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HomeMy WebLinkAboutResolution - 81-122 - MIDB's - Preliminary Approval - Frana and Sons - $340,000 - 07/07/1981 RESOLUTION NO . RESOLUTION GIVING PRELIMINARY APPROVAL TO A PROJECT UNDER THE MINNESOTA MUNICIPAL INDUSTRIAL 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 and finance a project pursuant to the Municipal Industrial Development Act, Minnesota Statutes , Chapter 474, as amended (the "Act" ) consisting of the acquisition of land in the City, the construction of an office building thereon and the purchase of equipment therefor ( the "Project" ) . Under the proposal , Gary H . and Jacqueline R . Frana , husband and wife ( the "Proponents" ) will enter into a loan agreement ( the "Loan Agreement" ) with the City whereby the City agrees to issue and sell $34fr;:af�r c ,f its Commercial Development Revenue Bonds in the .form of two debt` � rC;;co instruments ( the "Bonds" ) to partially finance the Project and to loan the proceeds of such sale to the Proponents who agree to con- struct the Project. The Loan Agreement will require the Proponents to pay amounts sufficient to pay the principal of and interest on the Bonds . The Bonds will be issued and sold to two investors , as a tax exempt mortgage financing , and will be secured by a mortgage and other encumbrances on the Project. The Proponents will retain title to and ownership of the Project and will lease the Project to Frana and Sons , Inc . , a Minnesota corporation wholly owned by -the Proponents , under lease terms sufficient to provide for the payment of principal of and interest on the Bonds . The interest of the Proponents in the lease and the interest of the City in the Loan Agreement will be assigned to the holder of the Bonds as additional security for the Bonds . The Bonds will be issued and sold in accordance with the Act and will provide that the Bonds are payable solely from amounts received by the City pursuant to the Loan Agreement and other property pledged to its payment . The Bonds 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 July 7 , 1981 , in accordance with the Act, all parties desiring to appear were afforded an opportunity to be heard . 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 : -2- ` ( 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 , such as that of the Project. (e ) This Council has been advised by TCF Mortgage Corp . , agent for the Proponents ( 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 substaritially increased and that the issuance of the Bonds by the City would be a significant inducement to the Proponents to construct the Project in the City. (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 : r.formation provided to this Council , it appears that it would be in the best interest of the City to issue -3- the Bonds in accordance with the Act, in an amount not to exceed $340 , 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 Bonds by the City in the foregoing amount is also hereby approved, subject to approval of the Project by the Commis- sioner of Securities and Real Estate , Minnesota Department of Commerce ( the "Commissioner" ) ; the fulfillment of such other conditions as the City may require with respect to the issuance of the Bonds in connection with the Project; and the mutual agreement of this Council , the Proponents and the purchaser of the Bonds as to the structuring of the financing and as to the terms and condi- tions 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 cr otherwise granted to the City for this purpose. The Bonds 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 Bonds 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 Bonds , or to enforce payment thereof against any property of the City except the Project. The Bonds shall recite on their face that the principal of and interest on the Bonds are payable solely from the revenue and proceeds pledged to the payment thereof . The Bonds shall riot 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 Proponents 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 City 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 Application to be submitted to the Commissioner for approval of the Project. The Mayor, City Manager, 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 Proponents and the purchaser of the Bonds as to the maturity, interest rate and other terms and provisions of the Bonds and as to the covenants and other provisions of the operative documents ; and ( to submit such documents to this Council for final approval . -4- SECTION 3 General 3 . 1 The Proponents have 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 Bonds or operative instruments are executed. 3 . 2 Subject to the terms and provisions of the Memorandum of Agreement, the Proponents are hereby authorized to enter into such contracts as ma_v be necessary for the construction of the Project by any means available to them and in the manner they determine without advertisement for bids as may be required for the con- struction or acquisition of other municipal facilities but other- wise without liability on the part of the City . 3 . 3 The adoption of this resolution does not constitute a guarantee or a firm cornniitment that the City will issue and sell the Bonds as requested by the Proponents . The Citv retains the right in its sole discretion to withdraw from participation, and accordingly not issue the Bonds , 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 Bonds 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. 3 . 4 All commitments of the City expressed herein are subject to the condition that within twelve months from the date of adoption of this resolution, the City and the Proponents shall have agreed to mutually acceptable terms and conditions of a Revenue Agreement ( as defined in the Memorandum of Agreement ) , the Bonds and of all other instruments and proceedings relating to the Bonds and their issuance and sale . If the events set forth herein do rot take place within the time set forth above , or any extension thereof, and the Bonds are not issued and sold within such time, this resolu- tion shall. expire and be of no further effect. Adopted by the City Council of the _City of Eden Prairie, Minnesota, the 7th day of July, 1981 . /- 1r10 gang nze 1 , Mayor Attest: �y hn r_ane, City Clerk 1 ' -5-