CCP 07-15-1996 - Laserfiche WebLink

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. . . 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' -I 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 I 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 S400,000 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 - bonds. We have made the assumption that in any case, the financing type chosen will incorporate the . 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 - 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 I 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 fonn. 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 I