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91-071 RES . 4 . RESOLUTION NO. 91-71 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ELK RIVER, MINNESOTA, APPROVING THE ISSUANCE AND SALE OF THE CITY'S $1,000,000 VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS (TESCOM CORPORATION PROJECT) SERIES 1991 AND AUTHORIZING THE APPROVAL AND EXECUTION OF RELATED DOCUMENTS AND THE APPROVAL OF RELATED MATTERS WHEREAS, pursuant to and in accordance with the provisions of Minnesota Statutes, Chapter 474 (as amended and restated in Minnesota Statutes, Chapter 469, the "Act") and Resolution of the City Council of the City of Elk River (the "City") adopted on October 21, 1991, by appropriate action duly taken by the City, and in furtherance of the purposes of the Act, the City previously declared its preliminary intention to issue up to $1,000,000 of Industrial Development Bonds and loan the proceeds thereof to Tescom corporation, a Minnesota corporation (the "Company") in order to provide financing for an expansion of industrial facilities owned and operated by the Company in Elk River, Minnesota (the "Project") (as defined in more detail in the Loan Agreement); and . WHEREAS, the City is willing to issue its Variable Rate Demand Industrial Development Revenue Bonds (Tescom Corporation Project), Series 1991 in the principal amount of $1,000,000 (the "Series 1991 Bonds"), pursuant to an Indenture of Trust dated as of December 1, 1991 between the City and The First National Bank in sioux Falls, as Trustee (the "Indenture"), and to apply the proceeds of the Series 1991 Bonds to pay the costs of the Project; and WHEREAS, the issuance and sale of the Series 1991 Bonds (the "Series 1991 Bonds") and deposit of the proceeds thereof in the Construction Fund as provided in the Indenture for the purpose of paying the Costs of the proj ect shall constitute a loan of $1,000,000 to the Company as provided in the Loan Agreement dated as of December 1, 1991 between the City and the Company (the "Loan Agreement"); and WHEREAS, to secure the Series 1991 Bonds and paYments under the Loan Agreement and the performance of other obligations of the Company, the Company will cause to be issued to the Trustee an irrevocable letter of credit (the "original Letter of Credit") by Norwest Bank Minnesota, National Association (the "Bank") in an amount equal to the principal amount outstanding on the Bonds together with interest thereon for a period of 50 days at a maximum rate of 12% per annum; and 5 . WHEREAS, the Original Letter of Credit may be replaced from time to time by an Alternate Letter of Credit as provided in the Indenture (the Original Letter of Credit and any Alternate Letter of Credit are collectively referred to herein as the "Letter of Credit"); and WHEREAS, Norwest Bank Minnesota, National Association acting by and through its Norwest Corporate Finance division (the "Placement Agent") has placed the Series 1991 Bonds with an initial purchaser upon the terms and conditions described below; NOW, THEREFORE, BE IT RESOLVED by the Council as follows: Section 1. The City hereby finds and determines that: (a) By virtue of the Act, the City has been vested with all powers necessary and convenient to carry out and effectuate the purposes and provisions of the Act and to exercise all powers granted to it under the Act. . (b) It is desirable and in the public interest for the City to issue and sell the Series 1991 Bonds upon the terms and conditions set forth in the Indenture, for the purpose of financing the costs of a project consisting of an expansion of the existing manufacturing facility owned and operated by the Company in the City of Elk River, Minnesota pursuant to the Loan Agreement (the "Project"). (c) The proposed project is a "project" as such term is now defined in and as authorized by section 469.153, Subd. 12 of the Act. (d) The acquisition and construction of the Project will further the purposes stated in the Act. (e) To enhance the marketability of the Series 1991 Bonds, the Bank shall issue the original Letter of Credit to secure the payment of the principal and purchase price of, and premium, if any, and interest on the Series 1991 Bonds, which original Letter of Credit by its terms will expire no later than June 30, 1993. . (f) The issuance of the Series 1991 Bonds is authorized by the Act and it is necessary and desirable that the Series 1991 Bonds in an amount not to exceed $1,000,000 be issued by the City upon the terms set forth in the Indenture, under the provisions of which Indenture the city's interest in the Loan Agreement and the payments thereunder will be . (g) pledged to the Trustee as security for the payment of principal and interest on the Series 1991 Bonds. The Loan Agreement constitutes a "revenue agreement" within the meaning of section 469.153, Subd. 9 of the Act. The payments required by the Loan Agreement are fixed and required to be revised from time to time as necessary, so as to produce income and revenues sufficient to provide for prompt payment of principal and purchase price of and interest on all Series 1991 Bonds issued under the Indenture when due, and the Loan Agreement also provides that the Company is required to pay all expenses of the operation and maintenance of the project including, but without limitation, adequate insurance thereon and insurance against all liability for injury to persons or property arising from the operation thereof, and all taxes and special