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HomeMy WebLinkAbout06-22-1998 EDA PacketAGENDA ECONOMIC DEVELOPMENT AUTHORITY MONDAY JUNE 22, 1998 6:00 P.M. 1. Call to Order and Roll Call 2. Consideration of Minutes of Monday, June 8, 1998 3. Consideration of Resolution No. 98-02 awarding the sale of $5,350,000 Lease Revenue Bonds, Series 1998A (Civic Complex) 4. Adjourn CITY OF LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY MINUTES DATE: Monday, June 8, 1998 MEMBERS PRESENT: J. Bergeson„ C. Lyden, A. Neal, C. Dahl, K. Sullivan MEMBERS ABSENT: None OTHERS PRESENT: Brian Wessel, Ron Batty, Mary Divine, Fritz Johnson CONSIDERATION OF MINUTES EDA Member Neal moved to approve the minutes from the May 26, 1998 EDA meeting. EDA Member Dahl seconded the motion. Motion passed unanimously. INDUSTRIAL INCENTIVES: TAX INCREMENT FINANCING POLICY Mr. Wessel reviewed with the board the city's past Tax Increment Financing (TIF) policy, and the success the city has had providing land and assessments to qualified companies on a combination of upfront and pay-as-you-go basis. The districts have aged and diminished in capacity, and the city is no longer able to provide a subsidy in the range of 16%, which usually covers land and assessments based on 10,000 square feet of building per acre. Other factors have produced a slow down in industrial development, including competition and less accessible or desirable land. Mr. Wessel requested that the board consider revitalizing the TIF program by allowing the creation of new TIF districts, when appropriate, within Apollo Business Park, Lakes Business Park and Clearwater Creek Development Center. Mr. Batty explained the 2-year lag time between a building getting built and starting to pay taxes. He informed the board that within the last two years the legislature had lowered the C/I tax rate, but the city was protected from a possible lack of increment due to lower taxes through its use of pay-as-you-go. This means if there is not enough increment to meet the obligation, the business doesn't get it. The city is not obligated. Also, the city has never bonded for TIF projects. The legislature also loosened the Green Acres clause, and now manufacturing and distribution facilities can be built on former Green Acres parcels without penalty, but 90% of the jobs must be at 160% of minimum wage. He also explained that the city could now create an new district where an old one was without the historic rate of inflation on the land being a detriment, since the city does not have to include the value of new public improvements into determining the inflation on the property. Mr. Lyden asked if TIF was meant to "start the fire" for industrial development, and that has been done in Lino Lakes, why keep using TIF? Mr. Batty said that was the policy question for the city council to decide, but his opinion was that some cities need it to remain competitive, and Lino Lakes probably still needed TIF to maintain a momentum in industrial development. Mr. Wessel introduced Fritz Johnson, owner of Teknapack in the Apollo Business Park. He described Teknapack as an example of the success of the incubator program. Mr. Johnson is now leasing in the park, and wants to build his own building with a partner, Dana Madsen of NATRA, who is also leasing in the park. Mr. Johnson explained that he lived in the city and wanted to stay in the park, but to continue growing, he needed more space. He planned to also add leasable space to his new building to include other incubator businesses. He said he checked with other cities, and Lino Lakes is about average in its TIF incentives. He added the city needs to be creative with the parcels left in Apollo. Some have double frontage, making them more difficult to develop, and the correctional facility is a perception problem for some prospects. Mr. Batty said he would recommend a new district be formed for each new qualifying project. This has higher administrative costs, but provides more flexibility. Ms. Sullivan questioned if this would cause hopscotch development. Mr. Batty said it would not, but new facilities would keep coming on the tax rolls over time, just as now. It would not lengthen the approvals process. Mr. Wessel noted that if the EDA approved revitalizing the TIF program, staff would be returning in July to recommend establishing a new TIF district to support the Teknapack project. EDA member Bergeson moved to reestablish the TIF Proposal Policy by allowing the creation of new districts, when appropriate, within the Apollo Business Park, Clearwater Creek Development Center and Lakes Business Park. EDA Member Neal seconded the motion. Motion passed unanimously. ADJOURNMENT EDA Member Lyden moved to adjourn at 6:40 p.m. EDA Member Neal seconded the motion. Motion passed unanimously. AGENDA ITEM 3 STAFF ORIGINATOR: Brix Wessel DATE: 6122/98 TOPIC: Consideration of Resolution No. 98-02 Awarding the Sale of $5,350,000 Lease Revenue Bonds, Series 1998A (Civic Complex) BACKGROUND: This is the final action lo be taken by the EDA necessary for the financing of the Civic Complex. Springted, Inc. solicited proposals to purchase the bonds, and the proposals were received the morning of June 22. In the transactions that will be taking place between the EDA and the city, the city will lease the site to the EDA until the bonds are repaid. The EDA will lease the site and project back to the city pursuant to the lease. The EDA will issue the bonds to pay acquisition and construction costs, and the city's lease payments will be used to pay the principal and interest on the bonds. When all the required lease payments are made and the bonds are repaid, the land and the building will be owned by the city. OPTIONS: 1. Approve resolution No. 98-02 2. Return to staff for further consideration RECOMMENDATION: Option 1 Extract of Minutes of Meeting of the Lino Lakes Economic Development Authority Pursuant to due call and notice thereof, a meeting of the Lino Lakes Economic Development Authority was duly held in the City Hall in said City on Monday, June 22, 1998, commencing at 6:00 o'clock P.M. The following members were present: and the following were absent: The President announced that the next order of business was consideration of the proposals which had been received for the purchase of the Authority's $5,350,000 Lease Revenue Bonds, Series 1998A (City of Lino Lakes, Minnesota Lease Obligation). Springsted Incorporated presented a tabulation of the proposals which had been received in the manner specified in the Terms of Proposal of the Series 1998A Bonds. The proposals were as follows: After due consideration of the proposals, Member then introduced and moved the adoption of the following written resolution, the reading of which had been dispensed with by unanimous consent: RESOLUTION NO. 9 8 - 0 2 A RESOLUTION AWARDING THE SALE OF $5,350,000 LEASE REVENUE BONDS, SERIES 1998A (CITY OF LINO LAKES, MINNESOTA LEASE OBLIGATION); BE IT RESOLVED By the Lino Lakes Economic Development Authority (the "Authority"), as follows: Section 1. Recitals. 1.01. The City of Lino Lakes, Minnesota (the "City") is authorized by Minnesota Statutes, Section 465.71, as amended, to acquire real and personal property under lease -purchase agreements. 1.02. The Authority has agreed with the City that pursuant to a Ground Lease dated as of August 1, 1998 (the "Ground Lease"), the Authority will acquire certain property from the City, and the Authority will lease such property, together with the buildings, structures or improvements now or hereafter located thereon, to the City pursuant to a Lease -Purchase Agreement dated as of August 1, 1998 (the "Lease"). 1.03. Pursuant to a Trust Indenture dated as of August 1, 1998 (the "Indenture"), between the Authority and U.S. Bank Trust National Association, as trustee (the "Trustee"), the Authority will issue its Lease Revenue Bonds, Series 1998A (City of Lino Lakes, Minnesota Lease Obligation) (the "Series 1998A Bonds") in an aggregate principal amount of $5,350,000. 1.04. Under the Indenture, proceeds of the Series 1998A Bonds will be used to establish a Debt Service Reserve Fund to secure the Series 1998A Bonds and to pay costs of acquisition, construction and equipping of the Facilities described in the Lease, pursuant to a Disbursing Agreement dated as of August 1, 1998 (the "Disbursing Agreement"), among the Authority, the City, the Trustee and Chicago Title Insurance Company. 1.05. Pursuant to an Assignment and Security Agreement dated as of August 1, 1998 (the "Assignment"), the Authority will assign to the Trustee all of the Authority's right, title and interest in and to the Ground Lease, the Lease and the Lease Payments to be made by the City thereunder (other than certain rights to indemnification and payment of expenses) as security for the Series 1998A Bonds. 1.06. Forms of the Ground Lease, the Lease, the Indenture, the Disbursing Agreement, the Assignment, the Official Statement for the Series 1998A Bonds and a Continuing Disclosure Agreement of the City dated as of August 1, 1998, have been prepared and submitted to the Authority and are on file with the Authority. Section 2. Sale of Series 1998A Bonds. 2.01. The proposal of (the "Purchaser") to purchase the Series 1998A Bonds is hereby found and determined to be a reasonable offer and is hereby accepted, the proposal being to purchase the Series 1998A Bonds at a price of $ plus accrued interest to date of delivery, for Series 1998A Bonds bearing interest as follows: Year of Interest Year of Interest Maturity Rate Maturity Rate 2001 2011 2002 2012 2003 2013 2004 2014 2005 2015 2006 2016 2007 2017 2008 2018 2009 2019 2010 True interest cost: 2.02. The Treasurer is directed to retain the good faith check of the Purchaser, pending completion of the sale of the Series 1998A Bonds, and to deliver the good faith check to the Trustee upon the issuance of the Series 1998A Bonds. The Authority shall return the good faith checks of the unsuccessful proposers forthwith. 