9.1. SR 03-17-2014 City of
Elk - Request for Action
River O.
To Item Number
Mayor and Council 9.1
Agenda Section Meeting Date Prepared by
Work Session March 17, 2014 Tim Simon, Finance Director
Item Description Reviewed by
Host Approval Request—Spectrum School Project Cal Portner, City Administrator
Reviewed by
Action Requested
Consider Spectrum School's request for host approval for issuance of charter school lease revenue bonds.
Background/Discussion
Spectrum School currently owns a building at 17796 Industrial Circle NW. In 2012, the city hosted a
public hearing for the issuance of charter school lease revenue bonds issued by Anoka County. The
school proposes to purchase some of the units at 11044 Industrial Cir. NW and asked the city to again
host a public hearing. Anoka County has preliminarily indicated they would again issue the bonds.
Per state and federal law, the governmental entity with jurisdiction over the project site must hold a
public hearing and give approval for the issuance of the bonds even if the bonds are issued by another
issuer (Anoka County). The city, county,and state meet the host jurisdiction requirement. Holding a
public hearing as a host assumes no risk to the city with regard to the bonds or the bonding process.
Since Elk River Municipal Utilities recently refunded bonds tax exempt and we plan to issue bonds for
our wastewater plant expansion we are not able to issue the amount of conduit bonds needed without
exceeding our$10 million bank-qualified limit. Therefore,they are working with Anoka County to issue
the bonds tax exempt as they did in 2012.
School officials will be in attendance to answer any questions.
Financial Impact
In 2012,when the Council agreed to provide host approval, Spectrum agreed to a Payment In Lieu of Fee
(PILOF). The PILOF was based on four years of city taxes since the building they were issuing the
bonds for would become tax exempt upon purchase.
Spectrum has indicated interest in another PILOF agreement as in 2012. Staff worked with the county
assessor to determine appropriate city taxes on the units they plan to acquire. Based on the current value,
taxes would be $8,603.61 per year or$34,414.44 over four years. The county assessor also provided an
estimate based on a low-grade office on typical flex buildings,which would be $14,010.80 per year or
$56,043.20 for four years.
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