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HomeMy WebLinkAboutResolution - 79-153 - Preliminary Approval MIDB'S Big G. Imports 650,000 - RESOLUTION GIVING PRELIMINARY APPROVAL TO A PROPOSED INDUSTRIAL DEVELOPMENT PROJECT TO BE CONSTRUCTED AND FINANCED UNDER THE MI:NNESOTA MUNICIPAL INDUSTRIAL DEVELOPMENT ACT , AUTHOR- IZING THE SUBMISSION OF AN APPLICATION TO THF, MINNESOTA COMMISSIONER OF SECURITIES FOR APPROVAL, THEREOF AND AUTHORIZING THE PREPARA- TION OF DOCUMENTS AND MATERIALS IN CONNECTION WITH THE PROJECT BE IT RESOLVED by the City Council of the City of Eden Prairie, Minnesota, as follows : 1 . There has been presented to this City Council a proposal that the City undertake a project pursuant to the Minnesota Munici- pal Industrial Development Act, Chapter 474 , Minnesota Statutes, as amended ( the "Act" ) consisting of the acquisition of land in the City , the construction of a 30 , 000 square foot combination office- warehouse building thereon and the purchase of equipment therefor ( the "Project " ) . Under the proposal , a partnership formed under the laws of the State of Minnesota consisting of Messrs . John K . Galarneault and Robert J . Galarrneault (the "Partnership" ) will enter into a loan agreement ( the "Loan. Agreement" ) with the City whereby the City agrees to issue and sell its $650 , 000 Industrial Development Revenue Bond ( the "Bond" ) to partially finance the Project and to loan the proceeds of such sale to the Partnership which agrees to construct the Project. The Loan Agreement will require the Partnership to pay amounts sufficient to pay the principal of and interest on the Bond. The Bond will be issued and sold to an institutional investor or investors , as a tax exempt mortgage financing, and will be secured by a mortgage on the Project . The Partnership will retain title to and ownership of the Project and will lease the Project to Big G Imports Co. , a Minne- sota corporation, under lease terms sufficient to provide for the payment of principal of and interest on the Bond. The interest of the Partnership in the lease and the interest of the City in the Loan Agreement will be assigned to the holder of the Bond as additional security for the Bond . The Bond will be issued and sold in accordance with the Act and will provide that the Bond is pay- able solely from amounts received by the City pursuant to the Loan Agreement and other property pledged to its payment. The Bond will not be a general obligation of the City or be payable from any other property or funds of the City . 2. There has also been presented to this City Council a form of Application to the Minnesota Commissioner of Securities , for approval of the Project, setting forth the estimated costs of the Project and the increased employment and payrolls to result therefrom. It is hereby found, determined and declared that the purpose of the Project is and the effect thereof will be to promote the public welfare by the attraction , encouragement and development of economically sound industry and commerce ; the development of industry to use the available resources of the City, in order to retain the benefit of its existing investment in educational and public service facilities ; the promotion of employment opportuni- ties in the City ; and the more intensive development of land. available in the area to provide an adequate tax base to finance the increase in the amount and cost of governmental services pro- vided by the City , the county and the school district in which the City is located . 3 . The Project is hereby given preliminary approval by the City, subject to (i ) approval of the Project by the Minnesota Commissioner of Securities and ( ii ) approval of this City Council , the Partnership and the institutional investor or investors of the ultimate details of the Project and the terms of the Bond . 4 . The Partnership, through Dougherty , Dawkins , Strand & Ekstrom, Incorporated , investment bankers , is undertaking to make arrangements with an institutional investor or investors for the purchase of the Bond . This City Council has been advised by Dougherty, Dawkins , Strand & Ekstrom, Incorporated that, on the basis of information submitted to it, the Project is economically feasible - nd that the Bond could be issued and sold upon favorable rates and terms in order to finance the Project. The Mayor and the City Manager are hereby authorized and directed to submit the Application to the Minnesota Commissioner of Securities for approval of the Project, substantially in the form presented at this meeting , together with the letter of economic feasibility for the sale of the Bond prepared by Dougherty, Dawkins, Strand & Ekstrom., incor- porated, and the Statement Concerning a Proposed Project, substan- tially in the form presented at this meeting . The Mayor and the City Manager and other officers, employees and agents of the City are hereby authorized to provide the Minnesota Commissioner of Securities with such preliminary information as he may request and are hereby authorized and directed to execute the Memorandum of Agreement substantially in the form presented at this meeting. 