day of , 2017. McLeod County Auditor (SEAL) EHLERS LEADERS IN PUBLIC FINANCE October 10, 2017 Sale Day Report for City of Hutchinson, Minnesota $2,445,000 General Obligation Improvement Bonds, Series 2017A Prepared by: Nick Anhut, CIPMA Senior Municipal Advisor and Bruce Kimmel, CIPMA Senior Municipal Advisor 111-w 1-800-552-1171 1 www.ehlers-inc.com Sale Day Report — October 10, 2017 City of Hutchinson, Minnesota $2,445,000 General Obligation Improvement Bonds, Series 2017A Purpose: Rating: Number of Bids: Low Bidder: Comparison from Lowest to Highest Bid: (TIC as bid) Notes: Financing various public improvements within the City's 2017 Infrastructure Improvement Program. S&P Global Ratings "AA-" affirmed with stable outlook 2 Baird, Milwaukee, Wisconsin Low Bid High Bid 2.5418% 2.5976% Interest Difference $25,625 Summary of Results: Pre -Sale Estimate Results of Sale Principal Amount*: $2,535,000 $2,445,000 Reoffering Premium: $0 $83,214 Underwriter's Discount: $30,420 $23,943 Costs of Issuance: $40,000 $39,488 True Interest Cost: 2.7880% 2.5424% Yield: 1.25% - 3.40% 1.07% - 3.00% Total Net P&I: $3,075,526 $3,016,514 Closing Date City Council Action * The final principal amount was reduced due to a premium bid and lower than budgeted financing costs. The final True Interest Cost was recalculated to reflect the adjustment. October 31, 2017 Adopt a resolution awarding the sale of $2,445,000 General Obligation Improvement Bonds, Series 2017A. Attachments: • Bid Tabulation • Sources and Uses of Funds • Updated Debt Service Schedules • S&P Rating Report (separately distributed) Sale Day Report City of Hutchinson, Minnesota 0 October 10, 2017 BID TABULATION 0 EHLERS LEADERS IN PUBLIC FINANCE $2,535,000* General Obligation Improvement Bonds, Series 2017A City of Hutchinson, Minnesota SALE: October 10, 2017 AWARD: BAIRD Rating: S&P Global Ratings "AA-" BBI: 3.63% Non -Bank Qualified NET TRUE MATURITY REOFFERING INTEREST INTEREST NAME OF BIDDER (February 1) RATE YIELD PRICE COST RATE BAIRD $2,596,560.55 $529,139.45 2.5418% Milwaukee, Wisconsin 2019 2.000% 1.070% C.L. King & Associates WMBE 2020 3.000% 1.140% Dougherty & Company, LLC 2021 3.000% 1.260% Edward Jones 2022 3.000% 1.420% Fidelity Capital Markets 2023 2.000% 1.580% Ross, Sinclaire & Associates, LLC 2024 2.000% 1.700% WNJ Capital 2025 3.000% 1.870% SAMCO Capital Markets 2026 3.000% 2.050% Crews & Associates, Inc. 2027 3.000% 2.150% Davenport & Co. L.L.C. 2028 3.000% 2.350% Loop Capital Markets 2029 3.000% 2.550% Oppenheimer & Co. 2030 3.000% 2.700% R. Seelaus & Company., Inc. 2031' 3.000% ° 3.000/o Duncan -Williams, Inc. 2032' 3.000% 3.000% Vining -Sparks IBG, Limited 2033' 3.000% 3.000% Partnership IFS Securities Bernardi Securities, Inc. Country Club Bank Siena Pacific Securities Alamo Capital WMBE Isaak Bond Investments, Inc Wayne Hummer & Co. SumRidge Partners W.H. Mell Associates First Empire Securities UMB Bank,N.A. Midland Securities FMS Bonds Inc. First Kentucky Securities Corp. First Southern Securities Subsequent to bid opening the issue size was decreased to $2,445,000. Adjusted Price - $2,504,270.25 Adjusted Net Interest Cost - $512,243.36 Adjusted TIC - 2.5424% 1$495,000 Term Bond due 2033 with mandatory redemption in 2031-2032. 