In the original agreement, Section 3-A-2 gave the city "naming and advertising rights for the renovated Arena." This section is no longer in the April 15 document. I asked Councilman Chris Wissmann what he thought of this and he wasn't particularly concerned, saying he felt people would complain no matter what the city named the Arena. There would be complaints if we named it to honor somebody and didn't get money out of it and complaints if we sold the rights, with the naysayers saying we should have taken the opportunity to honor someone instead.
Section 2 of the agreeement has been extensively rewritten to more closely define what the university is doing with the funds, i.e. paying interest or principal on tax exempt or tax credit bonds or obligations and (quote) "In the event the University notifies the City of an examination of its bonds or obligations by the Internal Revenue Service of the United States of America, the City will cooperate with the University in defending such examination." (unquote)
Finally, Section 10 originally said that the city was still obligated to make its annual payment, even if the 1/4% sales tax is repealed or there is(quote) "a change to State law or andministrative regulations which modifies the manner in which the Home Rule Sales Tax is collected or paid or the base upon which it is levied." (unquote)
When he emailed Mayor Cole about the changes to the contract, D. Gorton received the following email in reply:
_____________________________________________________________________________________
From: Brad Cole [mailto:bcole@ci.carbondale.il.us]
Sent: Tuesday, September 29, 2009 10:53 AM
To: Duane Stucky
Subject: Saluki Way Contract
There have been some questions recently about why the original Saluki Way contract was revised, which was done at the University's request to meet bond counsel concerns..... can you please provide me with clarification that I can share with the City Council and others? Thank you.
----- Original Message -----
From: Duane Stucky
To: 'Brad Cole'
Sent: Tuesday, September 29, 2009 12:20 PM
Subject: Saluki Way Contract
The three primary reasons that bond counsel requested changes to the original agreement are:
1) Language in the agreement did not accurately describe the amount of revenue the City agreed to allocate to the University.
2) Language was desired to determine how the City would accumulate revenue so IRS tax-exempt rules would not be violated.
3) The inclusion of naming rights could lead to private use issues and impair the tax-exempt status of the bonds.
Items 1 and 2 were addressed by a number of suggested changes in Section 2A. Item 3 was addressed by a suggested change in Section 3A.
Other less significant changes were proposed. Changes were suggested in Section 3B and Section 17 to ensure full disclosure of the University's intent to use the revenue to finance bonds, and minor language changes were suggested in Section 3C and Section 7.
As a footnote, I would add that the University ultimately chose to issue Taxable Build America Bonds. These bonds must comply with the same requirements as tax-exempt bonds.
*************************************
Duane Stucky
Senior Vice President for Financial and Administrative
Affairs and Board Treasurer
Southern Illinois University
Office of the President
Phone: 618-536-3475
Fax: 618-536-3404
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