02-08-2012 Council Agenda - Laserfiche WebLink

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(2147 Of - e'i e / &evzaa'a 515 Little Canada Road, Little Canada, MN 55117-1600 (651) 766 -4029 / PAX: (651) 766 -4048 www.ci.liale-canadamin.us MEMORANDUM MAYOR Bill Wegener COUNCIL Rick Montour John Kola Michael McGraw Shelly Boss ADMINISTRATOR Joel R. Ranson TO: Mayor 13lesener and Members of the City Council FROM: Joel Hanson, City Administrator DATE: February 3, 2012 RE: Approval of Concept for Conduit Financing -South Metro Human Services 'Chc City was approached by a representative of Bremer Bank on behalf of South Metro Human Services (SMIIS) asking if we would provide conduit financing for a $4.7 million transaction that consists of acquisition and rehabilitation of the former Ethan Allan store in Maplewood and refinancing of 17 group homes (one of which is in Little Canada). As the Council is aware, a municipality has a $10 million annual hank qualified limit for this type of purpose. 'This same limit would apply to tax exempt financing the City may undertake. The Council will also recall that we have utilized $2 million of this limit assisting the Presbyterian Ilonmes project in Arden Hills. The City of Maplewood has declined financing in this case. Staff believes this is due to their need to issue debt. Under our longstanding policy, we have charged a l% issuance fee thr new issues. In the case of Presbyterian Homes we reduced that fee to .65% which was the same rate Arden Hills was charging the project. In discussing this matter with Mary Ippel of Briggs and Morgan, she feels the top end of the range for this type of'project is more typically around .5% and can go much lower. In discussing this with Bremer Bank, they have been informed we would not go less than .5 %, subject to approval of the City Council. Given that Little Canada does not usually issue debt and that we will have $3.3 million of financing still available, staff feels this is a good opportunity to generate some additional dollars to the City with very minimal risk. The only risk we are taking is if we would need to issue bonds greater than the amount remaining ($3.3 million). I'he issuance fee for this project would be $23,500 (at .5 %), and Brenner Bank has indicated its acceptance of that amount. Staff world like the Council's concurrence with this approach prior to Bremer Bank and SMI -IS incurring legal costs to move forward with the transaction. cc: Mary Ippel, I3riggs and Morgan 1