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HomeMy WebLinkAboutResolution 81-14RESOLUTION NO.~l-lh . RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COLUMBIA HEIGHTS, MINNESOTA ("CITY~) AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF THE $775,000 COMMERCIAL DEVELOPMENT REVENUE NOTE (RUVELSON & ASSOCIATES, INC. PROJECT), SERIES 1981 ("NOTE"), WHICH NOTE AND THE INTEREST AND ANY PREMIUM THEREON SHALL BE PAYABLE SOLELY FROM THE REVENUES DERIVED FROM THE LOAN AGREEMENT; APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF A CONSTRUCTION LOAN AGREEMENT, A LOAN AGREEMENT AND AN ASSIGNMENT OF LOAN AGREEMENT; APPROVING THE FORM OF A MORTGAGE, SECURITY AGREEMENT, AND FIXTURE FINANCING STATEMENT; APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF THE NOTE; AND PROVIDING FOR THE SECURITIES, RIGHTS AND REMEDIES OF THE HOLDER OF SAID NOTE WHEREAS, the purpose of the Minnesota Municipal Industrial Development Act, Minnesota Statutes, Chapter 474, as amended (the "Act"), as found and determined by the Legislature of the State of Minnesota, is to promote the welfare of the State of Minnesota by the active attraction, encouragement and develop- ment of economically sound industry and commerce to prevent so far as possible the emergence of blighted and marginal lands and areas of chronic unemployment, and for this purpose the State of Minnesota has encouraged action by local governmental units; and WHEREAS, factors necessitating the active promotion and development of economically sound industry and commerce are the increasing concentration of population in urban and metropolitan areas, the rapidly rising increase in the amount and cost of governmental services required to meet the needs of the increased population, and the need for development and use of land which will provide an adequate tax base to finance these increased costs; and WHEREAS, the City of Columbia Heights, Minnesota (the "City"), desires to expand the business and employment opportunities, and the available tax base of the City and to promote the redevelopment of property within the City; and WHEREAS, the City is authorized by the Act to enter into a revenue agreement with any person, firm, or public or private corporation or federal or state governmental subdivision or agency in such manner that payments required thereby to be made by the contracting party shall be fixed, and revised from time to time as necessary, so as to produce income and revenue sufficient to provide for the prompt payment of principal of and interest on all bonds issued under the Act when due, and the revenue agreement shall also provide that the contracting party shall be 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 revenue agreement; and WHEREAS, the Act further authorizes the City to issue revenue bonds, in anticipation of the collection of revenues of a project, to finance, in whole or in part, the cost of acquisition, construction, reconstruction, improvement, better- ment, or extension of such project and to provide temporary loans in advance of the issuance of said bonds; and WHERE'AS, the City has received from Ruvelson & Associates, Inc. (the "Developer"), ~ proposal that the City finance a project for purposes consistent with the Act, said project to consist of the construction of an office building (the "Project") in the City; and WHEREAS, by Ordinance No. 927, adopted on September 8, 1980, the City determined that, on the basis of information provided to it by the Developer and others, the effect of the Project, if undertaken, would be to encourage the development of economically sound commerce in the City, increase the assessed value of property within the City, increase current employment opportunities for residents of the City and surrounding areas, and to facilitate the redevelopment of property within the City, all to the benefit of the residents and taxpayers of the City; and WHEREAS, by Ordinance No. 927, adopted on September 8, 1980, the City approved the proposal of the Developer that the City undertake to provide financing for the Project and gave preliminary approval of the Project, including the issuance, sale and delivery of bonds, subject to final approval by the City; and WHEREAS, the City proposes to undertake said Project under the Act and to provide permanent financing of the cost of the Project within 24 months of the date of the Note of the City (as hereinafter defined) by the issuance of its bonds under a resolution to be adopted at that time; and WHEREAS, the City proposes to provide temporary financing of the cost of said Project by the issuance of the Note under this resolution; and WHEREAS, the Note issued under this resolution will be secured by a mortgage and lien on said Project and a pledge and assignment of the Loan Agreement, as hereinafter defined, and of the revenues derived by the City from the Loan Agreement, and said Note and the interest on said Note shall be payable solely from the revenue pledged therefor and the Note shall not constitute a debt of the