ITEM 4.1 Resolution 14-510
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MINNESOTA V
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT:
REQUESTOR:
MEETING DATE:
Administration
Lori Johnson, City Administrator
July 28, 2014
PRESENTER(s):
REVIEWED BY:
ITEM #:
Lori Johnson, City Administrator
On June 23, 2014, the City Council approved a resolution calling for a public hearing on the issuance of
4.1
AGENDA ITEM DETAILS
RECOMMENDATION:
Recommend holding a public hearing on the issuance of charter school lease revenue bonds in an
amount not to exceed $17,500,000 to refinance and finance Kaleidoscope Charter School, a public
charter school located in Otsego and adopting a resolution giving preliminary approval to the issuance of
the bonds.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?
No
Yes
BACKGROUND/JUSTIFICATION:
On June 23, 2014, the City Council approved a resolution calling for a public hearing on the issuance of
conduit bonds for Kaleidoscope Charter School. The Council is asked to take public comment on this
project at the public hearing. Kaleidoscope Charter School Representatives Paula Higgins, Executive
Director and Andrea Mitlyng, School Board Chair will be in attendance to present the project and answer
questions.
The project is slated for consideration by the Planning Commission on August 4, 2014; Council
consideration is scheduled for August 11, 2014. If the project is approved on August 11, the Council will
subsequently be asked to adopt a resolution authorizing the issuance of the bonds for this project.
Bond closing is scheduled for September 10, 2014.
All City costs for review and issuance of the bonds are entirely the responsibility of Kaleidoscope Charter
School. In addition, a fee of .50 percent of the par amount of the bonds is payable to the City. The City
is not obligated in any way for the payment of the bonds; the bond is payable solely from the revenues
derived from the sale, operation, or leasing of the facilities.
SUPPORTING DOCUMENTS: Xo ATTACHED o NONE
• Resolution Preliminarily Approving the Issuance and Sale of Charter School Lease Revenue
Bonds
• DEED application and letter
0 Project schematics
Extract of Minutes of a Meeting of the
City Council of the City of Otsego, Minnesota
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City
of Otsego, Minnesota was duly held at Otsego Prairie Center, Otsego, Minnesota, on Monday,
July 28, 2014, at 7:00 o'clock P.M.
The following members were present:
and the following were absent:
During said meeting introduced the following resolution and moved its
adoption:
RESOLUTION NO. 2014-51
RESOLUTION PRELIMINARILY APPROVING THE ISSUANCE AND SALE OF
CHARTER SCHOOL LEASE REVENUE BONDS
(KALEIDOSCOPE CHARTER SCHOOL PROJECT)
(a) Minnesota Statutes, Sections 469.152 to 469.1655, as amended (the "Act)
authorizes cities to issue revenue bonds to finance industrial development projects to promote the
welfare of the state by the active development of economically sound industry and commerce to
meet the needs of an increasing population and the need for development of land use which will
provide an adequate tax base to finance the increasing cost of governmental services and access
to employment opportunities for such population;
(b) The City of Otsego, Minnesota (the "City") has received from KCS
Building Company, a Minnesota nonprofit corporation organized under the laws of the State of
Minnesota (the "Borrower"), a proposal that the City assist in financing a Project hereinafter
described through the issuance of revenue bonds or other obligations (which may be issued in
one or more series) (the "Bonds") pursuant to the Act;
(c) The City desires to facilitate the selective development of the community,
retain and improve the tax base, and help to provide the range of services and employment
opportunities required by the population, including educational services; and the Project will
assist the City in achieving those objectives and will enhance the image and reputation of the
community;
(d) The project to be financed by the Bonds is the (a) refinancing the
outstanding principal amount of the City of Falcon Heights, Minnesota $8,110,000 Lease
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and to promote more intensive development and use of land within the City and
surrounding communities.
2. Preliminaa Approval. The City hereby gives preliminary approval to the
proposal of the Borrower that the City undertake the Project, and the financing therefor, pursuant
to the Act and to issue the Bonds in the principal amount not to exceed $17,500,000.
3. DEED Application. The financing of the Project by the issuance of the Bonds by
the City is subject to, among other things, (a) the approval of the Project by the City and the
Minnesota Department of Employment and Economic Development, (b) final approval by the
City, the Borrower and the purchaser of the Bonds as to the ultimate details of the financing, and
(c) review and approval of the proposed Project by Bond Counsel.
4. Payment of Costs. The Borrower has agreed and it is hereby determined that any
and all costs incurred by the City in connection with the financing of the Project whether or not
the Project is carried to completion and whether or not approved by the City will be paid by the
Borrower.
5. Bond Documents. Briggs and Morgan, Professional Association, acting as bond
counsel, is authorized to assist in the preparation and review of necessary documents relating to
the Project, to consult with the Borrower and the purchaser of the Bonds as to the maturities,
interest rates and other terms and provisions of the Bonds and as to the covenants and other
provisions of the necessary documents and submit such documents to the City for final approval.
