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HomeMy WebLinkAboutResolution - 79-173 - Preliminary Approval MIDB Eden Prairie Partners - RESOLUTION NO . 79-173 RES0r,UTION GIVING PRELIMINARY APPROVAL TO A PROJECT UNDER THE MINNESOTA MUNICIPAL INDUSTRIAI, DEVELOPMENT ACT_, AUTHORIZING SUBMISSION OF AN APPLICATION TO THE MINNESOTA COMMISSIONER OF SECURITIES FOR APPROVAL THEREOF AND AUTHORIZING EXECUTION OF' A MEMORANDUM OF AGREEMENT AND PREPARATION OF NECESSARY DOCUMENTS IN CONNECTION WITH THE PROJECT BE IT RESOLVED by the City Council ( this "Council " ) of the City of Eden Prairie , Minnesota ( the "City" ) , as follows : SECTION 1 Recitals and Findings 1 . 1 This Council called a public hearing on a proposal pre- sented to it that the City undertake a project pursuant to the Municipal Industrial Development Act, Minnesota Statutes , Chapter 4 74 , as amended (the "Act" ) consisting of the acquisition of land in the City , the construction of an office-warehouse complex thereon consisting of three buildings totaling approximately 74 , 000 square feet in size , and the purchase of equipment therefor ( the " Project" ) . Under the proposal , a partnership formed under the laws of the State of Minnesota and consisting of Messrs . Brian M. Zubert and Malcolm D. Reid ( the "Partnership" ) will enter_ into a loan agreement ( the "Loan Agreement" ) with the City whereby the City agrees to issue and sell its $1 , 500, 000 Industrial Develop- ment Revenue Bond in the form of a single debt instrument ( 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 , as a tax exempt mortgage financing , and will be secured by a mort- gage and other encumbrances on the Project . The Partnership will retain title to and ownership of the Project and will lease the Project to various business enterprises 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 payable solely from amounts received by the City pursuant to the Loan Agreement and other prol-,erty 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 . 1 . 2 At a public hearing , duly called , noticed and held on October 2 , 1979 , in accordance with the Act , all parties desiring to appear were afforded an opportunity to be lieard . Based on such public hearing and on such other facts and circumstances as this Council deems relevant, this Council hereby finds , determines and declares as follows : (a) The purpose of the Act as found and determined by the state legislature is to promote the welfare of the state by the active attraction , encouragement and development of economically sound industry and commerce to prevent so far as possible the emergence of blighted and marginal lands and areas of chronic unemployment. Factors necessitating the active promotion and development of economically sound industry and commerce are the increasing concentration of population in the metropolitan areas, the rapidly rising increase in the amount and cost of governmental services required to meet the needs of the increased population and the need for development of land use which will provide an adequate tax base to finance these increased costs and access to employment opportunities for such population . ( b) The welfare of the residents of the state requires the active promotion , attraction, encouragement and development of economically sound industry and commerce through governmental acts; the encouragement of employment opportunities for citizens of the state and the City; and the development of industry to use available resources of the City , in order to retain the benefit of its exist- ing investment in educational and public service facilities . ( c ) The Project would further the foregoing purposes of the Act as contemplated by and described in Section 474 . 01 of the Act . ( d) The City is authorized by the Act to issue its industrial development revenue bonds to finance capital projects consisting of properties used or useful in connection with a revenue producing enterprise . ( e) This Council has been advised by Northland Mortgage Company , agent for the Partnership ( the "Agent" ) that conventional , commercial financing to partially finance the cost of the Project is available on such a limited basis and at such high interest rates that the economic feasibility of operating the Project would be significantly reduced . However , with the aid of a municipal borrower , and its resulting lower borrowing cost , the economic feasibility of the Project would be substantially increased and that the issuance of the Bond by the City would be a significant inducement to the Partnership to construct the Project in the City . -2- ( f ) The existence of the Project would add to the tax base of the City and of the county and school district in which the Project is located and would provide increased employment opportu- nities for residences of the City and the surrounding area . SECTION 2 Preliminary Approval of Project 2. 1 On the basis of information provided to this Council , it appears that it would be in the best interest of the City to issue the Bond in accordance with the Act, in an amount not to exceed $1 , 500, 000, in order to partially finance the cost of the Project . 2. 2 The Project is hereby given preliminary approval and the issuance of the Bond by the City in the foregoing amount is also hereby approved , subject to approval of the Project by the Commission- er of Securities, Minnesota Department of Commerce ( tl.e "Commissioner" ) ; the fulfillment of such other conditions as the City may require with respect to the issuance of the Bond in connection with the Project ; and the mutual agreement of this Council , the Partnership and the purchas-r of the Bond as to the structuring of the financing and as to the terms and conditions of any of the documents required for the transaction. 2, 3 Nothing in this resolution or in the documents prepared pursuant hereto shall authorize the expenditure of any funds of the City on the Project other than the revenues derived therefrom or otherwise granted to the City for this purpose . The Bond 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 and proceeds pledged to the payment thereof , nor shall the City be subject to any liability thereon . No holder of the Bond shall have the right to compel any exercise of the taxing power of the City to pay the outstanding principal of or interest on the Bond , or to enforce payment thereof against any property of the City except the Project . The Bond shall recite on its face that the principal of and interest on the Bond is payable solely from the revenue and proceeds pledged to the payment thereof . The Bond shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation . 2 .4 The forms of Memorandum of Agreement between the City and the Partnership and the Application for Approval of Municipal Industrial Revenue Bond Project by the City to the Commissioner , together with all attachments and exhibits thereto, substantially in the forms presented herewith, are hereby approved , and the Mayor and Cite Manager are authorized to execute said documents on behalf of the City and , in accordance with Section 474 . 01 , Subdivision 7a of the Act, are hereby authorized and directed to cause said -3- Application to be submitted to the Commissioner for approval of the Project . The r4ayor , City P•lanager , City Attorney and other officers, employees and agents of the City are hereby authorized and directed to provide the Commissioner with any preliminary information the Commissioner may need for this purpose . 2 . 5 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 operative documents; and to submit such documents to this Council for final approval . SECTION 3 General 3 . 1 The Partnership has agreed to pay any and all costs incurred by the City in connection with the Project whether or not the Project is approved by the. Commissioner ; whether or not the Project is carried to completion; and whether or not the Bond or operative instruments are executed . 3 . 2 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 con- struction or acquisition of other municipal facilities . 3. 3 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 sole 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 interest of the City not to issue the Bond or should the parties to the transaction be unable to reach agreement as to the structuring of the financing or as to the terms and conditions of any of the documents required for the transaction . Adopted by the City Council of the City of Eden Prairie , Minnesota , this 2nd day of October , 1979 . a y#r Attest : City Clerk J. 1 -4-