3.6. EDSR 12-12-2011Ory of
ERiver
REQUEST FOR ACTION
TO ITEM NUMBER
Economic Develo ment Authorit ~ 3.G
AGENDA SECTION MEETING DATE PREPARED BY
Consent December 12, 2011 Tim Simon, Finance Director
ITEM DESCRIPTION REVIEWED By
Adopt a Resolution Approving Consent to Merger of the Young
Men's Christian Association of Metropolitan Minneapolis and REVIEWED BY
Young Men's Christian Association of the Greater Twin Cities
ACTION REQUESTED
'The Economic Development Authority (EDA) is asked to approve a resolution approving consent to
merger of the Young Men's Christian Association of metropolitan Minneapolis and Young Men's
Christian Association of the greater twin cities
BACKGROUND/DISCUSSION
Earlier this year the YMCA announced a merger of the Young Men's Christian Association of
Metropolitan Minneapolis and the YMCA of Greater St. Paul. 'Ilrese two entities are planning to create a
single entity called Young Men's Christian Association of the Greater Twin Cities (Y-GTC). As you
recall, the EDA issued bonds to fmanee construction of the YMCA facility in Elk River by issuing bonds
in the amount of $12,000,000. "the EDA has a lease agreement in which the YMCA pays, as "basic rent"
one-third of the debt service on the bonds. Since we have a lease agreement with the YMCA-
Minneapolis, we are consenting to their merger into Y-G"1 C.
As part of the lease agreement the EDA must consent to the merger so long as certain conditions were
met. Steve Bubul from Kennedy and Graven has attached a memo outlining the conditions. Mr. Bubul
represented the EDA on the original lease. In addition Mr. Bubul has reviewed all documents and sees no
issue with consent requested by the YMCA. Therefore, staff recommends approval of the consent.
FINANCIAL IMPACT
All obligations will remain the same with the merger.
ATTACHMENTS
• Memo fox Stephen Bubul (Kennedy & Graven)
• Resolution Approving Consent "1'o Merger Of "1'he Young Men's Christian Association Of
Metropolitan Minneapolis And Young Men's Christian Association Of The Greater Twin
Cities
• Consent To Merger Of The Young Men's Christian Association Of betropolitan binneapolis
And Young Men's Christian Association Of The Greater "Twin Cities
Action Motion by Second by 'Vote
Follow Up
voreele er
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47U US Bank Plea
200 South Six[h Street
Minneapolis MN 55402
(612) 337-9300 telephone
(612)337-9310 fax
http://w ww, keno edy-graven. com
MEMORANDUM
TO: Tim Simon, Finance Director
FROM: Stephen Bubul
DATE: December 7, 201 l
RE: YMCA Merger
You asked me to explain the proposed consent by the Economic Development Authority
for the City of Elk River (the "Authority") to merger of the Young Men's Christian
Association of Metropolitan Minneapolis and the YMCA of Greater St. Paul. Those two
entities are planning to merge, creating a single entity called Young Men's Christian
Association of the Greater Twin Cities (`Y-GTC").
As you know, the Authority helped finance construction of the YMCA facility in Elk
River (the "Project") by issuing certain general obligation bonds in 2007 and 2008 in an
aggregate principal amount of $12,000,000 (the "Bonds"), after those Bonds were
approved by the voters. The Authority leases the Project to the YMCA under a Lease
Agreement dated August 20, 2007 (the "Lease").l Under the Lease, the YMCA pays, as
"basic rent," an amount equal to one-third of the debt service on the Bonds.
Under the Lease, the YMCA is permitted to merge with another entity, with the
Authority's consent, so long as these conditions are met:
(1) the resulting entity assumes all the obligations of YMCA under the Lease;
(2) afrer that merger, the resulting party will not be engaged in any trade or
business other than the operation of the Project (as defined the Lease) as permitted under
the Lease;
~ For commissioners who may not know this, I represented the Authority in [he negotiation and drafting of
the Lease.
395661v1 SJB EL185-6
(3) the successor lessee provides the Authority with a certificate executed by an
authorized representative of the successor lessee that such new lessee has a net worth and
revenues available to pay Basic Rent that are equal to or greater than the net worth and
revemies of the YMCA, immediately prior to the merger; and
(4) YMCA causes to be delivered to the Authority an opinion of bond counsel to
the effect that such merger shall not cause interest on the Bonds to be included in gross
income for federal tax purposes; and
The YMCA has provided forms of all the materials described in points 1 through 4
above, and the Authority expects to receive fully signed copies of the relevant documents
on or before the effective date of the merger (which is December 31, 2011). The bond
counsel opinion will be provided by Gray, Plant, Mooty, Mooty & Bennett, P.A, which is
a nationally recognized bond counsel (as required under the terms of the Lease).
Therefore, in my view it is appropriate for the Authority's board of commissioners to
approve the consent form requested by the YMCA.
If you or commissioners have any questions on this topic, please let me know.
395661v1 SJB F.LI85-6
ECONOMIC DEVELOPMENT AUTHORITY
FOR THE CITY OF ELK RIVER
RESOLUTION NO.
RESOLUTION APPROVING CONSENT TO MERGER OF THE YOUNG
MEN'S CHRISTIAN ASSOCIATION OF METROPOLITAN MINNEAPOLIS
AND YOUNG MEN'S CHRISTIAN ASSOCIATION OF THE GREATER TWIN
CITIES
BE IT RESOLVED By the Boazd of Commissioners ("Board") of the Economic
Development Authority of the City of Elk River, Minnesota ("Authority") as follows:
Section 1. Recitals.