1-800-552-1171 1 www.eNers-inc.com NET TRUE MATURITY REOFFERING INTEREST INTEREST NAME OF BIDDER (February 1) RATE YIELD PRICE COST RATE NORTHLAND SECURITIES, INC. Minneapolis, Minnesota 2019 4.000% 2020 4.000% 2021 4.000% 2022 4.000% 2023 4.000% 2024 4.000% 2025 4.000% 2026 4.000% 2027 4.000% 2028 4.000% 2029 4.000% 2030 4.000% 2031 3.000% 2032 3.000% 2033 3.000% Bid Tabulation City of Hutchinson, Minnesota $2,535,000* General Obligation Improvement Bonds, Series 2017A $2,723,610.60 $554,764.40 2.5976% October 10, 2017 Page 2 Hutchinson, Minnesota $2,445,000 General Obligation Improvement Bonds, 2017A Dated: October 31, 2017 Sources & Uses Dated 10/31/2017 1 Delivered 10/31/2017 Sources Of Funds Par Amount of Bonds $2,445,000.00 Reoffering Premium 83,213.65 Prepaid Assessments 251,890.00 Total Sources $2,780,103.65 Uses Of Funds Total Underwriter's Discount (0.979%) 23,943.40 Costs of Issuance 39,488.00 Deposit to Project Construction Fund 2,716,672.25 Total Uses $2,780,103.65 2017A GO Bonds 1 10/10/2017 1 12:22 PM EHLERS LEADERS IN PUBLIC FINANCE Page 1 Hutchinson, Minnesota $2,445,000 General Obligation Improvement Bonds, 2017A Dated: October 31, 2017 Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 10/31/2017 2.5938945% True Interest Cost (TIC) 2.5424676% Bond Yield for Arbitrage Purposes - - 2.7693098% 08/01/2018 - - 51,113.61 51,113.61 - 02/01/2019 230,000.00 2.000% 33,950.00 263,950.00 315,063.61 08/01/2019 - - 31,650.00 31,650.00 - 02/01/2020 160,000.00 3.000% 31 650.00 191 650.00 223 300.00 08/01/2020 - - 29,250.00 29,250.00 - 02/01/2021 160,000.00 3.000% 29,250.00 189,250.00 218,500.00 08/01/2021 - - 26,850.00 26,850.00 - 02/01/2022 160,000.00 3.000% 26,850.00 186,850.00 213,700.00 08/01/2022 24,450.00 24,450.00 02/01/2023 165,000.00 2.000% 24,450.00 189,450.00 213,900.00 08/01/2023 - - 22,800.00 22,800.00 - 02/01/2024 150,000.00 2.000% 22,800.00 172,800.00 195,600.00 08/01/2024 - - 21,300.00 21,300.00 - 02/01/2025 150,000.00 3.000% 21 300.00 171 300.00 192 600.00 08/01/2025 - - 19,050.00 19,050.00 - 02/01/2026 155,000.00 3.000% 19,050.00 174,050.00 193,100.00 08/01/2026 - - 16,725.00 16,725.00 - 02/01/2027 155,000.00 3.000% 16,725.00 171,725.00 188,450.00 08/01/2027 14 400.00 14 400.00 02/01/2028 160,000.00 3.000% 14,400.00 174,400.00 188,800.00 08/01/2028 - - 12,000.00 12,000.00 - 02/01/2029 150,000.00 3.000% 12,000.00 162,000.00 174,000.00 08/01/2029 - - 9,750.00 9,750.00 - 02/01/2030 155,000.00 3.000% 9,750.00 164,750.00 174,500.00 08/01/2030 - - 7,425.00 7,425.00 - 02/01/2031 160,000.00 3.000% 7,425.00 167,425.00 174,850.00 08/01/2031 - - 5,025.00 5,025.00 - 02/01/2032 165,000.00 3.000% 5,025.00 170,025.00 175,050.00 08/01/2032 2,550.00 2,550.00 02/01/2033 170,000.00 3.000% 2,550.00 172,550.00 175,100.00 Total $2,445,000.00 - $571,513.61 $3,016,513.61 - Yield Statistics Bond Year Dollars $19,748.04 Average Life 8.077 Years Average Coupon 2.8940268% Net Interest Cost (NIC) 2.5938945% True Interest Cost (TIC) 2.5424676% Bond Yield for Arbitrage Purposes 2.3640060% All Inclusive Cost (AIC) 2.7693098% IRS Form 8038 Net Interest Cost 2.4033061% Weighted Average Maturity 8.036 Years 2017A GO Bonds 1 10/1012017 1 12:22 PM EHLERS LEADERS IN PUBLIC FINANCE Page 3 Hutchinson, Minnesota $2,445,000 General Obligation Improvement Bonds, 2017A Dated: October 31, 2017 Levy Schedule 2017A GO Bonds 1 10/10/2017 1 12:22 PM EHLERS LEADERS IN PUBLIC FINANCE Page 17 Net DS Special Date CUSIP Principal Coupon Interest Total P+l Net D/S 1.05% Asmnt Levy Amount 02/01/2018 - - - - - - 02/01/2019 230,000.00 2.000% 85,063.61 315,063.61 315,063.61 330,816.79 (22,118.21) 308,698.58 02/01/2020 160,000.00 3.000% 63,300.00 223,300.00 223,300.00 234,465.00 (21,538.72) 212,926.28 02/01/2021 160,000.00 3.000% 58,500.00 218,500.00 218,500.00 229,425.00 (20,959.24) 208,465.76 02/01/2022 160,000.00 3.000% 53,700.00 213,700.00 213,700.00 