Minutes - Council - 02/10/2004 - Laserfiche WebLink

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City Attorney Goodrich advised page 117, paragraph 2A states the company would compensate the City for its inability to designate its bonds as bank qualified in 2004. Councilmember Kurak questioned when the funds will be put into escrow. Finance Officer Lund explained the funds will be held in escrow with the school's trust agency. In the loan agreement on Section 4.2B it states that the school will be responsible for payment to the City for any costs that are incurred from being non-bank qualified. Councilmember Kurak questioned if the escrow will be guaranteed in an account. City Attorney Goodrich explained the funds will come out of the bond sale and will be escrowed. A representative of PACT Charter School, explained the money will be held by the trustee of the bonds, which is Wells Fargo National Bank. Counci hnember Strommen clarified the school will be responsible for the fees if the City were to become non-bank qualified and that there is no other liability to the City for these bonds. City Attorney Goodrich explained page 119, paragraph 3G of the resolution states "...as provided in the Loan Agreement and Indenture, the Bonds are not to be payable from nor charged upon any fimds other than amounts payable pursuant to the Loan Agreement and money in the funds and accounts held by the Trustee which are pledged to the payment thereof; the City is not subject to any liability thereon..." City Attorney Goodrich advised the last sentence of this paragraph also states the bonds shall not constitute or give rise to a charge against the general credit or taxing powers of the City. It also states that the City will not be obligated to tax to pay on the bonds. Councilmember Strommen clarified for the record these bonds are done under the authority of Minnesota State Statute Section 469.1522 to 469.1651. The purpose language of this statute talks about redevelopment in blighted areas. The City has been informed this does qualify under that statute. City Attorney Goodrich explained a representative from the charter school was present in December and language in the resolution was changed based on comments by the Council. Councilmember 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 requirements in the amount of lA 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 closed on 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 15th. If it is not paid by May 15th the City is authorized to foreclose on the five acre piece of property. City Council/February 10, 2004 Page 8 of 18