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Department Approval <br />MEQUEST FOR, COUNCIL ACTION <br />Date: 03/17/08 <br />Item No.: I La <br />City Manager Approval <br />Item Description: Public Hearing to Issue Tax-Exempt Revenue Bonds on Behalf of <br />Concordia Academy. <br />BACKGROUND <br />2 Under Federal and State Statutes, municipalities are authorized to pledge their bond issuance authority to <br />1) <br />15 non-profit groups for the benefit of non-sectarian educational facilities (or the non-sectarian portion of the <br />44 facility) . If a municipality expects to issue or receive tax-exempt bond proceeds, either directly or <br />5 indirectly through separate establishments, it is required by federal law to hold a public hearing. <br />7 Concordia Academy, located at 2400 North Dale Street in Roseville, has requested that the City of <br />8 Roseville assist in the issuance of tax-exempt revenue bonds to finance improvements at both their <br />Roseville and Bloomington facilities. The debt is considered conduit debt, and does not constitute a legal <br />or moral obligation on the part of the City. However, the City must still meet all legal requirements prior to <br />issuing any tax-exempt bonds, including holding a public hearing. <br />2 <br />The total amount of financing is approximately $7 million. The City has participated in financing <br />�Z arrangements for similar entities most recently in 2007. The City s Bond Counsel of Briggs & Morgan, has <br />5 reviewed the legal and financing agreements, and will provide an unqualified opinion as the legality of the <br />bonds and their tax-exempt status. <br />�7 POLICY OBJECTIVE <br />Generally speaking, the public policy reason for City participation in these financings is to promote greater <br />investment in the City's educational facilities than would otherwise occur by market factors alone. <br />20 Allowing the bonds to be issued tax-exempt makes the bonds more attractive to investors and results in <br />2 lower borrowing costs compared to traditional financing methods. This in turn, provides more available <br />22 dollars for the proposed project. <br />2`,u FINANCIAL IMPACTS <br />2,4 There is no financial impact on the part of the City. All costs of debt issuance will be paid by the applicant. <br />25 STAFF RECOMMENDATION <br />2 6,, Staff has reviewed the application and believes all necessary legal and financing provisions will be met. <br />27 Staff recommends the Council set a public hearing to consider the issuance of tax-exempt bonds for <br />28 Concordia Academy. <br />Page I of 10 <br />