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HomeMy WebLinkAboutResolution 83-24RESOLUTION NO. 83-24 RESOLUTION AUTHORIZING THE DEVELOPMENT OF A CITY OF COLUMBIA HEIGHTS SMALL BUSINESS FINANCING PROGRAM PURSUANT TO MINNESOTA STATUTES, CHAPTER 474 WHEREAS, the welfare of the State of Minnesota (the "State") requires active promotion, attraction, encouragement and development of economically sound industry and commerce through governmental acts to prevent, so far as possible, emergence of blighted lands and areas of chronic unemployment, and i't is the policy of the State to facilitate and encourage action by local government units to prevent the economic deterioration of such areas to the point where the process can be reversed ordy by total redevelopment through the use of local, state and federal funds derived from taxation, with the attendant necessity of relocating displaced persons and of duplicating public services in other areas; and WHEREAS, technological change has caused a shift to a significant degree in the area of opportunity for educated youth to processing, transporting, market- ing, service and other industries, and unless existing and related industries are retained and new industries are developed to use the available resources of 'the City of Columbia Heights (the "City"), a large part of the existing investment of the community and of the State as a whole in educational and public service facilities will be lost, and the movement of talented, educated personnel of mature age to areas where their services may be effectively used and compensated and the lessening attraction of persons and businesses from other areas for purposes of industry, commerce and tourism will deprive the City and the State of the economic and human resources needed as a base for providing governmental services and facilities for the remaining population; and WHEREAS, the increase in the amount and cost of governmental services requires the need for more intensive development and use of land to provide an adequate tax base to finance these costs; and WHEREAS, the existence of the Project, as hereinafter defined, in the City will contribute to more intensive development and use of land to increase the tax base of the City and overlapping taxing authorities and maintain and provide for an increase in opportunities for employment for residents of the City; and WHEREAS, the Minnesota Municipal Industrial Development Act, Minnesota Statutes, Sections 474.01 et seq. (the "Act") authorizes the issuanee of revenue bonds to finance the c~-t of the acquisition, construction, reconstruction, improvement, betterment or extension of projects; and WHEREAS, the term "project" is defined by Section 474.02, subdivision la, of the Act to include "any properties, real or personal, used or useful in connection with a revenue producing enterprise"; and WHEREAS, Section 474.07 of the Act authorizes the governing body of the City, after the authorization of the issu~mee of bonds pursuant to Section 474.04 of the Act, to provide funds immediately required for the purpose and not exceeding the amount of such bonds, by effecting temporary loans upon such terms as it shall by resolution determine, evidenced by notes, due in not exceeding 24 months from the date thereof, to be repaid with interest from the proceeds of such bonds when issued and delivered to the purchaser thereof; and WHEREAS, a representative of Ruvelson & Associates, Incorporated, a Minnesota corporation (the "'Developern) has presented the City Council of the City with information concerning a proposed project (the "Project") to be undertaken with the City; and WHEREAS, the Project proposed by +he Developer would require the Developer to construct certain retai7 :an~/or office facilities (the "Facilities") within the City' for acquisition, in whole or in part, by small commercial firms, corporations, partnerships, or persons (the "Purehasers") wishing to locate, relocate, or expand within the City, and; WHEREAS; the obligation of the Developer to construct the Improvements in connection with the Project would be contingent upon the City's undertaking a program ('~Small Business Finance Program" or "Program") to make available to ;the Purchasers of the Facilities the City's financing powers under the Act; and WHEREAS, the Developer has proposed that, under the City's Program, the City would, upon compliance by a Purchaser with the Program requirements, offer to issue its note (the "Note") pursuant to Sections 474.04 and 474.07 of the Act and loan the proceeds thereof to the Purchaser for the acquisition, in whole or in part, of an office Facility, which Note would be a revenue obligation of the City, payable solely from loan repayments received from the Purchaser; and WHEREAS, the Developer has proposed that, pursuant to the Program, the City would offer to issue one or more issues of bonds, pursuant to Section 474~04 (the "Bonds"), within 24 months from the date of the first Note to be repaid therefrom or to directly fin.~nce an office o~ retail facility in the event.a Note has not been issued to do so, ~vhich Bonds would be revenue obligations of the City,,~payabTe solely from loan payments received under the program from the pui-~nasers, ~ndt WHEREAS, prior to the issuance of any Notes or Bonds by the City under .the Program, the representations and obligations of the City and the Developer to ,a~t {ate the Program and construct the Facilities pursuant to the Project, and the terms uncer which a Purchaser would qualify to participate in the Program would be established in a Development Agreement (the "Agreement") between the C~ty and the Developer; and WHEREAS, the City has been advised that conventional, commercial financing to pay the eapit~ cost of the Project is available at such costs of borrowing that the economic feasibility of operating the Project would be significantly reduced, but that with the aid of municipal financing, and its resulting lower borrowing cost, the Project is economically more feasible; and WHEREAS, the City has been advised that the Program and the Project would make financing under the Act available to the prospective Purchasers under the Program, and that suck~ financing would not otherwise be available to such small business Purchasers without the standardization and aggregation of their financings pursuant to the Program; and WHEREAS, the Developer has requested that the City resolve to enter into the Agreement, to undertake the Program, to issue the Notes and to issue the Bonds pursuant to the Act to finance the Project, and to authorize and direct the City Manager of the City and the City Staff to enter into negotiations with the Developer and any other interested parties to that end; and WHEREAS, before entering into such an Agreement, undertaking such a Project, initiating the Program and issuing any Notes or Bonds thereunder, the City requires professional assistance to determine the marketability of the Notes and Bonds, the financial feasibility of the Program and Project, and the legality of the Project and the issuance of the Notes and Bonds; and WHEREAS, on the basis of the information given the City to date, the City finds that it would be in the best interests of the City to begin negotiations with the Developer to establish the final terms and conditions of the Agreement, the Project and the Program under which the City would issue the Notes and Bonds to finance the Purchasers' acquisition of their office Facilities in the Project in an amount presently estimated not to exceed an aggregate total of $2,000,000. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF COLUMBIA HEIGHTS, THAT: 1. The City hereby grants preliminary approval to the Project and the Program and declares its present intention to work, together with the Developer, toward reaching a final understanding on the terms of the Agreement pursuant to which the Project and the Program would be undertaken and the Notes and Bonds would be issued; provided that the City shall incur no obligation to the Developer with respect to the issuance of the Notes or Bonck~ until the City, the Developer and any lender or lenders who may become a party to the Agreement have reached a final understanding as to the terms thereof, and such Agreement has been approved and the execution thereof authorized by the final resolution of the City. 2. The City Manager and the staff of the City are hereby authorized and directed to take such actions as are deemed necessary to prepare for the undertaking of the Project and the Program, the preparation of the Agreement and the other necessary documents and the i~suanee of the revenue Notes and revenue Bonds thereLunder, by the City, w'~ ~n, as and if authorized by the C~ty Council of the City, to finance the Purchasers' acquisitions of the office ~r retail fac- ~ti~ties in the proiect, ~ncluding specifically the h~r~ng of Holmes & C~raven as bond~tcounsel. Such bond counsel w~?l] be compensated for its services out of the proceeds of the proposed issues of Notes arid Bonds, when and if issued, or by the Developer in the event that the Notes or Bonds are not issued. Passed this 23 of May ~ t9~3. Offered by: Hentges Seconded by: Petkoff Ro~t Cali: Al} Ayes Student, se'~re[ta ry Bruce G. Nawrockl, Mayor