5 . The Partnership 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 Commissioner of Securities ; whether or not the Project is carried to completion; and whether or not the Bond or operative instruments are executed . 6 . The adoption of this Resolution does not constitute a guarantee or a firm commitment that the City will issue and sell the Bond as requested by the Partnership. The City retains the right in its reasonable discretion to withdraw from participation, and accordingly not issue the Bond , should the City at any time _ prior to the issuance thereof determine that it is in the best i -2- interest of the City not to issue the Bond or should the parties to the transaction be unable to reach agreement as to the structur- ing of the financing or as to the terms and conditions of any of the documents required for the transaction. 7 . The Partnership acknowledges the current lack of public access to the subject property . By Resolution No . 79-42 this City Council ordered public improvements and the preparation of plans and specifications for said improvements following receipt of a petition for such public improvements by the owners of 100% of the subject property. The adoption of this Resolution does not constitute a guarantee or a firm commitment that the City will proceed with the ordered public improvements nor does it prohibit or prevent the City from any further action regarding such public improvements , including abandonment of the project or the repeal of Resolution_ No . 79-42 . 8 . The Partnership is hereby authorized to enter into such contracts as may be necessary for the construction of the Project by any means available to it and in the manner it determines without advertisement for bids as may be .required for the construc- tion or acquisition of other municipal facilities . 9. Mackall , Crounse & Moore, acting as bond counsel , is authorized to assist in -the preparation and review of all documents relating to the Project; to consult with the City Attorney , the Partnership and the purchaser of the Bond as to the maturity , interest rate and other terms and provisions of the Bond and as to the covenants and other provisions of the necessary documents ; and to submit such documents to this City Council .for final approval . N; o r Attest: /� -i y Clerk -3- STATE OF MINNESOTA ) ss . COUNTY OF NE /V I , the undersigned , being the duly qualified ,and acting City Clerk of the City of Eden Prairie , Minnesota , do hereby certify that the attached extract of minutes of a regular meeting of the City Council of the City held August 21 , 1979 , is a full , true and correct transcript therefrom insofar as the same relates to the $650 , 000 Industrial Development Revenue Bond of the City . WITNESS My hand officially and seal officially as said t� City Clerk this day of August, 1979 . City Clerk (Seal ) i 1 a -4- S i IMPORTANT This Application must be submitted to Commissioner in triplicate STATE OF MINNESOTA DEPARTMENT OF COMMERCE APPLICATION For Approval of Municipal Industrial Revenue Bond Project Date Auqust 21 1979 To . Minnesota Department of Commerce St . Paul , Minnesota 55101 The governing body of Eden Prairie County of Hennepin , Minnesota, hereby applies to the Commissioner of Securities of the State of Minnesota, 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: Messrs . John K. Galarneault and Robert J . FIRM Galarneault, Partners c/o Big G Imports Co. ADDRESS 3021 Fifth Avenue South CITY Minneapolis STATE Minnesota 55408 State of Incorporation N/A Marvin C. Ingber Attorney Mackall, Crounse & Moore 1000 First National Bank Building Address Minneapolis, Minnesota 55402 This firm is engaged primarily in (nature of business) ownership and operation of the Project . The Partners are the sole officers and shareholders of Big G Imports Co. , a Minnesota corporation , which is to be the lessee of the entire Project . The funds received from the sale of the Industrial Revenue Bonds will be used to (general nature of project) : partially fund the purchase of 2-1/2 acres of real estate and the construction thereon of a 30,000 square foot combination office-warehouse building It will be located in Eden Prairie, Minnesota The total bond issue will be approximately $650,000 to be applied toward payment of costs now estimated as follows: Cost Item Amount -Land Acquisition and Site Development $ 125 ,000 Construction Contracts 550,000 Loan Fees 19,500 Legal Fees �15 ,000 Interest during Construction 13 ,800 Initial Bond Reserve N/A Contingencies -0- Bond Discount N/A Closing Costs 3 ,200 It is presently estimated that construction will begin on or about July 15 , 1979 , and will be completed on or about December 31 , 1979. When completed, there will be approximately 20 new jobs created by the project at an annual payroll of approximately $200,000 based upon currently prevailing wages. The tentative revenue agreement term is 30 years, commencing July 15, 1979, and the firm will retain title to the project. 