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HomeMy WebLinkAbout05-26-1998 EDA PacketAGENDA ECONOMIC DEVELOPMENT AUTHORITY TUESDAY MAY 26, 1998 6:00 P.M. 1. Call to Order and Roll Call 2. Consideration of Minutes of Monday, March 9, 1998 3. Consideration of Resolution No. 98-01 providing for the Issuance and Sale of $5,350,000 Lease Revenue Bonds 4. Consideration of Subordinaton Agreement to the Contract for Private Development between Lino Lakes EDA and Nol-Tec, Inc. (Apollo Business Park) 5. Adjourn CITY OF LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY MINUTES DATE: March 9, 1998 MEMBERS PRESENT: K. Sullivan, C. Lyden, J. Bergeson, A. Neal, C. Dahl MEMBERS ABSENT: None OTHERS PRESENT: B. Wessel, R. Batty, M. Divine CONSIDERATION OF MINUTES EDA Member Neal moved to approve the minutes of October 13, 1997. EDA Member Bergeson seconded the motion. Only two current members of the EDA were present at that meeting. Motion passed with Lyden, Dahl and Sullivan abstaining. CONSIDERATION OF ANNUAL APPOINTMENTS Mr. Wessel explained to the board that the EDA by-laws require the EDA elect a president, vice president, secretary, treasurer and assistant treasurer. The EDA should also appoint a new executive director to replace Randy Schumacher. EDA Member Sullivan asked if the city administrator position could be appointed to executive director, without specifically appointing Dave Pecchia, interim city administrator. Mr. Batty said yes, the position could be named so that the new city administrator would automatically assume the position. EDA Member Neal moved to appoint EDA Member Sullivan as president, EDA Member Dahl as vice-president, EDA Member Neal as Treasurer, Ms. Divine as secretary, Marilyn Anderson as assistant treasurer, and the position of city administrator as executive director. EDA Member Lyden seconded the motion. Motion passed unanimously. CONSIDERATION OF EDA OFFICIAL NEWSPAPER Mr. Wessel explained the EDA is required to publish public notices and needs to designate an official newspaper. EDA Member Bergeson moved to approve the Quad Community Press as the official newspaper. EDA member Dahl seconded the motion. Motion passed unanimously. CONSIDERATION OF OFFICIAL DEPOSITORIES Mr. Wessel explained that on occasion the EDA and the city have financial transactions and the EDA will need official depositories. EDA Member Lyden moved to approve Norwest Bank, First Bank NA, Firstar Bank, Merrill Lynch, Dain Bosworth, Juran and Moody, and Prudential Bache. EDA Member Dahl seconded the motion. Motion passed unanimously. CONSIDERATION OF CONTRACT FOR PRIVATE DEVELOPMENT BETWEEN LINO LAKES EDA AND NOL-TEC, INC. Mr. Wessel explained that in 1996 the EDA approved a development agreement with Nol- Tec to build a 16,000 square foot facility in the Apollo Business Park. In the agreement, TIF was used to pay for 1.6 acres and all the assessments. Nol-Tec paid for the remaining 1.4 acres of the 3-acre parcel. The agreement the city made with Nol-Tec was that TIF would be used to subsidize the remaining 1.4 acres if the company expanded. The company is now planning to double the size of its Lino Lakes facility. This decision is based, in part, on the commitment of $54,000 in additional pay-as-you-go TIF to pay for the remaining 1.4 acres. This expansion will increase the industrial tax base and provide the capacity for 25 additional high -quality jobs. This development contract between the EDA and Nol-Tec outlines the conditions for public assistance for the additional TIF. In this agreement, the city will continue to be reimbursed for assessments first from available tax increment, and Nol-Tec will be reimbursed the additional $54,000 from the remaining available tax increment. Payback on the entire project will be complete in 2004. EDA Member Bergeson asked when the original payback was to occur. Ms. Divine said it was scheduled to go on the tax rolls in 2004, the same as with the expansion. The additional increment from the expansion would pay for the additional TIF. EDA Member Bergeson moved to approve the development contract. EDA Member Lyden seconded the motion. Motion passed unanimously. CONSIDERATION OF AGREEMENT RELATING TO DEVELOPMENT CONTRACT AND MORTGAGE FINANCING, F&G, INC. Mr. Wessel explained that in 1997 the EDA entered into a development agreement for financial assistance with F&G, Inc. regarding a project within TIF District 1-7, the Apollo Business Park. The agreement called for the construction of two buildings in 1997, and a third in 1998. The first two buildings have been completed and the developer has arranged for a permanent mortgage on the project. The development agreement contains a provision which prohibits any liens (including a mortgage) against the property without the