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occupancy in September. They may have a situation where they will need to bring in some <br />portable classrooms at the start of the year to get the school open. <br />City Administrator Norman explained that Academic Investments is no longer the developer of <br />the project and Amcon will be the interim property owner, but in the end PACT Charter School <br />will be the owner of the school. <br />Mayor Gamec stated that one of the concerns of the Council is what happens if the Charter <br />school fails. <br />Mr. Carins explained that once the project is built, the bondholders have a lien on the property <br />and if the school ends up defaulting, the first thing that happens on the financing side is the bond <br />holders, through the trustee, steps in and determines what can be done to make the financing <br />work. They will look at what the building is suited for and zoned for. Since the building will be <br />built for a school and the property is zoned for a school they would begin seeking a school <br />tenant. If in fact they are able to do that, the site will continue with a new school. If in the event <br />the trustees cannot find a tenant, they have the option of trying to sell the property and recover <br />what they can. At that time the City has a zoning ordinance and development agreement in place <br />so the only thing the City would have to allow would be a school. If in the event the school is <br />successful and the bonds are paid off in 25 years and they decide to do something different they <br />could decide to sell the property to run another school or come forward with a proposal to the <br />City. Those funds would have to go back into the public education system if that property is <br />sold. <br />Councilmcmber Elvig stated that it was his understanding that the owners of Amcon were <br />stepping forward as a bridge financer until the bonds close and then they will be only the <br />contractor. After that, a separate entity has been foiiued as a building company to actually own <br />the building because Charter schools cannot own schools. Earlier in the evening the Finance <br />Committee had an issue come up that the City has incurred a cost of $13,750 for the issuance of <br />bonds based on the request of the PACT Charter school and inquired if they would be willing to <br />take on those costs even if the project does not proceed forward. <br />Mr. Carins replied that the PACT Charter School absolutely agrees that that is their cost. <br />Councilmember Elvig inquired if the bonds would be sold on a retail basis. <br />Mr. Carins replied yes. <br />Dick Ward noted that a majority of the buyers for Charter Schools are institutional buyers. <br />Councilmember Elvig inquired if they were confident they could get the bonds sold. <br />Mr. Ward replied yes. He explained that they recently sold bonds for a Charter school in St. <br />Paul. <br />City Council Work Session/December 9, 2003 <br />Page 2 of 3 <br />