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HomeMy WebLinkAboutResolution - 78-110 - Relating to Project Under the Municipal Industrial Development Act, Giving Preliminary Approval, Referring Proposal to Commissioner of Securities and Authorizing Execution of Memorandum of Agreement - Gelco Corporation - RESOLUTION 78-110 RESOLUTION RELATING TO A PROJECT UNDER THE MUNICIPAL INDUSTRIAL DEVELOPMENT ACT; GIVING PRELIMINARY APPROVAL TO THE PROJECT; REFERRING THE PROPOSAL TO THE COMMISSIONER OF SECURITIES FOR APPROVAL; AND AUTHORIZING EXECUTION OF A MEMORANDUM OF AGREEMENT AND PREPARATION OF NECESSARY DOCUMENTS BE IT RESOLVED by the City Council of the City of Eden Prairie, Minnesota (the City) , as follows: 1. 1. The welfare of the State of Minnesota 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, and the State has encouraged local government units to act to prevent such economic deteriora- tion. 1. 2. Gelco Corporation, a Minnesota corporation (the Company) , which is engaged primarily in the business of pro- viding transportation and vehicle management services, principal- ly through the leasing of automobiles and trucks, and which now has its headquarters in the City, is considering acquisition of additional land within the City and construction thereon of one or more buildings and acquisition and installation therein of items of equipment, machinery, furnishings and other items of personal property (all such property hereinafter referred to as the Project) , to be used by the Company for additional office space and vehicle parking, and related facilities. 1. 3. The existence of the Project would add to the tax base of the City, Hennepin County and the school district in which the City is located, would provide increased opportunities for employment for residents of the City and surrounding area, and would tend to insure that the Company will continue to operate its business within the City. 1. 4. This Council has been advised by a representa- tive of the Company that with the aid of municipal borrowing, and its resulting low borrowing cost, the economic feasibility of undertaking the Project is significantly improved. 1. 5. This Council has also been advised by a repre- sentative of Piper, Jaffray & Hopwood Incorporated, of Minneapolis, r Minnesota, investment bankers and dealers in municipal bonds, that on the basis of information submitted to them and their discussions with representatives of the Company and potential buyers of tax-exempt bonds, industrial development revenue bonds of the City could be issued and sold upon favorable rates and terms to finance the Project. 1. 6. The City is authorized by Minnesota Statutes, Chapter 474, as amended (the Act) , to issue its revenue bonds to finance capital projects consisting of properties used and useful in connection with a revenue-producing enterprise, such as that of the Company, and the issuance of such bonds by the City would be a substantial inducement to the Company to con- struct the Project. 2. 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 $1, 000, 000 of the cost of the Project, the total cost of which is presently estimated to be approximately $ 6,nnn,000 3. The Project is hereby given preliminary approval by the City and the issuance of bonds for such purpose and in an amount up to $1, 000,000 approved, subject to the approval of the Project by the Commissioner of Securities and to the mutual agreement of this Council, the Company and the initial purchasers of the bonds as to the details of the bond issue and provisions for their payment. 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, and each bond, when, as and if issued, shall recite in substance that the bond, including interest thereon, is payable solely from the revenues received from the Project and property pledged to the payment thereof, and shall not constitute a debt of the City. 4. The form of Memorandum of Agreement relating to the issuance of revenue bonds of -the City to finance the cost of the Project is hereby approved and the Mayor and City Clerk are hereby authorized and directed to execute the Memorandum of Agreement in behalf of the City. 5. In accordance with Section 474. 01, Subdivision 7 of the Act, the Mayor is hereby authorized and directed to sub- mit an Application for the Project to the Commissioner of Secu- rities for his approval of the Project. The Mayor, City Clerk, . -2- 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. yor Attest: ity Cq4rk i -3- t • MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT, dated as of , 1978, between the City of Eden Prairie, Minnesota (the City) , and Gelco Corporation, a Minnesota corporation (the Company) , provides as follows: 1. Preliminary Statement. Among the matters of mu- tual inducement which have resulted in this Agreement are the following: (a) The City is authorized and empowered by the pro- visions of Chapter 474, Minnesota Statutes, as amended (the Act) , to issue revenue bonds to defray 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 the costs to be incurred in connection with the acquisition of certain real and personal properties (the Project) to be used by the Company for office space and vehicle parking in conjunction with the head- quarters of the Company within the City, 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 the Project. (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, agrees to issue and sell its revenue bonds in a principal amount not exceeding $1,000,000 (the Bonds) to pay the costs of the Project. (e) The Bonds shall be limited obligations of the City and the principal of and interest on the Bonds shall be payable solely out of revenues derived from amounts payable to the City by the Company pursuant to the terms 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 authorize the issuance and sale of the Bonds, pursuant to the terms of the Act as then in force. • (b) 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 redemp- tion premium, if any, on the Bonds as and when the same shall become due and payable. 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 agree to pay to the City sums sufficient in the aggregate to pay the principal of, interest on 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 here- of and of the Company under paragraph 3 hereof are subject to the condition that within twelve months from the date hereof (or such • other date as shall be mutually satisfactory to the City and the Company) , 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 set forth or any extension thereof and the Bonds are not sold within such time, the Company agrees that it will reimburse the City for all reasonable and necessary 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 there- upon terminate. IN WITNESS WHEREOF, the parties hereto have entered into this Agreement by their officers thereunto authorized this day of , 1978. CITY OF EDE -PRAIRIE, MINNESOTA GELCO CORPORATION ByA -S�/V By Its • Attest Attest 'ty erk Its -2-