7.2. SR 04-21-2014 City of
Elk Request for Action
River
To Item Number
Mayor and Council 7.2
Agenda Section Meeting Date Prepared by
Public Hearinj Aril 21, 2014 Tim Simon, Finance Director
Item Description Reviewed by
Spectrum School Project Cal Portner, City Administrator
• Resolution Giving Host Approval to the Reviewed by
Issuance of Charter School Lease Revenue
Bonds
• Agreement for Payment in Lieu of Fees
Action Requested
• Approve,by motion,a resolution granting host approval to the issuance of charter school lease
revenue bonds under Minnesota Statutes,Sections 469.152 through 469.1651.
• Approve,by motion,an agreement for Payment In Lieu of Fees.
Background/Discussion
On March 17, 2014, at the City Council Work Session, the Council reviewed the request by Spectrum
High School for a Host Approval Agreement.
Spectrum High School currently owns a building at 17796 Industrial Circle NW. The school is looking at
purchasing a number of the units at 11044 Industrial Circle NE.
Because the city is anticipating issuing General Obligation Sewer Revenue bonds as tax-exempt financing
in 2014,we are not able to issue the amount of conduit bonds needed without exceeding our $10 million
bank-qualified limit. As was the case in 2012,Anoka County has given preliminary approval to issuance
of conduit bonds on their behalf.
Per state and federal law, the governmental entity with jurisdiction over the project site must hold a
public hearing and give approval to the issuance of the bonds even if the bonds are issued by another
issuer. 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 bonds or the bonding process.
The attached agreements have been reviewed by the City's bond attorney.
Financial Impact
The School has proposed a lump sum Payment In Lieu Of Fee (PILOF) in the amount of$56,043 due
within 10 days of receiving the property tax exemption from Sherburne County. The funds will be
released from escrow once the property tax exemption is received from the county. The amount was
determined based on city taxes for a low-grade office on a typical flex building over a 4-year period,
consistent with the 2012 agreement. The agreement does not waive any future fees the school might
incur.
P a w E R E U 6 Y
NaA f RE]
The lease revenue bonds issued would be no obligation of the City of Elk River.
Attachments
• Resolution giving host approval to the issuance of charter school lease revenue bonds under
Minnesota Statutes, Sections 469.152 Through 469.1651 (Spectrum High School Project).
• Agreement for payment in lieu of fees.
N:\Public Bodies\Agenda Packets\04-21-2014\Final\x7.2 sr spectrum host approval.docx
Extract of Minutes of a Meeting of the
City Council of the City of Elk River, Minnesota
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of
Elk River, Minnesota, was duly held at the City Hall in said City on Monday, April 21, 2014 at 6:00
P.M.
The following members were present:
and the following were absent:
Member introduced the following resolution and moved its adoption:
Resolution No. 14-
Resolution Giving Host Approval to the Issuance of Charter School Lease Revenue
Bonds Under Minnesota Statutes, Sections 469.152 Through 469.1655 (Spectrum
High School Project)
The motion for the adoption of the foregoing resolution was duly seconded by member
, and after full discussion thereof and upon vote being taken thereon, the
following voted in favor thereof-
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
440886v1 JSB EL185-19
Resolution Giving Host Approval to the Issuance of Charter School Lease Revenue
Bonds Under Minnesota Statutes, Sections 469.152 Through 469.1655 (Spectrum
High School Project)
BE IT RESOLVED, by the City Council (the "Council") of the City of Elk River,
Minnesota (the "City") as follows:
Section 1. General Recitals. The purpose of Minnesota Statutes, Sections 469.152
through 469.1655 as amended, (the "Act"), is, among other things, to promote the welfare of the
State of Minnesota (the "State") by the active attraction and encouragement and development of
economically sound industry and commerce to prevent so far as possible the emergence of blighted
and marginal lands and areas of chronic unemployment.
Section 2. Description of the Project.
(a) Spectrum Building Company (the `Borrower"), a Minnesota nonprofit corporation
and organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code") has proposed that the County of Anoka,Minnesota (the "Issuer") issue revenue bonds
under the Act, in one or more series, in an aggregate amount not to exceed $4,250,000 (the
"Bonds") to finance (i) the acquisition, construction, and improvements of the Borrower's charter
school facilities located at 11044 Industrial Circle NE in the City consisting of approximately 23,740
square feet of improvements, including gymnasium and classroom facilities and associated
infrastructure improvements (the "Facility"); (ii) the funding of a debt service reserve fund; (iii)
payment of a portion of the interest on the Bonds; and (iv) payment of the costs of issuing the
Bonds (collectively, the "Project"). The Facility will be owned by the Borrower and leased to and
operated by the Spectrum High School, a Minnesota nonprofit corporation (the "School").