City within the meaning of any constitutional, charter, or statutory limitation nor shall constitute nor give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers and shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City other than its interest in the revenues derived from the Loan Agreement; and NOW, THEREFORE, BE IT RESOLVED BY THE CITY: 1. That the City Council of the City finds, determines and declares that the construction of the Project within the City will expand the business and employment opportunities within the City, will expand the tax base of the City, will promote the redevelopment of property within the City, and will generally aid and assist the City, the School District in which the City is located, and the County of Anoka. 2. That for the pur[~ose of financing the acquisition, construction, and installation of the Project, there }s hereby authorized the issuance, sale and delivery of revenue bonds in the principal amount of $775,000. The City shall employ its best efforts to issue its revenue bonds in order to provide permanent financing for the Project, but the City is not presently legally obligated to issue such revenue bonds. Such revenue bonds shall be issued on or before the date that ~s two years .from the date of the Note. To provide funds immediately required for the purpose of financing the acquisition, construction, and installation of the Project, there is hereby authorized the issuance, sale and delivery of the $775,000 Commercial Development Revenue Note (Ruvelson & Associates, Inc. Project), Series 1981 (the ~Note"). The Note shall bear interest at the rates, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, shall be in such form, and shall have such other details and provisions as are prescribed in Exhibit A attached hereto. 3. The Note shall be a special obligation of the City the proceeds of which shall be disbursed pursuant to the Construction Loan Agreement, dated as of the date of the Note and executed by the City, American National Bank and Trust Company (the "Lender"), and the Developer (the "Construction Loan Agreement"). The principal, premium, if any, and interest on the Note shall be payable solely from the revenues derived from the Loan Agreement, dated as of the date of the Note and executed by the City and the Developer (the "Loan Agreement"). The Mayor and City Manager of the City are hereby authorized and directed to execute and deliver the Note. 4. That the Construction Loan Agreement, the Loan Agreement, and the Assignment of Loan Agreement, dated as of the date of the Note and executed by the City (the "Assignment of Loan Agreement"), all in the form now on file with the City Clerk of the City are hereby approved. The Mayor and City Manager of the Cit~ are hereby authorized and directed to execute and deliver the Construc- tion Lo~n Agreement, Loan Agreement and Assignment of Loan Agreement. 5. That the Mortgage, Security Agreement, and Fixture Financing Statement? dated as of the date of the Note and executed by the Developer, and the Assignment of Leases and Rents, dated as of the Date of the Note and executed by the Developer, are hereby approved in the form now on file with the City Clerk of the City. 6. That the Personml Guaranty, dated as of the date of the Note and executed by James J. Ruvelson is hereby approved in the form now on file with the City Clerk of the City. 7. That the Refunding Agreement, dated on or about the date of the Note and executed by the Developer, the Lender, and ITT Industrial Credit Company, is hereby approved in the form now on file with the City Clerk of the City. 8. That upon approval by the Mayor, and concurrence by the City Attorney, amendments may be made to the aforementioned documents to the extent not inconsistent with this resolution. 'Such approval and concurrence shall be evidenced by the execution of the aforementioned documents by the Mayor and the delivery of the opinion of the City Attorney. 3 9. That the Mayor, City Manager and Clerk of the City are hereby authorized to execute and deliver, on behalf of the City, such other documents as are necessary or appropriate in connection with the issuance, sale, and delivery of the Note. 10. That all covenants, stipulations, obligations and agreements of the City containe~l in this resolution and the aforementioned documents shall be deemed to be {he covenants, stipulations, obligations and agreements of the City to the full extent authorized or permitted by law, and all such covenants, stipulations, obligations and agreements shall be binding upon the City. Except as otherwise provided in this resolution, all rights, powers and privileges conferred and duties and liabilities imposed upon the City by the provisions of this resolution or of the aforementioned docun~ents shall be exercised or performed by the City or by such members of the City, or such officers, board, body or agency thereof as may be required by law to exercise such powers and to perform such duties. No covenant, stipulation, obligation or agreement herein contained or contained in the aforementioned documents shall be deemed to be a covenant, stipulation, obligation or agreement of any member of the City Council of the City, or any officer, agent or employee of the City in that person's individual capacity, and neither the City Council of the City nor any officer executing the Note shall be liable personally on the Note or be subject to any personal liability or accountability by reason of the issuance thereof. 