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132046990v3 <br /> <br />Chris Heineman <br />March 20, 2024 <br />Page 2 <br /> <br /> <br /> <br />The Note and the resolutions adopted by the Issuer will recite that the Note, if and when <br />issued, will not to be payable from or charged upon any of the Issuer’s funds, other than the <br />revenues received under the Loan Agreement and pledged to the payment of the Note, and the <br />Issuer is not subject to any liability on the Note. No holder of the Note will ever have the right to <br />compel any exercise by the Issuer of its taxing powers to pay any of the principal of the Note or <br />the interest or premium thereon, or to enforce payment of the Note against any property of the <br />Issuer except the interests of the Issuer in payments to be made by the Borrower under the Loan <br />Agreement. The Note will not constitute a charge, lien, or encumbrance, legal or equitable, upon <br />any property of the Issuer, except the interests of the Issuer in payments to be made by the <br />Borrower under the Loan Agreement. The Note is not a moral obligation on the part of the State <br />or its political subdivisions, including the Issuer, and the Note will not constitute a debt of the <br />Issuer within the meaning of any constitutional or statutory limitation. <br />The issuance of the Note will not affect the Issuer credit rating on Note they issue for <br />municipal purposes. <br />Each city may issue up to $10,000,000 of its own and 501(c)(3) bonds each calendar year <br />as bank-qualified bonds. None of the City of Saint Paul, the Saint Paul HRA, or the Saint Paul Port <br />Authority have sufficient bank qualification capacity on their own to accommodate the Note, <br />which is anticipated to be issued by Little Canada in the amount of approximately $10,000,000. <br />Therefore, an alternative city was sought to act as the issuer for the Note. Under the federal tax <br />law, alternative issuers are permitted, but a “nexus” between the jurisdictional city and the issuer <br />is preferred. In this case, the Issuer is geographically proximate to the City of Saint Paul. And <br />Little Canada currently has residents who are students attending the Borrower. Bonds issued for <br />affordable housing where the owner is a for-profit entity – not a 501(c)(3) organization – do not <br />count against the $10,000,000 bank qualification limit. Therefore, the City may also issue bonds <br />for the Rice and Demont Apartments project in 2024 should it obtain a bonding allocation. It is <br />our understanding that the City does not anticipate issuing any bonds for its own purposes or any <br />other 501(c)(3) organization in 2024. <br />The Issuer has agreed to and will receive a one-time issuer administration fee equal to 1 2⁄ <br />of 1% of the principal amount that the Issuer issues. <br />The Note will be issued in accordance with Minnesota Statutes, Sections 469.152 through <br />469.165 . A city may not issue bonds for a project located outside of its jurisdiction, as is requested <br />in this case. However, the city in which a project is located may give permission for the issuance <br />of bonds by another city. This is commonly referred to as “ host approval.” Under Minnesota <br />Statutes, Section 471.656, subdivision 2(2), host approval may be given for a project located in <br />the host city, by resolution of the host city.