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HomeMy WebLinkAboutResolution - 78-76 - Giving Approval to Project Under Municipal Industrial Development Act, Referring Proposal to Commissioner of Securities and Authorizing Execution of Memorandum of Agrement - Super Valu Stores - f RESOLUTION NO. 2 6 RESOLUTION GIVING PRELIMINARY APPROVAL TO A PROJECT UNDER THE MUNICIPAL INDUSTRIAL DEVELOPMENT ACT, REFERRING THE PROPOSAL TO THE COMMISSIONER OF SECURITIES FOR APPROVAL, AND AUTHORIZING EXECUTION OF A MEMORANDUM OF AGREEMENT AND PREPARATION OF NECESSARY DOCU- MENTS BE IT RESOLVED by the City Council of the City of Eden Prairie, Minnesota, as follows : Section 1. Recitals. 1. 01. The Legislature of the State of Minnesota in Minnesota Statutes, Chapter 474 , as amended (the Act) has found and declared that the welfare of the State requires active promotion, attraction, encouragement and development of economically sound industry and commerce through governmental acts to prevent, so far as possible, emergence of blighted lands and areas of chronic unemployment; has authorized municipalities to issue revenue bonds to finance, in whole or in part, the costs of the acquisition, construc- tion, reconstruction, improvement and betterment of projects, including any properties, real or personal, used or useful . in connection with a revenue producing enterprise engaged in any business; and has authorized municipalities to enter into "revenue agreements" as defined in the Act with any person, firm, or public or private corporation or federal or state governmental subdivision or agency (the "Contracting Party") providing for the payment by the Contracting Party of amounts sufficient to provide for the prompt payment of principal of and interest on the revenue bonds. 1.02. Pursuant to the authori.ty :of the Act, it has been proposed that the City issue its revenue bonds in an amount sufficient to pay part of the costs of the acquisition, , construction, improvement and betterment of certain real and personal properties in the City to be used by Super Valu Stores, Inc. , a Delaware corporation (the Company) , as its executive office building (the Project) and to make the proceeds of the sale of those revenue bonds available to the Company, which will agree to pay the City amounts sufficient to pay promptly the principal of and interest on the revenue bonds, and to cause the Project to be constructed. The Project is presently estimated to cost in excess of $5,000 ,000 . 1. 03. The existence of the Project would add to the tax base of the City, County and School District in which the City is located and would provide increased opportunities for employment for residents of the City and surrounding area. 1. 04 . The City has been advised that conventional commercial financing to pay the capital cost of the Project is available only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be significantly reduced, but that with the aid of municipal financing, and its resulting low borrowing costs, the Project is economically more feasible. 1. 05. This Council has been advised that revenue bonds of the City could be issued and sold upon favorable rates and terms to finance the Project. 1. 06 . There has been presented to this Council a form of Memorandum of Agreement relating to the issuance of revenue bonds of the City to finance costs of the Project. Section 2 . Approvals and Authorizations. 2.01. On the basis of information given 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 part of the costs of the Project. 2. 02 . The Project is hereby given preliminary approval by the City and the issuance of revenue bonds for such purpose and in an amount not to exceed $1,000 ,000 approved, subject to approval of the Project by the Commissioner of Securities and of the purchasers of the bonds as to the details of the bond issue and provisions for their payment. 2. 03. The form of Memorandum of Agreement is approved and the Mayor and City Manager are authorized to execute the Memorandum of Agreement, with such changes as the City Attorney may approve, on behalf of the City. 2. 0'4. In accordance with law, the Mayor is hereby authorized and directed to submit the proposal for the Project to the Commissioner of Securities for his approval of the Project. The Mayor, City Clerk, City Manager, City Attorney and other officers, employees and agents of the City are hereby authorized to provide the Commissioner with any preliminary information he may need 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 Commissioner. Section 3. Special Obligations. In all events, it is understood, however, that the bonds of the City shall not constitute a charge, lien or encumbrance legal or equitable upon any property of the City except the Project, if it becomes the property of the City, -2- and each bond, as, and if issued, is payable solely from the revenues from the Project and property pledged" to the payment thereof, and shall not constitute a debt of the City. Mayor Attest: az AL Id .4 City gTerk c • -3- IMPORTANT This Application must be submitted to Commissioner in triplicate STATE OF MINNESOTA DEPARTMENT OF COr1MEERCE - SECURITIES DIVISION APPLICATION For Approval of Municipal Industrial Revenue Bond Project Date To: Minnesota Department of Commerce Securities Division 500 Metro Square Building St. Paul, Minnesota 55101 The governing body of Eden Prairie County of Hennepin , Minnesota, hereby applies to the Commissioner of the State ot Minnesota, Securities Division of the Department of Commerce, for his approval of this community' s proposed Municipal Industrial Revenue Bond issue, as • required by Section 1, Subdivision 7, Chapter 474, Minnesota Statutes . We have entered into preliminary discussions with: FIRM Super Valu Stores, Inc. ADDRESS 101 Jefferson Avenue South CITY Hopkins STATE Minnesota State of Incorporation Delaware Attorney Dorsey, Windhorst Hannaford Whitney & Halladay 00 First National Bank Building Address Minneapolis, Minnesota This firm is engaged primarily in (nature of business) : Wholesale food distribu ,on The funds received from the sale of the Industrial Revenue Bonds will be used to (general nature of project) : Corporate headquarters It will be located in Eden Prairie • 8/1/77 -1- The total bopd issue will be approximately $1,000,000 to be applied toward payment of costs now estimated as o ows : Cost Item. Amount I Land Acquisition and Site Development $ Construction Contracts 970 ,000 • Equipment Acquisition and Installation Architectural and Engineering Fees Legal Fees 10 ,000 Interest during Construction Initial Bond Reserve Contingencies Bond Discount 20 ,000 Other It is presently estimated that construction will begin on or about August 1 19 7& and will be completed on or about ,June 1 8Q WW- en completed, there will be approximately 50 new jobs created by the project at an annual payroll of ap- proximately $ 750 ,000 based upon currently prevailing wages. The tentative lease term is 30 years, commencing Jul 1 , 19 78, and the tenant wi t) have the option to purchase the project for a nominal value upon expiration of the lease term. The municipality will provide the Commissioner with a -comprehensive statement indicating how the project satisfies the public purpose and policies of the Minnesota Industrial Development Act. A letter of intent to purchase the bond issue from an underwriter • or an analysis of a fiscal consultant as to the feasibility of the project from a financial standpoint is attached to this application. We, the undersigned, are duly elected representatives of Eden Prairie , Minnesota, and solicit your approval of this project at your earliest convenience so that we may carry it to a final conclusion. Signed by. rinci Offi s) This approval shall not be deemed to be an approval by' the Commissioner or the state of the feasibility of the project or the terms of the lease to be executed or the bonds to be issued therefor. Date of Approval: Commissioner of Securities Minnesota Department of Commerce 8/1/77 n MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT, dated as of 1978, between the City of Eden Prairie, Minnesota (the City) , and Super Valu Stores, Inc. (the Company) , provides as follows: 1. Preliminary Statement. Among the matters of mutual inducement which have resulted in this Agreement are the following: (a) the City is authorized and empowered by the provisions of Chapter 474 , Minnesota Statutes, as amended (the Act) , to issue revenue bonds to defray, in whole or in part, the costs of a. project as defined in the Act. (b) the Company has proposed that the • City, pursuant to the Act, issue its revenue bonds to defray in part the costs to be incurred in connection with the acquisition of certain properties, consisting of the acquisition, constructing, furnishing and equipping of ;certain real and personal properties in the City to be used by the Company as its executive office building (the Project) , and that the City and the Company enter into a lease, sale or loan agreement or similar agreement satisfying the requirements of the Act (the Revenue, Agreement) . (c) the Company wishes to obtain satisfactory assurance from the City that the proceeds of the sale of the revenue bonds of the City will be made • available to finance costs of the Project. r , • (d) subject to due compliance with all requirements of law, the City by virtue of such . statutory authority as may now or hereafter be conferred by the Act, will issue and sell its revenue bonds in an amount not exceeding $1,000 ,000 (the Bonds) to pay in part the costs of the Project. (e) the Bonds shall be special obligations of the City and the principal of and interest on the Bonds shall be payable solely out of the revenues derived from amounts payable to the Cityi by the Company pursuant to the provisions of the Revenue Agreement. 2. Undertakings on the Part of the City. Subject to the conditions stated in (d) of paragraph 1 hereof, the City agrees as follows: • (a) that it will forthwith submit an application for approval of the Project to the Commissioner of Securities of the State of Minnesota. (b) that it will authorize the issuance and sale of the Bonds, pursuant 'to the terms of the Act as then in force. (c) that, if it issues and sells the Bonds, it will as requested by the Company enter into the Revenue Agreement with the Company. The lease rentals, installment sale payments, loan payments or other amounts payable under the Revenue Agreement will be sufficient to pay the principal and interest and redemption premium, if any, on the Bonds as and when the same shall become due and payable. -2- 3. Undertakings on the Part of the Company. The Company agrees as follows: (a) that it will use all reasonable efforts to find one or more purchasers for the bonds. (b) that contemporaneously with the delivery of the Bonds the Company will enter into the Revenue Agreement with the City under the terms of which the Company will provide security to the City for payment of sums sufficient in the aggregate to pay the principal of and interest and redemption premium, if any, on the Bonds as and when the same shall become due and payable. 4. General Provisions. (a). all commitments of the City under paragraph 2 hereof and of the Company under paragraph 3 hereof • are subject to the conditions that within twelve (12) months from the date hereof (or such other date as shall be mutually satisfactory to the City and the Company) , the Commissioner of Securities of the State of Minnesota shall have approved the Project and the City and the Company shall have agreed to mutually acceptable terms and conditions of the Revenue Agreement, the Bonds and of the other instruments and proceedings relating to the Bonds. (b) if the events set forth in (a) of this paragraph do not take place within the time -3- � 1 set forth or any extension thereof and the Bonds are not sold within such time, the iCompany agrees that it will reimburse the City for all reasonable and necessary direct out-of-pocket expenses which the City may incur at the Company' s request arising from the execution of this Agreement and the performance by the City of its obligations hereunder, and this Agreement shall thereupon terminate. t IN WITNESS WHEREOF, the parties hereto have entered into this Agreement by their officers thereunto duly authorized this 18th day of April , 1978. CITY OF EDEN PRAIRIE, MINNESOTA • By Ma(vor Attest (SEAL) &Zity Manager SUPER VALU STORES, INC. By Its Attest: (SEAL) Its -4-