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4 ,/ r; 2;114 - eane Xfe <br />515 Little Canada Road, Little Canada, MN 55117 -1600 <br />(651) 766 -4029 / FAX: (651) 766 -4048 <br />www.ei.little- canada.mn.us <br />MEMORANDUM <br />TO: Mayor Blesener and Members of the City Council <br />FROM: Joel Hanson, City Administrator <br />DATE: January 7, 2005 <br />IVIAYOR <br />Michael 1. Fahey <br />COUNCIL <br />Jim LaValle <br />Matt Anderson <br />Rick Montour <br />B111 Blesener <br />ADMINISTRATOR <br />Joel R. Hanson <br />RE: Sponsorship of Tax- exempt Financing for New Harmony Care Center, <br />Inc. <br />Staff was contacted by New Harmony Care Center, Inc. (see attached for more detail as to the <br />organization and the project) about our interest in sponsoring tax - exempt financing for an <br />upcoming project in St. Paul. The reason they are approaching other communities instead of <br />St. Paul relates to the federal limitation on the amount of "bank- qualified" tax - exempt <br />financing a public entity may undertake in any one calendar year. (This applies to the normal <br />bonding uses by the City as well as any sponsorship of non - profit entities.) The limitation is <br />$10,000,000. St. Paul will typically exceed this amount for typical "city" uses. Little Canada, <br />on the other hand, has not issued any debt for the past few years. Therefore, we could be in <br />the position to sponsor this project impacting our operations given the fact we have no current <br />plans for debt issuance in 2005. Even if a special need arose, we would still have $5.5 million <br />to work with and that would be a huge debt issue for the City. <br />The project has an estimate value of $4.5 million. By sponsoring this project, we do not incur <br />any credit obligation or risk to the city. The benefit to Little Canada in doing this would be to <br />generate the one percent (1 %) bond issuance fee we would collect ($45,000) in addition to <br />having our expenses reimbursed (bond counsel). <br />At this time, staff is seeking the Council's direction as to whether or not you would like us to <br />further pursue this possibility. (No obligation on the part of the City would be created at this <br />time other than an indication to continue to work with New Harmony on exploring this <br />possibility. <br />ft would be my recommendation to continue investigation of this possibility, subject to any <br />questions or concerns you may have. If we pursued this matter further, Briggs & Morgan <br />(Mary 1ppel) would serve as bond counsel and New Harmony would have to agree to be <br />