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1985-3212 j rJ '1) '1 i .J f t rJ I i ~ ~'; .. I ~ .. I . rO ~ o .0 o r I, RESOLUTION GIVING PRELIMINARY APPROVAL TO A PROJECT UNDER THE MUNICIPAL INDUSTRIAL DEVELOPMENT ACT AND THE INTERNAL REVENUE CODE; REFERRING THE PROPOSAL TO THE MINNESOTA DEPARTMENT OF ENERGY AND ECONOMIC DEVELOPMENT FOR APPROVAL; AND AUTHORIZING PREPARATION OF NECESSARY DOCUMENTS. RESOLUTION NO. 85-3212 WHEREAS, under the enactment by the Minnesota Legislature of Chapter 474 of the Minnesota Statutes, which is cited as the "Municipal Industrial Development Act" (the "Act"), the City of Hopkins ("City") is authorized to issue industrial development revenue bonds for the purpose of providing financing for the acquisition, construction and installation of projects consisting of real and personal properties used or useful in connection with a revenue-producing enterprise engaged in any business; and WHEREAS, in enacting the Act the Legislature found that the welfare of the State of Minnesota requires the active promotion, attraction, encouragement and development of economically sound industry and commerce to prevent, as far as possible, the emergence of blight and areas of chronic unemployment and to prevent economic deterioration; and WHEREAS, the promotion, attraction, encouragement and development of economically sound industry and commerce provides employment opportunities for residents of the City of Hopkins and encourages land development, thereby increasing the tax base of the City of Hopkins and overlapping taxing districts; and NOW, THEREFORE, BE IT RESOLVED by the City CounclI ("Council") of the City of Hopkins, Minnesota as follows: 1. It is hereby found, determined, and declared as follows: 1.1 Rolfe Properties, Inc., a Minnesota corporation ("Borrower") has advised this Council that it desires to construct an office building of approximately 14,268 square feet on certain land owned by the Corporation (hereinafter referred to as the "Project"), all or a substantial portion of the cost of which would be financed pursuant to the Act. 1.2 Borrower has advised that said Project does not include any property to be sold or affixed to or consumed in the production of property for sale, and does not include any housing facility to be rented or used as a permanent residence. . j 'b J J J I ,ill I ,0 i . 1.6 o 1.7 1.8 o 1.3 The welfare of the State requires the active promotion, attraction, encouragement and development of economically sound industry and commerce through governmental action for the purpose of preventing, so far as possible the emergence of blighted and marginal lands and areas of chronic unemployment. 1.4 The existence of the Project in the City will contribute to more intensive development and use of land, maintain and provide for an increase in opportunities for employment for residents of the City and further promote the purposes as specifically described in Section 474.01 of the Act. 1.5 The City has been advised by representatives of Borrower that conventional, commercial financing to pay the capital costs of the Project is unavailable at a cost required to make construction of the Project and the operation thereof economically feasible but that with the aid of industrial development bond financing, and its resulting lower borrowing cost, construction and operation of the Project is economically feasible and accordingly the Council finds that the Project would not be undertaken without the availability of industrial development bond financing. This City has also been advised by representatives of the Borrower, that on the basis of its discussions with potential buyers of tax exempt bonds, industrial development bonds (which may be in the form of a single instrument, such as a Note, or in the form of bonds with vary ing maturities) of the City, could be issued and sold upon favorable rates and terms to finance the Project. The City is authorized by the Act to issue its Industr~al Development Revenue Bonds, to finance capital projects consisting of properties used and useful in connection with a revenue producing enterprise such as that of the Borrower, and the issuance of such bonds by the City would be a substantial inducement to the Borrower to construct the Project. That a public hearing on the proposal to undertake and finance the Project, was duly noticed and held on September 18, 1985, in accordance with the Act, and in accordance with Section 103(k) of the Internal Revenue Code of 1954, as amended ("Code") and the regulations thereunder, and all parties who appeared at the hearing were given an opportunity to express_ their views with respect to the proposal to undertake and finance the Project. -2- t~ I I ~ 10 '1 .~ ~ I 1 ~ .-J' ., .~ 1 ~ I ~ 1 o .- o - ,-;; , ~ ,.) 1""" ,...1 tp ;1, I ~b t ~ ,... J '" .-:' 1. 9 The proposed Project consists of real and personal properties to be used in a revenue-producing enterprise engaged in business, as authorized by the Act. 1.10 The recitals commencing with the word "Whereas" set forth above are incorporated into this Resolution by reference and shall be made a part hereof. 1.11 The City has been advised by representatives of Borrower that the Project does not include an airplane, a private luxury box, a facility primarily used for gambling, or a store the principal business of which is the sale of alcoholic beverages for consumption off premises. 1.12 The City has been advised by representatives of Borrower that with respect to the Project, no more than twenty-five percent (25%) of the Industrial Development Revenue bond or bonds issued in connection with the Project will be used to finance the acquisition of land; and not more than $10,000,000.00 in revenue bonds which are Industrial Development Bonds subject to the exemption described in section 103(b)(6) of the Internal Revenue Code of 1954, as amended, will be issued with respect to anyone building which is used for commercial, office or industrial purposes, without regard to the ownership of the condominium units within the building; and no portion of the bond proceeds will be utilized to finance a structure that is used primarily for self-storage by an individual of goods, wares, or merchandise for compensation. 