2.03. The Authority will forthwith issue and sell the Series 1998A Bonds in the total principal amount of $5,350,000, originally dated August 1, 1998, in the denomination of $5,000 each or any integral multiple thereof, numbered No. R-1, upward, bearing interest as above set forth, and which mature serially on February 1, in the years and amounts as follows (subject to redemption and prior payment as set forth in the Indenture): Year Amount Year Amount 2001 $165,000 2011 $290,000 2002 175,000 2012 305,000 2003 190,000 2013 325,000 2004 205,000 2014 340,000 2005 195,000 2015 360,000 2006 210,000 2016 380,000 2007 230,000 2017 405,000 2008 250,000 2018 430,000 2009 270,000 2019 455,000 2010 170,000 2.04. Execution, Authentication and Delivery. The Series 1998A Bonds, substantially in the form provided in the Indenture, will be prepared under the direction of the Authority staff and executed on behalf of the Authority by the signatures of the President and one other officer of the Authority, provided that all signatures may be printed, engraved or lithographed facsimiles of the originals. Notwithstanding such execution, a Series 1998A Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution or the Indenture unless and until a certificate of authentication on the Series 1998A Bond has been duly executed by the manual signature of an authorized representative of the Trustee. When the Series 1998A Bonds have been so prepared, executed and authenticated, the Authority will deliver the same to The Depository Trust Company, New York, New York, on behalf of the Purchaser, upon payment of the purchase price, and the Purchaser is not obligated to see to the application of the purchase price. Section 3. Approval and Execution of Documents. The Ground Lease, the Lease, the Indenture, the Disbursing Agreement, the Assignment and the Continuing Disclosure Agreement described in Section 1 are hereby approved. The President and one other officer of the Authority are authorized and directed to execute and deliver the Ground Lease, the Lease, the Indenture and the Disbursing Agreement on behalf of the Authority, substantially in the forms on file, but with all such changes therein as shall be approved by the officers executing the same, which approval shall be conclusively evidenced by the execution thereof. Copies of all of the transaction documents shall be delivered, filed and recorded as provided therein. The President and other officers of the Authority are also authorized and directed to execute such other instruments as may be required to give effect to the transactions herein contemplated. Section 4. Payment; Security; Pledges and Covenants. The Series 1998A Bonds are payable solely from the Lease Payments to be made by the City under the Lease and from other moneys realized by the Trustee after default or termination of the Lease by the City as provided. therein. No property or funds of the Authority, other than the property pledged pursuant to the Indenture and assigned to the Trustee pursuant to the Assignment, is pledged to the payment of the Series 1998A Bonds. Section 5. Authentication of Transcript. 5.01. The officers of the Authority are authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Series 1998A Bonds, certified copies of proceedings and records of the Authority relating to the Series 1998A Bonds and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books and records in their custody and under their control, relating to the validity and marketability of the Series 1998A Bonds and such instruments, including any heretofore furnished, may be deemed representations of the Authority as to the facts stated therein. 5.02. The preparation and distribution of the Official Statement prepared and circulated in connection with the issuance and sale of the Series 1998A Bonds is hereby approved. Section 6. Tax Covenant. 6.01. The Authority covenants and agrees with the holders from time to time of the Series 1998A Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Series 1998A Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Series 1998A Bonds. The motion for the adoption of the foregoing resolution was duly seconded by Member , 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. STATE OF MINNESOTA ) COUNTY OF ANOKA ) SS. CITY OF LINO LAKES ) I, the undersigned, being the duly qualified and acting Secretary of the Lino Lakes Economic Development Authority, do hereby certify that I have carefully compared the attached and foregoing extract of minutes of a meeting of the Authority held on June 22, 1998 with the original minutes on file in my office and the extract is a full, true and correct copy of the minutes insofar as they relate to the issuance and sale of $5,350,000 Lease Revenue Bonds, Series 1998A (City of Lino Lakes, Minnesota Lease Obligation) of the Authority. WITNESS My hand officially as such Secretary this day of August, 1998. LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY Secretary