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City Council Resolution 2017-23CITY OF MONTICELLO, MINNESOTA RESOLUTION NO. 2017-23 RESOLUTION CALLING A PUBLIC HEARING AND GRANTING PRELIMINARY APPROVAL FOR THE ISSUANCE OF CONDUIT REVENUE BONDS FOR THE BENEFIT OF SRCS BUILDING COMPANY BE IT RESOLVED by the City Council (the "Council") of the City of Monticello (the "City") as follows: Section 1. Recitals. 1.01. Pursuant to Minnesota Statutes, Sections 469.152 through 469.1655, as amended (the "Act"), the City is authorized to issue revenue obligations to finance or refinance, in whole or in part, the cost of the acquisition, construction, reconstruction, improvement, betterment, or extension of a "project," defined in the Act, in part, as any properties, real or personal, used or useful in connection with a revenue producing enterprise. 1.02. SRCS Building Company, a Minnesota nonprofit corporation (the "Borrower"), has proposed that the City issue its revenue obligations, in one or more series (the "Note"), in the approximate aggregate principal amount of $2,300,000. The proceeds of the Note are proposed to be loaned by the City to the Borrower to be applied by the Borrower, along with equity of the Borrower, to (i) refinance outstanding taxable debt of the Borrower which previously financed the acquisition, construction and equipping of the public charter school buildings and related facilities located at 411, 500, and 503 Maple Street in the City (collectively, the "School Facilities"); (ii) finance certain capital improvements to the School Facilities; and (iii) pay the costs of issuance of the Note (the "Project"). The School Facilities are owned by the Borrower and are leased to Swan River Montessori Charter School, or any of its affiliates, a Minnesota nonprofit corporation and public charter school ("the School"), for the operation of a preschool and elementary school. 1.03. Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations promulgated thereunder, requires that prior to the issuance of the Note, the Council approve the Note after conducting a public hearing thereon. Section 469.154, subdivision 4, of the Act requires that prior to submitting an application to the Minnesota Department of Employment and Economic Development ("DEED") for approval of the Project, the Council must conduct a public hearing on the proposal to undertake projects authorized to be financed under the terms of the Act. 1.04. The Borrower has requested that the Council conduct a public hearing on Monday, July 1.0, 2017, to provide approval to the issuance of the Note, pursuant to the requirements of the Act and the Code and regulations promulgated thereunder. Pursuant to 500914v1 GAF MN 190-155 Section 147(f) of the Code, the Council must conduct a public hearing after one publication of notice in a newspaper circulating generally in the City at least fourteen (14) days before the hearing. Under Section 469.154, subdivision 4 of the Act, a public hearing must be held after one publication of notice in the official newspaper and a newspaper circulating generally in the City at least fourteen (14) days before the hearing. Section 2. Preliminary Findings. Based on representations made by the Borrower to the City to date, the City Council hereby makes the following preliminary findings, deterininations, and declarations: (a) It is hereby found and determined that the Project furthers the purposes set forth in the Act, and the Project constitutes a "project" within the meaning of Section 469.153, subdivision 2(b) of the Act. (b) The proceeds of the Note will be loaned to the Borrower and the proceeds of the loan will be applied to finance the Project. The City will enter into a loan agreement (or other revenue agreement) with the Borrower requiring loan repayments from the Borrower in amounts sufficient to repay the loan of the proceeds of the Note when due and requiring the Borrower to pay all costs of maintaining and insuring the School Facilities, including taxes thereon. (c) In preliminarily authorizing the issuance of the Note and the financing of the Project, the City's purpose is to further the policies of the Act. (d) The Note will be a special, limited obligation of the City payable solely from the revenues pledged to the payment thereof, and will not be a general or moral obligation of the City and will not be secured by or payable from revenues derived from any exercise of the taxing powers of the City. Section 3. Public Hearing. The Council shall meet at 6:30 P.M. on Monday, July 10, 2017, to conduct a public hearing on the Project and the issuance of the Note by the City, notice of such hearing (the "Public Notice") will be published as required by Section 469.154, subdivision 4 of the Act and Section 147(f) of the Code. The City Clerk of the City is hereby authorized and directed to publish the Public Notice, in substantially the form attached hereto as EXHIBIT A, in the Monticello Times, a newspaper of general circulation in the City, at least fourteen (14) days before the meeting of the Council at which the public hearing will take place. At the public hearing reasonable opportunity will be provided for interested individuals to express their views, both orally and in writing, on the Project and the proposed issuance of the Note. Section 4. Preliminary Approval. The Council hereby states its preliminary intention to issue the Note in the approximate aggregate principal amount of $2,300,000 to finance the Project and the costs of issuance of the Note. The Note shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City except the City's interest in the loan or revenue agreement with respect to 500914v1 GAF MN 190-155 2 the Note and the Project, and the Note, when, as, and if issued, shall recite in substance that the Note, including interest thereon, is payable solely from the revenues received from the Project and property pledged to the payment thereof, and shall not constitute a general or moral obligation of the City. Section 5. Submission of Project to DEED. Pursuant to Section 469.154 of the Act, prior to the issuance of the Note by the City, the Commissioner of the Minnesota Department of Employment and Economic Development ("DEED") must approve the costs of the Project to be funded by the Note on the basis of an application submitted by the City with all required attachments and exhibits (the "DEED Application"). In accordance with Section 469.154 of the Act, the City Administrator is hereby authorized and directed to cause a draft copy of the DEED Application, together with drafts of all required attachments and exhibits, to be prepared by Kennedy & Graven, Chartered, as bond counsel (`Bond Counsel"). The DEED Application, together with all attachments and exhibits, shall be made available for public inspection in the office of the City Administrator during regular business hours of the City. The City Administrator and other officers, employees, attorneys, and agents of the City are hereby authorized to provide DEED with any information needed for this purpose, and the City Administrator is authorized to initiate and assist in the preparation of such documents as may be appropriate to the Project. Section 6. Approval of Bond Counsel. The law firm of Kennedy & Graven, Chartered, is authorized to act as Bond Counsel and to assist in the preparation and review of necessary documents relating to the Project and the Note issued in connection therewith. The Mayor, City Administrator, and other officers, employees, and agents of the City are hereby authorized to assist Bond Counsel in the preparation of such documents. Section 7. City's Costs. The Borrower will pay any administrative fees of the City and pay, or, upon demand, reimburse the City for payment of, any and all costs incurred by the City in connection with the Project and the issuance of the Note, whether or not the Note is issued. Section 8. Commitment Conditional. The adoption of this resolution does not constitute a guaranty or firm commitment that the City will issue the Note as requested by the Borrower. The City retains the right in its sole discretion to withdraw from participation and accordingly not to issue the Note, or issue the Note in an amount less than the amount referred to herein, should the City at any time prior to issuance thereof detennine that it is in the best interest of the City not to issue the Note, or to issue the Note in an amount less than the amount referred to in Section 1.02 hereof, or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents required for the transaction. Section 9. Effective Date. This Resolution shall be in full force and effect from and after its passage. 500914v1 GAF MN 190-155 3 Adopted by the City Council of the City of Monticello, Minnesota this 12tH day of June, 2017. Mayor Attest: City2d Vtrator 500914v1 GAF MN 190-155