(b) The City has been advised that the Bonds or other obligations, as and when issued,
will not constitute a charge,lien or encumbrance upon any property of the City or the Issuer, except
the Project and the revenues to be derived from the Project. Such Bonds or obligations will not be a
charge against the general credit or taxing powers of the City or the Issuer, but is payable from sums
to be paid by the Borrower pursuant to a revenue agreement.
Section 3. Recital of Representations Made by the Borrower.
(a) The Borrower has agreed to pay any and all costs incurred by the City in connection
with the issuance of the Bonds,whether or not such issuance is carried to completion.
(b) The Borrower has represented to the City that no public official of the City has
either a direct or indirect financial interest in the Project nor will any public official either directly or
indirectly benefit financially from the Project.
Section 4. Public Hearing.
(a) As required by the Act and Section 147(f of the Code a Notice of Public Hearing
was published in the City's official newspaper and newspaper of general circulation, for a public
hearing on the proposed issuance of the Bonds and the proposal to undertake and finance the
Project.
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440886v1 JSB EL185-19
(b) As required by the Act and Section 147(f of the Code the City Council has on this
same date held a public hearing on the issuance of the Bonds and the proposal to undertake and
finance the portion of the Project located within the jurisdictional limits of the City, at which all
those appearing who desired to speak were heard and written comments were accepted.
Section 5. Host Approval. The City Council hereby gives the host approval required
under Section 147(f of the Code and,pursuant to Minnesota Statutes X471.656, Subd. 2(2), the City
Council hereby consents to the issuance of the Bonds.
Section 6. Approval of PILOF Payment. In connection with the approval granted
herein to the issuance of the Bonds, and the anticipated exemption of the Facility from property
taxes due to the acquisition of the Facility by the Borrower, the City Council hereby accepts, as a
condition to the approval granted by this Resolution, payment of$56,043.20 in accordance with an
Agreement for Payment in Lieu of Fees to be executed by the Borrower and the City (the "PILOF
Agreement").
Section 7. Authorization to Execute Agreements. The form of the proposed PILOF
Agreement is hereby approved in substantially the form presented to the City Council, together with
such additional details therein as may be necessary and appropriate and such modifications thereof,
deletions therefrom and additions thereto as may be necessary and appropriate and approved by the
City's Bond Counsel prior to the execution of the PILOF Agreement, and the Mayor and City Clerk
of the City are authorized to execute the PILOF Agreement in the name of and on behalf of the
City and such other documents and certificates as the City's Bond Counsel considers appropriate in
connection with the issuance of the Bonds. In the event of the absence or disability of the Mayor or
City Clerk such officers of the City as, in the opinion of the City Attorney, may act on their behalf,
shall without further act or authorization of the City Council do all things and execute all
instruments and documents required to be done or executed by such absent or disabled officers.
The execution of any instrument by the appropriate officer or officers of the City herein authorized
shall be conclusive evidence of the approval of such documents and certificates in accordance with
the terms hereof.
John,J. Dietz,Mayor
ATTEST:
Tina Allard, City Clerk
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STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
I, the undersigned, being the duly qualified and acting Clerk of the City of Elk River,
Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of
minutes with the original thereof on file in my office, and that the same is a full, true and complete
transcript of the minutes of a meeting of the City Council of said City duly called and held on the
date therein indicated, insofar as such minutes relate to granting host approval to the issuance of
revenue bonds for a project in the City.
WITNESS my hand this day of 12014.
City Clerk
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440886v1 JSB EL185-19
AGREEMENT FOR PAYMENT IN LIEU OF FEES
BETWEEN
THE CITY OF ELK RIVER, MINNESOTA
AND
SPECTRUM BUILDING COMPANY
This Agreement for Payment in Lieu of Fees ("Agreement") is made this 21st day of
May, 2014 between the City of Elk River, Minnesota, a Minnesota municipal corporation
("City") and Spectrum Building Company, a Minnesota non-profit corporation ("SBC"). The
City and SBC are jointly hereinafter referred to as the "Parties."
RECITALS: SBC has requested that the County of Anoka, Minnesota (the "County") provide
conduit debt financing by issuing 501(c)(3) tax-exempt and taxable lease revenue bonds in an
aggregate principal amount not to exceed Four Million Two Hundred Fifty Thousand and
No/100 Dollars ($4,250,000.00) (the `Bonds"). The proceeds from the sale of the Bonds shall be
used to finance (i) the acquisition, construction, and improvements of the Borrower's charter
school facilities located at 11044 Industrial Circle NE in the City consisting of approximately
23,740 square feet of improvements, including gymnasium and classroom facilities and
associated infrastructure improvements (the "SBC Project"); (ii) the funding of a debt service
reserve fund; (iii) payment of a portion of the interest on the Bonds; and (iv) payment of the
costs of issuing the Bonds. The SBC Project is located on property legally described on Exhibit
A attached hereto and incorporated herein (the "Property").
The City has agreed, in accordance with applicable Federal and Minnesota law, to give local host
approval to permit the Bonds to be issued by the County or another issuer in the event that
County declines. By granting said host approval, the City will not be eligible to receive funds
paid to issuers in these circumstances.
The Parties have agreed that, as consideration for providing host approval, the Borrower shall
pay the City $56,043.20 not later than 10 days following a determination by the City that the
Property is real estate tax exempt according to Sherburne County records.
Further, Parties agree and acknowledge that the amount to be paid by SBC to the City is fair and
reasonable notwithstanding that Spectrum High School, tenant of the SBC Project (the
"Tenant"), is a public charter school funded by the State of Minnesota.
I. TAX EXEMPTION. The Parties agree that the payments due under this Agreement
shall be conditioned upon the designation of the Property as exempt from real estate
taxation pursuant to Minnesota Statutes, Section 272.02, Subd. 42.
2. PAYMENT BY SBC TO THE CITY. As consideration for providing the City providing
host approval as permitted by Minnesota law, SBC shall pay the City the amount of
$56,043.20 not later than 10 business days following a determination by the City that
the Property is real estate tax exempt according to Sherburne County records. In order
to provide for such payment, upon the issuance of the Bonds, SBC shall deposit
$56,043.20 with the trustee for the Bonds with instructions to hold said amount until
4418470 EL185-19
the trustee receives notification from the City that such payment is due in accordance
with this Agreement. Such payment shall be in addition to any ordinary and usual
charges by the City for land use approvals, building permits and other approvals, if
any, required by the City.
3. DEFAULT. In the event of a default hereunder, the City may enforce this Agreement
and may exercise any and all rights or remedies permitted by law. SBC agrees to pay
all costs of collection, including attorneys' fees, if any payment is not made when
due, whether suit is brought or not.
4. COMMUNICATIONS. All notices and other communications shall be sufficiently given
when delivered by United States mail or in person to the applicable address stated
below or by such other means as shall provide the sender with documentary evidence
of such delivery. The Parties agree to provide notice of any new address to the other
party within 10 days of such address change.
5. INVALIDITY OR UNENFORCEABILITY. If any provision of this Agreement is held
invalid or unenforceable to any extent, the remainder of this Agreement shall be
enforced as permitted by law.
6. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the Parties
on the subject matter of this agreement and supersedes all prior contracts, agreements,
whether oral or written with respect thereto. Exhibit A attached hereto is specifically
included in this Agreement.
7. ENFORCEABILITY. Each of the Parties represents and warrants that the execution,
delivery and performance of this Agreement (i) has been duly authorized and does not
require any other consent or approval; (ii) does not violate any article, bylaw or
organizational document or any law, rule, regulation, order or decree by which it is
bound; and (iii) will not result in or constitute a default under any indenture, credit
agreement or other agreement or instrument to which any of them is a party.
Each party represents that this Agreement shall constitute the legal, valid and
binding agreement of the Parties enforceable in accordance with its terms.
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4418470 EL185-19
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and
year first above written.
ADDRESS: CITY OF ELK RIVER, MINNESOTA
a Minnesota municipal corporation
13065 Orono Parkway
Elk River, Minnesota 55330
Phone: 763-635-1000
Fax: 763-635-1090
www.elkrivermn.gov
By:
Its: Mayor
By:
Its: City Clerk
441847vl EL185-19
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ADDRESS: SPECTRUM BUILDING COMPANY
a Minnesota non-profit corporation
17796 Industrial Circle N.W.
Elk River, MN 55330
Phone: 763-241-8703
Fax: 763-633-1380
www.spectirumhighschool.org
By:
Its:
By:
Its:
S-2
441847v1 EL185-19
EXHIBIT A
PROPERTY LEGAL DESCRIPTION
The real property situated in the City of Elk River, Sherburne County, State of Minnesota,
described as follows:
Parcel 1 (School Building):
Lot 3, Block 1, Elk River Business Park.
Sherburne County, Minnesota
Abstract Property
Parcel 2 (Athletic Fields):
The Southeast Quarter (SE 1/4) of the Southwest Quarter(SW 1/4) of Section 36, Township 33,
Range 26, Sherburne County, Minnesota, Except: That part of the East 75.00 feet of said
Southeast Quarter (SE 1/4) of the Southwest Quarter (SW 1/4), which lies Southerly of the
Westerly extension of the North line of the South 600 feet of the Southwest Quarter (SW 1/4) of
the Southeast Quarter (SE 1/4) of said Section 36, and except that part platted as Sherburne
County Highway Right of Way Plat No. 7.
Sherburne County, Minnesota
Abstract Property
[Parcel 3 ( M
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