6. Limited Obliation. Nothing in this Resolution or the documents prepared
pursuant hereto shall authorize the expenditure of any municipal funds on the Project other than
the revenues derived from the Project or otherwise granted to the City for this purpose. The
Bonds shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property
or funds of the City except the revenue and proceeds pledged for the payment thereof, nor shall
the City be subject to any liability thereon. No holders of the Bonds shall ever have the right to
compel any exercise of the taxing power of the City to pay the outstanding principal on the
Bonds or the interest thereon, or to enforce payment thereon against any property of the City,
except such property as may be expressly pledged for the security of the Bonds. The Bonds shall
recite in substance that the Bonds, including the interest thereon, is payable solely from the
revenue and proceeds pledged to the payment thereof The Bonds shall not constitute a debt of
the City within the meaning of any constitutional or statutory limitation.
7. Reimbursement. In anticipation of the approval of the Project by the State of
Minnesota, Department of Employment and Economic Development and all other necessary
entities and the issuance of the Bonds to finance all or a portion of the Project, and in order that
completion of the Project will not be unduly delayed when approved, the City hereby authorizes
the Borrower, in accordance with the provisions of the Act and subject to the terms and
conditions imposed by the Lender, to provide for the acquisition, construction, and equipping of
the Project by such means as shall be available to the Borrower and in the manner determined by
the Borrower, and without advertisement for bids as may be required for the construction and
acquisition of other municipal facilities; the City hereby ratifies, affirms, and approves all actions
heretofore taken by the Borrower consistent with and in anticipation of such authority; and the
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STATE OF MINNESOTA
COUNTY OF WRIGHT
CITY OF OTSEGO
I, the undersigned, being the duly qualified and acting Clerk of the City of Otsego,
Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of
minutes with the original thereof on file in my office, and that the same is a full, true and
complete transcript of the minutes of a meeting of the City Council duly called and held on the
date therein indicated, insofar as such minutes relate to a resolution giving preliminary approval
for the'issuance of revenue Bonds.
WITNESS my hand this day of July, 2014,
Clerk
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CfTY OF
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MINNESOTA
July 28, 2014
Mr. Bob Isaacson
Minnesota Department of
Employment and Economic Development
First National Bank Building
332 Minnesota Street, E200
St. Paul, Minnesota 55101
Re: City of Otsego, Minnesota - Charter School Lease Revenue Bonds (Kaleidoscope
Charter School Project), Series 2014A and Series 2014B
Dear Mr. Isaacson:
Attached hereto in duplicate is the application of the City of Otsego, Minnesota (the "City"),
for approval of the above referenced project (the "Project") including a copy of the Resolution
adopted by the City Council approving the issuance of the note named above.
As indicated in the attached Resolution, we believe that this Project fully meets the public
purpose requirements of Minnesota Statutes, Sections 469.152 to 469.1655, as amended (the "Act").
KCS Building Company, a Minnesota nonprofit corporation, provides educational facilities by
leasing public school facilities to Kaleidoscope Charter School, a Minnesota nonprofit corporation,
formed as a public (charter) school pursuant to Minnesota Statutes, Section 124D.10. The City
Council desires to help promote development of educational facilities and believes that the
financing of the Project by the issuance of the revenue Bonds will accomplish that objective.
Reference is made to the Resolution for a more definitive statement of the public purposes served
by the financing.
The Project does not contain any property to be sold or affixed or consumed in the
production of property for sale, and does not include any housing facility to be rented or used as a
permanent residence.
The City has complied with the notice and hearing requirements of -Minnesota Statutes,
Section 469.154, subdivision 4, and agrees it will comply with the reporting requirements set forth
in Minnesota Statutes, Section 469.154, subdivisions 5 and 7. The public hearing was held on July
28, 2014 at 7:00 p.m., at the Otsego Prairie Center, 8899 Nashua Avenue N.E., in the City of
Otsego, a draft copy of the enclosed application with all attachments was available for public
inspection and all interested parties were afforded an opportunity to express their views.
City of Otsego 113400 90th Street NE, Otsego, MN 55330 1 Tel. (763) 441-4414 Fax (763) 441-9163
The City will undertake to encourage that the employment opportunities made available by
the Project will, if feasible, be offered to individuals who are unemployed or who are economically
disadvantaged.
We respectfully request prompt approval by the Minnesota Department of Employment and
Economic Development of the Project under the provisions of the Act.
Sincerely,
Vice Mayor
CITY OF OTSEGO, MINNESOTA
City of Otsego 113400 90th Street NE, Otsego, MN 55330 1 Tel. (763) 441-4414 Fax (763) 441-9163
V
Department of E�uphymut
a: €��n�mic 0.=velopment
Application for Approval of Industrial Development/Revenue Bond Proiect
Pursuant to Minn. Stat. 469.152 — 469.165
Page 1 of 3
Please submit two copies of this form but only one copy of supporting documents requested on page 2.
