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~~ <br />tll~ REQUEST FOR ACTION <br />..~... <br />R.~.ver <br />TO ITEM NUMBER <br />Ma or and Ci Council 6.1 <br />AGENDA SECTION MEETING DATE PREPARED BY <br />Work Session une 11, 2012 Tim Simon, Finance Director <br />ITEM DESCRIPTION REVIEWED By <br />Host Approval Request -Spectrum High School Project <br /> REVIEWED BY <br />ACTION REQUESTED <br />Consider Spectrum High School's request for host approval to the issuance of charter school lease <br />revenue bonds. <br />BACKGROUND/DISCUSSION <br />Spectrum High School currently leases a building at 17796 Industrial Circle NW in Elk River and operates <br />a 6-12 grade charter school under a Conditional Use Permit. Spectrum officials requested a zoning <br />change to operate their school in an industrial park in 2010. <br />Under state statute, charter schools cannot own its own land or facility, and must form a separate affiliate <br />tax-exempt entity to own a school building. The school has formed a new tax-exempt entity and is <br />seeking a partner to issue conduit bonds on their behalf to purchase the current building, to purchase <br />another parcel of land, to complete the build-out of the existing school and to develop athletic facilities <br />on the new parcel. <br />Because the City of Elk River has already approved tax-exempt financing for the public works facility in <br />2012, we are not able to issue the amount of conduit bonds needed without exceeding our $10 million <br />bank-qualified limit. Spectrum officials are seeking another partner to issue conduit bonds on their <br />behalf. <br />Per state and federal law, the governmental entity with jurisdiction over the project site must hold a <br />public hearing and give approval to the issuance of the bonds even if the bonds are issued by another <br />issuer. The city, county and state meet the host jurisdiction requirement. Holding a public hearing as a <br />host assumes no risk to the city with regard to bonds or the bonding process. <br />School officials will be in attendance to answer any questions about the project. <br />FINANCIAL IMPACT <br />When the property operates under a lease agreement, the property currently generates property taxes. <br />When the property is held by a tax exempt entity, its value will be removed from the tax roll. <br />N:\1'ublic Bodies\Ciry Council\Finance\'Tim\201?\I-Iostapprovalrequest.docx <br />@IiNE~E6 8{' <br />A~`U <br />