Agenda - Council - 02/24/2004 - Laserfiche WebLink

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Councilmemb~r ElVig noted a preliminary arrangement was made with the builder to allow them to begin construction. He inquired how this plays into this bond being released. City Attorney !Goodrich explained in December the builder asked for relief from the City's typical escrow ?equirements in the amount of ½ million dollars, stating they did not have the cash available. In lieu of the City taking that escrow at the time of the development agreement, the City accepted the securing of a one million dollar first mortgage against the five acre site. That project closedion December 18th. The mortgage is on record as a promissory note. The promissory note will be paid out of the proceeds when the bonds are sold, and it must be paid by May 15t~'. If it ls not paid by May 15th the City is authorized to foreclose on the five acre piece of property. Councihnembelr Elvig clarified the City played a role to bridge the finances on a no-money transaction for [approximately six months. This will ultimately be paid off by the bond note or another source. Councilmember Zimmerman inquired how money borrowed by the City would relate to this and the City being bank qualified. Finance Officer Lund explained if the City stays under the ten million dollars the school would be responsible ~for any fees associated with the City being non-bank qualified. Motion by Cotmcilmember Cook, seconded by Councilmember Kurak, to adopt Resolution #04- 02-041 authorizing the issuance of approximately $11.8 million in lease revenue bonds for Pact Charter School !and the execution of various documents in connection with the school project. Councihnember Kurak clarified the City is not financing anything with these bonds. Tbis is merely a pass t~ough bond and the City is covered on the back end so their rate is still protected by this escrow fitnd. Finance Officer Lund noted last year when the City issued its capital equipment certificates in 2003, PACT Charter School wanted to complete the bond issue in December. The school did pay an amount of $14,000 because this made the City non-bank qualified. Councilmember Elvig questioned if staff is certain that 8.9 million dollars is an ample bond amount for the City this year. Finance Officer Lund explained if the City bonds over ten million dollars they would become non-bank qualified themselves and the escrow would not be required from the school. City Attorney Goodrich explained the City will have a better picture of the amounts by the time these bonds are! sold. If the City needs to go up an extra two million dollars they could do that the day before the bonds are sold. City Council/February 10, 2004 Page 9 of 18