EDA's permission, if the project is not complete. Because the development agreement also calls for construction of a third building, which has not yet occurred, the EDA's permission for financing is necessary. This agreement focuses on two matters. It partially subordinates the EDA's development agreement with F&G, Inc. to the new financing. This means that the new mortgage will be treated as if it had been recorded prior to the development agreement. The EDA's position with the developer will remain unchanged, and none of the EDA's significant protections will be weakened by this action. The second matter in the agreement concerns various representations about what has or has not happened with regard to the project. The lender is asking the city for assurance that there have been no violations of the development agreement. Staff and legal counsel have reviewed the representations. The project has gone very well, the buildings are 100% occupied with excellent tenants, and, to staffs knowledge, there are no defaults or violations. According to legal counsel the agreement is reasonable and represents standard procedure for refinancing. EDA member Bergeson moved to authorize the president and executive director to execute the agreement. EDA Member Neal seconded the motion. Motion passed unanimously. ADJOURNMENT EDA Member Neal moved to adjourn. EDA Member Dahl seconded the motion. Meeting adjourned at 6:20 p.m. AGENDA ITEM 3 STAFF ORIGINATOR: Brian Wessel DATE: 5/26/98 TOPIC: Resolution No. 98-01 providing for the issuance and sale of $5,350,000 Lease Revenue Bonds BACKGROUND: The issuance and sale of $5,350,000 in 20-year Lease Revenue Bonds is to assist in the financing of the construction of the public facilities complex in The Village. The bonds will assist with the construction of the city hall, police station and Early Childhood Learning Center. Revenues from the lease of the building to Centennial School District at $1.2 million for 10 years for the Early Childhood Center will be used to pay that portion of the bond. These bonds are not general obligation bonds of either the EDA or the city. The bonds will be scheduled for sale at 6 p.m. on June 22, 1998. OPTIONS: 1. Approve Resolution No. 98-01 2. Return to staff for further consideration RECOMMENDATION: Option 1 Extract of Minutes of Meeting of the Board of Commissioners of the Lino Lakes Economic Development Authority Anoka County, Minnesota Pursuant to due call and notice thereof a regular meeting of the Board of Commissioners of the Lino Lakes Economic Development Authority, Anoka County, Minnesota, was held at the City Hall in the City on Tuesday, May 26, 1998, commencing at 6:00 o'clock P.M. The following members of the Board of Commissioners were present: and the following were absent: * * * The following written resolution, the reading of which had been dispensed with by unanimous consent, was presented by Commissioner , who moved its adoption: BMB131417 LN140-60 RESOLUTION NO. 98 — 01 RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF $5,350,000 LEASE REVENUE BONDS, SERIES 1998A (CITY OF LINO LAKES, MINNESOTA LEASE OBLIGATION) BE IT RESOLVED By the Board of Commissioners of the Lino Lakes Economic Development Authority, Anoka County, Minnesota (the "Authority") as follows: 1. It has been proposed to the Authority that the Authority assist in the financing of the acquisition and construction of a site and facilities to be used by the City of Lino Lakes, Minnesota (the "City"). Under the proposal, the City and the Authority will enter into a Ground Lease Agreement (the "Ground Lease"), whereby the City will lease to the Authority certain land in the City (the "Site"). The Authority will lease to the City the Site and the facilities to be constructed thereon by the City (the "Facilities"), pursuant to a Lease -Purchase Agreement (the "Lease"). Pursuant to a Trust Indenture (the "Indenture") between the Authority and a corporate trustee (the "Trustee"), the Authority will issue $5,350,000 aggregate principal amount of Lease Revenue Bonds, Series 1998A (City of Lino Lakes, Minnesota Lease Obligation) (the "Bonds"), the proceeds of which will be used to finance the acquisition and construction of the Site and the Facilities. The Authority will enter into an Assignment and Security Agreement (the "Assignment") with the Trustee, whereby the Authority will assign to the Trustee, as security for the Bonds, 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 under the Lease (other than certain rights to indemnification and payment of the Authority's expenses). The Bonds will be payable solely from Lease Payments received from the City under the Lease and moneys realized by the Trustee from re -leasing the Site and the Facilities following default or termination of the Lease, and the Authority shall have no liability with respect to the Bonds. 