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Attachment 3 <br />Qbusjdl!Usvehfpo! <br />Njdifmmf!Qjfusjdl! <br />Efdfncfs!2:-!3135! <br />Qbhf!3! <br />construct public facilities such as the Project. The Project is leased to the City pursuant to a Lease with <br />Option to Purchase Agreement (the "Lease"). The annual lease payments to be paid by the City to the <br />EDA under the Lease will be in an amount sufficient to pay the debt service on the EDA's revenue bonds. <br />The lease payments are pledged to the payment of the EDA’s revenue bonds. As required by state law, <br />the Lease must contain the annual right of the City to nonappropriate and terminate the Lease at the end <br />of any fiscal year. Any taxes levied to pay the lease payments are considered a special levy and outside <br />of any applicable levy limits because the lease payments are pledged to the payment of the revenue bonds <br />issued by the EDA. Because the bonds issued by the EDA are revenue bonds and are not a general <br />obligation of the City, the revenue bonds bear a higher interest rate than General Obligation Bonds issued <br />by the City. The market at the time the revenue bonds are sold determines the actual interest rate <br />differential. <br />c)City Revenue Bonds. The City is authorized to issue revenue bonds payable solely from the net <br />revenues derived from the Project after payment of operating expenses. The net revenues derived from <br />the Project may not be sufficient to pay the entire cost of the Project and therefore the principal amount of <br />the revenue bonds may need to be reduced. City revenue bonds bear a higher rate of interest because <br />there is no tax levy supporting the bonds. <br />In summary, the above identifies the various statutory authority for the issuance of bonds to <br />finance the Project. The issuance of General Obligation Bonds utilizing the port authority powers granted <br />to the City is the easiest procedural process for the City and would have the benefit of the lowest interest <br />rate. <br />If you have any other questions, please do not hesitate to contact me. <br />Sincerely, <br />Mary L. Ippel <br />MLI:cln <br />170364294v1 <br />Qbhf!31!pg!6: <br /> <br />