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Department Approval �. �: ,��c Item Description: BACKGROUND �i1 `Y ��r I REQUEST FOR COUNCIL ACTION Date: 06/09/14 Item No.: l l.a City Manager Approval ��..-��.�C..� Public Hearing to Acknowledge the Expenditure of Tax-exempt Funds for the University of Northwestern-St. Paul. Under Federal and State Statutes, municipalities are authorized to pledge their bond issuance authority to non-profit groups for the benefit of higher educational facilities. If a municipality expects to issue or receive tax-exempt bond proceeds, either directly or indirectiv throu�h separate establishments, it is required by federal law to hold a public hearing. The Wisconsin Public Facilities Authority intends to proceed with the issuance of tax-exempt bonds for the benefit of the University of Northwestern-St. Paul located in Roseville. The proceeds of the bonds will not exceed $26,000,000 and will be used to finance or reimburse the University for the cost of certain higher education facilities and related costs, including but not limited to: •3 Refund the outstanding bonds from the 2002 and 2008 Northwestern College bonds ❖ Finance the acquisition of the Country Inn and Suites and conversion of that facility into student housing :• Construction of new athletic facilities �:• Fund bond-related costs including; capitalized interest, debt service reserve fund, and issuance costs where applicable. The Bonds will not constitute a charge, lien or encumbrance upon any property of the City. Such Bonds will not be a charge against the general credit or taxing powers of the City, but are payable from sums to be paid by Northwestern pursuant to a separate revenue note with their eventual lender. The purpose of the public hearing is to allow for public comment on the proceeds to be expended. POLICY OBJECTIVE Generally speaking, the public policy reason for City participation in these tax-exempt financings is to promote greater investment in the City's higher educational facilities. Allowing the bonds to be issued tax-exempt makes the bonds more attractive to investors and results in lower borrowing costs compared to traditional financing methods. This in turn, provides more available dollars for the proposed project. Should the Council deny the use of tax-exempt proceeds to be spent in the City, Northwestern would be required to finance the acquisition and improvements using more costly financing methods. Page 1 of 2