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 or appointed 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 y: kPrincipal O ce s) pp• r Mayor City Manager 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 Minnesotan Department of Commerce PUBLIC PURPOSE STATEMENT CONCERNING A PROPOSED PROJECT UNDER THE MUNICIPAL INDUSTRIAL DEVELOPMENT ACT , MINNESOTA STATUTES , CHAPTER 474, AS AMENDED The undersigned , being the Mayor of the City of Eden Prairie, Minnesota ( the "City" ) , certifies that Messrs . John K . Galarneault and Robert J. Galarneault of Minneapolis , Minnesota ( the "Proponents " ) has provided the City Council of Eden Prairie , Minnesota (the "City Council " ) with certain information relating to the acquisition of approximately 2-1/2 acres of land in the City and the construction thereon and equipping thereof of a combination office-warehouse building, approximately 30 , 000 square feet in size ( the "Project" ) , to be partially financed under the Municipal Industrial Development Act, Minnesota Statutes , Chapter 474 , as amended (the "Act " ) . On the basis of the information provided to the City Council by the Proponents, and following a public hearing , duly called , noticed and held at City Hall on Tuesday, August 21 , 1979 , at 7 : 30 o 'clock p .m. , in accordance with Section 474 . 01 Subd. 7b of the Act, all parties desiring to appear having been afforded an opportunity to express their views with respect to the proposal to undertake the Project, the City Council has given preliminary approval to the Project and to the partial financing thereof by the sale and issuance of the City ' s industrial development revenue bond in a principal amount not to exceed $650 , 000 . The following factors were considered by the City Council in determining to give pre- liminary approval to the Project . 1 . Mackall , Crounse & Moore , as bond counsel , has given its preliminary opinion that the Project constitutes a "project" within the meaning of Section 474 . 02 of the Act. 2. As a result of the following considerations , the Project will further the public purposes contemplated by and described in Section 474 . 01 of the ,Act. ( a) The Proponents estimate that, as a result of the acquisition, construction and equipping of the Project, Big G Imports Co . , a Minne- sota corporation wholly owned by the Proponents ( the "Company" ) will employ approxi- mately 20 persons in the City and the surround- ing area . The City Council is concerned about providing employment opportunities in the City and believes that the existence of the Project in the City will provide such employment. (b) The Proponents and the Company estimate that the acquisition, construction and equipping of the Project will result in an additional annual payroll of approximately $200 , 000, based on wage rates currently in effect. The City Council believes that a substantial percentage of that additional payroll will be spent on housing, food and other goods and services in the City and surrounding areas, thus benefiting the local economy. -2- ( c ) The City Council believes that the acquisi- tion , construction and equipping of the Project will , in addition to providing employment opportunities in the City, result in more intensive development of the subject land, thereby helping to provide an adequate tax base to finance the costs of governmental services provided by the City , the county and the school district in which the City is located , and result in greater utilization of the City ' s existing investment in educational and public service facilities and thereby contribute to the economic and human resources needed as a base for the provision thereof . (d ) The Proponents report that, during the past two years , the Company has experienced an upward trend of income before taxes . The City Council believes that the upward trend of income before taxes is a demonstration of the economic soundness of the Company, and that the Company will contribute to the soundness of the local economy. 3 . The City will require the Proponents , upon execution of a revenue agreement pursuant to Section 474 . 03 ( 3 ) of the Act , to provide the Minnesota Department of Economic Development with the information required by Section 474 . 01 Subd . 8 of the Act. -3- 4 . The Project will not include any property to be sold , affixed -to, or consumed in the production. of property for sale, and will not include any housing facility to be rented or used as a permanent residence. 5. The Planning Commission of the City has reviewed the preliminary plans for the Project and believes that the Project , when completed , will be compatible with present and projected development in the area. i i CITY OF EDEN PRAIRIE , MINNESOTA By M-14yor t i -4- MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT ( this "Agreement" ) dated as of August 21 , 1979 , between the city of Eiden Prairie , Minnesota (the "City" ) , and Messrs . John K. Galarneault and Robert J . Galar- neault, bath of Minneapolis, Minnesota ( the " Proponents" ) , 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 the Minnesota Municipal Indus- trial Development Act, Minnesota Statutes, Chapter 474 , as amended ( the "Act" ) , to issue revenue bonds to defray the costs of a "project" as defined in the Act. (b ) the Proponents have proposed that the City, pursuant to the Act, issue its revenue bond to defray the costs to be incurred in connection with the acquisition of