1.01. The Young Men's Christian Association of Metropolitan Minneapolis ("YMCA")
entered into a Lease Agreement dated as of August 20, 2007 (the "Lease"), under which the
Authority leases a recreational facility (the "Project") to YMCA.
1.02. Construction of the Project was financed in part with proceeds of the Authority's
$10,000,000 General Obligation Bonds, Series 2007 and $2,000,000 General Obligation Bonds,
Series 2008A (together, the "Bonds"), which Bonds are secured in part with lease payments under
the Lease.
1.03. The YMCA has proposed to merge with the YMCA of Greater St. Paul to form a
single entity known as the Young Men's Christian Association of the Greater Twin Cities ("Y-
GTC").
1.04. YMCA has requested that the Authority consent to the merger, such that Y-GTC
assumes all obligations of YMCA under the Lease.
1.05. The Board has reviewed a form of Consent to merger of The Young Men's Christian
Association of Metropolitan Minneapolis and Young Men's Christian Association of the Greater
Twin Cities (the "Consent") and has determined that rt is in the best interest of the Authority and the
City of Elk River to approve such Consent.
Section 2. Authority Annroval; Further Proceedines.
2.01. The Consent as presented to the Boazd is hereby in all respects approved, subject to
modifications that do not alter the substance of the transaction and that are approved by the
President and Executive Director, provided that execution of the documents by such officials shall
be conclusive evidence of approval.
2.02. The President and Executive Director are hereby authorized to execute on behalf of
the Authority the Consent, and any documents referenced therein requiring execution by the
Authority, or otherwise required to carry out the transaction described in the Consent.
Approved by the Board of Commissioners of the City of Elk River, Minnesota this 12thh
395645v1 SJl3 [:1,185-h
day of December, 2011.
President
ATTEST:
Secretary
395645v1 SJB ELI85-6
CONSENT TO MERGER OF
THE YOUNG MEN'S CHRISTIAN ASSOCIATION OF
METROPOLITAN MINNEAPOLIS AND YOUNG MEN'S CHRISTIAN
ASSOCIATION OF THE GREATER TWIN CITIES
This CONSENT is made as of the date set forth below by the Economic
Development Authority for the City of Elk River, Minnesota (the "Authority") for the
benefit of The Young Men's Christian Association of Metropolitan Minneapolis, a
Minnesota nonprofit corporation ("YMCA") and Young Men's Christian Association of
the Greater Twin Cities, a Minnesota nonprofit corporation ("Y-GTC").
WHEREAS, the Authority and Minnesota and YMCA entered into that certain
Lease dated August 20, 2007 (the "Lease"); YMCA and Y-GTC have reached an
agreement whereby YMCA shall be merged with and into Y-GTC, and Y-GTC shall
succeed, insofar as permitted by law, to all of the rights, assets, liabilities and obligations
of YMCA, including those associated with the Lease (the "Merger"); and
WHEREAS, under the terms of the Lease the assignment of the Lease to another
entity through a merger requires Authority's consent; and YMCA has requested of
Authority that it consent to the proposed assignment of the Lease from YMCA to Y-GTC
through the Merger; and
WHEREAS, under Section 10.02 of the Lease, the YMCA is permitted to merge
with another entity if:
(a) the resulting entity assumes all the obligations of YMCA under the Lease;
(b) after that merger, the resulting party will not be engaged in any trade or
business other than the operation of the Project (as defined the Lease) as permitted under
the Lease;
(c) the successor lessee provides the Authority with a certificate executed by an
authorized representative of the successor lessee that such new lessee has a net worth and
revenues available to pay Basic Rent (as defined in the Lease) that are equal to or greater
than the net worth and revenues of the YMCA, immediately prior to the merger; and
(d) YMCA causes to be delivered to the Authority an opinion of bond counsel to
the effect that such merger shall not cause interest on the Bonds (as defined in the Lease)
to be included in gross income for federal tax purposes; and
WHEREAS, the Authority has agreed to YMCA's request, upon the terms and
conditions hereinafter set forth.
395105v2 51B ELI85-6
NOW, THEREFORE:
Authority's Consent. Authority hereby consents to the Merger, and consents to
the assignment of the interests under the Lease from YMCA to Y-GTC, effective
upon:
(a) the closing of the Merger; and
(b) compliance by YMCA (as of the date of closing of the Merger) with the
requirements in Section 10.02 of the Lease, summarized above.
2. Continuing Effect. All amounts, terms, provisions, conditions and covenants of
the Lease shall remain unchanged and in full force and effect, and the Lease is in
all respect confirmed, ratified, and approved on the date hereof, and is
acknowledged to be in full force and effect. The Authority expressly
acknowledges that the Merger (upon satisfaction of the requirements of Section
10.02 of the Lease) is not an event of default under the Lease.
IN WITNESS WHEREOF, the undersigned has executed this Consent as of the
day and year written below.
ECONOMIC DEVELOPMENT AUTHORITY
FOR THE CITY OF F,LK RIVER, MINNESOTA
By
Its President
By
Its Executive Director
Date: December , 2011
395105v2 51B EL185-6 2