CCP 06-24-1996 - Laserfiche WebLink

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I transaction is desired it is important that 100% of the debt service be covered by a general . obligation pledge. This requirement affects the business agreements between parties concerning guaranteed usage levels, access to unallocated time, and calculation of the parties' -. obligations in the event revenues are inadequate to cover debt service and operating and maintenance costs. Although a school district can obligate itself as issuer and/or general obligation guarantor . under the Mighty Ducks legislation, they must seek approval from the Department of Education through the Review and Comment process before constructing facilities that require bonding in excess of $400,000 and are to be used for educational purposes. . Potential Issuers The potential issuers of bonds for the MASC project would include the primary users, with the . exception of MASC, Anoka County, and the Anoka County HRA, or some combination of the above. MASC does not have general taxing authority nor do they have authorization to issue I bonds. We have made the assumption that in any case, the financing type chosen will incorporate the I general obligation pledge of the users. Disregarding the actual authority under which the bonds may be issued, the general obligation pledge could take the form of: (1) A single issuer whose general obligation is the first line of defense for I bondholders. Underlying agreements with the other parties backed by their individual general obligations would limit the issuer's financial exposure. (2) An issue sold under a joint party agreement among several of the primary users, e. with underlying agreements with the other parties limiting the issuers' financial exposure. I (3) A joint party agreement among all of the obligated users. In each case, the ultimate responsibility for an initial percentage of debt service would be . guaranteed by each party. A process for reallocation of the assigned debt service could be established if desired. The borrowing rate for the bonds will rely on market acceptance of the financing vehicle and . the perceived credit of the transaction. With an underlying general obligation pledge, the bonds should be ratable in some form. If a standard general obligation bond is sold, the rating . will reflect the lowest general obligation credit rating of the first obligor(s). For a lease purchase transaction, the rating is usually reduced 1/2 step from the lowest general obligation credit rating of the first obligor(s), if the facility is perceived to be an essential one. Non- essential facility lease purchase obligations drop one full credit grade. . I . e. DRAFT REPORT 5/30/96 Page 11 .