Minutes - Council - 12/16/2003 - Laserfiche WebLink

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principal and interest on the bonds, whereas the City is merely a conduit and the money and obligations are between the PACT Charter School and the Trustee for the bondholders. PACT Charter School will be held responsible for all fees that are incurred for the issuance of this bond. Also, PACT will be required for all fees associated with the costs incurred by the City relating to their own bond issuance if PACT's bond issues causes the City to become non-bank qualified. To remain bank qualified, which offers a lower interest rates, the City must not borrow more than ten million dollars in any one calendar year. Thus, PACT will be responsible for the additional costs incurred on the City's 2003 Capital Equipment certificates, and also for any costs incurred in 2004, as the City is planning on issuing a total of 5 to 7 million dollars for the Town Center project. Citizen Input Eric Zaetsch, 6521 154th Lane NW, Ramsey, stated that he was uncertain about the bonds. He questioned if the City was issuing the bonds and would the City be liable for the bonds. He also questioned if there was a statute that applies to such bonds and defines the process. John Carins, Briggs and Morgan, stated that he was the bond counsel for the City of Ramsey and was also representing the PACT Charter School. He explained that the City has no liability for the bonds even if there is a default. The bonds are paid for entirely out of the funds the school receives and the school has agreed to reimburse the City for all the costs they incur with issuing the bonds. Mr. Cairns noted there is a statute that allows for such bonds to be issued. Mr. Zaetsch replied that he did not understand what the City's role was. He questioned if the City was going to issue the bonds. Mr. Cairns explained that under State Statutes 469.152 and 469.1651 the bonds are issued by a governmental entity issue so in this instance they would be issued by the City of Ramsey, but the City would have no obligation. City Attorney Goodrich noted that these types of bonds are called conduit bonds, which means the Charter School would be using the City to receive bonds. Mr. Cairns replied that that was correct. City Attorney Goodrich explained that the City has done this several times for other projects in the City. It is not an unusual or unique situation. Councilmember Elvig requested that Mr. Cairns allude to what the remedies are if there is a default on tim bonds. Mr. Cairns explained that there will be a mortgage placed on the property that will be held by the trustee on behalf of the bondholders. If there is a default the bondholders can take the property and then they can decide what to do with the property based on the mortgage and the use of the City Council/December 16, 2003 Page 5 of 33