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91-059 RES RESOLUTION NO. 91-59 . RESOLUTION GIVING PRELIMINARY APPROVAL TO A PROJECT ON BEHALF OF TESCOM CORPORATION AND ITS FINANCING UNDER THE MINNESOTA MUNICIPAL INDUSTRIAL DEVELOPMENT ACT; REFERRING THE PROPOSAL TO THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT FOR APPROVAL AND THE DEPARTMENT OF FINANCE FOR A PRIVATE ACTIVITY BOND ALLOCATION; AND AUTHORIZING THE PREPARATION OF NECESSARY DOCUMENTS BE IT RESOLVED by the City Council of the City of Elk River, Minnesota (the City), as follows: SECTION 1 Recitals and Findinqs . 1.1. This Council has received a proposal that the City finance a portion or all of the cost of a proposed project under Minnesota Statutes, sections 469.152 through 469.165 (the "Act"), on behalf of Tescom Corporation, a Minnesota corporation (the "Borrower"), consisting generally of financing of (i) the construction of an addition of approximately 20,000 square feet to its existing manufacturing facility located at 12616 Industrial Boulevard in Elk River, Minnesota, including landscaping, parking and related improvements (ii) the financing of certain related equipment for use therein in connection with its business of manufacturing pressure control devices, including regulators and valves, and (iii) to the extent permitted under the Internal Revenue Code of 1986, as amended (the "Code"), costs of the issuance of the bonds (collectively, the "Project"). 1.2 Based on a preliminary review of the proposed Project, it would appear that: (a) The undertaking of the Project would further the general purposes contemplated and described in section 469.152 of the Act. (b) This Council has been advised by representatives of the Borrower that conventional, commercial financing to pay the cost of the Project is available only at such high costs of borrowing that the economic feasibility of the Project would be reduced. . (c) This Council has also been advised by representatives of the Borrower that on the basis of their discussions with potential buyers of tax-exempt bonds, revenue bonds of the City (which may be in the form of a revenue note or notes) could be issued and sold upon favorable rates and terms to finance the Project. . . . (d) The City is authorized by the Act to issue its revenue bonds to finance projects consisting of properties used and useful in connection with a revenue producing enterprise engaged in manufacturing and related activities, such as that of the Borrower, and the issuance of the bonds by the City would be a substantial inducement to the Borrower to undertake the Project. 1.3 In order to determine whether the preliminary findings set forth in section 1.2 are appropriate, and in order to satisfy the requirements of section 147(f) of the Code, it is hereby determined that a notice substantially in the form of Exhibit A hereto shall be published in the Elk River Star News a newspaper of general circulation in the City of Elk River, providing a minimum of fourteen days pUblic notice that this City Council will conduct a public hearing on November 18, 1991, in accordance with the Act and section 147(f) of the Code, on the proposal to undertake and finance the Project. All interested parties may appear at the hearing and will be given reasonable opportunity to express their views with respect to the proposal to undertake and finance the Project. Interested persons are also hereby given the opportunity to submit written comments to the City Administrator before the time of the hearing. SECTION 2 Determination To Proceed with the Pro;ect and the Financing 2.1. On the basis of the preliminary information given the City to date, it appears that it would be desirable for the City to issue its revenue bonds under the provisions of the Act to finance the Project in an amount not to exceed $1,000,000 (and presently estimated as being $800,000). 2.2. It is hereby determined, subject to the completion of the public hearing and consideration of information made available to the City either at or following the public hearing, to proceed with the Project and the financing. Accordingly, this Council hereby declares its present intent to have the City issue its revenue bonds under the Act to finance the Project. Notwithstanding the foregoing, however, the adoption of this resolution shall not be deemed to establish a legal obligation on the part of the City or its Council to issue or to cause the issuance of such revenue bonds. All details of such revenue bond issue and the provisions for paYment thereof shall be subject to final approval of the Project by the Minnesota Department of Trade and Economic Development (the Department), receipt of a private activity bond allocation from the Department of Finance pursuant to Section 146 of the Code and Minnesota statutes, Chapter 474A, and may be subject to such further conditions as the City may specify. -2- . . . The revenue bonds, if issued, shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City, except the revenues specifically pledged to the payment thereof, and each bond, when, as and if issued, shall recite in substance that the bond, including interest thereon, is payable solely from the revenues and property specifically pledged to the payment thereof, and shall not constitute a debt of the City within the meaning of any constitutional, statutory or charter limitation. In addition, the Bonds will not be general obligations of the City, nor shall they be payable in any manner by taxation. The Revenue Bonds will be payable solely from the revenues of the Project pledged to the payment thereof, from investment proceeds and from other revenues of the Borrower, except that the Bonds may be secured by other encumbrances on the Project. 