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89-073 RES . . . RESOLUTION NO. 73 RESOLUTION AUTHORIZING LEASE-PURCHASE TRANSACTION RELATING TO FIRE STATION BE IT RESOLVED by the City Council of the City of Elk River, Minnesota as follows: section 1. Findings It is hereby found and declared as follows: 1.1) This Council has previously authorized the construction of an addition to the City's Fire Station located at 415 Jackson Avenue in the City. The total costs incurred and to be incurred by the City in connection with the construction of that addition are expected to be approximately Three Hundred Forty Thousand Dollars ($340,000). 1.2) Approximately One Hundred Seventy-five Thousand Dollars ($175,000) of the total costs will be financed out of funds on hand in the City fund to which are allocated the revenues from the operation of the City'S liquor store. This Council hereby determines that it is advisable and in the best interests of the City to finance the balance of such costs by means of a lease-purchase arrangement under which a financing source will advance to the City the sum of One Hundred Sixty- five Thousand Dollars ($165,000) to be applied by the City to pay a portion of the costs of construction, or, to reimburse the City for expenditures previously made in payment of the costs of construction. Under such lease-purchase arrangement, the City will enter into a so called ground lease with the party providing the financing, under which the party providing the financing will be granted possession of the land which is the site of the fire station for sufficient period of time to enable that party to recover the amount of its advance, together with interest, out of rental payments to be made by the City under a lease between the lender, as lessor, and the City, as tenant. At the time of the expiration of such ground lease and lease, and payment in full to such lessor of the rentals and other obligations existing under such lease, the City will have the right to reacquire exclusive ownership and possession of the fire station property by payment of the nominal purchase price of One Dollar ($1.00). 1.3) The staff of the City has sought proposals from several potential financing sources regarding the terms of such a lease-purchase arrangement. The City staff has recommended, and this Council hereby finds, that the terms of the proposal submitted by Norwest Investment Services, Inc. (Norwest) represent the proposal containing the most desirable terms. This Council hereby determines that it is in the best interest of the City to enter into a lease-purchase arrangement with Norwest with respect to the fire station property. 2. . 1.4) It is proposed that: (01) The City will transfer possesslon of site of the fire station to Norwest under the terms of a Ground Lease between the City, as lessor and Norwest, as lessee (the "Ground Lease"); (02) Norwest will lease the land, building and other improvements that are the site of the fire station back to the City under the terms of the certain Lease and Purchase Option Agreement between Norwest, as lessor, and the City, as lessee (the "Lease and Purchaser option Agreement"). . 1.5) There are no actions, suits or proceedings pending, or, to the best of the knowledge of the members of this Council, threatened against the City, questioning the organization or boundaries of the City, or the right of any officer of the City to hold his or her office, or in any manner questioning the right and power of the city to execute and deliver the Ground Lease or the Lease and Purchase Option Agreement, or otherwise questioning the validity of either of such instruments, or questioning the appropriation of revenues for the payment of rentals and other obligations under the Lease and Purchase Option Agreement or which, if adversely determined, will have a materially adverse effect on the ability of the City to perform its obligations under the Ground Lease and the Lease and Purchase Option Agreement. 1.6) No approval, consent or withholding of objection is required from any governmental body or authority or any other person, firm or corporation with respect to the City entering into and performing the Ground Lease and the Lease and Purchase option Agreement. 1.7) Neither the execution and delivery of the Ground Lease or the Lease and Purchase Option Agreement, nor the performance by the city of its obligations under those instruments, will violate any judgment, order, law or regulation applicable to the City, or result in any breach of, or constitute a default under, or result in the creation of any lien, charge, security interest or other encumbrance upon any assets of the City under the provisions of any indenture, mortgage, deed of trust, bank loan or credit agreement or other instrument to which the City is a party by which it or its assets may be bound. section 2. Authorization to Execute, Deliver and Perform Documents. . 2.1) Documents. Copies of the proposed form of the Ground Lease and the Lease and Purchase Option Agreement have been prepared and presented to this Council, each of which are directed to be placed on file in the offices of the City Clerk. 3 . . . . 2.2) Authorization and Execution of Documents. The forms of the Ground Lease and the Lease and Purchase Option Agreement are hereby approved, with such variations, insertions, and additions as are deemed appropriate by the officers of the City and Norwest. The Mayor and the City Administrator are hereby authorized and directed to execute, attest and deliver the Ground Lease and the Lease and Purchase Option Agreement. All of the provisions of the Ground Lease and the Lease and Purchase option Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Ground Lease and the Lease and Purchase Option Agreement shall be substantially in the forms presented to this Council and on file in the office of the City Clerk, but with such variations, omissions and insertions as may be approved by the officers executing the same, which approval shall be conclusively evidenced by such execution. In case any officer whose signature shall appear on the Ground Lease and/or the Lease and Purchase Option Agreement shall cease to hold such office before the delivery thereof, such signature shall nevertheless be valid and sufficient for all purposes. In the absence of the Mayor or the City Administrator, the Ground Lease and/or the Lease and Purchase Option Agreement, and any other documents authorized by this resolution to be executed and delivered by the City, may be executed and delivered by any other member of the City Council in place of the Mayor or the City Administrator. 