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in the funds and accounts held by the Trustee which are pledged to the payment thereof; the City. <br />is not subject to any liability thereon..." City Attorney Goodrich advised the last sentence of this <br />paragraph also states the bonds shall not constitute or give rise to a charge against the general <br />credit or taxing powers of the City. It also states that the City will not be obligated to tax to pay <br />on the bonds. <br /> <br />Councilmember Strommen clarified for the record these bonds are done under the authority of <br />Minnesota State Statute Section 469.1522 to 469.1651. The purpose language of this statute <br />talks about redevelopment in blighted areas. The City has been infon-ned this does qualify under <br />that statute. <br /> <br />City, Attorney Goo&Sch explained a representative from the charter school was present in <br />December and language in the resolution was changed based on comments by the Council. <br /> <br />Councilmember Elvig noted a preliminary arrangement was made with the builder to allow them <br />to begin construction. He inquired how this plays into this bond being released. <br /> <br />City Attorney Goodrich explained in December the builder asked for relief from the City's. <br />typical escrow requirements in the amount of ½ million dollars, stating they did not have the <br />cash available. In lieu of the City taking that escrow .at the time of the development a~eement, <br />the City accepted the securing of a one million dollar first mortgage against the five acre site. <br />That project closed on December 18th. The mortgage is on record as a promissory note. The <br />promissory note will be paid out of the proceeds when the bonds are sold, and it must be paid by <br />May 15't~. If it is not paid by May 15th the City is authorized to foreclose on the five acre piece of <br />property. <br /> <br />Councilmember Etvig clarified the City played a role to bridge the finances on a no-money <br />transaction for approximately six months. This will ultimately be paid off by the bond note or <br />another source. <br /> <br />Councilmember Zimmerman inquired how money borrowed by the City would relate to this and <br />the City being bank qualified. <br /> <br />Finance Officer Lurid explained if the City stays under the ten million dollars the school would <br />be responsible for any fees associated with the City being non-bank qualified. <br /> <br />Motion by Councilmember Cook, seconded by Councilmember Kurak, to adopt Resolution #04- <br />02-041 authorizing the issuance of approximately $11.8 million in lease revenue bonds for Pact <br />Charter School and the execution of various documents in connection with the school project. <br /> <br />Councihnember Kurak clarified the City is not financing anything with these bonds. This is <br />merely a pass through bond and the City is covered on the back end so their rate is still protected <br />by this escrow fund. <br /> <br />Finance Officer Lund noted last year when the City issued its capital equipment certificates in <br />2003, PACT Charter School wanted to complete the bond issue in December. The school did <br />pay an amount of $14,000 because this made the City non-bank qualified. <br /> <br />Councihnember Elvig questioned if staff is certain that 8.9 million dollars is an ample bond <br />amount for the City this year. <br /> <br />P36 <br /> <br />CiD, Council/February 10, 2004 <br /> Page 8 of 18 <br /> <br /> <br />