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HomeMy WebLinkAbout2018-32CITY OF COLUMBIA HEIGHTS, MINNESOTA RESOLUTION NO. 2018-32 RESOLUTION AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF A REVENUE OBLIGATION FOR THE BENEFIT OF LOVE TO GROW ON; AUTHORIZING THE EXECUTION AND DELIVERY OF THE REVENUE OBLIGATION AND RELATED DOCUMENTS; AND APPROVING OTHER ACTIONS RELATED THERETO BE IT RESOLVED by the City Council of the City of Columbia Heights, Minnesota (the "City "), as follows: Section 1. F= indicts. 1.01. Minnesota Statutes, Sections 469.152 through 469.1655, as amended (the "Act "), authorizes the City to carry out the public purposes described in the Act by providing for the issuance of revenue obligations to provide funds to finance revenue - producing enterprises, whether or not operated for profit. 1.02. Minnesota Statutes, Section 471.656, as amended, authorizes a municipality to issue obligations to finance or refinance the acquisition or improvement of property located outside of the corporate boundaries of such municipality if the governing body of the city in which the property is located consents by resolution to the issuance of such obligations. 1.03. Love To Grow On, a Minnesota nonprofit corporation, or any of its affiliates (the "Borrower "), has proposed that the City issue its revenue obligation (the "Note "), in one or more series, as a taxable or tax - exempt obligation, in an aggregate principal amount not to exceed $3,800,000. The Borrower has proposed to apply the proceeds of the Note to (i) finance the acquisition, construction, and equipping of an approximately 13,000 square foot early childhood educational facility located at 6499 Lakota Trail in Lino Lakes, Minnesota (the "Project "); (ii) finance capitalized interest on the Note during construction of the Project, if necessary; (iii) fund required reserves for the Note, if any; and (iv) pay the costs of issuing the Note. 1.04. The Project financed with the proceeds of the Note will be owned and operated by the Borrower. 1.05. The Borrower has represented to the City that it is exempt from federal income taxation under Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code "), as a result of the application of Section 501(c)(3) of the Code. 1.06. Section 147(f) of the Code, and regulations promulgated thereunder, and Section 469.154, subdivision 4 of the Act require that, prior to the issuance of the Note, the City Council approve the issuance of the Note after conducting a public hearing thereon preceded by publication of a notice of public hearing (in the form required by Section 147(f) of the Code and applicable regulations) in the official newspaper of and a newspaper of general circulation in the City at least fourteen (14) days prior to the public hearing date. 1.07. On the date hereof, the City Council conducted a public hearing on the Project and the issuance of the Note. A notice of public hearing was published at least fourteen (14) days prior to the regularly scheduled meeting of the City Council in the Sun Focus, the official newspaper of and a 524236v1 GAF CL162 -55 newspaper of general circulation in the City, with respect to the required public hearing under Section 147(f) of the Code and the Act. At the public hearing, a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing, on the Project and the proposed issuance of the Note. 1.09. Pursuant to Section 469.154 of the Act, prior to the issuance of the Note by the City, the Commissioner of the Minnesota Department of Employment and Economic Development ( "DEED ") must approve the costs of the Project to be funded by the Note on the basis of an application submitted by the City with all required attachments and exhibits (the "DEED Application "). 1.09. The Note is to be issued under the terms of this resolution. Northeast Bank, a Minnesota banking and insurance corporation (the "Lender "), has agreed to purchase the Note. The proceeds derived from the sale of the Note to the Lender (the "Loan ") are to be loaned by the City to the Borrower pursuant to the terms of a Loan Agreement (the "Loan Agreement ") between the City and the Borrower. Proceeds of the Note will be applied by the Borrower to (i) finance the acquisition, construction, and equipping of the Project; (ii) finance capitalized interest on the Note, if necessary; (iii) fund required reserves for the Note, if any; and (iv) pay the costs of issuing the Note. The proceeds of the Note will be disbursed pursuant to the Loan Agreement and a Disbursing Agreement (the "Disbursing Agreement ") between the Borrower, the Lender, and a disbursing agent named therein. 1.10. The loan repayments required to be made by the Borrower under the terms of the Loan Agreement and certain other rights will be assigned to the Lender under the terms of a Pledge Agreement (the "Pledge Agreement ") between the City and the Lender. 