224,385.00 (20,379.76) 204,005.24 02/01/2023 165,000.00 2.000% 48,900.00 213,900.00 213,900.00 224,595.00 (19,800.28) 204,794.72 02/01/2024 150,000.00 2.000% 45,600.00 195,600.00 195,600.00 205,380.00 (19,220.80) 186,159.20 02/01/2025 150,000.00 3.000% 42,600.00 192,600.00 192,600.00 202,230.00 (18,641.32) 183,588.68 02/01/2026 155,000.00 3.000% 38,100.00 193,100.00 193,100.00 202,755.00 (18,061.84) 184,693.16 02/01/2027 155,000.00 3.000% 33,450.00 188,450.00 188,450.00 197,872.50 (17,482.36) 180,390.14 02/01/2028 160,000.00 3.000% 28,800.00 188,800.00 188,800.00 198,240.00 (16,902.88) 181,337.12 02/01/2029 150,000.00 3.000% 24,000.00 174,000.00 174,000.00 182,700.00 182,700.00 02/01/2030 155,000.00 3.000% 19,500.00 174,500.00 174,500.00 183,225.00 183,225.00 02/01/2031 160,000.00 3.000% 14,850.00 174,850.00 174,850.00 183,592.50 183,592.50 02/01/2032 165,000.00 3.000% 10,050.00 175,050.00 175,050.00 183,802.50 183,802.50 02/01/2033 170,000.00 3.000% 5,100.00 175,100.00 175,100.00 183,855.00 183,855.00 Total - $2,445,000.00 - $571,513.61 $3,016,513.61 $3,016,513.61 $3,167,339.29 (195,105.41) $2,972,233.88 2017A GO Bonds 1 10/10/2017 1 12:22 PM EHLERS LEADERS IN PUBLIC FINANCE Page 17 Hutchinson, Minnesota $2,445,000 General Obligation Improvement Bonds, 2017A Dated: October 31, 2017 Detail Costs Of Issuance Dated 10/31/2017 1 Delivered 10/31/2017 COSTS OF ISSUANCE DETAIL Financial Advisor $20,100.00 Bond Counsel (Dorsey & Whitney) $7,500.00 Rating Agency Fee (S&P) $11,000.00 Paying Agent $688.00 County Auditor - McLeod $200.00 TOTAL 2017A GO Bonds 1 10/10/2017 1 12:22 PM EHLERS LEADERS IN PUBLIC FINANCE Page 11 HUTCHINSON CITY COUNCIL c`=y-f 0' a_ � Request for Board Action 79 M-W Agenda Item: Ordinance to Sell City-Owned Land to Titanium Partners Department: Legal LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: Marc A. Sebora Agenda Item Type: Presenter: Marc A. Sebora Reviewed by Staff ❑ unfinished Business Time Requested (Minutes): 0 License Contingency N/A Attachments: No BACKGROUND/EXPLANATION OFAGENDA ITEM: As you may recall, earlier this year the City completed a court action and was declared the legal owner of a 1/10 acre parcel of land near Prospect Street with the intent that a portion of this parcel be included in the land to be conveyed with the rest of the parcels to the developer of the hotel project. As required under the Hutchinson City Charter, all land owned by the City must be conveyed by ordinance. Therefore, for your consideration, is the first reading of the ordinance which would convey this land to the hotel developer. I recommend that you approve this ordinance. BOARD ACTION REQUESTED: Approve first reading of ordinance to sell municipally-owned land to Titanium Partners, LLC, and set second reading and adoption for October 24, 2017. Fiscal Impact: $ 0.00 Funding Source: N/A FTE Impact: 0.00 Budget Change: No Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: Remaining Cost: $ 0.00 Funding Source: ORDINANCE NO. 17-779 PUBLICATION NO. AN ORDINANCE OF THE CITY OF HUTCHINSON, MINNESOTA, AUTHORIZING THE SALE OF MUNICIPALLY OWNED REAL PROPERTY THE CITY OF HUTCHINSON ORDAINS: Section 1. That the municipally owned real property legally described as follows: Lot 12, Block 13, TOWNSITE OF HUTCHINSON, NORTH HALF, according to the plat thereof on file and of record in the office of the County Recorder in and for McLeod County, Minnesota. EXCEPTING THEREFROM the North 199.5 feet of said Lot 12. ALSO EXCEPTING THEREFROM the South 97 feet of said Lot 12 for good and valuable