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REQUEST FOR COUNCIL ACTION Date: 4/22/2024 Item No.: 7.d. Department Approval City Manager Approval Item Description: Discuss Kids in Need Foundation State Bonding Request 1 2 Background 3 Kids in Need Foundation (KINF), currently headquartered at 2719 Patton Road, Roseville, 4 is a non-profit that provides resources to teachers and students in under-resourced schools 5 throughout the nation. Over the past few months, KINF has been working with legislators 6 to receive state bonding dollars to fund the purchase of the former Department of 7 Education building (1500 West Highway 36) for its new headquarters, warehouse, and 8 teacher resource center space. KINF estimates the total cost of the project is $10 million, 9 and are asking for state bonding money for half of that cost - $5 million. 10 11 During last year's legislative session, numerous non-profits received capital dollars from the 12 State of Minnesota. The funding for these projects came from general cash reserve funds 13 available at the time. In this session, KINF has been told that funding on that basis would 14 not be available due to the current level of state general fund reserves. As a result, they 15 are asking for the state to use General Obligation (GO) bonding to fund their project. 16 17 In order for KINF (or any non-profit) to receive state bonding funds, a political subdivision 18 must request the funds from the Legislature. A political subdivision that receives state 19 bonding funds for a project cannot simply act as a mere fiscal agent or a pass-through of 20 the funds. Instead, they must own the property/building where the funding will be used. The 21 political subdivision remains responsible for operating the bond financed property and the 22 public program associated with it, even if the non-profit abandons the project or property, 23 through a term of at least 125% of the useful life of the project, estimated to be 40 years. 24 The political subdivision is responsible for all spending of the state dollars, which would 25 include processing and paying of invoices, managing the construction and remodeling to 26 ensure compliance with the state approved plan, ensuring compliance with prevailing wage 27 requirements, and providing regular reports on the project. Once the project is complete, 28 the political subdivision must remain involved with the project to ensure continued 29 compliance with the public purpose identified as a part of the bonding award. 30 31 While there are creative arrangements that can be entered into such as long-term lease 32 backs, construction management contracts, and long-term operating agreements with the 33 non-profit, there would still need to be a substantial commitment of staff resources and 34 legal costs to negotiate and implement these arrangements. 35 36 It is staff's understanding that the groundwork has been laid for this project to be Page 1 of 2 Qbhf!218!pg!33: