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HomeMy WebLinkAboutMinutes - 42nd - February 11, 1982 signedbp MINUTES OF A REGULAR MEETING OF THE ECONOMIC DEVELOPMENT CORPORATION OF LIVONIA A Regular Meeting of the Economic Development Corporation of Livonia was called to order by the Chairman, Peter Ventura, at approximately 5:02 p.m., February 11, 1982, in the Council Chambers of the City Hall, 33000 Civic Center Drive, Livonia, Michigan. The Secretary called the roll: Directors Present: Mr. Kenneth Hale Mr. Frank Hand Mr. Alan Helmkamp Mr. Robert Jankowski Ms. Helen Kavanaugh Mr. Ron Mardiros Mr. Angelo Plakas Mr. Peter Ventura Mr. Joseph Iovannisci(Pittsburgh Testing) Mr. Dana King (Pittsburgh Testing) Directors Absent: Mr. Stanley Telman Others Present: Ms. Kimberly Kellogg, Student Mr. Dennis Neiman, Miller/Canfield Mr. Daniel Gilmartin, Executive Director Ms. Marie King, Recording Secretary On a motion by Mr. Mardiros, supported by Mr. Jankowski, it was #82-263 RESOLVED, that the minutes of January 14, 1981, of the Special Meeting of the Economic Development Corporation of Livonia be approved as submitted. A roll call vote was taken on the foregoing motion with the following results; AYES: Hale, Hand, Helmkamp, Jankowski, Kavanaugh,. Mardiros, Plakas, Ventura NAYS: None The Chairman declared the resolution adopted. The first item on the agenda was a resolution authorizing the issuance of EDC bonds for the Pittsburgh Testing Laboratory Project. There was no discussion. 0n a motion by Mr. Helmkamp, supported by Mr. Hand, it was 1182-264 WHEREAS, the Economic Development Corporation of the City of Livonia (the "EDC") is empowered under Act 338, Public Acts of Michigan, 1974, as amended (the "Act"), to assist in the financing of certain projects and facilities through the issuance of its economic development limited obligation revenue bonds. Pittsburgh Testing Laboratory, a Pennsylvania corporation (the "Company") has proposed that the Company acquire and construct an industrial building (the "Project"), and as an inducement therefor, has requested the EDC to assist in the financing of the Project in the following general manner (as detailed in the Loan Agreement (the 287 "Agreement"): The EDC would issue its Economic Development Limited Obligation Revenue Bonds (Pittsburgh Testing Laboratory Project), Series A, in the principal amount of $350,000 (the "Bonds") under the Act and would loan the proceeds of the Bonds to the Company to be used to finance the acquisition, construction and installation of the Project as the Company causes the Project to be acquired, constructed and installed. Under the terms of the Agreement the Company would make loan repayments (the "Loan Repayments") in amounts sufficient to pay the principal, premiums, if any, and interest on the Bonds, and would be responsible for paying any Project Costs (as defined in the Agreement) exceeding the amount of the Bonds, maintaining and insuring the Project and paying all taxes and expenses relating to the Project. In addition, the Company would execute and deliver to the EDC an Economic Development Note (the "Note") evidencing the Company's obligation under the Agreement. The Company would also grant a mortgage and security interest in the Project pursuant to a Mortgage (the "Mortgage") and a Security Agreement (the "Security Agreement"). The EDC would enter into an Indenture (the "Indenture") with Mellon Bank, N.A., as Secured Party (the "Secured Party") wherein the EDC would assign and pledge its right, title and interest in the Agreement, the Note, the Mortgage and the Security Agreement to the Secured Party as security for the Bonds. Upon full payment of the Bonds or provision therefor,the Agreement would be terminated and the Note appurtenant thereto cancelled. The EDC's participation in the financing of the Project is to enable the Company to utilize applicable provisions of the United States Internal Revenue Code of 1954, as amended (the "Code"). Section 103 of the Code encourages the construction of certain facilities and the public financing thereof through economic development limited obligation revenue bonds by providing that the interest on such bonds, as contrasted with any bonds issued by the Company itself, will be exempt from Federal income tax. This tax exemption enables the bond purchaser to accept a lower rate of interest, and since the Company in effect pays the interest on the Bonds, reduces the interest cost of the Project financing to the Company. On the basis of representations of the Company and the advice of Bond Counsel that the EDC has the authority to issue the Bonds and loan the Bond proceeds to the Company; and in order to induce construc- tion of the Project, and thereby serve the purposes of the Act, the EDC has previously determined to issue the Bonds, subject to the following condition: principal and interest on the Bonds and any other cost or liability relating to the Bonds or the issuance or sale thereof, the Project, or the ownership or financing of the Project and the performance of any obligation of the EDC under the Agreement, the Indenture or the Bond Purchase Agreement between the EDC and Mellon Bank, N.A. (the "Purchaser"), shall never be payable from tax revenues or other public or general funds of the EDC or the City of Livonia, Michigan (the "Municipality"), but shall be payable only from the Security (as defined in the Indenture) or otherwise by the Company. 288 The Company has estimated Project Costs to be not less than #350,000 and has tentatively arranged the financial terms and sale of the Bonds in that amount to the Purchaser. The EDC, the Company, and the Purchaser have completed negotiation and drafting of the Agreement, the Indenture, the Mortgage, the Security Agreement, the Bond Purchase Agreement between the Company and the Secured Party and the Guarantee Agreement between the Company, as Guarantor, and the Secured Party, and have submitted these documents to the EDC for review and action. It is now appropriate for the EDC to act on the proposed documents and the proposed issuance and sale of the Bonds. NOW, THEREFORE, BE IT RESOLVED: SECTION 1. Determination of Necessity. The Project creates employment in and stimulates the economy of the Municipality and constitutes a public purpose under the Act. The issuance of the Bonds is necessary to induce the Company to locate in the Municipality and thereby obtain the employment and economic benefits. SECTION 2. Issuance of Bonds, Limited Obligation. The Bonds shall be issued by the EDC in the principal amount of $350,000, in such form and denominations as provided in the Indenture. SECTION 3. Approval of Agreement and Note. The forms of Agreement and Note on file with the Secretary of the EDC ("Secretary") are hereby approved. SECTION 4. Approval of Indenture. The form of Indenture on file with the Secretary is hereby approved. SECTION 5. Approval of Bond Purchase Agreement. The form of Bond Purchase Agreement on file with the Secretary is hereby approved. SECTION 6. Execution and Delivery of the Agreement, the Indenture, the Bond Purchase Agreement and Changes Therein. The Chairman of the Board ("Chairman") is hereby authorized to execute and deliver and the Secretary is authorized to attest and seal the Agreement, the Indenture and the Bond Purchase Agreement, all in the forms approved, with such changes and insertions in such documents as may be necessary or desir- able, permitted by the Act and otherwise by law, and not materially adverse to the EDC. SECTION 7. Acknowledgment of Other Agreements. The forms of the Mortgage, the Security Agreement and the Guarantee Agreement on file with the Secretary are hereby acknowledged. SECTION 8. Sale and Delivery of the Bonds. The Bonds shall be sold by the EDC to the Purchaser under the Bond Purchase Agreement at a purchase price of 100% of the principal amount thereof. Upon com- pliance with the terms and conditions of the Bond Purchase Agreement, 289 the Chairman and the Secretary shall execute, seal and deliver the Bonds upon receipt by the Secured Party of the proceeds therefor to the credit of the Project Fund (as defined in the Agreement) in accordance with the Agreement. SECTION 9. Approval of Filings and Submissions with Other Governmental Agencies. The Chairman, Secretary, members, staff and counsel for the EDC, or any of them, are authorized on behalf of the EDC to apply for such rulings, orders and approvals and file or submit such elections or other documents to any governmental agency, in order that the Bonds may be validly issued and the interest thereon be exempt from Federal income taxation, and to execute such powers of attorney as may be appropriate in connection with the foregoing. SECTION 10. Authorization of Other Documents. The Chairman, Secretary, members, staff and counsel for the EDC or any of them, are hereby authorized to execute and deliver such other certificates, documents, instruments, and opinions and other papers as may be required by the Agreement, the Indenture or the Bond Purchase Agree- ment or as may be necessary or convenient to effectuate the sale and delivery of the Bonds in accordance with the terms of the Agreement, the Indenture and the Bond Purchase Agreement. SECTION 11. Conflict and Effectiveness. All resolutions and parts of resolutions or other proceedings of the Issuer in conflict herewith are repealed to the extent of such conflict. This resolu- tion shall become effective upon adoption. SECTION 12. Definitions. The words used herein and in the premises shall have, where not otherwise indicated, those meanings established in the Indenture, dated as of February 1, 1982, by and between the EDC and the Secured Party. A roll call vote: was taken on the foregoing resolution with the following results: AYES: Hale, Hand, Helmkamp, Jankowski, Kavanaugh, Mardiros, Plakas, Ventura, Iovannisci, King NAYS: None The Chairman declared the resolution adopted. Mrs. Kavanaugh gave the Treasurer's Report. There is $21,655.72 in the various accounts. $20,668.05 is invested in C. D. Accounts; $805.49 is in the Savings Account; and $182.18 is in the checking account. On a motion by Mr. Mardiros, supported by Mr. Hale, it was #182-265 RESOLVED, that the Treasurer's Report be accepted as submitted by Mrs. Kavanaugh. A roll call vote was taken on the foregoing motion with the following results; 290 AYES: Hale, Hand, Helmkamp, Jankowski, Kavanaugh, Mardiros, Plakas, Ventura NAYS: None The Chairman declared the resolution adopted. The Executive Director reported that letters were sent out to those applicants who have not paid the balance of their fee. Checks were received from Central Properties, Borregard, and Charles Strand Co. The Levan Group indicated that the check was in the mail, although we have not received it. Dr. Ajluni asked that his project be kept active but he does not have the money to pay the balance of the fee at this time. Mr. Dinan is out of town and should be back next week, Valassis is seeking other financing. Drury has withdrawn its proposal. Mr. DeMarco has not responded. We have not heard from Bailey or the Livonia Professional Pavilion. Mr. Ventura suggested we turn these accounts over to our attorney, Mr. Neiman, and see if he can collect from them. Mr. Hand said that to go back to companies who have found an alternate source of financing at this point and have not received any value from the EDC would be a very valid argument in their behalf. It would only antagonize reputable businessmen. Maybe in the future we could try to eliminate this from happening. Mr. Plakas asked if the total for the three main applicants, Valassis, Drury, and DeMarco, was $12,500. The Executive Director said that was correct. Mr. Neiman said it would not be difficult to collect from those who wish to be kept active; however, it would be difficult to collect from those who are no longer interested. He suggests that the contract should be pointed out to each of them so they realize the obligation exists and then ask them for payment, Mr. Hale asked how the Executive Director felt about this. The Executive Director said he would hesitate to take any legal action against the applicants. Drury already left the City of Livonia with hard feelings. He would hate to see them go public with their complaints. He doesn't know how Valassis would react, and he thinks Mr. āž¢eMarco is trying to sell his property, 291 Mr. Helmkamp said he did not think this group wants the reputation of being an easy touch. If we develop the reputation of being hard-nosed, that is not all bad. A bit of publicity could help us avoid this in the future. Mr. Ventura suggested that Mr. Gilmartin write letters to the applicants involved and point out that they have entered into a contract. Mr. Hale suggested that the letters come from Mr. Neiman instead. Mr. Hand said he is not against making an attempt at collecting the fees from those three who have expressed no further interest in pursuing EDC financing, but it is more important that we collect from those who have expressed an interest in continuing with this vehicle for financing. They should make an immediate payment of monies due. Mrs. Kavanaugh asked if there had ever been a time limit set. Mr. Gilmartin replied that it states in the application that the balance is due at the time of the Inducement Resolution. Mr. Plakas did not think we should start a law suit to collect these fees. We made a mistake by not collecting them sooner. Hopefully, we have learned by this mistake and we have outlined a procedure so we do not get into this position again. On a motion by Mr. Ventura, supported by Mr. Plakas, it was #82-266 RESOLVED that Dennis Neiman write letters to all delinquent applicants and explain that they have signed a contract and are obligated to pay the fee even if they no longer wish to pursue the EDC financing. A roll call vote was taken on the foregoing motion with the following results; AYES: Hale, Hand, Helmkamp, Jankowski, Kavanaugh, Mardiros, Plakas, Ventura NAYS; None The Chairman declared the resolution adopted. 292 On a motion by Mr, Mardiros, supported by Mrs. Kavanaugh, and unanimously approved, it was ##82-267 RESOLVED, that the meeting of the Economic Development Corporation of the City of Livonia be adjourned at 5:25 p.m. Thursday, February 11, 1982. Respectfully submitted, Frank Hand, Secretary FH/mk