2.3) Delivery of Documents and Receipt of Advance. The City shall execute and deliver the Ground Lease and the Lease and Purchase Option Agreement, together with certified copies of this resolution and such closing certificates, opinions and related documents as are required by the attorneys representing the City in this transaction and Norwest. Upon delivery of such documents to Norwest, Norwest shall advance the sum of One Hundred Sixty-five Thousand Dollars ($165,000) to the City. section 3. Use of Proceeds. 3.1) Construction Account. A special fund designated "The 1989 Fire Station Addition Fund" (the "Fund") is hereby established separate from other funds of the City. A separate account is hereby established within the Fund designated "The 1989 Fire station Addition Construction Account." The funds advanced to the City by Norwest in connection with the closing of the transactions to which this resolution relates shall be credited to The 1989 Fire Station Addition Construction Account. All costs and expenses related to the construction of the fire station addition shall be paid from such account and/or the City's general fund shall be reimbursed for any such costs paid from it. If after all such costs and expenses are paid there shall remain any unexpended balance in such account, the remainder of the funds in such account will be devoted to such other uses as are permitted by applicable law. 4 . . . . Section 4. Debt Service Account and Tax Pledqe. 4.1) Debt Service Account. A separate account within the Fund is hereby established, designated liThe 1989 Fire Station Addition Debt Service Account. II There is hereby pledged and there shall be credited to such debt service account so much of the revenues from the operation of the City's liquor store as will cause an amount which is five percent (5%) in excess of the rentals and any other obligations (the "Obligations") payable under the Lease and Purchase Option Agreement to be allocated to such account and such separate account shall be used to pay the Obligations. If monies in such separate account should at any time be insufficient to pay the Obligations, such amount shall be paid from the general fund of the City, which shall be reimbursed therefore when sufficient money becomes available in such separate account. Any sums from time to time held in such separate account (or any other fund of the City which shall be used to pay the Obligations) in excess of amounts which under section 148 of the Internal Revenue Code of 1986, as amended (the "Code") may be invested without regard to yield, shall not be invested at a yield not in excess of applicable yield restrictions imposed by such provisions of the Code. 4.2) Pledge of Full Faith and Credit. The City hereby pledges its full faith and credit to the payment of the Obligations. In the event that the said revenues from the City's liquor store do not prove sufficient to pay the Obligations, the City will promptly levy taxes as necessary for such payment without limitation as to rate or amount. Section 5. Miscellaneous. 5.1) Qualified Tax Exempt Obliqations. The rental obligations of the City under the Lease and Purchase Option Agreement are hereby designated as "Qualified Tax-Exempt Obligations" as such term is defined in section 265(b)(3) of the Code. The City represents and covenants that it does not reasonably anticipate issuing Obligations which would constitute Qualified Tax Exempt Obligations in an aggregate amount greater than $10,000,000 in 1989. . 5.2) County Auditor Reqistration. The City Clerk is directed to file with the County Auditor of Sherburne County a certified copy of this resolution and to obtain from the County Auditor a certificate stating that the City's rental and other Obligations under the Lease and Purchase option Agreement have been entered upon his register of Obligations pursuant to Section 475.62 of the Minnesota Statutes. 5.3) Authentication of Transcript. The officers of the City and said County Auditor are authorized and directed to prepare and furnish to Norwest, and to the attorneys acting for the City in these transactions, certified copies of all 5 . . . . proceedings and records of the City relating to the transactions authorized by this resolution and such other affidavits and certificates as may reasonably be required to show the facts relating to the legality of the authorized transactions as such facts appear from the officers' books and records or are otherwise known to them. All such certified copies, certificates, and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the accuracy of all statements contained therein. 5.4) Arbitrage. (01) The City covenants and agrees with Norwest, its successors and assigns, that it will not take, or permit to be taken, by any of its officers, employees, or agents, any action which would cause the interest portion of the rental obligations under the Lease and Purchase Option Agreement to become subject to taxation under the Code; and that it will take, or will cause its officers, employees, or agents to take, all affirmative actions within its powers which may be necessary to ensure that such interest portion will not become subject to taxation under the Code. The Code as used herein includes the Code and all regulations, amended regulations and proposed regulations issued thereunder, as now existing or as hereafter amended or proposed (collectively the "Regulations"). The City will make payments to the United States, if any, which are required to be made by the provisions of paragraph (f) of Section 148 of the Code. (02) The Mayor and the City Administrator, being officers of the City charged with the responsibility for issuing the Obligations pursuant to this resolution, are authorized and directed to execute and deliver to Norwest a certification in order to satisfy the provisions of Section 148 of the Code and the Regulations. The motion for the adoption of the foregoing resolutions was duly seconded by Councilmember ~chuldt The following voted in favor of adoption of such resolution: Mayor Tralle, Councilmembers Schuldt, Kropuenske, Holmgren and Dobel and the following voted against the adoption of the proposed resolution: None Whereupon, such resolution was declared duly adopted. 6. . . . STATE OF MINNESOTA COUNTY OF SHERBURNE CITY OF ELK RIVER I, the undersigned, being the duly qualified and acting Clerk of the City of Elk River, Minnesota, or an appropriate official of the City authorized to execute this instrument on behalf of the Clerk, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on file 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 the City, duly called and held on the date therein indicated, insofar as such minutes relate to authorization for the City to enter into and perform the Ground Lease and the Lease and Purchase Option Agreement to which reference is made in the resolutions included within such extract of minutes. WITNESS my hand and seal this day of December, 1989. (SEAL) SBS:BZ8 7 .