1.11. In consideration of the Loan by the City and to secure the payment of its obligations under the Loan Agreement and the principal of, premium, if any, and interest on the Note when due, the Borrower will execute and deliver a mortgage agreement granting a mortgage lien on certain property of the Borrower (the "Mortgage "), an assignment of leases and rents (the "Assignment "), and other security documents that are intended to secure timely payment of the Loan. 1.12. The principal of, premium, if any, and interest on the Note (i) shall be payable solely from the revenues pledged and otherwise available therefor; (ii) shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation; (iii) shall not constitute or give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers; and (iv) shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City other than the City's interest in the Loan Agreement. Section 2. The Note. 2.01. For the purposes set forth above, there is hereby authorized the issuance, sale, and delivery of the Note in an aggregate principal amount not to exceed $3,800,000. The Note shall bear interest at rates designated by the terms of the Note, and shall be designated, 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 terms, details, and provisions as are prescribed in the form of the Note now on file with the City, with the amendments referenced herein. The City hereby authorizes the Note to be issued as a "tax- exempt bond" the interest on which is not includable in gross income for federal and State of Minnesota income tax purposes. 2.02. All of the provisions of the Note, when executed 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 Note shall be substantially in 524236v1 GAF CL162 -55 2 the form now on file with the City, which form is hereby approved, with such necessary and appropriate variations, omissions, and insertions (including changes to the name of the Note, the aggregate principal amount of the Note, the stated maturity of the Note and the maturity date of the Note, the interest rate on the Note, and the terms of optional and mandatory redemption of the Note) as the Mayor and the City Manager (the "Mayor" and the "City Manager," respectively), in their discretion, shall determine. The Mayor and the City Manager are authorized and directed to prepare the Note, and the Note shall be delivered to the Lender. The execution of the Note with the manual or facsimile signatures of the Mayor and the City Manager and the delivery of the Note by the City shall be conclusive evidence of such determination. The City Council of the City hereby authorizes and directs the Mayor and the City Manager to execute and deliver the Note. 2.03. The Note shall be a special, limited obligation of the City, and the principal of, premium, if any, and interest on the Note shall be payable solely from the proceeds of the Note, the revenues derived from the Borrower pursuant to the terms of the Loan Agreement and the security provided by the Borrower in accordance with the terms of the Loan Agreement, the Mortgage, the Assignment, and any and all other security of any kind or nature provided by the Borrower (or an affiliate) to the Lender. 2.04. As provided in the Loan Agreement, the loan repayments to be made by the Borrower under the Loan Agreement will produce revenues sufficient to pay the principal of, premium, if any, and interest on the Note when due. The Note shall not be payable from or charged upon any funds other than the revenues pledged to its payment, nor shall the City be subject to any liability thereon, except as otherwise provided in this paragraph. No holder of the Note shall ever have the right to compel any exercise by the City of its taxing powers to pay any of the Note or the interest or premium thereon, or to enforce payment thereof against any property of the City except the interests of the City in the Loan Agreement and the revenues and assets thereunder, which will be assigned to the Lender under the Pledge Agreement. The Note shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City, except the interests of the City in the Loan Agreement, and the revenues and assets thereunder, which will be assigned to the Lender under the Pledge Agreement. The Note shall recite that the Note is issued pursuant to the Act and that the Note, including interest and premium, if any, thereon, is payable solely from the revenues and assets pledged to the payment thereof, and the Note shall not constitute a debt of the City within the meaning of any constitutional or statutory limitations. 2.05. It is hereby found and determined that the Project furthers the purposes set forth in the Act, and therefore the Project constitutes a "project" within the meaning of Section 469.153, subdivision 2(b) of the Act. The City acknowledges, finds, determines, and declares that the issuance of the Note is authorized by the Act and is consistent with the purposes of the Act and that the issuance of the Note and the other actions of the City under the Loan Agreement, the Pledge Agreement, and this resolution constitute a public purpose and are in the best interests of the City. In accordance with Section 469.154 of the Act, the City Manager and other City staff are hereby authorized and directed to cause a draft copy of the DEED Application, together with drafts of all required attachments and exhibits, to be prepared by Kennedy & Graven, Chartered, as bond counsel ( "Bond Counsel'). The City Manager and other officers, employees, attorneys, and agents of the City are hereby authorized to provide DEED with any information needed for this purpose, and the City Manager is authorized to initiate and assist in the preparation of such documents as may be deemed appropriate by Bond Counsel. Section 3. Agreements. The Mayor and the City Manager are hereby authorized and directed to execute and deliver the Loan Agreement and the Pledge Agreement. All of the provisions of the Loan Agreement and the Pledge 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 524236v1 GAF CL162 -55 and