ZUMBRO EDUCATION DISTRICT
SPECIAL BOARD MEETING MINUTES
AUGUST 3, 2009
ZUMBRO EDUCATION DISTRICT OFFICE
3:00 PM
The Governing Board of the Zumbro Education District No. 61-6012 met in a special meeting on August 3, 2009 at the Zumbro Education District Office. The Chair, Len Oelkers, called the meeting to order. At the roll call the following members were present: Duane Bartel, Cheryl Root, Loretta Ingvalson, Jan David Fisher, Gail Hester, and Carol Anhalt, Executive Director. Stephanie Fossum was absent. Heidi Kass recorded the minutes.
There were no visitors at the meeting.
Motion by Root, seconded by Bartel to approve the agenda. Voting for: Bartel, Root, Ingvalson, Hester, Oelkers, and Fisher. Voting against: none.
There were no Board Member requests.
RESOLUTION NO. 1
RESOLUTION AUTHORIZING THE EXECUTION
AND DELIVERY OF A LEASE-PURCHASE
AGREEMENT AND RELATED DOCUMENTS
BE IT RESOLVED by the Governing Board of Zumbro Education District (the “District”) as follows:
Section 1. Recitals.
1.01. The District is authorized by Minnesota Statutes, Sections 465.71 and 126C.40, as amended (the “Act”), to acquire real property under lease-purchase agreements.
1.02. The District has entered into a purchase agreement for the purchase of certain real property described in Exhibit A attached hereto (the “Property”), along with a secondary education facility constructed thereon (the “Project”). Wells Fargo Brokerage Services, Minneapolis, Minnesota (the “Bank”) has offered to enter into a lease-purchase agreement (the “Lease”) under the Act with the District to finance the Property and Project.
1.03. The Commissioner of the Minnesota Department of Education has reviewed the proposed Project and has issued a favorable Review and Comment, dated April 29, 2009.
1.04. The Lease requires the District to make payments (the “Lease Payments”) representing principal and interest, during the term of the Lease, subject to the right of the District, as required by the Act, at the end of any fiscal year to determine not to appropriate for future Lease Payments. The aggregate principal amount to be paid by the District pursuant to the Lease is $1,430,000 and the interest component of the Lease Payments to be made by the District under the Lease is computed at a rate of 5.73% per annum. Upon payment of all Lease Payments, the Lease will terminate, and the Property and Project will be the property of the District.
1.05. The Lease terms have been prepared and submitted to this Board and are on file with the District Clerk.
Section 2. Findings. On the basis of information given the District to date, it is hereby found, determined, and declared that:
(a) It is desirable and in the best interest of the District to purchase the Property and to enter into the Lease.
(b) The terms of the Lease are found to be advantageous to the District and the form and terms thereof are approved.
(c) The Property constitutes essential government property, and the District presently intends to appropriate all Lease Payments under the Lease for the term of the Lease; however, the obligations of the District under the Lease are not to be payable from nor charged upon any funds of the District other than the funds appropriated annually to the payment thereof, and the Lease will not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the District except its interest in the Lease and in the Property.
Section 3. Authorization of Documents. The Board Chair and the District Clerk are authorized and directed to execute and deliver the Lease and other documents necessary or desirable in connection with the Lease, substantially in accordance with the terms on file, but with all such changes therein as shall be approved by the officers executing the same, which approval will be conclusively evidenced by the execution thereof. Copies of all of the transaction documents are to be delivered, filed and recorded as provided therein. The Board Chair and the District Clerk, along with the Executive Director, are also authorized and directed to execute such other instruments as may be required to give effect to the transactions herein contemplated.
Section 4. Payment of Lease Payments. The District will pay to the Bank, promptly when due, all of the Lease Payments and other amounts required by the Lease. To provide moneys to make such payments, the District will include in its annual budget, for each Fiscal Year during the term of the Lease, commencing with the Fiscal Year ending on June 30, 2010, moneys sufficient to pay and for the purpose of paying all Lease Payments, a reasonable estimate of Additional Lease Payments, and other amounts payable under the Lease, and will take all other actions necessary to provide moneys for the payment of the obligations of the District under the Lease from sources of the District lawfully available for the purpose. The agreement of the District in this section is subject to the District's right to terminate the Lease at the end of any Fiscal Year, as set forth in the Lease.
Section 5. Miscellaneous.
5.01. The officers of the District are authorized and directed to prepare and furnish to the Bank, and to the attorneys approving the Lease, certified copies of all proceedings and records of the District relating to the power and authority of the District to enter into the Lease within their knowledge or as shown by the books and records in their custody and control, and such certified copies and certificates shall be deemed representations of the District as to the facts stated therein.
5.02. The District covenants and agrees with the Bank and its successors as owners from time to time of the Lease that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest component of the Lease Payments payable under the Lease to become subject to taxation under the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Lease.
5.03. The District covenants and agrees with the Bank and its successors as owners from time to time of the Lease that the investment of proceeds of the Lease, including the investment of any revenues pledged to the Lease Payments which are considered proceeds under applicable regulations, and accumulated sinking funds, if any, will be limited as to amount and yield in such manner that the Lease will not be an “arbitrage bond” within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and applicable regulations thereunder, and that the District will comply with all other applicable requirements of Section 148. On the basis of the existing facts, estimates and circumstances, including the foregoing findings and covenants, the District hereby certifies that it is not expected that the proceeds of the Lease will be used in such manner as to cause the Lease to be an “arbitrage bond” under Section 148 and any regulations thereunder. The Equipment will likewise be used in such manner that the Lease will not be a "private activity bond" under Section 141 of the Internal Revenue Code of 1986, as amended, and applicable regulations.