2. To provide financing for the acquisition and construction of the Site and the Facilities, including costs of issuance and the establishment of a Reserve Fund for the Bonds under the Indenture, the Authority will issue and sell the Bonds in the amount of $5,350,000. The Bonds will be issued, sold and delivered in accordance with the terms of the following Terms of Proposal, which are hereby approved: BMB131417 LN140-60 3. Springsted Incorporated is authorized and directed to negotiate the Bonds in accordance with the foregoing Terms of Proposal. The Board of Commissioners will meet at 6:00 o'clock P.M. on Monday, June 22, 1998, to consider proposals on the Bonds and take any other appropriate action with respect to the Bonds. The motion for the adoption of the foregoing resolution was duly seconded by Commissioner , and upon vote being taken thereon the following members voted in favor of the motion: and the following voted against: whereupon the resolution was declared duly passed and adopted. BMB131417 LN140-60 STATE OF MINNESOTA COUNTY OF ANOKA I, the undersigned, being the duly qualified and acting Executive Director of the Lino Lakes Economic Development Authority, hereby certify that I have carefully compared the attached and foregoing extract of minutes of a regular meeting of the Board of Commissioners of the Authority held on Tuesday, May 26, 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 this day of August, 1998. BMB131417 LN140-60 Executive Director Recommendations For Lino Lakes Economic Development Authority Lino Lakes, Minnesota $5,350,000 Lease Revenue Bonds, Series 1998A (City of Lino Lakes, Minnesota Lease Obligations) Presented to: EDA Board of Commissioners Economic Development Authority Mr. Brian Wessel, Community Development Director 1189 Main Street Lino Lakes, MN 55104-2123 Study No.: L0502D2 SPRINGSTED Incorporated May 20, 1998 Mayor Kim Sullivan Members, City Council Ms. Mary Vaske, Finance Director City of Lino Lakes 1189 Main Street Lino Lakes, MN 55104-2123 SPRINGSTED Public Finance Advisors RECOMMENDATIONS Re: Recommendations for the Issuance of $5,350,000 Lease Revenue Bonds, Series 1998A (the "Bonds") We respectfully request your consideration of the above -named issue. Proceeds of this issue will be used to finance a portion of the costs for constructing a new Civic Complex to be leased to the City of Lino Lakes (the "City"). We recommend the following for the bonds: 1. Action Requested 2. Sale Date and Time To establish the date and time of receiving bids and establish the terms and conditions of the offering. Monday, June 22, 1998 at 11:30 A.M. with award by the Board of Commissioners of the Economic Development Authority at 6:00 P.M. that same day. 3. Authority and Purpose for the Bond Issue The Bonds are being issued pursuant to Minnesota Statutes, Sections 469.090 to 469.1081 and Chapter 475 to finance a portion of the costs of constructing a civic complex to be leased by the City. 4. Principal Amount of Offering $5,350,000 5. Repayment Term Source of Debt Service Revenues 7 Prepayment Provisions 8. Credit Rating Comments The Bonds will mature annually each February 1, 2001 through 2019. Interest on the Bonds is payable semiannually each February 1 and August 1, commencing August 1, 1999. Debt service will be payable solely from the revenues derived from the lease of the financed project to the City. Bonds maturing on or after Februay 1, 2007 will be callable February 1, 2006 and any day thereafter at a price of par plus accrued interest. We recommend the EDA apply for a rating on this issue from Moody's Investors Service. The Bonds are payable from an annual appropriation by the City and are not a general obligation of the EDA; therefore, the rating will be based on the City's credit rating. The City's rating is currently "Baal." Typically, lease obligations are rated one or two "notches" lower than the general obligation bond rating of the entity. It is Lino Lakes Economic Development Authority May 20, 1998 9. Federal Treasury Regulations Concerning Tax -Exempt Obligations (a) Bank Qualification (b) Rebate Requirements anticipated that the Bonds will receive a "BAA2" or "BAA3" rating by Moody's. A "BAA2" or "BAA3" rating is still regarded as investment grade and may result in more bidders. Under Federal Tax Law, financial institutions cannot deduct from income for federal income tax purposes, income expense that is allocable to carrying and acquiring tax- exempt bonds. There is an exemption to this for "bank qualified" bonds, which can be so designated if the issuer does not issue more than $10 million of tax exempt bonds in a calendar year. Issues that are bank qualified