approximately 2-1/2 acres of land and the construction and equip- ping of a combination off ice-warehouse building thereon, approximately 30, 000 square feet in size ( the "Project" ) , and that the City and a partnership, consisting of the Proponents , to be formed enter into a lease, sale or loan agreement or similar agreement satisfying the requirements of the Act ( the "Revenue Agree- ment") . ( c ) the Proponents wish to obtain satisfactory assurances from the City that the proceeds of the sale of the revenue bond of the City will be made available to finance the costs of the Project . ( d ) subject to due compliance with all require- ments of law and the terms and conditions of this Agreement, the City by virtue of such statutory authority as may now or hereafter be conferred upon it by the Act , will issue and sell its revenue bond in an amount not to exceed $650, 000 (the "Bond" ) to pay a portion of the costs of the Project. ( e) the Bond shall be a limited obligation of the City and the principal of and interest on the Bond shall be payable solely out of the revenues derived from amounts payable to the City by the Proponents pursuant to the pro- visions of the Revenue Agreement . 2 . Undertakings on the Part of the City. Subject to the conditions stated in (d ) and ( e ) of Paragraph 1 hereof, the City agrees. as follows : ( a ) that it will authorize the issuance and sale of the Bond, pursuant to the Act as then in -2- L force and upon terms and conditions mutually agreeable to the City and the Proponents, and (b ) that , if the Bond is issued and sold, it will enter into the Revenue Agreement with the Proponents upon such terms and conditions as are mutually agreeable to the City and the Proponents and as satisfy the requirements of the Act . 3 . Undertakings on the Part of the Proponents . The Pro- ponents agree as follows : ( a ) that they will use all reasonable efforts to find one or more purchasers for the Bond, and (b) that contemporaneously with the delivery of �. the Bond the Proponents will enter into the Revenue Agreement with the City upon such terms and conditions as are mutually agreeable to the City and the Proponents and as satisfy the requirements of the Act, and ( c ) at such time as requested , the Proponents will pay directly to or reimburse the City for all reasonable and necessary expenses, includ- ing fees and expenses of counsel , incurred by the City in connection with 'the authorization, issuance, sale and delivery of the Bond . (d ) following sale and delivery of the Bond the Proponents will provide the City with the -3- i information necessary to fully comply with Section 474 . 01 Subdivision 8 of the Act . 4 . General Provisions. (a ) all commitments of the City under Paragraph 2 hereof and of the Proponents under Paragraph 3 hereof are subject to the condition that within twelve ( 12 ) months from the date hereof ( or such other date as shall be mutually satisfactory to the City and the Proponents ) , the City and the Proponents shall have agreed to mutually acceptable terms and conditions of the Revenue Agreement, the Bond and of the other instruments and proceedings relating to the Bond . (b ) if the events set forth in ( a ) of this Para- graph 4 do not take place within the time set forth or any extension thereof, and the Bond is not sold within such time, the Proponents agree that they will pay directly or reimburse the City for all reasonable and necessary direct out-of-pocket expenses which the City may incur at the Proponents ' request arising from the execution of this Agreement and the performance by the City of its obligations hereunder, and this Agreement shall thereupon terminate. -4- (c ) The execution of this Agreement does not con- stitute a guarantee or a firm commitment that the City will issue the Bond as requested by the Proponents . The City retains the right in its reasonable discretion to withdraw from participation, and accordingly not issue the Bond, should the City at any time prior to issuance thereof determine that it is in the best interest of the City not to issue the Bond or should the parties be unable to reach agreement as to the structuring of the f inancing or as to the terms and con- ditions of any of the documents required for i the transaction . ( d ) The Proponents acknowledge the current lack of public access to the subject property . By resolution No . 79-42 the City ordered public improvements and the preparation of plans and specifications for said improvements following receipt of a petition for such public improve- ments by the owners of 100% of the subject property. The execution of this Agreement does not constitute a guarantee or a firm commitment that the City will proceed with the ordered public improvements nor does it prohibit or prevent the City from any further -5- } action regarding such public improvements , including abandonment of the project or the repeal of Resolution No. 79-42 . IN WITNESS WHEREOF, the parties hereto have entered into this Agreement by their officers thereunto duly authorized as of the day and year first above written. CITY OF EDEN,. P AIRIE, MINNESOTA By Attest: C ' y Manager ohn X . Galarneault And Robe J . Galarneault 71 -6-