5.11. SR 12-18-1995ity of '
lk RiverTO: •
FROM:
DATE:
MEMORANDUM
Mayor & City Council
Lori Johnson
Assistant City Administrator
December 18, 1995
ITEM 5.11.
SUBJECT: Resolution of Improving Extension
Agreement for Industrial Revenue Bond
(Scherer Limited Partnership Project)
In 1985 the City authorized the issuance of an industrial development
revenue bond for the Scherer Limited Partnership Project which includes the
Pamida and Theater buildings. The bond documents called for a 20 year
amortization scheduled to be paid over 10 years with a balloon due on
January 1, 1996. The bank and developer are requesting an extension of the
industrial development revenue bond.
iAttached is a resolution which, when approved, would extent the IDRB for a
10 year period with a final maturity date of January 1, 2006. As paragraph 4
of the extension agreement states, the city is merely accommodating a
request from the bank and the partnership and "that the city assumes no
responsibility or liability, expressed or implied, as to the validity of this
Extension Agreement or any continued exemption of the interest on the Bond
from State of Minnesota and or federal income taxation or other taxation."
The extension of this bond issue does not adversely affect the city's bond
rating, and this is not an issue which is included in our outstanding
indebtedness. The only time an industrial revenue bond is reported is on an
annual debt report to the state of Minnesota.
Action Requested
The Council is asked to take action on the attached resolution which extends
the Scherer Brothers Limited Partnership Project Industrial Development
Revenue Bond in the original issue amount of $1,400,000 for 10 years to the
year 2006.
• s: \council \scherer.doe
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441 -7420 • Fax: (612) 441 -7425
RESOLUTION NO.
APPROVING EXTENSION AGREEMENT FOR
INDUSTRIAL DEVELOPMENT REVENUE BOND
(SCHERER LIMITED PARTNERSHIP PROJECT)
WHEREAS, pursuant to a Loan and Purchase Agreement dated as of December
1, 1985 ( the "Loan Agreement ") , among the City of Elk River ( the "City ") , Scherer
Limited Partnership, a Minnesota Limited partnership ( the "Partnership ") , and
Highland Bank (formerly Security State Bank of St. Mic]sael) , a Minnesota banking
association (the "Bank ") , the City has issued its $1,400,000 City of Elk River
Industrial Development Revenue Bond ( Scherer Limited Partnership Project) (the
"Bond ") to the Bank and loaned the proceeds of the Borld to the Partnership; and
WHEREAS, the Loan Agreement obligates the Partnership to make Loan.
Repayments in amounts and at times sufficient to pay principal of and interest on the
Bond; and
WHEREAS, the Bond bears interest at a variable rate that is adjusted
quarterly, on January 1, April 1, July 1 and October 1 of each year, to equal the
rate which is one percent per annum above the bond Equivalent yield on United
States Treasury bills having maturities of 180 days, as established on the date of
each such interest rate adjustment, but which rate shall never be less than 7.00
percent per annum nor greater than 13.00 percent per annum; and
WHEREAS, the Bond is payable in monthly installments of principal and
interest ( the amount of which is adjusted on each interest rate adjustment date) ,
based on a twenty -year amortization schedule, which payments commenced on
. February 1, 1986; and
WHEREAS, the Bond provides for a final payment on January 1, 1996 of all
principal of and interest due on the Bond ( the "Balloon Payment ") ; and
WHEREAS, the Partnership and the Bank desire to eliminate the Balloon
Payment and extend the final maturity of the Bond until January 1, 2006, as
provided herein;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk
River, Minnesota, that the form of Extension Agreement presented to this meeting,
and the amendments to the Bond and the Loan Agreement contemplated thereby, are
hereby approved, and the Mayor and City Administrator are authorized to execute
and deliver the Extension Agreement on behalf of the City, substantially in the form
on file, but with all such changes therein as may be approved by the officers
executing the same, which approval shall be conclusively ,evidenced by the execution
thereof.
EM696286
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STATE OF MINNESOTA )
COUNTY OF SHERBURNE } SS.
CITY OF ELK RIVER )
I. the undersigned, being the duly qualified and acting City Administrator of
the City of Elk River, Sherburne County, Minnesota, do hereby certify that I have
carefully compared the attached and foregoing resolution with the original resolution
adopted at a regular meeting of the City Council of the City held on J.
1995, and the attached is a full, true and correct copy of the Resolution Approving
Extension Agreement for Industrial Development Revenue Bond (Scherer Limited
Partnership Project) , which was adopted at said meeting a;ad has not been rescinded,
modified or amended.
WITNESS My hand officially as such City Administrator and the corporate seal
of the City this day of , 1995.
