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HomeMy WebLinkAbout1979-147 CCRMember Tony Kuefler introduced the following resolution and moved its adoption: RESOLUTION NO. 79 147 RESOLUTION TO EXPRESS CONCERN OVER THE OVERUSE BY MUNICIPALITIES OF THE AUTHORITY TO ISSUE NONTRADITIONAL TAX EXEMPT BONDS WHEREAS, cities and schools have traditionally used tax exempt municipal bonds to finance at a lesser rate, such traditional public services as streets, sewerage, water, park improvement projects, schools, hospitals, and other public buildings; and WHEREAS, they have accomplished this through the issuance of general obligation bonds (in which the bonds are backed by the full faith and credit of the issuing municipality) and through revenue bonds (which are backed by the revenue earned from the revenue producing entity of the municipality which is being financed); and WHEREAS, these bonds are attractive to the bond buyers because the interest on the bonds are not taxed by the federal or state government; and WHEREAS, because of the tax exempt status, and the soundness of the traditional municipal bond, municipalities have been able to finance public projects at extremely low interest rates which results in lower interest costs and subsequent tax savings to the taxpayer; and WHEREAS, municipal issuers of bonds have resisted legislation to regulate traditional municipal bonds by the U.S. Treasury; and WHEREAS, in recent years, municipalities have been given authority to issue industrial development revenue bonds, tax exempt mortgages and more recently locally issued below market rate mortgage bonds to finance single family housing; and WHEREAS, some municipalities throughout the United States have failed to police themselves and have shown a lack of self control in the issuance of nontraditional bonds; and WHEREAS, the City Council of the City of Brooklyn Center believes that the overuse of the authority to issue nontraditional municipal tax exempt bonds could destroy the advantage of tax exempt interest rates by both increasing the risk of tax exempt bonds and by flooding the market for municipal bonds; and WHEREAS, it is a concern of the Council to be able to continue to issue nontaxable bonds for traditional public purposes at the lowest possible interest rate thereby, reducing interest costs for the community's taxpayers. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Brooklyn Center to urge all municipalities to adopt guidelines for the issuance of nontraditional tax exempt bonds that will discourage either the misuse or overuse of the authority to issue said bonds. J I RESOLUTION NO. 79 147 BE IT FURTHER RESOLVED by the City Council of the City of Brooklyn Center to urge the State Legislature to act to more closely control the issuance of nontraditional tax exempt bonds. BE IT FURTHER RESOLVED that copies of this resolution be forwarded to State Legislators representing Brooklyn Center. June 11, 1979 Date ATTEST:�/� erk May The motion for the adoption of the foregoing resolution was duly seconded by member Bill Fignar and upon vote being taken thereon, the following voted in favor thereof: Dean Nyquist, Tony Kuefler, Bill Fignar, Gene Lhotka, and Celia Scott; and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted.