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Use of state bond-financed property <br />Page Two <br /> <br />term use or lease agreement where the term is equal to the expected life of the facility. The guideline <br />used by the Department of Finance is that a use or lease agreement cannot be for a term of more than <br />one-half the expected life of the facility. <br /> <br />A community can sell bond-financed property only when it determines that the public program <br />operated within the facility is no longer needed, the facility is sold for fair market value and the sale <br />is approved by the Commissioner of Finance. Therefore, a community cannot enter into an agreement <br />to sell a bond-financed facility to the non-profit organization for a set amount at some future time. <br /> <br />A second constitutional provision requires the state bond proceeds be used to finance the acquisition <br />or improvement of a capital nature. In the course of conducting our review of your request, we will <br />need to be assured that all of your project costs to be financed by state bonds meet this requirement. <br /> <br />A third constitutional requirement is that there must be a governmental program operated within the <br />facility. Elk River must be authorized by law to operate the governmental program which is proposed <br />for the facility and must be responsible for the continued operation of the governmental program. <br />This may mean that the program operated by the non-profit organization becomes the governmental <br />program and your community must have ongoing control of the program. It is like any department <br />of your city which must annually have a budget approved by your city council. The ultimate decision- <br />making authority for the program must be with your city council. <br /> <br />Further, should the Minnesota Sports Federation no longer operate the governmental program for <br />you, then you have the responsibility to continue the operation of the program or find another <br />organization to run the program for you. The State's policy, as stated in the grant agreements, is the <br />local government must repay to the state the amount of the grant should the governmental program <br />be terminated. <br /> <br />I would suggest that you consult your legal advisors on the responsibilities your community will <br />assume should it receive bond funds for your proposed project, and to be certain that you will wish <br />to continue to make an application for such funds. Peter Sausen, Assistant Commissioner, is available <br />to discuss these issues with you. His phone number is 612-296-8372. <br /> <br />Warmest regards, <br /> <br />Wayne Simoneau <br />Commissioner <br /> <br /> <br />