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<br /> <br />City of Elk River <br />REQUEST FOR ACTION (EDA & Council) <br />Agenda Section Meeting Date <br />.t\dministration T ul r 17, 2006 <br />Item Description <br />Consider Financing )1vfC.L"\ Facility Througll General Obligation <br />Bonds issued by the EDi\/Consider ED.L'\. Resolution Calling for an <br />Election on tile issuance of $12,000,000 of General Obligation <br />Bonds for tile Constluction of a ThIC1\/ Consider City Resolution <br />Calling for an Election on Pledging tlle City's Full Faidl and Credit <br />in Resources to $12,000,000 bonds to be issued by the Economic <br />Devela tnent .L\utlloritv for the Ci i of Elk Ri,Ter <br /> <br />Item Number <br />5.1. <br /> <br />Prepared by <br />Loxi ohnson, Ci r Administrator <br />Reviewed by <br /> <br />Introduction <br />TIle city and l.T1\i1C.L\ hav'e been \vorking together refining a stlucture to allo\v tlle City to partially <br />finance the consuuction of a l'l\ICj\ if the ,Toters approve sucll action. .L"\t the July 10, 2006, City <br />Council meeting, staff \vas directed to get additional legal input from I(ennedy and Gra,Ten on <br />tllls project. City Attorney, Peter Beck llas been \vorking \Vitll Steve Bubul of I<.ennedy & Graven <br />on this issue. i\s a result, a ne\v option to finance the r1vlC~A is being presented to the Council <br />and ED~A.. LTnder tlle ne\v proposal, dle EDi\ \vould become tile \'lvlCA's partner in tllls project <br />instead of tlle City. This stlucture potentially alle-v.iates most, if not all, of tlle legal issues <br />associated \vith tlle previous management contract concept. <br /> <br />Discussion <br />.L~ttaclled is a memo from dle city's bond counsel, tvlary Ippel, detailing the ne\v proposal for <br />financing tlus project. In sununary, dle YNIC_A \vould be financed througll the issuance of <br />General Obligation Bonds tlUOUgll tlle ED.L~ upon ,Toter appro'val. The EDA \vould le,TY for the <br />paYlnent of tlle bonds and dle EDi\ \vould enter into a lease \vidl the ThICA. <br /> <br />If tlle ED.L~ concurs \vith serving in this capacity, dle Council may act on the resolution calling for <br />tlle election. There llas been additional discussion about tlle \vording of the question so the <br />Council sllould re'Tie\v that again before taking action. i\lternate language is suggested in the last <br />paragraph of 1v1s. Ippel's memo. <br /> <br />-L~dditionally, Peter Beck prepared a draft of the proposed 1vlemorandum of Understanding <br />bet\veen the ED.L~ and YlvICA that is attaclled for your re,rie\v. TIus 11as not been re,rie\ved by <br />tlle \'1\IC_A. Because a lease \vill no\v be entered into instead of a management contract, some of <br />tlle prov'isions are different froln tllose discussed at tlle July 10 meeting. The term is proposed to <br />be 30 years \Vitll a ten year \vritten notice to terminate unless it is terminated for cause. The <br />\TrvIC.1'\. \vill be responsible for alllnaintenance and capital impro,rements. Lease payments \vill be <br />one-tlilld of tlle debt plus tlle cost of property insurance for tlle term of tlle bonds and tile cost <br />of property insurance tllereafter. <br /> <br />S:\Council\Lori\200G\ 'x1vICA Bond Resolution.doc <br />