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Case # I, <br /> <br />ISSUANCE OF REVENUE BONDS FOR <br />PACT CHARTER SCHOOL <br /> By: Diana Lund, Finance Officer <br /> <br />Background: <br /> <br />Pact Charter School has asked the City to issue revenue bonds on their behalf to finance a <br />charter school facility in the City. <br /> <br />State and Federal law allows cities to issue bonds and loan the proceeds to nonprofit <br />corporations to finance capital expenditures. By issuing tax-exempt bonds through the <br />City, the Charter school reduces their borrowing costs due to the tax-exempt status. <br /> <br />The Pact Charter School agrees to pay all principal and interest on the bonds, whereas the <br />City is merely a conduit and the money and obligations are between Pact and the Trustee <br />for the bondholders. <br /> <br />Pact Charter School will be held responsible for all fees that are incurred for the issuance <br />of this bond. Also, Pact will be required for all fees associated with Costs incurred by the <br />City relating to their own bond issuance, (Ex: disclosure, Moody's, etc) ifPact's bond <br />issue causes the City to become non-bank qualified. To remain bank qualified, which <br />offers lower interest rates, the City must not borrow more than ten million dollars in any <br />one calendar year. Thus, Pact will be responsible for the additional costs incurred on the <br />City's 2003 Capital equipment certificates, and also for any costs incurred in 2004, as the <br />City is planning on issuing a total of 5-7 million for the Town Center project. <br /> <br />Council Action: <br /> <br />Motion to recommend City Council adoption of Resolution #03-12-XXX authorizing the <br />issuance of approximately twelve million dollars in revenue bonds to be used for the <br />construction of a Pact Charter School. <br /> <br /> <br />