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RES 05-017 . . . RESOLUTION NO. 05-17 CITY OF ELK RIVER RESOLUTION GIVING PRELIMINARY APPROVAL TO A PROJECT PURSUANT TO MINNESOTA STATUTES, SECTION 469.154, AND AUTHORIZING THE SUBMISSION OF AN APPLICATION TO THE MINNESOTA DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT AND THE PREPARATION OF NECESSARY DOCUMENTS (ST. ANDREW SCHOOL PROJECT) WHEREAS, (a) The purpose of Minnesota Statutes, Sections 469.152 to 469.165 relating to municipal industrial development (the "Act") as found and determined by the legislature is to promote the welfare of the state by the active attraction and 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; (b) Factors necessitating the active promotion and development of economically sound industry and commerce are the increasing concentration of population in the metropolitan areas and 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 ftnance these increased costs and access to employment opportunities for such population; (c) The City Council of the City of Elk River (the "City") received a proposal from The Church of St. Andrew, a nonproftt religious corporation (the "Borrower") that the City undertake to ftnance a Project hereinafter described, through the issuance of revenue bonds (hereinafter the "Bonds" or the " Revenue Bonds") pursuant to the Act; (d) The City desires to facilitate the selective development of the community and surrounding area, retain and improve the tax base in the City, and help to provide the range of services and employment opportunities required by the population; and the Project will assist the City in achieving those objectives. The Project will help to increase assessed valuation in the City and help maintain a positive relationship between assessed valuation and debt and enhance the image and reputation of the community; (e) The Project to be ftnanced by the Bonds is (i) renovation, and constructing additions to, the St. Andrew School located at 428 Irving Avenue in the City and (ii) the acquisition and installation of equipment therein (the "Project"). The Project is expected to create 1.4 additional new full-time equivalent jobs in addition to the existing 26 jobs; (f) The City has been advised by representatives of Borrower that conventional, commercial fmancing to pay the capital cost of the Project is available only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be signiftcantly reduced; . . . (g) No public official of the City has either a direct or indirect fmancial interest in the Project nor will any public official either directly or indirectly benefit fmancially from the Project; (h) A public hearing on the Project was held on February 22, 2005, pursuant to published notice as required by the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River, Minnesota, as follows: 1. The Council hereby indicates its preliminary intent to undertake the Project, and additional fmancing therefore, pursuant to the Act, and pursuant to a revenue agreement between the City and Borrower upon such terms and conditions with provisions for revision from time to time as necessary, so as to produce income and revenues sufficient to pay, when due, the principal of and interest on the Bonds in the total principal amount of up to approximately $1,500,000 to be issued pursuant to the Act to fmance or refmance a portion of the costs of the construction and installation of the Project. 2. On the basis of information available to this Council it appears, and the Council hereby finds, that the Project constitutes properties, real and personal, used or useful in connection with one or more revenue producing enterprises within the meaning of Subdivision 2(b) of Section 469.153 of the Act; that the Project furthers the purposes stated in Section 469.152; that the availability of the financing under the Act and willingness of the City to furnish such fmancing will be a substantial inducement to Borrower to undertake the Project, and that the effect of the Project, if undertaken, will be to encourage the development of economically sound industry and commerce, to assist in the prevention of the emergence of blighted and marginal land, to help prevent chronic unemployment, to help the surrounding area retain and improve the tax base and to provide the range of service and employmept opportunities required by the population, to help prevent the movement of talented and educated persons out of the state and to areas within the State where their services may not be as effectively used, to promote more intensive development and use of land within the City and surrounding communities and eventually to increase the tax base of the community. 3. The Project is hereby given preliminary approval by the City subject to fmal approval by this Council, Borrower, and the purchaser of the Bonds as to the ultimate details of the fmancing of the Project. 4. The Mayor and staff of the City are hereby authorized and directed to submit an application for approval of a bond project to the Minnesota Department of Employment and Economic Development for the Project. 5. The Borrower has agreed and it is hereby determined that any and all costs incurred by the City in connection with the fmancing of the Project, including legal fees, whether or not the Project is carried to completion; will be paid by the Borrower. 6. Briggs and Morgan, Professional Association, acting as bond counsel, is authorized t~ assist in the preparation and review of necessary documents relating to the Project, to consult with the City Attorney, the Borrower and the purchaser of the Bonds as to the maturities, interest . . . rates and other terms and provisions of the Bonds and as to the covenants and other provisions of the necessary documents and to submit such documents to the Council for fInal approval. 7. Nothing in this resolution or in the documents prepared pursuant hereto shall authorize the expenditure of any municipal funds on the Project other than the revenues derived from the Project or 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 revenue and proceeds pledged to the payment thereof, nor shall the City be subject to any liability thereon. The holder of the Bonds shall never have the right to compel any exercise of the taxing power of the City to pay the outstanding principal on the Bonds or the interest thereon, or to enforce payment thereof against any property of the City. The Bonds shall recite in substance that the Bonds including interest thereon, are payable solely from the revenue and proceeds pledged to the payment thereof. The Bonds shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation. 