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SENT BY:SHERMAN HOWARD 1 -10 -97 ;10 :49AM <br />Sherman Howard L.L.C. <br />Direct Dial Number: (303) 299 -8228 <br />E -Mail: dwisor @sah.com <br />Bill Simmons <br />City Manager <br />City of Louisville <br />749 Main Street <br />Louisville, Colorado 80027 <br />Dear Bill: <br />ATTORNEYS COUNSEL( IRS AT LAW <br />633 SEVRN'i'L'ENTH STREET, SU17T::i000 <br />OEN VBR, R021)2 <br />TELEPHONE! :iO3 297.290 <br />FAX; 303 298.0940 <br />11FEU:11S 1N: COLORADO SYBi NGS <br />RENO LAS VEGAS <br />January 10, 1997 <br />Re: Manufacturing Facility Private Activity Bond <br />SERVICES DESK 3036739043;# 2/ 6 <br />BY FACSIMILE <br />As we discussed, enclosed is a revised inducement resolution for the proposed private <br />activity bonds for the NTA Leasing project. I have made the changes which you requested. This will <br />also confirm that we are acting as bond counsel to the City (as we have in the past) and that all of our <br />fees are to be paid solely by NTA Leasing. <br />Private activity bonds are expressly authorized to be issued by the City pursuant to <br />the County and Municipality Development Revenue Bond Act. Pursuant to the Act and appellate <br />court decision, private activity bonds do not constitute a debt of the City. Rather, the bonds are <br />payable solely from loan payments made by the Company. Private activity bonds are really a way for <br />the City to grant a federal tax advantage (through tax exempt interest rates) to a private entity to <br />induce it to locate a business activity in the City. <br />The inducement resolution is only the first step in the private activity bond process. <br />It is required by Section 24- 32- 1709(1)(g), C.R.S. in order for the project to be considered by the <br />State as being an eligible private activity bond process. The inducement resolution does not bind the <br />City to issue the bonds or to approve the project under any of the City's land use processes. <br />You asked me whether the City has any potential liability if it issues such bonds. The <br />bonds will clearly state that they are payable solely by the Company. Further, the Company will <br />indemnify the City should there be any legal proceedings related to the bonds. However, 1 am aware <br />of at least one Colorado city which was sued in the context of a private activity bond issue and either <br />