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April23, 2003 <br /> <br />NORTHLAND SECURiTIES <br /> <br />Jim Norman, Administrator <br />Diana Lu_nd, Finance Director <br />City of Ramsey <br />15153 Nowthen Blvd NW <br />Ramsey, MN 55303 <br /> <br />Re: Financing Considerations for a City Hall <br /> <br />Dear Jim and Diana: <br /> <br />There are basically two options to finance a City Hall. They are as follows: <br /> <br />General Obligation Bonds - the City has the authority to issue General Obhgation <br />Bonds backed by the full fa/th and credit of the City. It would be necessary for the <br />City to hold a special election on this question. If the election question passes, the <br />City has the ability to issue General Obhgation Bonds. The bonds would be subject <br />to the statutory debt limit. The City's current estimated statutory debt limit margin <br />is shghtly greater than $20,000,000. <br /> <br />Lease Purchase Revenue Bonds - the City has the authority pursuant to Minnesota <br />Statutes, Section 465.71 to acquire the city hall pursuant to a lease with option to <br />purchase agreement. The City must have the right to terminate rite lease purchase <br />agreement at the end of any fiscal year during its term. Unless terminated at the end <br />of any fiscal year the lease is payable from any revenues available to the City. Under <br />current law, ff the City wants the ability to levy taxes, outside of levy limits, to make <br />the lease payments, the City's Economic Development Authority (the "EDA") or a <br />Housing and Redevelopment Authority ("HRA") has the authority to issue revenue <br />bonds payable solely from lease payments to be made by the City pursuant to the <br />lease purchase agreement entered into between either the EDA or the HRA and the <br />City. Under current law, a financing of this type does not require a referendum. In <br />addition, because the project cost will exceed $1.0 million, the entire lease purchase <br />bond-financing amount counts against the City's statutory debt limit. <br /> <br />Under the General Obligation Bond financing scenario, it will be necessary for ownership of the <br />city hall to be in the City and in the case of a Lease Purchase Revenue Bond, ownership will be <br />with the EDA or HRA. <br /> <br />Northland Securities, Inc. 45 South 7~' Street, Suite 2500, Minneapolis, MN 55402 'lolt Fre,: 800-851-2920 .Uai, 612-851-5900 F,,x 612-851-5987 <br /> wvwa,.northland secur/ties.¢om <br /> <br /> Member NASD and SlOe <br /> <br /> -26- <br /> <br /> <br />