consideration is hereby transferred and conveyed to Titanium Partners, LLC, or its successor. Section 2. The City Administrator, Matthew Jaunich, or his designee is authorized to sign any and all documents on behalf of the City to effectuate the closing of this transaction. Section 3. This ordinance shall take effect upon its adoption and publication. Adopted by the City Council this 24th day of October, 2017. Gary T. Forcier Mayor ATTEST: Matthew Jaunich City Administrator HUTCHINSON CITY COUNCIL c`=y-f 0, a_ � Request for Board Action 79 M-W Agenda Item: Ordinance No. 17-778 - An Ordinance Suspending Hours of Liquor Sales Department: Police LICENSE SECTION Meeting Date: 10/10/2017 Application Complete N/A Contact: Daniel T. Hatten Agenda Item Type: Presenter: Daniel T. Hatten Reviewed by Staff ✓❑ New Business Time Requested (Minutes): 2 License Contingency N/A Attachments: No BACKGROUND/EXPLANATION OFAGENDA ITEM: Buffalo Wild Wings is requesting they be allowed to sell liquor on Sunday October 29, 2017, beginning at 8:00 am to accommodate the unusual hours of the Minnesota Viking's football game. The Vikings game is being played in London so kickoff begins at 8:30 am central time. This request would expand the the hours of sales for liquor by two and half hours on Sunday October 29, 2017, only. The current City Ordinance states: 112.088 HOURS AND DAYS OF SALES. No sale of intoxicating liquor shall be made between the hours of 1:00 a.m. and 10:00 a.m. on Sunday, nor between 12:00 midnight and 8;00 a.m. on Monday, nor between the hours of 1:00 a.m. and 8:00 a.m. on Tuesday through Saturday. I have reviewed this request and see no issues of concern. I would recommend this authorization of expansion of hours be authorized for all establishments selling liquor within the City of Hutchinson for the one day, Sunday October 29, 2017. BOARD ACTION REQUESTED: I recommend approval of Ordinance No. 17-778, suspending the hours of liquor sales on Sunday, October 29, 2017. Fiscal Impact: $ 0.00 Funding Source: 0 FTE Impact: 0.00 Budget Change: No Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: Remaining Cost: $ 0.00 Funding Source: ORDINANCE NO. 17-778 AN ORDINANCE ALTERING ENFORCEMENT OF HUTCHINSON CITY ORDINANCE 112.088 PERTAINING TO HOURS OF LIQUOR SALES ON OCTOBER 29, 2017 Findings of the City Council: That the Minnesota Vikings football team is playing an NFL football game in London, England on October 29, 2017; That kick-off for the football game is at 8:30 a.m. central standard time and will be nationally televised; That the restaurants in the City of Hutchinson holding liquor licenses generally have high customer counts for viewing of the Vikings football games; That Section 112.088 of the Hutchinson City Code states that no on -sale of intoxicating liquor may be made before 10:00 a.m. on Sundays; That a request has come before the City from a liquor license holder requesting that sales of on -sale intoxicating liquor may be made starting at 8:00 a.m. on October 29, 2017, to accommodate customers viewing the Minnesota Vikings football game, Therefore, the Council of the City of Hutchinson does hereby ordain that Hutchinson City Code § 112.088 shall be altered to allow on -sale intoxicating liquor sales to begin at 8:00 a.m. on October 29, 2017, only. Adopted by the City Council this 24th day of October, 2017. Attest: Matthew Jaunich, City Administrator Gary T. Forcier, Mayor Library Board Meeting Minutes August 28, 2017 Present: Steve Bailey, Carolyn Ulrich, Julie Lofdahl, Kristine Leuze, Jack Sandberg, Gerry