Name of Issuer (Municipality or Redevelopment agency): -City of Otsego, Minnesota
Contracting Party Business Name: KCS Building Company
Business Industry and/or Products: Public (charter) school educational services
Description of Project Financed by Bond Proceeds: (a) refinancing the outstanding principal amount of the City of
Falcon Heights, Minnesota $8,110,000 Lease Revenue Bonds (Kaleidoscope Charter School Project), Series 2007A
the proceeds of which were used, in part, to finance the acquisition, construction and equipping of an approximately
42,700 square foot kindergarten through grade eight education facility located at 7525 Kalland Avenue N.E. in the
City of Otsego, and (b) the acquisition, construction, and equipping of an approximately 29,000 square foot grade
nine through grade twelve addition to the existing education facility, consisting of a one-story building with nine
classrooms, special education, administration offices, serving kitchen and cafeteria, to be located in the City of
Location (address and city) of Project: 7525 Kalland Avenue N.E., Otsego, Minnesota
Dates of Construction (if applicable): September 2014 — August 2015
Date Project Funded by Bonds Expected to be Operational: (a) Currently operational; (b) August 2015
New (not currently in Minnesota) Permanent Full -Time Jobs Created by Project: 7 FTE
Expected Annual Wages of New Full -Time Jobs: $227,300
Current Jobs at Location: 7
Amount of Issuance Authority Expected to be Requested from MMB: None. Qualified 501(c)(3) bonds.
Maturity Schedule and Interest Rates: 30 year term; estimated not to exceed 8%
Bond Counsel: Catherine J. Courtney, Briggs and Morgan, P.A.
IDB Approval 4-10
63020241
Phone: 612-977-8765
Revised 04/10
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Application for Approval of Industrial Development/Revenue Bond Proiect
Pursuant to Minn. Stat. 469.152 — 469.165
Page 2 of 3
The following exhibits are furnished with this application and are incorporated herein by reference:
An opinion of bond counsel that the proposal constitutes a project under Minn. Stat. 469.153, Subd. 2.
A copy of the resolution by the governing body of the Issuer giving preliminary approval for the
issuance of its revenue bonds and stating that the project, except for a project under Minn. Stat.
469.153, Subd. 2(g) or (j), furthers the purposes of Minn. Stat. 469.152 —469.165.
A letter of intent to purchase the bond issue or a letter confirming the feasibility of the project from a
financial standpoint.
4. A comprehensive statement by the municipality indicating how the project satisfies the purposes of
Minn. Stat. 469.152 - 469.165.
5. A statement signed by a representative of the Issuer that the project does not include any property to
be sold or affixed to or consumed in the production of property for sale, and does not include any
housing facility to be rented or used as a permanent residence.
6. A statement signed by a representative of the Issuer that a public hearing was conducted pursuant to
Minn. Stat. 469.154, Subd. 4. The statement shall include the date, time and place of the meeting and
certify that a draft copy of this application with all attachments was available for public inspection and
that al interested parties were afforded an opportunity to express their views.
7. A statement signed by the principal representative of the issuing authority to the effect that upon
entering into the revenue agreement, the information required by Minn. Stat. 469.154, Subd. 5 will be
submitted to the Department (not applicable to projects under Minn. Stat. 469.153, Subd. 2(g) or (j).
8. The plan for encouraging the targeting of employment opportunities to economically disadvantaged or
unemployed individuals. (See Minn. Stat. 469.154, Subd. 7.)
9. Affidavit(s) of publication or copies of notice(s) as published which indicate the dates) of publication
and the newspaper(s) in which the notice(s) were published.
IDB Approval 4-10 Revised 04/10
63020241
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Application for Approval of Industrial Development/Revenue Bond Proiect
Pursuant to Minn. Stat. 469.152 — 469.165
Page 3 of 3
We, the undersigned, are principal officer(s) or representative(s) of the Issuer
and solicit DEED's approval of this project.
Signature
13400 90th Street NE
Street Address
vheidner@ci.otsego.mn.us
E -Mail
Signature
13400 90th Street NE
Street Address
I.iohnson@ci.otsego.mn.us
E -Mail
DEED Approval
Vern Heidner, Vice Mayor
Print Name and Title
Otsego, MN 55330-7259
City, State and Zip
July 28, 2014
Date
Lori Johnson, Administrator
Print Name and Title
Otsego, MN 55330-7259
City, State and Zip
July 28, 2014
Date
Authorized Signature Approval Date
(Approval shall not be deemed to be an approval on the feasibility of the project or the terms
of the revenue agreement to be executed or the bonds to be issued thereof.)
Send two copies of form and one copy of supporting documents noted on page 2 to:
Minnesota Department of Employment and Economic Development
Bob Isaacson, Director, JOBZ & Business Finance
1St National Bank Building
332 Minnesota Street, Suite E200
St. Paul, Minnesota 55101
Phone: 651-259-7458
E-mail: Bob. Isaacson@state.mn.us
Fax: 651-296-5287
IDB Approval 4-10 Revised 04/10
63020241
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