4.8. SR 12-21-1995ITEM 4.8 .
ety of MEMORANDUM
Elk• TO: Mayor & City Council
River
FROM: Lori Johnson, Asst. City Administrato
DATE: December 21, 1995
SUBJECT: Resolution Approving Extension
Agreement for Industrial Revenue
Development Bond (J. Morrell and John
Plaisted Partnership Project)
The City is in receipt of a second request to extend the term of an industrial
development revenue bond. This bond is for the J. Morrell and John Plaisted
Partnership project which consisted of the Coast to Coast building located
near the Elk River shopping center. The original issue is in the amount of
$400,000. Again, this bond had a 20 year amortization schedule paid over a
ten year term with a balloon due on January 1, 1996.
• Similar to the request the Council acted on at its last Council meeting, this
request is for a ten year extension based on the 20 year amortization
schedule. This resolution includes the same language as the first extension
resolution; similarly, this extension would have no effect on the city's bond
rating or outstanding indebtedness.
Action Requested
The City Council is asked to act upon the attached resolution Approving
Extension Agreement for an Industrial Development Revenue Bond (J.
Morrell and John Plaisted Partnership Project).
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441 -7420 • Fax: (612) 441 -7425
•
EXTENSION AGREEA ENT
This Extension Agreement, dated as of December 1, 1995, among the CITY OF
ELK RIVER, a Minnesota municipal corporation (the "City "), JOHN PLAISTED (the
"Borrower ") , as successor to Jay Morrell & John Plaisted Partnership, a Minnesota
general partnership (the "Partnership "), and HIGHLAND BANK (formerly Security
State Bank of St. Michael), a Minnesota banking assockftion (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 $400,000 City of Elk River Industrial Development Revenue Bond
(Jay Morrell & John Plaisted 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, John Plaisted and the Bank have represented to the City that the
Partnership has been dissolved, the Bank has released Jay Morrell from all
obligations under the Loan Agreement and the Bond, and the Borrower is the
successor in interest to the Partnership and has assumed the obligations of the
Partnership under the Loan Agreement and 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 € unnum; 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 Borrower 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 interast be made on the first day
BM97836
min -3 1
of each month from January 1, 1996 to January 1, 2006.
40 2. The Loan Repayment obligation of the Borrower 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 .
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
Borrower hereby represents to the City that he is in full compliance with the
obligations imposed on him pursuant to the Loan Agreement, the Mortgage and the
other documents related to the issuance of the Bond, aad 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 Borrower acknowledge 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 Borrower; 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, ;he 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 anal are and shall remain in
full force and effect. No other change in, modification to 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.
3MR97836
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• RESOLUTION 95 -
A RESOLUTION FOR THE CITY OF ELK RIVER
A RESOLUTION APPROVING EXTENSION AGREEMENT FOR
INDUSTRIAL DEVELOPMENT REVENUE BOND
(JAY MORRELL & JOHN PLAISTED 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 "), Jay Morrell and John Plaisted
Partnership, a Minnesota general partnership (the
"Partnership "), and Highland Bank (formerly Security State
Bank of St. Michael), a Minnesota banking association (the
"Bank "), the City has issued its $400,000 City of Elk River
Industrial Development Revenue Bond (Jay Morrell and
John Plaisted 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, John Plaisted and the Bank have represented to the City
that the Partnership has been dissolved, the Bank has
released Jay Morrell from all obligations under the Loan
Agreement and the Bond, and John Plaisted (the "Borrower ")
is the successor in interest to the Partnership and has
assumed the obligations of the Partnership under the Loan
Agreement and 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
Sschedule, which payments commenced on February 1, 1986;
and,
• WHEREAS, the Bond provides for a final payment on January 1, 1996, of
all principal and interest due on the Bond (the "Balloon
Payment "); and,
WHEREAS, the Borrower 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 Clerk
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.
Passed and adopted by the City Council of the City of Elk River, Minnesota,
this 21st day of December 1995.
0
ATTEST:
Sandra A. Thackeray, City Clerk
•
Henry A. Duitsman, Mayor
•
11
STATE OF MINNESOTA )
COUNTY OF SHERBURNE ) SS.
CITY OF ELK RIVER )
I, the undersigned, being the duly qualified and acting City Clerk 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 special meeting of the City Council of the
City held on December 21, 1995, and the attached is a full, true, and correct
copy of the Resolution Approving Extension Agreement for Industrial
Development Revenue Bond (Jay Morrell & John Plaisted Partnership
Project), which was adopted at said meeting and has not been rescinded,
modified, or amended.
WITNESS my hand officially as such City Clerk and the corporate seal
of the City this
(SEAL)
day of )1995.
City Clerk
City of Elk River, Minnesota