8. In anticipation of the issuance of the Bonds to fInance a portion of the Project, and in order that completion of the Project will not be unduly delayed when approved, Borrower is hereby authorized to make such expenditures and advances toward payment of that portion of the costs of the Project as Borrower considers necessary, including the use of interim, short-term fInancing, subject to reimbursement from the proceeds of the Bonds if and when delivered but otherwise without liability on the part of the City. 9. This resolution shall take effect immediately upon adoption. Adopted by the City Council of the City of Elk River, Minnesota, this 22nd day of February, 2005. Attest: /' d,,(/ ~ 1"/t/.. /U;plt--t:.#7[ Schmidt, City Clerk . . . STATE OF MINNESOTA COUNTY OF SHERBURNE CITY OF ELK RIVER I, the undersigned, being the duly qualified and acting Clerk of the City of , Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on ftle in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council of said City duly called and held on the date therein indicated, insofar as such minutes relate to a resolution giving preliminary approval to an industrial development project. WITNESS my hand this 1.L day of February, 2005. (~J~ J oaf( S~dt, City Clerk \....,.// City Council :Minutes February 22,2005 Page 11 MOVED BY COUNCILMEMBER FARBER AND SECONDED BY COUNCILMEMBER GUMPHREY TO APPROVE THE CITY OBTAINING A 10' SIDEWALK EASEMENT FROM WAL-MART. MOTION CARRIED 4-0. 5.11. Consider Quotes for Environmental Abatement at the ERMU Building Mr. Maurer stated he has received two quotes for the abatement of hazardous materials from the former Elk River Municipal Utilities building at 322 King Avenue prior to its demolition. MOVED BY COUNCILMEMBER GUMPHREY AND SECONDED BY COUNCILMEMBER MOTIN TO ACCEPT THE QUOTE FROM VEIT ENVIRONMENTAL, INC. IN THE AMOUNT OF $7,840. MOTION CARRIED 4-0. 6.1. Consider Temporary Tobacco License for Majdi Almadien Director of Finance and Administrative Services Lori Johnson stated the Majdi Almadien, who is leasing space for his store Jackson's Shop, is delinquent in paying $3,950 in property taxes. She stated that Mr. Almadien was issued a temporary tobacco license until February 24, 2005, in order to give him time to pay the taxes. Mr. Almadien is requesting another extension on the tobacco license so that he can work with the owner of the building to get the taxes paid. Acting Mayor Dietz questioned why Mr. Almadien needs to wait for the building owner in order to pay for the taxes as it clearly stated in his lease agreement that he is responsible for the tax payment. MOVED BY ACTING MAYOR DIETZ AND SECONDED BY COUNCILMEMBER FARBER TO EXTEND THE TEMPORARY TOBACCO LICENSE TO JACKSON'S SHOP TO APRIL 15, 2005 AND IF THE $3,950 PROPERTY TAXES ARE NOT PAID BY THIS DATE, THEN THE TOBACCO LICENSE WILL BE REVOKED. MOTION CARRIED 3-1. Councilmember Motin opposed. 6.2. Consider Proposal for a Private School Facility Project Pursuant to .MN Law. Public Hearing Ms. Johnson stated the Church of St. Andrew's is requesting city financing in tax exempt bonds for the construction of non-religious portions of the St. Andrew's school. She stated a public hearing is scheduled tonight for $1.5 million in bonds but that the church has since requested to increase the amount to $2.5 million. She stated another public hearing will need to be held for the increased bond amount. Acting Mayor Dietz opened the public hearing. Tom Kaempffer, Church of St. Andrews-Stated the church asked their contractor for a project cost estimate but then when the church finalized the project more, they went back to their contractor for a more firm cost estimate and the project came out at $2.5 million. Acting Mayor Dietz closed the public hearing. City Council .Minutes February 22, 2005 Page 12 MOVED BY COUNCILMEMBER FARBER AND SECONDED BY COUNCILMEMBER GUMPHREY TO ADOPT RESOLUTION 05-17 GIVING PRELIMINARY APPROVAL TO A PROJECT PURSUANT TO MINNESOTA STATUTES, SECTION 469.154, AND AUTHORIZING THE SUBMISSION OF AN APPLICATION TO THE MINNESOTA DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT AND THE PREPARATION OF NECESSARY DOCUMENTS (ST. ANDREW SCHOOL PROJECT). MOTION CARRIED 4-0. MOVED BY COUNCILMEMBER FARBER AND SECONDED BY COUNCILMEMBER GUMPHREY TO ADOPT RESOLUTION 05-18 CALLING FOR A PUBLIC HEARING ON A PROPOSAL FOR A PRIVATE SCHOOL FACILITY PROJECT PURSUANT TO MINNESOTA LAW, AND AUTHORIZING PREPARATION AND PUBLICATION OF A NOTICE OF THE HEARING. MOTION CARRIED 4-0 6.3. Parks & Recreation Update Parks and Recreation Director Bill Maertz provided an update of activities for the past month as outlined in his staff report. 6.5. YMCA Update-Mayor Klinzing Mayor Klinzing was not at the YMCA meeting so Parks and Recreation Director Bill Maertz provided an update. Mr. Maertz stated the YMCA is working with the Boys & Girls Club and with Sherburne County Social Services on programming. Acting Mayor Dietz questioned if the city has been approached by anyone regarding the purchase of the Elk River Country Club and whether it would be a good revenue source. Mr. Maertz stated it is difficult to determine if the golf course would be a good revenue source without looking at its financials. 6.4. Utilities Update. Acting Mayor Dietz Acting Mayor Dietz provided an update of the Elk River Municipal Utilities meeting held on February 8, 2005. 7. Other Business 7.1. Set Board of Equalization Meeting and Discuss Who Will Attend Mandatory Training Ms. Johnson stated it is now mandatory to have at least one voting Councilmember attend training for the Board of Appeal and Equalization process. She stated the City of Elk River Board of Appeal and Equalization meeting should also be scheduled. MOVED BY COUNCILMEMBER FARBER AND SECONDED BY COUNCILMEMBER MOTIN TO CALL A SPECIAL BOARD OF APPEAL AND EQUALIZATION MEETING TO BE HELD AT THE SHERBURNE COUNTY GOVERNMENT CENTER ON MONDAY, APRIL 25, 2005. MOTION CARRIED 4-0.