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