11. That except as herein otherwise expressly provided, nothing in this resolution or in the aforementioned documents expressed or implied, is intended or shall be construed to confer upon any person or firm or corporation, other than the City or any holder of the Note issued under the provisions of this resolution, any right, remedy or claim, legal or equitable, under and by reason of this resolution or any provision hereof, this resolution, the aforementioned documents and all of their provisions being intended to be and being for the sole and exclusive benefit of the City and any holder from time to time of the Note issued under the provisions of this resolution. 12. That in case any one or more of the provisions of this resolution, or of the aforementioned documents, or of the Note issued hereunder shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this resolution, or of the aforementioned documents, or of the Note, but this resolution, the aforementioned documents and the Note shall be construed and endorsed as if such illegal or invalid provision had not been contained therein. 13. That the Note shall contain a recital that it is issued pursuant to the Act, and such recital shall be conclusive evidence of the validity of the Note and the regularity of the issuance thereof, and that all acts, conditions and things required by the laws of the State of Minnesota relating to the adoption of this resolution, to the issuance of the Note and to the execution of the aforementioned documents to happen, exist and be performed precedent to and in the enactment of this resolution, and precedent to issuance of the Note and precedent to the execution of the aforementioned documents have happened, exist and have been performed as so required by law. 14. That the officers of the City, attorneys, engineers and other agents or emp}oyees of the City are hereby authorized to do all acts and things required of them by or in connection with this resolution, the aforementioned documents, and the Note for the full, punctual and complete performance of all the terms, covenants and agreements contained in the Note, the aforementioned documents and this resolution. 15. ' That this resolution shall be in full force and effect from and after its passage. Offered by: Heintz Seconded by: Hentges Roll Call: All ayes Bruce G. Nawrocki, Mayor ,, J -Anne Student, Secretary EXHIBIT A UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF ANOKA CITY OF COLUMBIA HEIGHTS Commercial Development Revenue Note (Ruvelson & Associates, Inc. Project) Series 1981 R-1 $775,000 1. The City of Columbia Heights, Minnesota (the "City"), a home rule charter city of the State of Minnesota, hereby promises to pay to the order of American National Bank and Trust Company, a national banking association with its main banking house located in Saint Paul, Minnesota, its successors and assigns, (the "Lender"), at its principal office or such other place as the Lender may designate in writing, the principal sum of seven hundred seventy-five thousand dollars ($775,000), or so much thereof which may be advanced to or for the benefit of the City pursuant to that certain construction loan agreement dated March 11, 1981, by and among the City, Ruvelson & Associates, Inc., a Minnesota corporation ("Developer") and the Lender ("Construction Loan Agreement~), solely from the revenues derived by the City from the Loan Agreement as hereinafter defined, and to pay, solely from such revenues, interest on said unpaid principal sum, from the date on which this Note is delivered to the Lender (the ~'Closing Date") until the City's obligation with respect to the payment of such principal amount shall be discharged, at a rate equal to the rate of interest as hereinafter specified. 2. The principal of and interest on this Commercial Development Revenue Note (Ruvelson & Associates, Inc. Project), Series 1981 (the "Note") are payable as follows: a. Commencing on the first day of the month following the month in which the Closing Date occurs, and on the first day of each month thereafter until the earlier of (i) twenty-four (24) months after the Closing Date, or (ii) the date when the City pays to the Lender the principal amount of the Note, the City shall pay to the Lender an amount equal to the interest accrued on the principal amount of the Note computed (subject to the provisions of Sections 3 and 4 hereof) at the rate which is seventy percent (70%) of the Prime Interest Rate, as hereinafter defined, but at no time during the term hereof less than ten percent (10%) per