HomeMy WebLinkAbout[09b] Conduit Debt
Council Agenda Item 9b
MEETING DATE: April 15, 2019
AGENDA ITEM: Conduit Debt
SUBMITTED BY: Administration
BOARD/COMMISSION/COMMITTEE RECOMMENDATION:
PREVIOUS COUNCIL ACTION:
BACKGROUND INFORMATION: The City has been requested to allow for issuance of conduit
debt for the Country Manor Project. Conduit debt is limited-obligation revenue bonds or similar debt
instruments issued for the express purpose of providing capital financing for a specific third party. The
City in the past has issued such debt. Although these bonds bear the name of the City, the City has no
obligation for the debt. Accordingly the bonds are not reported as liabilities in the financial statements of
the City.
Staff has worked with the City bond counsel and bond advisor regarding the issuance. They have both
indicated there is no obligation to the City and there is no reason to not participate. The City fee schedule
includes the fee for conduit debt as follows: $ 50,000 fee; $ 3,000 application fee. Other than annually
requesting a confirmation letter the City does not have expenses associated. The fee allows an entity to
use the City’s name for tax exempt bonds. This practice is common in municipalities and the fees are
very similar. In addition, since the City will also be issuing bonds this year, the total bonds in the City’s
name will exceed 10 M; therefore, the City bonds will be non-bank qualified. Tammy Omdahl from
Northland Securities has calculated the difference in interest rate and that difference will be paid to the
City upfront as a deposit and is estimated to be $ 15,000.
BUDGET/FISCAL IMPACT: None
ATTACHMENTS: Request for Action
Briggs – Acknowledgement o Counsel
Dougherty – Underwriter Notification
REQUESTED COUNCIL ACTION: Information at this time