Agenda - Economic Development Authority - 02/02/2005 - Special

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NO RTH LAN0 SECURITIES November 23, 2004 Mr. Jim Norman, Administrator Ms. Heidi Nelson, Assistant Administrator Ms. Diana Lund, Finance Director City of Ramsey 15153 Nowthen Blvd NW Ramsey, MN 55303 Re: Financing Considerations for a City Municipal Center Dear Jim, Heidi and Diana: As you know there are basically three options to the acquisition, construction and equipping of a new City Municipal Center facility: General Obligation Bonds - the City has the authority to issue General Obligation Bonds backed by the full faith and credit of the City. It would be necessary for the City to hold a special election on this .question. If the election question passes, the City has the ability to issue General Obligation Bonds. The bonds would be subject to the statutory debt limit. The City's current statutory debt limit margin is approximately $27,000,000. Lease Purchase Revenue Bonds - the City has the authority pursuant to Minnesota Statutes, Section 465.71 to acquire such a facility pursuant to a lease with option to purchase agreement. The City must have the right to terminate the lease purchase agreement at the end of any fiscal year during its term. Unless terminated at the end of any fiscal year the lease is payable from any revenues available to the City. Under current law, if the City wants the ability to levy taxes outside of levy limits to make the lease payments, the bonds must be issued by an Economic Development Authority (the "EDA") or a Housing and Redevelopment Authority ('HRA") of the City. The EDA and the HRA has the authority to issue revenue bonds payable solely from lease payments to be made by the City pursuant to the lease purchase agreement entered into between either the EDA or the HRA and the City. Under current law, a financing of this type does not require a referendum. In addition, because the project cost will iexceed $1.0 million, the entire lease purchase bond-financing amount counts against the City's statutory debt limit. General Obligation Capital Improvement Plan Bonds (NEW) - may be issued to fund lands, buildings or other improvements for the purpose of a City Hall, public safety facility and public works facility. These bonds would also be subject to the City's debt limit of approximately $27,000,000. In addition, Northland Securities, Inc. 45 South 7t~ Street, Suite 2500, Minneapolis, MN 55402 Toll Free 800-851-2920 Main 612-851-5900 Fax 612-851-5987 www. northlandsecurities.eom Member NASD and SIPC