annum during the first year following the Closing Date or eleven and one-ha~ percent (11.5%) per annum thereafter nor more than twenty-five percent (25%) per annum at any time; and b. On the earlier of (i) twenty-four (24) months after the Closing Date, or (ii) the date when the City elects, pursuant to the terms of the Loan Agreement and this Note, to pay to the Lender the principal amount of the Note, the City shall pay to the Lender the principal amount of the Note plus accrued interest from the date of the last payment of interest made pursuant to the preceding paragraph (a). The term "Prime Interest Rate" means the prime rate of interest set or announced from time to time by the Lender as a basis for determining the rate of interest on commercial b. orrowings. The Lender may, but shall not be required to, give notice of any change in the Prime Interest Rate to the City or the Developer. Any change in the interest rate of this Note due to a change in the Prime Interest Rate shall be deemed to have occurred on the day on which the Prime Interest Rate changes. 3. In the event that interest on this Note becomes includable in the gross income of the Lender for federal income tax purposes pursuant to a Determination of Taxability, as hereinafter defined, the interest rate of this Note shall, subject to the provisions of Section 4 hereof, be increased to an interest rate equal to two percent (2%) per annum above the Prime Interest Rate beginning on the Date of Taxability, as hereinafter defined; provided, however, that in such event the interest rate per annum on the Note shall at no time be less than twelve percent (12%) during the first year following the Closing Date and thirteen and one-half percent (13.5%) thereafter, nor more than thirty-five percent (35%) at any time. In such event the interest payments to be made by the City pursuant to this Note shall be adjusted accordingly and the principal amount of this Note shall be immediately due and payable in full at the option of the Lender. In addition, the City agrees to pay to the Lender the difference between the aggregate payments made by the City between the Date of Taxability and the date upon which the adjusted payments commence pursuant to this paragraph, and the payments which would have been made by the City during such period if the interest payments had been made at the adjusted interest rate. Without limiting in any way survival of other provisions of this Note, it is hereby expressly agreed that the provisions of this paragraph shall survive payment and discharge of this Note. The term "Determination of Taxability" shall mean, and for all purposes shall be deemed to have occurred as of (i) a change in the Internal Revenue Code of 1954, as amended, (ii) the issuance of a statutory notice of deficiency by the Internal Revenue Service, (iii) a ruling of the National Office or any District Office of the Internal Revenue Service, (iv) a ruling of the Minnesota Department of Revenue, (v) a decision of a court of competent jurisdiction, or (vi) any'other occurrence, which makes the interest payable on the Note includable in the gross income of the recipient for federal income tax purposes. The term "Date of Taxab~ity" shall mean that point in time when the interest payable on this Note becomes includable in the gross income of the recipient for purposes of federal income taxation. 4. Notwithstanding anything to the contrary contained herein, the rate of interest hereunder shall be equal to five percent (5%) per annum in excess of the Prime Interest Rate, as the same changes from time to time, but not greater than thirty-five percent (35%), if, and from and after the date on which, the "Standby Lender's Commitment Letter" (as that term is defined in the Construction Loan Agreement) expires or is terminated, regardless of whether or n~t the Lender declares an Event of Default as a result of such expiration or termirmtion, and regardless of whether or not a Determination of Taxability has theretofore occurred or thereafter occurs. 5. If any installment of interest hereunder is not paid within ten (10) days of the due date thereof, the City shall pay to the Lender, on demand, a late charge equal to four percent (4%) of the amount of such installment. 6. In all cases interest shall be calculated on the basis of a 360-day year, but charged for actual days elapsed in a year of 365 days. All payments or prepayments hereunder shall, at the option of the Lender, first be applied to any late charges, next to accrued interest, and the remainder to principal. 