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REQUEST FOR COUNCIL ACTION Date: 8/19/2002 Item No: V. D. Department ApprovaL Manager Approved: Agenda Section: Reports & Recommendations Item Description: Consideration of Issuing Tax-Exempt Bonds for Northwestern College Background State Statute provides for the issuance of tax-exempt bonds by municipalities for the benefit of educational institutions that are deemed to be in the best interest of the City, and results in no negative fiscal impact. The bonds are considered conduit debt, and do not constitute a financial obligation in any part by the City. However, the City must still meet all legal requirements prior to issuing any tax-exempt bonds, including holding a public hearing. Northwestern College has requested that the City provide tax-exempt financing for the purposes of funding student housing and a classroom portion of a new media center on the Northwestern College Campus located in Roseville and Arden Hills. The total amount of fmancing is appro�mately $1 0,000,000. Discussion Items At the July 29, 2002 Council Meeting, discussions were held on whether to proceed with issuing tax- exempt bonds for Northwestern College. The Council was generally agreeable to proceeding as long as Northwestern College agreed to stipulate that: 1) The proceeds of the bonds will not be used for religious purposes, and; 2) Should a legal challenge be filed calling into question the legality of the bonds or their tax-exempt status, Northwestern College will acquire new financing and pay off the bonds. The stipulations were added to provide additional assurances that the City would not face any e�tended negative publicity, should the legality of the issue be challenged. Northwestern College has agreed to these additional provisions. Both the City and Northwestern College have discretion to call for the redemption of the bonds, should a legal challenge be filed. It's worth reiterating that the City will not be using the legal opinion from the City's Bond Counsel, Briggs and Morgan, as to the legality of the bonds. Rather it will be relying upon the opinion of the law firm of Ice Miller, based out of Indianapolis, IN. This represents a departure from past practices. The following is an excerpt from a previous memo forwarded to the Council stating Briggs & Morgan's position on this matter: