91-057 RES
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RESOLUTION 91 - 57
RESOLUTION FOR THE CITY OF ELK RIVER
A RESOLUTION APPROVING THE LEASE PURCHASE AGREEMENT BETWEEN THE CITY OF
ELK RIVER AND ITS ECONOMIC DEVELOPMENT AUTHORITY AND MAKING AN IRREVOCABLE
ALLOCATION FOR PURPOSES OF THE SMALL ISSUER EXCEPTION TO REBATE
WHEREAS, the city hall and law enforcement facility currently leased and
operated by the City of Elk River (the City) is inadequate to meet the
present and future needs of the City; and,
WHEREAS, the City Council of the City has determined that the construction of a
new city hall and law enforcement facility (the Facility) is necessary
to meet the governmenta~ purposes of the City; and,
WHEREAS, the Authority will issue its $2,740,000 aggregate principal amount of
City Hall and Law Enforcement Facility Revenue Bonds (City of Elk
River Lease Purchase Obligation) Series 1991 (the Bonds), to finance
the construction, equipping, and furnishing of the Facility; and,
WHEREAS, the Authority proposes to lease the Facility to the City pursuant to a
Lease Purchase Agreement dated as of November 1, 1991 (the Lease); and,
tit WHEREAS, earnings on the investment of the proceeds of the Bonds will not be
subject to the arbitrage rebate requirement of Section 148(f)(I) of
Internal Revenue Code of 1986, as amended (the Code), if the Bonds
qualify for the small issuer exception to rebate pursuant to section
148(f)(4)(D) of the Code; and,
WHEREAS, the small issuer exception to rebate is available only to governmental
units with general taxing powers, Section 148(f)(4)(D)(i)(I) of the
Code, and subordinate entities of such governmental units, Section 148
(f)(4)(D)(iv) of the Code. An issuer issuing bonds on hehalf of a
governmental unit with general taxing powers is treated as a
subordinate entity of that governmental unit, Section 148(f)(4)(D)(iv)
of the Code. The Authority is issuing the Bonds and advancing the
proceeds to the City to construct the Facility. The Facility will be
leased to the City and the City will have the option to purchase the
Facility at the end of the lease term; and,
WHEREAS, the proceeds of the Bonds will finance a facility for governmental
use, payment of the principal of and interest on the Bonds will be
secured by payments derived from property used for a governmental use,
and the proceeds of the Bonds will not finance loans to persons other
than governmental units, such that no Bond which is part of the Bond
issue is considered a private activity bond within the meaning of
Section 141(a)(1) of the Code; and,
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~AU I!-Z;~
James A. Tralle, Mayor
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WHEREAS, more than ninety-five percent (95%) of the net proceeds of the Bonds
used to finance a facility that will be used for local governmental
activities of the City, and the City is a governmental unit the
jurisdiction of which is entirely within the jurisdiction of the
AuthoritYi and,
WHEREAS, the aggregate face amount of tax-exempt bonds (other than private
activity bonds) the City and the Authority reasonably expect to issue
during calendar year 1991 does not exceed $5,000,000 (the Annual
Limitation)i and,
WHEREAS, no bonds (other than private activity bonds) have been previously
issued by the City or the Authority during calendar year 1991, so that
the entire Annual Limitation of $5,000,000 is currently available for
use by the City or allocation to the AuthoritYi and,
WHEREAS, Section 148(f)(4)(D)(iv) of the Code requires the City, prior to the
issuance of the Bonds, to irrevocably allocate to the Authority, as
issuer of the Bonds, a portion of the Annual Limitation bearing a
reasonable relationship to the benefits received by the City from the
issuance of the Bonds; and,
WHEREAS, the City is benefiting from the issuance of the Bonds in at least the
aggregate face amount of the Bonds ($2,740,000) because the cost of
constructing, furnishing and equipping the Facility is expected to
exceed $2,740,000.
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NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Elk River
does hereby authorize the approval of the Lease substantially in the
form attached hereto, with such additions, modifications, and
omissions as are deemed appropriate by the authorized representatives
of the City, as evidenced by their signatures thereto.
BE IT FURTHER RESOLVED that for purposes of the small issuer exception to
rebate, the City irrevocably allocates to the Authority a portion of
its Annual Limitation of bond issuance for 1991, in the amount of
$2,740,000.
Passed and adopted by the City Council of the City of Elk River this 7th day of
October, 1991.
ATTEST:
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