03-14-2012 Council Agenda - Laserfiche WebLink

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l 515 Lillie Canada Road, t,ilttc Canada, MN 55117 -1600 (651) 766 -4020 / FAX: (651) 766 -4048 www.el.littte- canacla.mn.us MEMORANDUM _Lame 9ateach TO: Mayor I3lesencr and Members of the City Council FROM: Joel Hanson, City Administrator DATE: March 9, 2012 RE: Community Services Revenue Bonds -South Metro Human Services MAYOR 13111 131esener COUNCIL, lilcl< Montour John Nets Michael McGraw nv Shelly Boss ADMINISTRATOR Joel R. Hanson The purpose of this evening's Public Hearing is to consider giving approval to the issuance of Community Services Revenue Bonds on behalf of South Metro Human Services (SMHS) in the amount of $4.9 million to finance the acquisition and rehabilitation of the former Ethan Allan store in Maplewood and refinancing of 17 group homes (one of which is in Little Canada). (Please note that when the City was first approached with this concept, the issuance amount was $4.7 million.) As the Council is aware, a municipality has a $10 million annual bank 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 Biomes project in Arden Hills. The City of Maplewood has declined financing in this ease. Staff believes this is due to their need to issue debt. Given that Little Canada does not usually issue debt and that we will have $3.1 million of financing still available, staff feels this is a good opportunity to generate some additional dollars to the City with very minimal risk. "These bonds are in no way an obligation of the City of Little Canada. The only risk we are taking is i f we would need to issue bonds greater than the amount remaining ($3.1 million). Potential projects that may require the City to issue bonds include street improvements, a Public Works project, the refunding of any existing debt. Tax Increment Financing debt and any taxable debt is outside this $10 million limit. As was previously discussed and based on the recommendation of Briggs and Morgan relative to typical issuance fees, the City would charge a .5% issuance fee ($24,500). The .5% issuance fee has been discussed with Bremer Bank and SMI -IS, and they have indicated acceptance of that amount. Bremer Bank and SMHS would also be responsible for reimbursement of any legal costs incurred by the City in this transaction. Staff would recommend approval of the Issuance of Community Services Revenue Bonds for South Metro Human Services Project in the amount of $4.9 subject to payment of a .5% issuance fee and reimbursement of the City's legal expenses relative to this transaction. cc: Mary Ippel, Briggs and Morgan 1