CCP 06-24-1996 - Laserfiche WebLink

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I I succinctly describing the credit to the market, and the fact that the bond rating will reflect the lowest rating of any of the member issuers. .- Due to the number of parties involved and the nature of the project, it is assumed that a voted authorization will not be sought for this project and that other financing authorization will be employed. I General Obligation - Mighty Ducks Authority . Minnesota Statute, Chapter 475.58 provides authorization for the financing of ice facilities. The authorization remains in effect until December 31, 1997. In summary, it provides that indoor ice arenas to be used primarily for youth athietic activities can be financed by municipal I obligations without the requirement of an election if all the following conditions are met: (1) the facility revenues are pledged to the financing; I (2) the facility and its financing are approved by at least two of the following governing bodies of a) the city, b) the school district, or c) the county, where the I facility is located; (3) the governing body of the municipality finds, based on an analysis of a professional experienced in finance, that the revenues and other available I money will repay the obligations, without reliance on a property tax levy or general purpose state aid; and Ie (4) no petition for election is timely filed. At least 30 days before issuing its obligations, the municipality has to hold a public hearing for which due notice was given. The obligations can be issued unless a petition signed by ten . percent or more of the number of voters voting in the last general election is received within 20 days. "Municipality" of purposes of this section includes cities, townships, counties, and school districts. I This legislation is commonly referred to as the "Mighty Ducks" bonding legislation. Absent this legislation the issuance of general obligation bonds for this purpose would require an election. I The specific authorization contained in this portion of the Statute provides the most straightforward, cost-effective means of issuing debt for this project. It does not provide for funding for operating costs, but does offer the investor strong assurance that the debt will be I repaid. I Bond Issuance Generally On strictly a cost basis, general obligation bonds under 475.58 offer the lowest cost alternative. The higher the rating of the lowest rated first line guarantor, the lower the I borrowing costs. Fairly similar results can be achieved with a lease purchase revenue bond if it is fully backed by general obligation leases. I In either case it is safe to assume that an investment grade credit can be structured and bond insurance purchased if it is cost effective. I. As mentioned earlier the general obligation pledge provided for in 475.58 may be. useful when incorporated into other financing types such as lease purchase revenue bonds and may be essential in the fonnulation of a sound financing mechanism for this project. If a rated I' DRAFT REPORT 5/30/96 Page 10