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City of Mounds View, Minnesota February 28, 1996 Page 4 110 establishment of a redevelopment project is governed by Minnesota Statutes, Section 469.028. To undertake a redevelopment project, the HRA must apply to the governing body (City Council or County Board). The application includes the redevelopment plan, a statement of the proposed method of financing the project and the written opinion of the planning commission. Before approving the redevelopment plan, the governing body must hold a public hearing. Notice of the hearing shall be published not less than 10 nor more than 30 days prior to the hearing. To approve the project, the governing body must make the following findings by resolution: 1. The land in the project area would not be made available for redevelopment without the financial aid to be sought; The redevelopment plan will afford the maximum opportunity, consistent with the needs of the locality as a whole, for the redevelopment of the areas by private or public enterprise; and 3. The redevelopment plan conforms to the general plan for the development of the locality as a whole. The statutes governing EDA's create a much less cumbersome process. The EDA may, by its ,lution, issue revenue bonds. This action does not require the approval of any other :ince the EDA has been created, no other public hearings are required. However, an EDA exercising HRA powers would be required to follow the process described above. Considerations for Usina Lease Financing Both the annual appropriation lease and the lease revenue bonds have the same underlying security. They also share many important considerations in their use: 1. Applications. Leases are a viable option for municipal buildings, public safety facilities and public works buildings. This finance option also has applications in shared facilities, such as the proposed City/School District joint facility. 2. Essentiality. Not all facilities are equally well-suited to lease financing. The more essential the facility, the less likely that the issuer will fail to appropriate funds to make lease payments. For example, it is difficult to imagine circumstances where a city would fail to appropriate funds on a lease to finance a city hall. The perception of security can help to overcome the risks of the actual security. 3. Rating. Like revenue bonds, lease financing constitutes a new rating. This opportunity creates flexibility in the decision to seek a rating from the rating agency. Past experience suggests that an annual appropriations pledge results in a rating one-half to one grade lower than a general obligation rating. 4. Arbitrage Rebate. An annual appropriation lease using COP's may be exempt from arbitrage rebate through either the $5 million small issuer exemption or the two-year expenditure test. Lease revenue bonds issued by an HRA or an EDA are not eligible for the small issuer exemption. It is important to note that even though the bonds cannot take advantage of the small issuer exemption, they would count against the issuer's calendar year limit. 4110