2. On the basis of all information given to the City to date, it appears that it would be in the best interest of the City to issue its Industrial Development Revenue Bonds under the provisions of the Act to finance a portion of the costs of the Project of the Borrower in an amount presently estimated to be $850,000.00. The issuance of the Industrial Development Revenue Bonds will be out of the 1985 entitlement issuer allocation to the City of Hopkins by the Minnesota Department of Energy and Economic Development pursuant to Minn. Stat. Section 474.18. 3. The Project above-referred, is hereby given preliminary approval by the City and the issuance of Industrial Development Revenue Bonds of the City (which may be in the form of one or more Industrial Development Revenue Note or Notes) in such amount is hereby approved, subject to the approval of the Project by the Minnesota Department of Energy and Economic Development and subject to the mutual agreement of this body, the Borrower and the initial purchaser of the bond as to the details of the bond issue and provisions for their payment. Messrs. Thompson & Klaverkamp, P.A., Minneapolis, Minnesota, are hereby appointed as bond counsel in connection with said bond issue. In all events, it is understood, however, -3- , ,7 t f , . n... ld ~ J L J l 1 ~ l 'l ~ .~ ... , ~ ~ '1 ~1' ~ , ... q ffi. '.... o I ,,. J ~ ,) t! ~ ii ~ 8. '0 " .:7 that the bonds of the City shall not constitute a charge, lien or encum- brance, legal or equitable upon any property of the City, except the Project, and each bond, when, as and if issued, shall recite in substance that the bond, including interest thereon, is payable solely from the revenue received from the Project and property pledged to the payment thereof, and shall not constitute a debt of the City. 4. In accordance with Minnesota Statutes, Section 474.01, Subdivision 7a, the Mayor and City Manager are hereby authorized and directed to execute and submit the proposal for the Project to the Minnesota Department of Energy and Economic Development for approval of the Project. The Mayor, City Manager, City Attorney, and other officers, employees and agents of the City, are hereby authorized to provide the Minnesota Department of Energy and Economic Development with any preliminary information needed for this purpose, and the City Attorney is authorized to initiate and assist in the preparation of such documents, as may be appropriate to the Project, if it is approved by the Minnesota Department of Energy and Economic Development" 5. If the revenue bonds are issued and sold, the City will enter into a lease, sale or loan agreement or similar agreement with the Borrower satisfying the requirements of the Act ("the Revenue Agreement"). The lease rentals, installment sale payments, loan payments or other amounts payable by the Borrower to the City under the Revenue Agreement shall be sufficient to pay the principal, interest and redemption, if any, on the revenue bonds as and when the same shall become due and payable. Upon entering into any Revenue Agreement, the information required by Minnesota Statute Section 474.01, Subdivision 8, will be submitted to the Minnesota Department of Energy and Economic Development. 6. The Borrower has agreed to pay directly or through the City any and all costs incurred by the City in connection with the Project whether or not the Project is approved by the Minnesota Department of Energy and Economic Development; whether or not the Project is carred to completion; whether or not the bonds or other operative instruments are executed; and whether or not the City grants final approval to the Project. 7. The adoption of this resolution does not constitute a guarantee or a firm commitment that the City will issue the bonds as requested by the Borrower. The City retains the right in its sole discretion to withdraw from participation and accordingly not issue the bonds should the City at anytime prior to issuance thereof determine that (1) it is in the best interest of the City not to issue the bonds, (i0 the purposes of the Act or the guidelines of the City would not be served thereby, or (iil) the parties to the transaction are unable to reach an agreement as to the terms and conditions of any of the documents required for the transaction. . Nothing in this Resolution or in the documents prepared pursuant hereto shall authorize the expenditure of any funds on the Project other than the -4- 1 n to o {J tJ I revenues thereof or the proceeds of the bonds or notes authorized by the City herein. The bonds or notes shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property or funds of the City except the Project and the revenue pledged to the payment thereof, nor shall the City be subject to any liability thereon. No bondholders shall ever have the right to compel any exercise of the taxing power of the City to pay any such bonds or notes or the interest thereon, nor to enforce payment thereof against any property of the City except the Project. Each bond shall recite in substance that the bond or note, including interest thereon, is payable solely from the revenue pledged to the pay ment thereof. No bond or note issued hereunder shall constitute a debt of the City within the meaning of any constitutional or statutory limitation. ! 11 J 9. In anticipation of the approval by the Minnesota Department of Energy and Economic Development and the issuance of revenue bonds or notes to finance the Project, and in order that completion of the Project will not be unduly delayed when approved, the Borrower is hereby authorized to make such expenditures and advances toward payment of costs of the Pr,oject as it considers necessary, including the use of interim, short-term financing, subject to reimbursement from the proceeds of the revenue bonds or notes when delivered, but otherwise without liability' on the part of the City. ! il ,.:. r . l .;. MAYOR p CITY MANAGER ~ ATTEST: , $ s ... CITY CLERK r ... \ ,:1 ~ ,.b I~ ~ -5-