HomeMy WebLinkAbout2014.06.16 CC PowerPoint Conduit BondsCITY OF HUGO
Charter School Lease Revenue
Bonds
2014 City Bonding Needs
• The two summer road projects (165tH
Street and Rosemary Way) will be funded
from a combination of developer escrows
and cash on hand.
• The City of Hugo will not be issuing
municipal bonds this year
• Allows us to issue conduit bonds and
receive a fee for doing so.
What Are Conduit Bonds
• Revenue Bonds issued by a governmental
agency (issuer) on behalf of the actual
borrower
• Typically, the borrower is a private
nonprofit 501 (c) (3) entity.
• May be issued for projects such as
nonprofit hospitals, housing developments,
and charter schools
Who Pays Back the Bonds
• The actual borrower, not the issuer, is
responsible for interest payments and
principal repayments
• The issuer is not a guarantor of conduit
bonds and is not obligated to repay the
bonds if the borrower fails to make the
payments
Request for Conduit Bonds
• The City of Hugo has been asked to
consider issuing Charter School Lease
Revenue Bonds
• Not to exceed $20 million
• On behalf of CS Property Noble, LLC
• Minnesota nonprofit liability company
• CSPN will use the bond proceeds to
finance the acquisition, construction, and
equipping of an approximately 95,000 sq.
ft. charter school facility to be leased to
Noble Academy.
• Will pay the City a fee of $50,000.
Noble Academy
• Noble Academy is approved as a K-8 charter
school by the Minnesota Department of
Education.
• Started in school year 2007-2008 in Brooklyn
Park.
• Moved to North Minneapolis after the 2008-2009
school year.
• There is now a desire to return to Brooklyn Park.
Risks to the City of Hugo
• City only serves as the bond "issuer."
is CSPN is the actual borrower and is solely
responsible for repaying investors.
• The bonds are not moral obligations on
the part of the City
• Will not constitute a debt of the City
• Will not affect our credit rating
• Borrower is solely responsible for on-going
reporting requirements.
Public Hearing
• Scheduled for this evening.
• Notice published in "The Citizen."
• Kou Vang from JB Realty is here to
answer any project questions.
• Mary Ippel from Briggs and Morgan is here
to answer any bonding questions.
Recommendation
• Approve Resolution Giving Preliminary
Approval to the Issuance and Sale of
Charter School Lease Revenue Bonds,
Series 2014