shall be in full force and effect from the date of execution and delivery thereof. The Loan Agreement and the Pledge Agreement shall be substantially in the forms on file with the City which are hereby approved, with such omissions and insertions as do not materially change the substance thereof, or as the Mayor and the City Manager, in their discretion, shall determine, and the execution thereof by the Mayor and the City Manager shall be conclusive evidence of such determination. Section 4. Disbursements of Note Proceeds. The proceeds of the Note shall be disbursed in accordance with the terms of the Loan Agreement and the Disbursing Agreement. Section 5. Other Documents. The Mayor, the City Manager, and the Finance Director 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, including one or more certificates of the City, an endorsement of the City to the tax certificate of the Borrower, an Information Return for Tax- Exempt Private Activity Bond Issues, Form 8038, and all other documents and certificates as shall be necessary and appropriate in connection with the issuance, sale, and delivery of the Note. The City hereby authorizes Bond Counsel to prepare, execute, and deliver its approving legal opinion with respect to the Note. Section 6. The City and Its Officers, Employees, and A gents. 6.01. Except as otherwise provided in this resolution, all rights, powers, and privileges conferred and duties and liabilities imposed upon the City or the City Council by the provisions of this resolution or of the aforementioned documents shall be exercised or performed by the City or by such members of the City Council, or such officers, board, body, or agency thereof as may be required or authorized by law to exercise such powers and to perform such duties. 6.02. 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 or employee 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. 6.03. No provision, covenant, or agreement contained in the aforementioned documents, the Note, or in any other document relating to the Note, and no obligation therein or herein imposed upon the City or the breach thereof, shall constitute or give rise to any pecuniary liability of the City or any charge upon its general credit or taxing powers. In making the agreements, provisions, covenants, and representations set forth in such documents, the City has not obligated itself to pay or remit any funds or revenues, other than funds and revenues derived from the Loan Agreement which are to be applied to the payment of the Note, as provided therein. 6.04. 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, any right, remedy, or claim, legal or equitable, under and by reason of this resolution or any provisions hereof, 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 holders from time to time of the Note. Section 7. Severabil�. In case any one or more of the provisions of this resolution, other than the provisions contained in Section 2.03 hereof, 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 5242360 GAF CL162 -55 4 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 provisions had not been contained therein. Section 8. Validity of the Note. The Note, when executed and delivered, 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 the execution of the aforementioned documents have happened, exist, and have been performed as so required by law. Section 9. Authorization For Other Acts. The officers of the City, Bond Counsel, other attorneys, engineers, and other agents or employees 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. In the event that for any reason the Mayor is unable to carry out the execution of any of the documents or other acts provided herein, any persons delegated the duties of the Mayor shall be authorized to act in the capacity of the Mayor and undertake such execution or acts on behalf of the City with full force and effect, which execution or acts shall be valid and binding on the City. If for any reason the City Manager is unable to execute and deliver the documents referred to in this resolution, such documents may be executed by any person delegated the duties of the City Manager, with the same force and effect as if such documents were executed and delivered by the City Manager. Section 10. Designation as Bank - Qualified Obli atiori. The City hereby designates the Note as a "qualified tax - exempt obligation" for purposes of Section 265(b)(3) of the Code. Section 11. Payment of Costs. The Borrower has agreed to pay directly or through the City any and all costs paid or incurred by the City in connection with the transactions authorized by this resolution, whether or not the Note is issued. It is understood and agreed that the Borrower shall indemnify the City against all liabilities, losses, damages, costs, and expenses (including attorneys' fees and expenses incurred by the City) arising with respect to the Project or the Note as provided for and agreed to by and between the Borrower and the City in the Loan Agreement. Section 12. Payment of City's Administrative Fee. The Loan Agreement will require the Borrower to pay the City's bond administrative fee when the Note is issued. Section 13. Effective Date. This resolution shall be in full force and effect from and after its passage. 5242360 GAF CL162 -55 Adopted by the City Council of the City of Columbia Heights, Minnesota, this 29th day of May, 2018. amj�A- Mayor ATTEST: Nancy B er, Council ecretary Pro Tern 524236v1 GAF CL162 -55