7. This Note is issued by the City as a revenue bond in the principal amount of seven hundred seventy-five thousand dollars ($775,000) under and pursuant to the Municipal Industrial Development Act, as amended, being Minnesota Statutes, Chapter 474, and any acts amendatory thereof and supple- mental thereto in effect on the date of a note resolution duly adopted by the City (the "Resolution"). The proceeds from the sale of the Note are being loaned to the Developer, pursuant to the terms of the Loan Agreement, dated as of March 11, 1981, and executed by the City and the Developer, for the purpose of financing the acquisition, construction and installation of a project (within the meaning of Minnesota Statutes, Section 474.02, subdivision la) within the corporate limits of the City. The project (hereinafter referred to as the "Project") consists of a building to be constructed for use as an office building. The disbursements of the proceeds from the sale of this Note will be made pursuant to the Construction Loan Agreement. Payment of the principal of and interest on the Note is also secured by the Mortgage, Security Agreement and Fixture Financing Statement, dated as of March 11, 1981, and executed by the Developer (the "Mortgage"), the Assignment of Leases and Rents, dated as of March 11, 1981, and executed by the Developer (the "Assignment of Leases and Rents"), the Assignment, dated as of March 11, 1981, and executed by the City (the "Assignment"), and the Refunding Agreement, dated as of March 11, 1981, and executed by the Developer and Lender and ITT Industrial Credit Company, a Nevada corporation, (the "Refunding Agreement"), and the Personal Guaranty, dated as of March 11, 1981 and executed by James J. Ruvelson (the "Guaranty"). 8. This Note may be prepaid in whole, but not in part, on any date on which any interest payment on the Note is due, without premium or penalty. 9. Ail of the agreements, conditions covenants, provisions and stipula- tions contained in the Resolution, Loan Agreement, Construction Loan Agreement, Mortgage, Guaranty, Assignment, Refunding Agreement, Commitment Letter (as that document is referred to in the Construction Loan Agreement), and Assignment of Leases and Rents, or any other instrument securing this Note are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. If an Event of Default occurs under any of the foregoing documents, then the Lender may at its right and option declare immediately due and payable the principal balance of this Note and interest accrued thereon, together with any attorney's fees incurred by the Lender in collecting or enforcing payment hereunder, whether suit be brought or not, ~n~ ~ll other sums due hereunder or under the Loan Agreement, Construction Loan Agreement, Mortgage, Guaranty, Refunding Agreement, Commitment Letter, and Assignment of Leases and Rents, or any other instrument securing this Note. The Lender may extend the time of payment of interest or principal of this Note, without notice to or consent of any party liable hereon, and without releasing any such party. 10. This Note and interest thereon are payable solely from the revenues and proceeds derived from the Loan Agreement, Construction Loan Agreement, Mortgage, Guaranty, Refunding Agreement, Assignment and Assignment of Leases and Rents, and does not constitute a debt of the City within the meaning of any constitutional or statutory limitation, is not payable from or a charge upon any funds other ti)an the revenues and proceeds pledged to the payment thereof, and does not give rise to a pecuniary liability of the City, or any of its officers, agents or employees; and no owner of this Note shall ever have the right to compel any exercise of the taxing power of the City to pay this Note or the interest thereon, or to enforce payment thereof against any property of the City, and this Note does not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City, other than the revenues derived from the Loan Agreement, and the agreement of the City to perform or cause the performance of the covenants and other provisions herein referred to shall be subject at all times to the availability of revenues or other funds furnished for such purpose in accordance with the Loan Agreement, sufficient to pay all costs of such performance or the enforcement thereof. 11. The remedies of the Lender as provided herein, and in the Loan Agreement, Construction Loan Agreement, Mortgage, Guaranty, Refunding Agree- ment, Commitment Letter, Assignment and Assignment of Leases and Rents, or any other instrument securing this Note, shall be cumulative and concurrent and may be pursued singly, successively or together, and at the sole discretion of the Lender, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. 12. The Lender shall not be deemed, by any act of omission or commis- sion, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Lender and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. 13. The City hereby waives presentment, demand, protest and notices of protest and dishonor. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts and things required to exist, happen and be performed precedent to or in the issuance of this Note do exist, have happened and have been performed in regular and due form as required by law. IN WITNESS 'WHEREOF, the City has caused this Note to be duly executed by its duly authorized officers and its corporate seal affixed all as of the first day of 1981. (SEAL) TH E C~MINNESOTA City Manager 4