receive slightly lower interest rates than issues that are not bank qualified. This issue is not designated as bank qualified. All tax-exempt issues are subject to the federal arbitrage and rebate requirements, which require all excess earnings created by the financing to be rebated to the U.S. Treasury. The requirements generally cover two categories: bond proceeds and debt service funds. There are exemptions from rebate in both of these categories: Bond proceeds, defined generally as both the original principal of the issue and the investment earnings on the principal, have 6, 18 and 24 month spend down exemption periods. If all of the proceeds are expended during one of those exemption periods, the bond proceeds are exempt from rebate and may retain the excess earnings. If the EDA does not anticipate being able to meet those requirements, the reinvestment of bond proceeds must be monitored and the EDA must rebate any amount earned in excess of the rate on the bonds. It is our understanding the EDA expects to spend all of the proceeds within 24 months. Springsted currently provides rebate calculation services to the City of Lino Lakes. An amendment for this issue has been provided to EDA staff. The EDA can elect, at the time of issuance, to pay a penalty in lieu of rebate. The penalty is 1.5% of the amount not meeting the expenditure tests, calculated every six Page 2 Lino Lakes Economic Development Authority May 20, 1998 (c) Economic Life (d) Federal Reimbursement Regulations 10. Continuing Disclosure 11. Attachments months until all proceeds are spent. We recommend the EDA select the penalty option as it will be more cost effective than rebate if the money is not spent as rapidly as expected. The average life of the Bonds cannot exceed 120% of the economic life of the projects to be financed. The economic life of the facility exceeds 20 years. This issue is within the economic life requirements. Federal reimbursement regulations require the EDA to make a declaration, within 60 days of the actual payment, of its intent to reimburse itself from expenses paid prior to the receipt of bond proceeds. It is our understanding the EDA has taken whatever actions are necessary to comply with the federal reimbursement regulations in regards to the Series 1998A Bonds. The new SEC rules require the City, as the obligated party, to undertake an annual update of its Official Statement information and report any material events to the national repositories. Springsted currently provides continuing disclosure services to the City of Lino Lakes. An amendment for this issue has been provided to EDA staff. • Sources and Assessments • Debt Service Schedule • Terms of Proposal DISCUSSION Proceeds of this issue and other funds on hand will finance the construction cost of the proposed Civic Complex. The EDA will enter into a lease agreement with the City whereby the City will commit to lease the facility at rental rates equal to the debt service on the Bonds. Since this will be an annual appropriations lease, the City Council must appropriate fundseach year in its budgetory process. Failure to appropriate such funds would constitute an evidence of default which would have a serious negative impact on the City's credit rating and its ability to access the capital markets in the future. Pursuant to legislation enacted in 1996, since these obligations are secured by a promise to pay by the City, the obligations will be included in the net debt calculation of the City. The net debt limit is equal to 2% of the City's current market value of $625,403,650 providing a net debt capacity of $12,508,073. The City will have a remaining debt capacity of $7,158,073 after these bonds are issued. The City currently has no other debt subject to the debt limit. Page 3 Lino Lakes Economic Development Authority May 20, 1998 The City has entered into a lease agreement with the Centennial School District whereby the District will lease the Early Childhood portion of the facility. Pursuant to the terms of that lease, the District has agreed to pay not more than $1.2 million for the next 10 years. Receipt of those lease payments will commence in 1999 and are currently scheduled at $120,000 per year. This payment does not cover all of the financing costs over the term of the lease. Page 6 shows the structure of this issue taking into consideration not only the expected lease payments from the District but also the City's current lease obligations for the fire station. The 1998 levy by the City covers the period of time from the date of the bonds through February 1, 2000. The total levy of $407,339 shown for 1998 is net of the school district contribution and includes the levy for the fire station. The levy increase due to this issue for 1998 is estimated to be $290,751 which is consistent with our earlier projections. In order to reduce the initial total levy to a level around $400,000, we have delayed the repayment of principal of this issue until February 1, 2001. Thereafter, we have maintained an average debt requirement of approximately $455,000 for the City's lease revenue obligations. We note that since the levies are for the payments of debt obligation of another jurisdiction (the EDA) such levies are outside the current provisions of the levy limitations. Respectfully submitted, SPRINGSTED Incorporated Ims Provided to Staff: a) Summary of Arbitrage Rules b) Rebate and Continuing Disclosure Addenda Page 4 Lino Lakes Economic Development Authority Lease Revenue Bonds, Series 1998A Sources and Uses Sources Gross Bond Proceeds Underwriter's Discount @ 1.5% Net Bond Proceeds Investment Earnings on Bond Proceeds Funds on Hand Area & Unit Fund Surface Water Management Fund Closed Bond Fund Apollo Drive Construction Fund Industrial Park Fund Water Operating Fund Sewer Operating Fund TIF Fund Total Sources Uses Construction Costs Furnishings and Equipment Professional Fees (Planning, Architectural, Engineering, Consultants) Communications/Technology Contingency SAC/WAC Charges Total Project Costs Funded Bond Reserve (Maximum Annual Debt Service) Costs of Bond Issuance/Miscellaneous Total Uses Prepared by SPRINGSTED Incorporated 5/20/98 5,350,000 (80,250) 5,269, 750 80,000 500,000 250,000 950,000 300,000 470,000 64,339 64,339 300,000 8,248,428 6,000,000 450,000 670,000 340,000 190,000 50,000 7,700,000 488,428 60,000 8,248,428 Page 5 Total Net Requirement (11) o0)N V V0)0) V V V V V V V (D(0(0(0(0(0to C) 1,- U) (A (O (0 N 0 '- (D (O 0) O N t- 00 V (') C) 0 C) O N n N r- 00 a0 (n 00 00 . (O .- N C) 1- (n N 0 R Ti: U) co- U) C) (n co- U) co- f` U) 0o V V (Ti- (n (O N O U) U) U) U. U) U) U) U) U) U) U) 0 U) U) U) U1 U) In V V V V V V V V V V V V V V V V V V V V V 9,048,898I School District Lease Payment Income (10) 0 0 0 0 0 0 0 0 0 0 0 O O O O O O O O O O 0 0 0 0 O 0 O O O O O O O O O O (5 O O O N N N N N N N N N N I 1,200,000 Existing Fire Hall Lease Bonds (9) a000(A(n0000000 00 CD O (t) U') U) U) O U) U) N O CD c0 (O (o (V V C) rM (V (0 co-OOO 6-0O .- V r- C)MNN V C)NNT- O I 1,388,726 Net Levy Required (8) RO)00)CDTrTt(T�pt(TpTrTr (D(D(OCO(O(Dto ti00(CO(0')ram-.-NO(n 0(DNCV00 V C)C)O � e- (D r- N 01 r- ((") N O O.- M V V U) CMS) c0') V 10 CO Tt (n U) to ((0 U U) 10 to ci et V V V V V V V V V V C) V V V V V V V V V 18, 860,172 Reserve Earnings 5.50% (7) in V V V V V V V V V V V V V V V V V V' CD (O CO (0 (O (O CD C) (O (D CO (D CO CO CO CO CO (D (D (A N 00 OD 00 OD 00 OD O 00 00 00 00 00 00 00 00 00 OD OD N O (0 co co- C0 (O Co (0 (0CD (0 (o (O (o CO (.0 (0 (0 (0(ri V N N N N N N N N N N N N N N N N N N T- O C) r- CA 0 v Total Principal & Interest (6) CD 00 00 OD M OD C) 0 OD GO 00 00 00 OD O O O O O O O V CA C) V V C) 00 C) .— N N h U) N CD V UP .— 0 0 0 C) (D CO O) 10 N 0)) O .— 0) V U) O 11 CD .- N O V . C) - 0 0 to Ti O C)) U) V co- C) V N V •- .- O N C) CV V) O 0 CD N- 00 U) (0 00 OD � OD 00 00 OD 00 00 OD OD 00 r- C) V V V V V V V V V C) V V V V V V V V V I 9,424, 306 Interest JY CD 00 00 M C) C) C) O0 OD OD 00 co O OO O O O 0 0 0 0 V CA CD V V 0)000)—NNI-11)NCA V U).-000 C)(0(0C))(oNCA0.-0) V U)0U)CDr-NO V e-C) 000N V (n V U) V.-OD(h V t-0).-•-0N-(')t- .MMNNNNNN(CVNC'1 V NOI-U)N I 4,074,306 (1) 0)-' 0000000000000to oU) O(n000 O(DI-ODOOT- NC) V 11)(01-1,-000D0)0)000 OTt Ti Ti Ti U)(n(1000U)U)(1011)(n(10V)(10(D0c0 o. •C 0 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O '(0000000000000000000 to U) O (A (n O O O O O O U) (A O �(�p O to C7 (n �A1NT-NNNNr^-N(0')(()01M(0')TtTtTt 5,350,000 Maturity Date (2) CAOr-NC) V U)c01-.000)O.—NC) V 10(O1'-ODCA C) 000000 CD 000 CA 0 O o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 a aaaaaaaaaaaaaaaaaaaa Totals ` 4)›.— 0003CD00N01 V(oUD 0000.-NM V toc01- 0000 0 rnrnrno0 0) 0)) 0)) N N N 0 0 0 N N N N N N N N N N N N O a E 0 V 00000Cr) O N O M CV 0 CO- 0 0 r- Tt to V Available Funds ti U O 7) U t-. ti co O 0 COCO 01'0 CO • C y () N E 1 ti • 'C L Q) m 3 03 TO Is 4?_ C Page 6 THE AUTHORITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $5,350,000 LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA LEASE REVENUE BONDS, SERIES 1998A (CITY OF LINO LAKES, MINNESOTA LEASE OBLIGATION) (BOOK ENTRY ONLY) Proposals for the Bonds will be received on Monday, June 22, 1998, until 11:30 A.M., Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award of the Bonds will be by the Authority Board at 6:00 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Proposals may be submitted in a sealed envelope or by fax (612) 223-3002 to Springsted. Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final Proposal price and coupons, by telephone (612) 223-3000 or fax (612) 223-3002 for inclusion in the submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder and the Authority to purchase the Bonds regardless of the manner of the Proposal submitted. DETAILS OF THE BONDS The Bonds will be dated August 1, 1998, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing August 1, 1999. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Bonds will mature February 1 in the years and amounts as follows: 2001 $165,000 2002 $175,000 2003 $190,000 2004 $205,000 2005 $195,000 2006 $210,000 2007 $230,000 2008 $250,000 2009 $270,000 2010 $170,000 2011 $290,000 2012 $305,000 2013 $325,000 2014 $340,000 2015 $360,000 2016 $380,000 2017 $405,000 2018 $430,000 2019 $455,000 Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds, provided that no serial bond may mature on or after the first mandatory sinking fund redemption date of any term bond. All term bonds shall be subject to mandatory sinking fund redemption and must conform to the maturity schedule set forth above at a price of par plus accrued interest to the date of redemption. In order to designate term bonds, the proposal must specify "Last Year of Serial Maturities" and "Years of Term Maturities" in the spaces provided on the Proposal Form. Page 7 BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bond, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, New York, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC. REGISTRAR The Authority will name the registrar which shall be subject to applicable SEC regulations. The Authority will pay for the services of the registrar. OPTIONAL REDEMPTION The Authority may elect on February 1, 2006, and on any day thereafter, to prepay Bonds due on or after February 1, 2007. Redemption may be in whole or in part and if in part at the option of the Authority and in such manner as the Authority shall determine. If less than all Bonds of a maturity are called for redemption, the Authority will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. SECURITY AND PURPOSE The Bonds will be special obligations of the Authority payable solely from lease payments to be received from the City of Lino Lakes, Minnesota pursuant to a lease agreement and shall not constitute a debt for which the faith and credit or taxing powers of the Authority will be pledged. The proceeds will be used to finance the construction of a municipal complex to house City Hall, police facilities and an early childhood center. TYPE OF PROPOSALS Proposals shall be for not less than $5,269,750 and accrued interest on the total principal amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit ("Deposit") in the form of a certified or cashier's check or a Financial Surety Bond in the amount of $53,500, payable to the order of the Authority. If a check is used, it must accompany each proposal. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the Authority. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the Authority to satisfy the Deposit requirement. The Authority will deposit the check of the purchaser, the amount of Page 8 which will be deducted at settlement and no interest will accrue to the purchaser. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the Authority. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the Authority scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 or 1 /8 of 1 %. Rates must be in ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis. The Authority's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The Authority will reserve the right to: (i) waive non -substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and, (iii) reject any proposal which the Authority determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the underwriter, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the Authority has requested and received a rating on the Bonds from a rating agency, the Authority will pay that rating fee. Any other rating agency fees shall be the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds. CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT Within 40 days following the date of their award, the Bonds will be delivered without cost to the purchaser at a place mutually satisfactory to the Authority and the purchaser. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no -litigation certificate. On the date of settlement payment for the Bonds shall be made in federal, or equivalent, funds which shall be received at the offices of the Authority or its designee not later than 12:00 Noon, Central Time. Except as compliance with the terms of payment for the Bonds shall have been made impossible by action of the Authority, or its agents, the purchaser shall be liable to the Authority for any Toss suffered by the Authority by reason of the purchaser's non-compliance with said terms for payment. Page 9 CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(5), the City of Lino Lakes will undertake, pursuant to a Continuing Disclosure Certificate, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Bonds will be conditioned upon its receiving the Continuing Disclosure Certificate at or prior to delivery of the Bonds. OFFICIAL STATEMENT The Authority has authorized the preparation of an Official Statement containing pertinent information relative to the Bonds, and said Official Statement will serve as a nearly -final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the Authority, Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55101, telephone (612) 223-3000. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a "Final Official Statement" of the Authority with respect to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any underwriter or underwriting syndicate submitting a proposal therefor, the Authority agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 140 copies of the Official Statement and the addendum or addenda described above. The Authority designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the Authority (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated May 26, 1998 BY ORDER OF THE AUTHORITY BOARD /s/ Marilyn Anderson Clerk Page 10 AGENDA ITEM 4 STAFF ORIGINATOR: Brian Wessel DATE: 5/26/98 TOPIC: Consideration of Subordination Agreement to the Contract for Private Development between Lino Lakes EDA and Nol-Tec LLC BACKGROUND: The EDA entered into a development agreement with NoI-Tec in 1995 regarding construction of their original building. We recently entered into a second agreement with regard to expansion. The owner is refinancing the development and the bank has asked the EDA to subordinate certain of its rights to the bank's mortgage. This is a typical request and one the EDA is generally willing to accommodate to at least a limited degree. We will not subordinate the assessment agreement to the new mortgage. The assessment agreement should remain in place even if the bank acquires the property. In this instance, the owner also agreed to allow the city to relevy unpaid special assessments in the case of a default. We should not give up this right. With these exceptions, it is reasonable to subordinate the remainder of the development agreement to the new financing. OPTIONS: 1. Authorize the president and executive director of the EDA to sign the subordination agreement that retains the assessment agreement and the right to relevy unpaid special assessments in the event of a default. 2. Return to staff for further consideration RECOMMENDATION: Option 1 Kennedy Craven C ►c A a t E R E C 470 Pillsbury Center 200 South Sixth Street Minneapolis MN 55402 (612) 337-9300 telephone (612) 337-9310 fax e-mail: attr@kennedy-graven.com RONALD I t. BATTY Attorney al law Direct rill (612) 337-9262 email: rbany@lcennedy-graven.com May 20. 1998 Ms. Vicky L. Krajsa-Frank Lindquist & Vennum 4200 IDS Center 80 South Eighth Street Minneapolis MN 55402-2205 RE: Nlol-Tec/Lino Lakes EDA Agreement Dear Vicky: I have reviewed the subordination agreement and estoppel certificate regarding the contract for private redevelopment between the captioned parties. I have the following comments with regard to the document: 1. Paragraph 6. There remains a reference to the assessment agreement in line 7. I believe this should be deleted for the sake of clarity. 2. Paragraph R. The major substantive issue I have is with regard to the extent to which the EDA will subordinate its interest in development contract 1. As I indicated in my letter of May 1. 1998. the city has the right to reimpose special assessments in the case of an event of default. This would most likely occur through nonpayment of real estate taxes. We will not subordinate our right to do so. i believe there should be recognition of this in paragraphs 8 and 9. 3. As a matter of form, this document will be executed by the executive director and president of the Lino Lakes EDA. It will not be executed by the mayor and president of the city council. I have asked the EDA to add this item to the agenda for the meeting of May 26. 1998. I assume we will be able to resolve the above differences prior to that date. I have asked staff to go Rr;B143R2E LR140-35 9ZE-d EO/ZO d lib-1 OlE61EE+ N3Alin 7 AO3NN3)l-woJd wel17:0l 86-0Z-4EN Ms. Vicky L. Krajsa-Frank May 20. 1998 Page 2 forward with placing this on the agenda. but it is important I get a corrected document back as soon as possible for inclusion in the packet. yours Ronald H. Batty Lino Lakes EDA Attorney RHB:lh cc: Ms. Mary Divine RMS14362F Lk140-2R 9ZE—d EO/EO'd 1117-1 OtE61EE+ N3AYa9 I A03NN3N—woad wElb:Ot 86-0Z-4EVl