Two Harbors, MN (NNCNOW.com) - A judge has ruled in favor of Lake County in a $5 million lawsuit involving bond money used in the installation of broadband internet services.
The ruling stems from a lawsuit filed by Texas-based investment group ORIX Public Finance, LCC over matching funds in the sale of bonds.
The investment group said it agreed to purchase bonds to help the county match $66 million in Federal loans and grants for broadband installation.
The loan/grant was conditioned upon the County providing $3.5 million in matching funds, through the sale of revenue bonds at 12 percent interest, as stated in the County's application.
In October 2010, ORIX agreed to purchase the bonds from Lake County. In November 2010, the Department of Agriculture, Rural Utility Service declined to allow ORIX equal security status for the bonds as the RUS had for the loan.
As a result, ORIX required Lake County to pay more financing costs, which would result in Lake County selling ORIX $5.6 million in revenue bonds at a higher interest rate of 15 percent, among other conditions.
The higher interest rates forced the county to match funds themselves, by using money from its own reserves.
That prompted the lawsuit which claimed the county breached the contract with ORIX.
The lawsuit was first dismissed in a federal court in Texas before moving to Minnesota.
The decision is subject to appeal.