•
( SEAL)
•
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2
City Administrator
City of Elk :River, Minnesota
EXTENSION AGREBENT
This Extension Agreement, dated as of December 1, 1995, among the CITY OF
ELK RIVER, a Minnesota municipal corporation (the "City "), SCHERER LIMITED
PARTNERSHIP, a Minnesota limited partnership (the " Pa:ctnership") , and HIGHLAND
BANK (formerly Security State Bank of St. Michael), a Minnesota banking
association ( the "Bank ") ,
WITNESSETH :
WHEREAS, pursuant to a Loan and Purchase Agreement dated as of December
1, 1985, among the City, the Partnership and the Bank (the "Loan Agreement ") , the
City has issued its $1,400,000 City of Elk River Industrial Development Revenue
Bond (Scherer Limited Partnership Project) (the "Bond ") to the Bank and loaned the
proceeds of the Bond to the Partnership; and
WHEREAS, the Loan Agreement obligates the Partnership to make Loan
Repayments in amounts and at times sufficient to pay principal of and interest on the
Bond; and
WHEREAS, the Bond bears interest at a variable rate that is adjusted
quarterly, on January 1, April 1, July 1 and October J. of each year, to equal the
rate which is one percent per annum above the bond equivalent yield on United
States Treasury bills having maturities of 180 days, as. established on the date of
each such interest rate adjustment, but which rate shall never be less than 7.00
percent per annum nor greater than 13.00 percent per annum; and
• WHEREAS, the Bond is payable in monthly installments of principal and
interest (the amount of which is adjusted on each interest rate adjustment date) ,
based on a twenty-year amortization schedule, which payments commenced on
February 1, 1986; and
WHEREAS, the Bond provides for a final payment on January 1, 1996 of all
principal of and interest due on the Bond (the "Balloon Payment "); and
WHEREAS, the Partnership and the Bank desire to eliminate the Balloon
Payment and extend the final maturity of the Bond until January 1, 2006, as
provided herein, and have requested the City to consent to said extension;
NOW, THEREFORE, the parties hereto covenant and agree as follows:
1. The Balloon Payment to have become due on January 1, 1996 is hereby
eliminated, and the twenty -year principal amortization :provided for in the Bond is
hereby extended to and until a final maturity date of -January 1, 2006, such date
being twenty years after the commencement of amortization on the Bond, with the
effect of such modification to the original Bond terms being to extend the
requirement that monthly payments of principal and interest be made on the first day
of each month from January 1, 1996 to January 1, 2006.
2. The Loan Repayment obligation of the Partnership pursuant to Section
5.01 of the Loan Agreement is hereby amended to conform to the modified schedule
of payments on the Bond set forth in paragraph 1 hereof.
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3. The Bank hereby represents to the City that it participated the Bond
on original issuance, and the Bank and its participants :hold the Bond for their own
accounts and intend to continue to hold the Bond for their own accounts. The
• Partnership hereby represents to the City that it is :fn full compliance with the
obligations imposed on the Partnership pursuant to the Loan Agreement, the
Mortgage and the other documents related to the issuance of the Bond, and no Event
of Default has occurred under any of said documents (or would occur with the
passage of time or giving of notice, or both) which has not been cured as of the date
hereof.
4. The Bank and the Partnership acknowledg a and agree that the City's
approval, execution and delivery of this Extension Agreement pursuant to that
certain resolution of the City Council authorizing the same are made as a requested
accommodation to the Bank and to the Partnership; that the City has not been
requested to take, and shall not be responsible to 'take, any other action in
connection with said extension; that the City has not conducted, been requested to
conduct and will not conduct any independent investigation as to the validity or
effectiveness of this Extension Agreement or upon the effect hereof on the Mortgage
or on any of the other documents executed and delivered in connection with the
original issuance of the Bond; and that the City assumes no responsibility or
liability, express or implied, as to the validity of this Extension Agreement or any
continued exemption of the interest on the Bond from State of Minnesota and /or
federal income taxation or other taxation.
5. To evidence the amendments made hereby, the Bank shall permanently
attach an executed copy of this Extension Agreement to the Bond.
6. Except as specifically modified hereby, the Bond, the Loan Agreement
. and all related instruments are and shall remain payable, enforceable and
outstanding according to their original tenor and effect and are and shall remain in
full force and effect. No other change in, modification i:o or waiver of any term or
provision of the Bond or the Loan Agreement, including without limitation the
interest rate thereon and any provision for the security thereof, is intended to be
made, effected or approved by this Extension Agreement .
7. Terms defined in the Loan Agreement and used in this Extension
Agreement shall have the same meanings herein as therein.
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IN WITNESS WHEREOF, the City, the Partnership and the Bank have caused
this Extension Agreement to be duly executed in their respective names as of
• December 1, 1995.
•
( SEAL)
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CITY OF E. K RIVED
By:
Mayor
By:
City Administrator
3 MMeasiM AgreeWnt Signature Yage
SCHERER LIMITED PARTNERSHIP
a Minnesota limited partnership
• By: S.B. GENERAL PARTNER, INC.,
Its General Partner
Partner
By:
•
Its
M896143
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HIGHLAND BANE:
(formerly SecuzZt,y State Bank of St_ Michael)
By:
•
46 U096143
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Its
gx=aion Agreement S1g t=* Page