Grinde, Katy Hiltner, Ex -Officio Excused: Mary Christensen Motion by Jack, Seconded by Carolyn to approve minutes from the July 24, 2017 meeting. Minutes approved as written. Old Business: 1. New Hires: LAII Therese O'Fallon will work 7 hours per week; LAI Taylor VanderHeiden will work 5 hours per week; and LAI Veronica Jacobs will work 3 hours per week. z. City Council Presentation: Tuesday, Oct. 10, Katy will present the happenings over the year and answer any questions. Katy and Lisa Ebert will present to the Winsted City Council the following week. 3. Adult Summer Reading Contest Wrap -Up: 32 participants with 5 completions. Prizes were two $10 gift certificates to the State Theatre. Julie participated and thought it was a fun contest. 4. Legacy Program: Family History Research Series: On final round of family history research series advanced class in Hutchinson on September 7, 14, 21. Classes will be held in Brownton, Glencoe and Winsted too. 5. Review Library Mission Statement: Set goals to evaluate next year. Katy to send PLS goals; board plans to narrow down to three or four goals. New Business: 1. Upcoming Adult Library Programs: --Little Golden Books —Tuesday, Sept. 26, 6:30 p.m. - 75th anniversary of Golden Books. Legacy sponsored event. --YA Author M.G. Nelson — Tuesday, Oct. 10, 7 p.m. - a Teen Read Week event. Author is from Ortonville and just published book for 13-18 year-olds. Friends of the Library to sponsor and Rachelle will get the word out. --MN Author Christine Husom —Tuesday, Oct. 24, 7 p.m. She writes mysteries and cozy mysteries. Friends to also sponsor this program. 2. Friends of Library Thrivent Grant: $250.00 to go to purchase graphic novels for the children's collection 3. HCVN — Something Artsy Program: Mark Santelman is hosting the program. The goal is to highlight various organizations in the community. The Library will be on this fall. Katy hopes the program keeps going so she can do spot for Summer Reading Program. 4. McLeod for Tomorrow Leadership Program: Katy will be participating in the program; she will attend all -day meetings once a month Sept. -May. This will be part of her continuing education. She feels it will help her learn about the county. 5. Library Buzz — What Have You Been Reading/Watching? Carolyn has been busy reading. Here is her list: Banana Cream Pie Murder by Joanne Fluke Joan Hess - the last Amelia Peabody book World War 1 book — Female Tommies Six Encounters with Lincoln by Elizabeth Brown Pryor A Stitch in Time 1880 - 1900 - women quilting history book The Age of the Homespun by Laura Thatcher Ulrich Jack read book of Poems of William Blake compiled by Patti Smith Kristine: The Glass Castle, memoir by Jeannette Walls. This is the most amazing memoir she has read. True story of three kids and growing up with their dysfunctional parents who ended up successful and living in New York City. Whiskey Tango Foxtrot. She thought it was a war book. Hard read. Had to read sentences twice, speculative. Gerry: Recent volume on Martin Luther, 400 pages, new version done by an Australian woman,- marriage oman;marriage and family written about; a woman's view. Ten Plants That Changed Minnesota by M. Hockenberry Meyer and Susan Davis Price. Plants include: alfalfa, apples, soybeans, and wild rice. Another David Housewright novel. Novels are centered in Minnesota, St. Paul area and have mentioned Hutchinson. Julie: What is the Bible? by Rob Bell Interesting way to read the Bible. Very good book. Katy: Eleanor Oliphant is Completely Fine, by a Gail Honeyman. Eleanor