06-14-2017 Council Packet - Laserfiche WebLink

Home Browse Search

8299079v1 Joel Hanson May 3, 2017 Page 2 this case, Bremer Bank, National Association (the “Lender”), who will purchase the Bonds and loan the purchase price of the Bonds directly to the Borrower. The Issuers are merely a conduit and the money and obligations flow only between the Lender and the Borrower. The Bonds and the resolutions adopted by the Issuers will recite that the Bonds, if and when issued, will not to be payable from or charged upon any of the Issuers’ funds, other than the revenues received under the Loan Agreements and pledged to the payment of the Bonds, and the Issuers are not subject to any liability on the Bonds. No holder of the Bonds will ever have the right to compel any exercise by the Issuers of their taxing powers to pay any of the principal of the Bonds or the interest or premium thereon, or to enforce payment of the Bonds against any property of the Issuers except the interests of the Issuers in payments to be made by the Borrower under the Loan Agreements. The Bonds will not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the Issuers, except the interests of the Issuers in payments to be made by the Borrower under the Loan Agreements. The Bonds are not moral obligations on the part of the State or its political subdivisions, including the Issuers, and the Bonds will not constitute a debt of the Issuers within the meaning of any constitutional or statutory limitation. The issuance of the Bonds will not affect the Issuers’ credit rating on bonds they issue for municipal purposes. Each city may issue up to $10,000,000 of its own and 501(c)(3) bonds each calendar year as bank-qualified bonds. None of the City of Saint Paul, the Saint Paul HRA, or the Saint Paul Port Authority have sufficient bank qualification capacity on their own to accommodate the Refunding Bonds, which are anticipated to be issued by Falcon Heights and Little Canada in the amount of approximately $7,375,000 each. Therefore, alternative cities were sought to act as the issuers for the Bonds. Under the federal tax law, alternative issuers are permitted, but a “nexus” between the jurisdictional city and the issuers is preferred. In this case, the Issuers are geographically proximate to the City of Saint Paul. And both Little Canada and Falcon Heights currently have residents who are students attending the Borrower. Each of the Issuers has agreed to and will receive a one-time issuer administration fee equal to ¼ of 1% of the principal amount that such Issuer issues. The Bonds will be issued in accordance with Minnesota Statutes, Sections 469.152 through 469.165 . A city may not issue bonds for a project located outside of its jurisdiction, as is requested in this case. However, the city in which a project is located may give permission for the issuance of bonds by another city. This is commonly referred to as “ host approval.” Under Minnesota Statutes, Section 471.656, subdivision 2(2), host approval may be given for a project located in the host city, by resolution of the host city.