3.5. SR 08-04-2008REQUEST FOR ACTION
To Item Number
Ci Council 3.5.
Agenda Section Meeting Date Prepared by
Consent August 4,2008 Catherine Mehelich, Director of
Economic Develo ment
Item Description Reviewed by
Consider Resolution Authorizing the Issuance and Sale of Tim Simon, Finance Director
Industrial Development Revenue Bonds for Metal Craft Reviewed by
Machine & Engineering, Inc. Project Lori ohnson, Ci Adminstrator
Action Requested
Adopt the attached Resolution Authorizing the Issuance and Sale of Industrial Development Revenue
Bonds fox Metal Craft Machine & Engineering, Inc. Project.
Background/Discussion
In accordance with statutory requirements, the City Council held a public hearing on July 7, 2008 and July
21, 2008 to consider a request for Industrial Revenue Bonds for the Metal Craft Machine & Engineering,
Inc. Project. In addition, the Council adopted a resolution granting preliminary approval of the project.
The resolution authorizes the issuance and sale of the bonds in two parts -
• Series 2008A - $1,000,000 to finance equipment
Series 2008B - $4,000,000 to finance the construction of the new industrial facility
The bond documents have been reviewed and approved by the City's Bond Counsel, Briggs & Morgan.
The attached resolution grants final approval for the issuance and sale of the bonds for the project.
Financial Impact
There will be no impact to the City since this request is fox a revenue bond (conduit financing) with the
City not having to pledge any considerations towards debt payment. In addition, Metal Craft has paid an
initial $5,000 application fee, the City will require an issuance fee of 1/a of 1%, and all out of pocket
expenses for legal fees to underwrite the bond will be paid fox by the applicant.
Attachments
Resolution 08- Authorizing the Issuance and Sale of $1,000,000 Industrial Development
Revenue Bond, Series 2008A and $4,000,000 Industrial Development Revenue Bond, Series
2008B (Metal Craft Machine & Engineering, Inc. Project) to Finance a Project
Action Motion by Second by Vote
Follow Up
S:\Industrial Siting\Metal Craft\IDB\8.04.08 Request Council Action metalcxaftdoc
Extract of Minutes of a Meeting of the
City Council of the
City of Elk River, Minnesota
Pursuant to due call and notice thereof, a regular meeting of the City Council of
the City of Elk River, Minnesota, was duly held at the City Hall in said City on Monday, the 4th
day of August, 2008, at 6:30 P.M.
The following Council Members were present:
and the following were absent:
During said meeting Council Member
the following resolution and moved its adoption:
then introduced
RESOLUTION NO.
AUTHORIZING THE ISSUANCE AND SALE OF
$1,000,000 INDUSTRIAL DEVELOPMENT REVENUE BOND
(METAL CRAFT MACHINE & ENGINEERING, INC. PROJECT), SERIES 2008A
AND
$4,000,000 INDUSTRIAL DEVELOPMENT REVENUE BOND
(METAL CRAFT MACHINE & ENGINEERING, INC. PROJECT), SERIES 2008B
TO FINANCE A PROJECT
The motion for the adoption of the foregoing resolution was duly seconded by
Council Member
and after full discussion thereof and upon vote
being taken thereon, the following voted in favor thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
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Elk River Metal Craft RESOLUTION AUTHORIZING ISSUANCE AND SALE.DOC
RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF
$1,000,000 INDUSTRIAL DEVELOPMENT REVENUE BOND
(METAL CRAFT MACHINE & ENGINEERING, INC. PROJECT), SERIES 2008A
AND
$4,000,000 INDUSTRIAL DEVELOPMENT REVENUE BOND
(METAL CRAFT MACHINE & ENGINEERING, INC. PROJECT), SERIES 2008B
TO FINANCE A PROJECT
BE IT RESOLVED by the City Council of the City of Elk River (the "Issuer"), as
follows:
1. The City Council has received a proposal from Metal Craft Machine &
Engineering, Inc., a Minnesota corporation ("Metal Craft") and Mowry Properties, LLC, a
Minnesota limited liability company ("Mowry" and together with Metal Craft the "Borrower"),
that the Issuer undertake to finance a certain Project as herein described, pursuant to Minnesota
Statutes, Sections 469.152 through 469.1651 (the "Act"), through issuance by the Issuer of its
$1,000,000 Industrial Development Revenue Bond (Metal Craft Machine & Engineering, Inc.
Project), Series 2008A (the "Series 2008A Bond") and its $4,000,000 Industrial Development
Revenue Bond (Metal Craft Machine & Engineering, Inc. Project), Series 2008B (the "Series
2008B Bond," and together with the Series 2008A Bonds, the "Bonds"). The Issuer held a
public hearing with respect to the Project on July 21, 200.8 after duly publishing notice thereof.
2. The Project consists of the construction of an approximately 63,000 square foot
manufacturing facility for medical devices, including related equipment and furnishings, located
at 13760 Business Center Drive in the City of Elk River, Minnesota (the "Property") and the
acquisition and installation of equipment (the "Equipment") therein.
