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Case <br /> <br />AUTHORIZING THE ISSUANCE OF APPROXIMATELY $11.8 MILLION IN <br />LEASE REVENUE BONDS FOR <br /> PACT CHARTER SCHOOL AND THE EXECUTION OF VARIOUS <br /> DOCUMENTS IN CONNECTION WITH THE SCHOOL PROJECT <br /> By: Diana Lund, Finance Officer <br /> <br />Background: <br /> <br />At the December 16, 2003, Council adopted Resolution #03-12-334 giving preliminary <br />approval to the issuance of Revenue bonds for the Pact Charter School Project. <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 />Pact Chartel: School is now asking for the authorization for the actual issuance of the <br />revenue borlds associated with their school project. The amount to be issued will not <br />exceed $11.8 million. <br /> <br />The following documents relating to the bond issuance also need to be executed. They <br />are as such: the Loan Agreement, Indenture of Trust, Mortgage-Security Agreement, Tax <br />Regulatory Agreement, Bond Purchase Agreement, and the Official Statements. These <br />are all standard documents that are filed in these types of financings. <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 wilt be required for all fees associated with Costs incurred by the <br />City relating to their own bond issuance, (Ex: disclosure, Moody' s, etc) if Pact's bond <br />issue causeslhe 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. <br /> <br />Council Action: <br /> <br />Motion to recommend City Council adoption of Resolution #04-02-XXX authorizing the <br />issuance of lease revenue bonds to finance a Pact Charter School project and authorizing <br />the execution of various documents in connection with the Pact Project. <br /> <br /> <br />