is a peculiar character. Watched the movie "The Founder." It was a very interesting history of Ray Kroc and McDonald's but it may have turned her away from eating there. Ray made the money and his wife Joan gave it away. She is also still reading books for One Book, One Community. Steve: 3 books in 3 weeks. Who is Looking Out for You? by Bill O'Reilly; Hillbilly Elegy by J.D. Vance, your enviroment sticks with you and it's hard to escape from; Jack and Rochelle by Jack Sutin, a dark book but he could not put it down. Books should be thought provoking and make change. We agreed that we have read books because of the recommendations from other board members. 6. Other: Friday -Saturday, Sept. 15-16 will be the annual Friends Fall Book Sale. Motion to adjourn by Gerry, seconded by Jack; adjourned at 5:22 p.m. Next meeting: Sept. 25, 2017 at 4:30 p.m. July 2017 Donations None Minutes submitted by Julie Lofdahl, Secretary To: Mayor and Council From: Candice Woods, Liquor Hutch Director Date: 10-02-17 Re: Liquor Hutch Sales January—Sept 2017 Total Sunday Sales (7/2 - 09/24) _ $110,956 Average Sunday Daily Sales = $8,535 Total Sales Increase (7/2 — 09/24) _ $ 89,674 Average Weekly Sales Increase = $6,905 Conclusion — Slight erosion of sales during the week but so far Sunday hours have been profitable! Store Activity Highlights (July -September): • Annual 25% Off Wine Sale held July 19th -26th • 4th Quarter/Holiday Season purchasing done/Holiday merchandising begun • 2017-18 Special Events Calendar set and coordinated with venues and vendors • Full Time Staff attended MMBA Regional meeting — information included legislative updates, Nielsen sales trend reports, merchandising tips, employee hiring and retention training • Quarterly Staff Training Sessions for all employees featured Minnesota wine with industry reps • Holiday Focus products chosen for high gross profit sales in last quarter of 2017 Further details of all statistics have been provided to the Administrative Department. Please feel free to contact me with any questions or requests for additional data. 2016 2017 Change Year to Date Sales: $4,354,890 $4,503,325 3.4% Increase Liquor $1,450,308 $1,482,594 2.2% increase Beer $2,181,494 $2,260,180 3.6% increase Wine $ 639,146 $ 662,226 3.6% increase Year to Date Gross Profit Dollars: $1,085,746 $1,146,789 5.6% Increase Year to Date Customer Count: 174,465 181,364 4.0% Increase Average Sale per Customer: $24.96 $24.83 $0.13 Decrease Gross Profit Percentage: 24.90% 25.47% 0.57% Increase Total Sunday Sales (7/2 - 09/24) _ $110,956 Average Sunday Daily Sales = $8,535 Total Sales Increase (7/2 — 09/24) _ $ 89,674 Average Weekly Sales Increase = $6,905 Conclusion — Slight erosion of sales during the week but so far Sunday hours have been profitable! Store Activity Highlights (July -September): • Annual 25% Off Wine Sale held July 19th -26th • 4th Quarter/Holiday Season purchasing done/Holiday merchandising begun • 2017-18 Special Events Calendar set and coordinated with venues and vendors • Full Time Staff attended MMBA Regional meeting — information included legislative updates, Nielsen sales trend reports, merchandising tips, employee hiring and retention training • Quarterly Staff Training Sessions for all employees featured Minnesota wine with industry reps • Holiday Focus products chosen for high gross profit sales in last quarter of 2017 Further details of all statistics have been provided to the Administrative Department. Please feel free to contact me with any questions or requests for additional data.