2.3. The Application to the Minnesota Department of Trade and Economic Development and the Department of Finance for the approval of the Project and the private activity bond allocation (collectively, the "Application"), with attachments, is hereby approved, and the Mayor and city Administrator are authorized to execute said documents on behalf of the City. 2.4. In accordance with section 469.154, Subdivision 3 of the Act, the Mayor and City Administrator are hereby authorized and directed to cause the Application to be submitted to the Department for approval of the Project. The Mayor, City Administrator, City Attorney and other officers, employees and agents of the City are hereby authorized and directed to provide the Department with any preliminary information needed for this purpose. The City Attorney is authorized to initiate and assist in the preparation of such documents as may be appropriate to the Project, if approved by the Department of Trade and Economic Development and if a private activity bond allocation is received from the Department of Finance. SECTION 3 General 3.1. If the bonds are issued and sold, the City will enter into a loan agreement or similar agreement satisfying the requirements of the Act (the Revenue Agreement) with the Borrower. The loan payments or other amounts payable by the Borrower to the City under the Revenue Agreement shall be sufficient to pay the principal of, and interest and redemption premium, if any, on, the bonds as and when the same shall become due and payable. 3.2. The Borrower has agreed and it is hereby determined that any and all direct and indirect costs incurred by the City in connection with the Project, whether or not the Project is -3- . carried to completion, and whether or not approved by the Department, and whether or not the City by resolution authorizes the issuance of the bonds, will be paid by the Borrower upon request. 3.3. The Mayor and City Administrator are authorized and directed, if the bonds are issued and sold, to take such actions as necessary or appropriate to comply with the provisions of section 469.154, Subdivisions 5 and 7 of the Act. . -4- 3.4. This resolution shall become effective immediately upon its passage and without publication. 1991. Adopted by the City Council this 21st day of October , J~ /? ;z;;:.ee Mayor Mayor . A~ a~ City Clerk ~4}? p~ City Administrator e. EXHIBIT A NOTICE OF PUBLIC HEARING ON THE ISSUANCE BY THE CITY OF ELK RIVER, MINNESOTA OF ITS REVENUE BONDS TO LOAN THE PROCEEDS OF THE REVENUE BONDS TO CORPORATION TO FINANCE THE CONSTRUCTION OF AN ADDITION TO AN EXISTING BUILDING AND CERTAIN EQUIPMENT TESCOM e NOTICE IS HEREBY GIVEN that the City of Elk River, Minnesota (the "City") will conduct a public hearing on November 18, 1991, at 7:00 p.m. at the Elk River Public Library, 413 Proctor Avenue, Elk River, Minnesota for the purpose of receiving any and all comments, reports or other information from the public and any interested persons or parties on the proposed issuance by the City of its revenue bonds for the purpose of financing of (i) the construction of an addition of approximately 20,000 square feet to its existing manufacturing facility located at 12616 Industrial Boulevard in Elk River, Minnesota, including landscaping, parking and related improvements (ii) the financing of certain related equipment for use therein in connection with its business of manufacturing pressure control devices, including regulators and valves, and (iii) to the extent permitted under the Internal Revenue Code of 1986, as amended (the "Code"), costs of the issuance of the bonds (collectively, the "Project") for the benefit of Tescom Corporation (the "Borrower") under the Minnesota Municipal Industrial Development Act, Minnesota Statutes, Sections 469.152 through 469.165 (the "Act"). The proceeds of the revenue bonds will be loaned to the Borrower to finance the costs of the Project. The Project will be owned, operated and managed by the Borrower. The Project will be located at 12616 Industrial Boulevard, Elk River, Minnesota. .. The purpose of the public hearing will be to receive information on a proposal that the City issue its Revenue Bonds under the Act in order to loan the proceeds to the Borrower. The City and Borrower presently anticipate the principal amount of the Bonds will be $800,000 and in any event the maximum principal amount of the total of the Bonds will be $1,000,000. The Bonds will not be general obligations of the City, nor shall they be payable in any manner by taxation. The Revenue Bonds will be payable solely from the revenues of the Project pledged to the payment thereof, from investment proceeds and from other revenues of the Borrower, except that the Bonds may be secured by other encumbrances on the Project. The public hearing will be conducted by the Mayor of the City or some other person delegated to conduct the hearing by the Mayor. All persons interested may appear and be heard at . . . the time and place set forth above or may file written comments with the Mayor of the City prior to the date of the hearing. The City is expected to meet and act on the preliminary approval to issue Bonds promptly upon completion of the hearing. A copy of the Application of the City for approval of the Project, together with all attachments and exhibits thereto is available for public inspection at City Hall, 720 Dodge Avenue NW, Elk River, Minnesota from the date of this notice to the date of the public hearing hereinabove identified, during normal business hours. The Mayor of the City has been authorized and directed by the City Council to file a request for approval of the Project by the Minnesota Department of Trade and Economic Development under Minnesota Statutes, Chapter 469, a request for a private activity bond allocation from the Minnesota Department of Finance under Section 147(f} of the Internal Revenue Code of 1986, as amended (the "Code") and seek such other approvals as are necessary for the issuance of the Bonds. This notice, the public hearing and the approval described in this paragraph is required by the Code. CITY OF ELK RIVER, MINNESOTA g~R~ Patrick D. Klaers City Administrator