5.04. The District covenants that it will file with the Internal Revenue Service the information required under Section 149(e) of the Internal Revenue Code of 1986.
5.05. In order to qualify the Lease as a “qualified tax-exempt obligation” within the meaning of Section 265(b)(3) of the Code, the District makes the following factual statements and representations:
(a) the Lease is not a “private activity bond” as defined in Section 141 of the Code;
(b) the District hereby designates the Lease as a “qualified tax-exempt obligation” for purposes of Section 265(b)(3) of the Code;
(c) the reasonably anticipated amount of tax-exempt obligations (other than any private activity bonds other than qualified 501(c)(3) bonds) which will be issued by the District (and all subordinate entities of the District) during calendar year 2009 will not exceed $30,000,000; and
(d) not more than $30,000,000 of obligations issued by the District during calendar year 2008 have been designated for purposes of Section 265(b)(3) of the Code.
5.06. The District will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section.
5.07. Capitalized terms used herein and defined in the Lease have the meanings given in the Lease.
Section 6. Effective Date. This resolution is effective immediately.
Exhibit A
Property
The north 187 feet of Lot 1, Block 2, Southwest Industrial Park First Addition.
The foregoing resolution was introduced by Member Fisher and seconded by Member Root. The following voted in favor of the resolution: Root, Hester, Fisher, Bartel, Ingvalson, Oelkers
The following voted against: none
Whereupon the resolution was adopted.
RESOLUTION NO. 2
DECLARING THE OFFICIAL INTENT OF
ZUMBRO EDUCATION DISTRICT TO REIMBURSE
CERTAIN EXPENDITURES FROM THE PROCEEDS
OF TAX-EXEMPT BONDS TO BE ISSUED BY THE DISTRICT
WHEREAS, the Internal Revenue Service has issued Treas. Reg. § 1.150-2 (the “Reimbursement Regulations”) providing that proceeds of tax-exempt obligations used to reimburse prior expenditures will not be deemed spent unless certain requirements are met; and
WHEREAS, Zumbro Education District, Olmsted County, Minnesota (the “District”) expects to incur certain expenditures that may be financed temporarily from sources other than tax-exempt obligations, and reimbursed from the proceeds of a tax-exempt obligation;
WHEREAS, the District has determined to make this declaration of official intent (“Declaration”) to reimburse certain costs from proceeds of tax-exempt obligations in accordance with the Reimbursement Regulations.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF ZUMBRO EDUCATION DISTRICT AS FOLLOWS:
1. The District proposes to undertake the following project (the “Project”).
Installment purchase of real property and of a secondary educational facility.
2. The District reasonably expects to reimburse the expenditures made for certain costs of the Project from the proceeds of tax-exempt obligations in an estimated maximum principal amount of $1,430,000. All reimbursed expenditures will be capital expenditures, costs of issuance of the tax-exempt obligations, or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Reimbursement Regulations.
3. This Declaration has been made not later than 60 days after payment of any original expenditure to be subject to a reimbursement allocation with respect to the proceeds of tax-exempt obligations, except for the following expenditures: (a) costs of issuance of tax-exempt obligations; (b) costs in an amount not in excess of $100,000 or 5 percent of the proceeds of an issue; or (c) “preliminary expenditures” up to an amount not in excess of twenty percent (20%) of the aggregate issue price of the issue or issues that finance or are reasonably expected by the District to finance the project for which the preliminary expenditures were incurred. The term “preliminary expenditures” includes architectural, engineering, surveying, tax-exempt obligation issuance, and similar costs that are incurred prior to commencement of acquisition, construction or rehabilitation of a project, other than land acquisition, site preparation, and similar costs incident to commencement of construction.
4. This Declaration is an expression of the reasonable expectations of the District based on the facts and circumstances known to the District as of the date hereof. The anticipated original expenditures for the Project and the principal amount of the tax-exempt obligations described in paragraph 2 are consistent with the District budgetary and financial circumstances. No sources other than proceeds of tax-exempt obligations to be issued by the District are, or are reasonably expected to be, reserved, allocated on a long-term basis, or otherwise set aside pursuant to the District budget or financial policies to pay such Project expenditures.
5. This Declaration is intended to constitute a declaration of official intent for purposes of the Reimbursement Regulations.
The foregoing resolution was introduced by Member Hester and seconded by Member Fisher. The following voted in favor of the resolution: Root, Hester, Bartel, Ingvalson, Oelkers, Fisher
The following voted against: none
Whereupon the resolution was adopted.
Motion by Bartel, seconded by Fisher to approve the use of the ZED fund balance for additional costs for the new facility located at 221 Second Ave. S.W., Byron, MN, up to a maximum of $125,000. Voting for: Bartel, Root, Ingvalson, Hester, Oelkers and Fisher. Voting against: none.
Motion by Bartel, seconded by Fisher to adjourn. Voting for: Bartel, Root, Ingvalson, Hester, Oelkers and Fisher. Voting against: none.
The next regular meeting will be held on August 20, 2009 at 7:00 p.m.
Len Oelkers adjourned the meeting at 3:16 p.m.
Heidi Kass
Recorder
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Gail Hester, Clerk/Treasurer