3. It is proposed that, pursuant to (a) a Loan Agreement dated as of August 1, 2008,
among the Issuer, GE Government Finance, Inc. (the "Lender") and the Borrower (the
"Equipment Loan Agreement"), the Issuer loan the proceeds of the Series 2008A Bond to Metal
Craft to finance the Equipment, and (2) a Loan Agreement dated as of August 1, 2008, among
the Issuer, the Lender and the Borrower (the "Property Loan Agreement"), the Issuer loan the
proceeds of the Series 2008B Bond to Mowry to finance the Property. The Property and the
Equipment are hereafter referred to as the "Project". The Property Loan Agreement and the
Equipment Loan Agreement are hereafter referred to as the "Loan Agreement". Proceeds of the
Bonds will be funded by the Lender and disbursed from (a) an escrow fund pursuant to the terms
of an Escrow Agreement dated as of August 1, 2008 by and among the Lender, the Issuer, the
Borrower (the "Property Escrow Agreement") and the escrow agent named therein, and (b) an
escrow fund pursuant to the terms of an Escrow Agreement dated as of August 1, 2008 by and
among the Lender, the Issuer, the Borrower (the "Equipment Escrow Agreement") and the
escrow agent named therein, collectively the Property Escrow Agreement and the Equipment
Escrow Agreement are referred to as the "Escrow Agreement." The loan payments to be made
by the Borrower under the Loan Agreement are fixed so as to produce revenues sufficient to pay
the principal of, premium, if any, and interest on the Bonds when due. Payment of the Bonds
will be secured as provided in the Loan Agreement and the Escrow Agreement.
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Elk River Metal Craft RESOLUTION AUTHORIZING ISSUANCE AND SALE.DOC
4. Forms of the following documents (collectively, the "Bond Documents") have
been submitted to the City Council for approval:
(a) the Loan Agreement
(b) the Escrow Agreement
(c) the Tax Regulatory Agreement, dated as of August 1, 2008, among the
Issuer, the Lender and the Borrower
5. It is hereby found, determined and declared that:
(a) it is desirable that the Bonds be issued by the Issuer upon the terms set
forth in the forms of the Loan Agreement and the Escrow Agreement and herein;
(b) the loan payments under the Loan Agreement are fixed to produce revenue
sufficient to provide for the prompt payment of principal of, premium, if any, and interest
on the Bonds when due, and the Loan Agreement also provides that the Borrower 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 premises and payable during the
term of the Loan Agreement; and
(c) under the provisions of Minnesota Statutes, Section 469.155, and as
provided in the Loan Agreement, the Bonds are not to be payable from or charged upon
any funds other than the revenues pledged to the payment thereof; the Issuer is not
subject to any liability thereon; no holder of the Bonds shall ever have the right to compel
any exercise by the Issuer of its taxing powers to pay the Bonds or the interest or
premium thereon, or to enforce payment thereof against any property of the Issuer except
the interests of the Issuer in the Loan Agreement; the Bonds shall not constitute a charge,
lien or encumbrance, legal or equitable, upon any property of the Issuer; the Bonds shall
recite that the Bonds, including interest thereon, is payable solely from the revenues
pledged to the payment thereof; and, the Bonds shall not constitute a debt of the Issuer
within the meaning of any constitutional or statutory limitation.
6. The forms of the Bond Documents and exhibits thereto shall be subject to the
review and approval of the City Administrator and the City Attorney, as appropriate. The Bond
Documents are approved substantially in the form submitted. The Loan Agreement, the Escrow
Agreement and the Tax Regulatory Agreement are directed to be executed in the name and on
behalf of the Issuer by the Mayor and the City Administrator. Any other documents and
certificates necessary to the transaction described above shall be executed and delivered by the
appropriate Issuer officers. Copies of all of the documents necessary to the transaction herein
described shall be delivered, filed and recorded as provided herein and in the Bond Documents.
7. The Issuer shall proceed forthwith to issue its Bonds, in the form and upon the
terms set forth in the Loan Agreement and the exhibits thereto. The offer of the Lender to
purchase the Bonds at par at the interest rate specified in the Loan Agreement (not exceeding 7%
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per annum) as of the date of issuance of the Bond, is hereby accepted. The Mayor and the
Administrator are authorized and directed to confirm the interest rate or rates and prepare and
execute the Bonds as prescribed in the Loan Agreement and to deliver it to the Lender.
8. The Mayor and the Administrator and other officers of the Issuer are authorized
and directed to prepare and furnish to the Lender certified copies of all proceedings and records
of the Issuer relating to the Bonds, and such other affidavits and certificates as maybe required
to show the facts relating to the legality of the Bonds as such facts appear from the books and
records in the officers' custody and control or as otherwise known to them; and all such certified
copies, certificates and affidavits, including any heretofore furnished, shall constitute
representations of the Issuer as to the truth of all statements contained therein.
9. The approval hereby given to the various documents referred to above includes
approval of such additional details therein as may be necessary and appropriate and such
modifications thereof, deletions therefrom and additions thereto as may be necessary and
appropriate and approved by the Issuer's Bond Counsel, the City Attorney and the Issuer officials
authorized herein to execute said documents prior to their execution; and said Issuer officials are
hereby authorized to approve said changes on behalf of the Issuer. The execution of any
instrument by the appropriate officer or officers of the Issuer herein authorized shall be
conclusive evidence of the approval of such documents in accordance with the terms hereof. In
the absence of the Mayor or the Administrator, any of the documents authorized by this
resolution to be executed maybe executed by an acting or duly designated official.
Adopted: August 4, 2008
Administrator
Mayor
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