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,.Aty of <br /> <br />· <br />lver <br /> <br />TO: <br /> <br />FROM: <br /> <br />Item #4.3. <br /> <br />MEMORANDUM <br /> <br />Mayor & City Council <br /> <br />Lori Johnson, Asst. City Administrator/ <br />Finance Director <br /> <br />DATE: <br /> <br />SUBJECT: <br /> <br />July 27, 1998 <br /> <br />Guardian Angels <br /> <br />At Monday's meeting the City Council is being asked to consider action on <br />the various items necessary in order for the city to assist Guardian Angels in <br />the sale of pooled revenue bonds. First, the city needs to act on the <br />agreement whereby it will be reimbursed for all of its expenses related to this <br />bond issue. Second, the City Council must hold public hearings on the <br />housing program and the issuance of the bonds. Third, the City Council is <br />asked to consider a resolution authorizing the issuance and sale of the bonds <br />and approving the housing program. Copies of the pertinent documents are <br />attached for your review. This memo will briefly summarize each of the <br />action items. <br /> <br />Authorizing Guardian Angels to issue $15,000,000 in pooled revenue <br />bonds will equate to higher interest costs on any city bonds issued in <br />1998. An agreement has been drafted setting out the provisions by <br />which Guardian Angels must reimburse the City of Elk River for all of <br />the costs associated with assisting Guardian Angels in the issuance of <br />these pooled revenue bonds. The intent is that when the city sells <br />bonds, a calculation will be made to determine the difference between <br />the interest rate on the bonds and what the interest rate would have <br />been had it been a bank qualified issue. A present value of the <br />additional interest costs will be determined and Guardian Angels will <br />make a one time payment to the city in calendar year 1998 to <br />compensate for its additional interest expense on each bond issue. The <br />agreement does not cap the amount of bonds that the city can issue in <br />1998 and also includes a provision that any additional legal, fiscal <br />consultant, or other related costs be paid by Guardian Angels. The <br />intent of the agreement as understood by both Guardian Angels and <br />the City of Elk River is that the city will not incur any additional costs <br />now or in the future related to the issuance of these pooled revenue <br />bonds. <br /> <br />13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425 <br /> <br /> <br />