Agenda - Council - 08/26/2014 - Laserfiche WebLink

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BRIGGS AND MORGAN However, if the private use is unrelated or disproportionate to the government use of the bond proceeds, the 10% thresholds are lowered to 5%. The test is applied by first determining whether a private business use is related to a governmental use. Next, private business use that is "related" is examined to determine if it is disproportionate. Whether use is related is determined on a case -by -case basis, emphasizing operational relationship. Generally, a related use must be located within or adjacent to the facility, which is the case for the City. Treas. Reg. 1.141-9 gives very limited examples of what constitutes a related use. In Treas. Reg. 1.141-9, examples of related use include a privately -operated cafeteria in a school or a courthouse or a parking lot adjacent to a governmental facility. Use of a facility by a nongovernmental person for the same purpose as use by a governmental person is treated as related use if the government use is significant. Similarly, a use of a facility in the same manner both for private business use that is related use and private business use that is unrelated use does not result in unrelated use if the related use is significant. For example, a privately -owned pharmacy in a governmentally -owned hospital does not ordinarily result in unrelated use solely because the pharmacy also serves individuals not using the hospital. In addition, use of parking spaces in a garage by a nongovernmental person is not treated as unrelated use if a significant portion of the parking spaces are used for a government use (or a private business use that is related to a government use), even though the use by the nongovernmental person is not directly related to that other use Depending on the private entity's purpose, it would appear that the occupancy of a portion of a governmental facility by a private entity is not related operationally to the governmental use of that facility. Because we don't know more about any private entity that might lease space in the City's facility, we must assume that its use will likely be an unrelated use and this memorandum does not include an analysis of disproportionate use. Assuming that private use of a portion of the facility would constitute an unrelated use, the private business tests are limited to the 5% thresholds rather than the 10% thresholds. Should the use by one or more private entities exceed 5%, the private use test would be met. The remaining question, then, would be whether the private payment exceeds 5%. If so, then the private business test is met and the use of the facility by the private entity(ies) would be an impermissible use. Thus, the safest course of action would be to lease excess space only to governmental entities and, if leasing to private entity(ies), keep the space leased to such organization(s) to 5% or less of the square footage of the facility. It is our understanding that the City is currently leasing some space to Anoka County. Because Anoka County is a governmental entity, that lease is a permissible governmental use. It is also our understanding that the City has calculated the remaining leasable space to be 4.431% of the total square footage of the building. Because this is less than 5%, the City will not have exceeded the threshold for private use and, therefore, it will not be necessary to consider 2 6377563v1