assessments levied upon or with respect to the Project and payable during the term of the Loan Agreement. (h) Under the provisions of the Act, and as provided in the Loan Agreement and Indenture, the Series 1991 Bonds are not to be payable from nor charged upon any funds other than the revenues pledged to the payment thereof; the City is not subj ect to any liability thereon (except with respect to such reve- nues); no holders of the Series 1991 Bonds shall ever have the right to compel any exercise of the taxing powers of the City to pay any of the Series 1991 Bonds or the interest thereon, nor to enforce payment thereof against any property of the City; the Series 1991 Bonds shall not constitute a charge, lien or encumbrance, legal or equitable upon any property of the city (except with respect to such revenues under the Loan Agreement); each Series 1991 Bond issued under the Indenture shall recite that the Series 1991 Bonds, including interest thereon, are payable solely from the Letter of Credit and the revenue pledged to the payment thereof; and no Series 1991 Bond shall constitute a debt of the City within the meaning of any constitutional or statutory limitation. . (i) Under Section 103(a) and Section 149(e) of the Internal Revenue Code of 1986, as amended, and the applicable regulations of the Department of the Treasury promulgated thereunder (the "Code"), the interest on an issue of private activity bonds issued by a political subdivision of a state for certain facilities is not includible in gross income . 6 . section 2. . section 3. Section 4. section 5. . for Federal income tax purposes, subject to the limitations and requirements of the Code, including the filing by such political subdivision of a statement providing information required by the Code on IRC Form No. 8038 (the "Information Statement"). In consequence of the foregoing, the City hereby determines (i) to issue and sell the Series 1991 Bonds to the initial purchaser of the Series 1991 Bonds secured by the Placement Agent in accordance with the terms and conditions as set forth in the Indenture (ii) to apply all of the Series 1991 Bond proceeds to pay costs of the Project as provided in the Loan Agreement and the Indenture; (iii) to execute and deliver the Loan Agreement and the Indenture; (iv) to secure the Series 1991 Bonds by pledging and assigning to the Trustee certain of the City's rights and remedies under the Loan Agreement and certain moneys due and to become due thereunder pursuant to the Indenture; (v) to execute an Arbitrage certificate in connection with the issuance of the Series 1991 Bonds; (vi) to file the Information Statement in connection with the issuance of the Series 1991 Bonds and (vii) to take such other actions as are necessary or appropriate to consummate the transactions contemplated by the documents and instruments approved hereby. The form and substance of the Series 1991 Bonds (in substantially the form contained in the form of Indenture presented to this meeting) is hereby approved. The form and substance of the following documents (in substantially the forms presented to this meeting of the Council) are hereby approved: the Indenture, the Loan Agreement and the Letter of Credit. The Mayor and the City Administrator of the City are hereby authorized, on behalf of the City, to execute and deliver the Series 1991 Bonds, the Indenture and the Loan Agreement (collectively, the "Financing Documents"), and the City Administrator of the City is hereby authorized to affix the seal of the City and to attest the same, all in substantially the forms thereof presented to this meeting with such changes, variations, omissions and insertions as the Mayor and the City Administrator shall approve (such execution, delivery, affixation of the seal and attestation thereof with respect to the Series 1991 Bonds, however, notwi thstanding the foregoing, to 7 . section 6. . section 7. section 8. occur as provided in the Indenture). The execution and delivery of such Financing Documents by the Mayor and the City Administrator shall constitute conclusive evidence of such approval. copies of the documents shall be delivered, filed and recorded as provided therein. The Mayor and the ci ty Administrator are hereby authorized and directed for and in the name and on behalf of the City to do all acts and things contemplated, required or provided for by the provisions of the Financing Documents, and to execute and deliver all such additional certi- ficates, instruments and documents, including the Arbitrage certificate and the Information Statement, and to do all such further acts and things as may be necessary or, in the opinion of the Mayor and the City Administrator, desirable and proper to effect the purposes of the foregoing resolution and to cause compliance by the City with all of the terms, covenants and provisions of the Financing Documents, including, without limitation, such certificates, acts and things as may be required by Bond Counsel, and approved by the City Attorney, to show the facts relating to the legality and marketability of the Series 1991 Bonds. Norwest Bank Minnesota, National Association acting by and through its Norwest Corporate Finance division is hereby appointed as Remarketing Agent under the Indenture. This Resolution shall take effect immediately, and the Bonds are hereby ordered to be issued in accordance with this Resolution. Approved and adopted this 2nd day of December, 1991. ___)~ It -Z::~ Mayor . 8